The Anatomy of an Employment Agreement Package

An Employment Agreement Package consists of the documents executed between your company and a new employee. Making sure this package has all the necessary documents and provisions following relevant state and local employment regulations, as well as keeping your best interests in mind is important to make sure you are protected.

This post will give you a high level overview of what goes into an Employment Agreement Package for a non-executive member of your team.

Please note for executive members, there are several additional provisions and agreements you should have.

Offer Letter

  1. General Details about the Parties – Address specific information about your business (type of entity, state of registration, address), the personal information of the potential employee, and any probationary period your new employee is subject to.
  2. Details about the Position – Full details about the position – including:
    • whether it is full-time or part-time,
    • workdays,
    • effective start date,
    • name of the position,
    • whether the position is exempt or non-exempt according to the Fair Labor Standards Act and other applicable local laws,
    • duties and responsibilities of the position,
    • who the employee will be reporting to,
    • an agreement to devote full business efforts into their role,
    • an agreement to further the interest of your business
  3. Compensation Details – Address the offered compensation – including:
    • specifically address whether it is an hourly offer or an annual salary,
    • what is the payment schedule (bi-weekly, monthly, etc.)
    • reserve the right to adjust compensation accordingly,
    • bonus or commission structure,
    • optional participation in profit sharing program.
  4. Benefit Details – You should have a comprehensive employment handbook with specific policies around employee benefits. Use this section to address the corporate benefits offered to the new employee, including:
    • health and other insurance,
    • paid time off,
    • disability benefits,
    • equity details,
    • and any company specific other benefits available to the employee.
  5. At-Will Provision – Most full-time employment offerings are generally at-will – which essentially states that either you, the employer, or the employee, can terminate the employment with proper notice for any or no reason. It is important to specifically mention whether the offer of employment is at-will or not. Alternatively, you can also have a provision laying out under what circumstances employment can be terminated.
  6. Contingencies – Lay out what the offer of employment is contingent upon, including:
    • Verification of right to work in the United States
    • References
    • Background check
    • Execution of other agreements as part of Employment Agreement Package,
    • Verification of qualifications,
    • Any examinations you want the employee to pass.
  7. Incorporation of other Documents – Lay out what other agreements will be signed as exhibits to be incorporated into the entire employment agreement.
  8. Miscellaneous Provisions – most enforceable contracts have boiler-plate or miscellaneous provisions to outline things like non-solicitation of employees, how notices get sent, what constitutes the entire agreement, etc.
  9. Acceptance – Quite simply, this is your new potential employee signing off on the offer of employment.

Other Agreements Part of the Package

  1. I-9 Acceptable Documents – Documents that the employee should provide you to confirm their identity and right to work in the United States.
  2. Non-Disclosure and Confidentiality Agreement – This agreement will lay out the employees promises to keep company information confidential from third parties.
  3. Proprietary Information and Inventions Agreement – This agreement has several names (Technology Assignment Agreement, IP Assignment Agreement, Invention Assignment Agreement, etc.). This is an extremely important document, specifically for software businesses – as this signs over the rights to intellectual property of anything created by the employee as part of their work with your business to the business itself. An exhibit can also be added to outline pre-existing inventions by the employee that your business has no right to.
  4. Stock Purchase Agreement – If you are offering equity, vested or on a vesting schedule, to your employee – they should sign an appropriately drafted stock purchase agreement clearly laying out what they are being offered, and what they have to do to get it.
  5. Written Notices Required by Applicable State or Local Law – Make sure you add any necessary notices required by your locality to ensure you are following appropriate employment laws.

Let us Help

This is a very high level overview of what should go into a basic employment agreement package. Having an attorney draft the appropriate documents specific to your company can be key to protecting your business.

Kader Law can help draft agreements through our outside general counsel offering, and refer you to reputable employment attorneys when necessary. Let’s connect.

This post is not legal advice, and does not establish any attorney client privilege between Law Office of K.S. Kader, PLLC and you, the reader.