{"id":4695,"date":"2016-04-04T10:47:40","date_gmt":"2016-04-04T15:47:40","guid":{"rendered":"https:\/\/ability-fl-prod.internetbrands.com\/ability-law\/smallbusiness\/employment-law-and-human-resources\/employment-contract-provisions.html"},"modified":"2026-08-31T11:01:03","modified_gmt":"2026-08-31T16:01:03","slug":"employment-contract-provisions","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/smallbusiness\/employment-law-and-human-resources\/employment-contract-provisions.html","title":{"rendered":"What Important Clauses Should You Include in an Employment Contract?"},"content":{"rendered":"\n
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What Important Clauses Should You Include in an Employment Contract?<\/h1>\n\n
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\n By Catherine Hodder, Esq.<\/a> | Legally reviewed by Laura Temme, Esq.<\/a>\n | Last updated\n
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Editorial Note: We earn a commission from affiliate partner links on FindLaw. Commissions do not affect the editorial integrity of our legal content.<\/p>\n\n <\/div>\n \n

\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n\n\n

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Key Takeaways<\/h2>\n

An employment contract<\/span> is a legally binding agreement that defines the terms and conditions of a job for both an employer and an employee. A well-drafted contract outlines key details like job responsibilities, compensation, and termination rules. It may also include important protective clauses covering confidentiality, non-competition<\/span>, and ownership of intellectual property<\/span>.<\/p>\n\n <\/div>\n <\/div>\n<\/div>\n\n

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Employee contracts<\/span> have common elements and specialty clauses depending on their purpose. As an employer, knowing what to include and what to leave out in an employee contract<\/span> is crucially important. This article reviews some of the most frequent clauses.<\/p>\n

Employment contract<\/span> templates<\/span> are available online, or you can opt to draft your own from scratch. Whatever you decide, consider working with an employment law<\/span> attorney<\/a> to make sure you comply with state and federal laws.<\/p>\n

Foundational Terms of Employment<\/span><\/h2>\n

Every written <\/span>employment contract<\/span><\/a> should start by defining the basic terms of the role. These clauses form the core of the agreement and outline the fundamental parameters of the job.<\/p>\n

Scope of Employment<\/h3>\n

The agreement should include the start date<\/span>, term of employment<\/span>, and end date<\/span> (if any).<\/p>\n

At-Will Employment<\/span> Clause<\/h3>\n

The employment agreement<\/span> can include a clause stating that the employment relationship<\/span> is “at will<\/a>,” meaning either party can end it for any reason with no notice.<\/p>\n

Compensation<\/h3>\n

The new hire<\/span>‘s initial salary or hourly pay rate should always be part of the contract.<\/p>\n

Benefits<\/h3>\n

Include employee benefits<\/span> and the start date<\/span> for when employees may receive them. For instance, if the employer offers health insurance<\/span> after the probationary period<\/span>, the contract should give the approximate date these benefits will begin. This also applies to the accrual of other benefits, like sick days<\/span> and vacation time. If the contract doesn’t include benefit details, define them clearly in your employee handbook<\/span><\/a>.<\/p>\n

Protective and Restrictive Covenants<\/span><\/h2>\n

Employers often include specific clauses to protect their intellectual property<\/span>, client relationships, and confidential business information, especially after an employee leaves the company. Let\u2019s take a look at these important additions.<\/p>\n

Confidentiality Clause or Non-Disclosure Agreement<\/span> (NDA)<\/h3>\n

A non-disclosure or confidentiality clause prohibits employees from sharing sensitive information<\/span> such as client lists, proprietary information, and business data. Employers in competitive markets use these clauses to protect trade secrets<\/span> and confidential information<\/span>. Many states, such as California, New York, and New Jersey, ban confidentiality clauses that hide acts of workplace sexual harassment, discrimination, or retaliation.<\/p>\n

Employers can attach a non-disclosure agreement<\/span> to an employee agreement<\/span> during their employment. A confidentiality agreement<\/span><\/a> may outlast the term of employment<\/span>.<\/p>\n

Non-Compete<\/span> Clause<\/span><\/h3>\n

A non-compete<\/span> clause<\/span><\/a> restricts the employee from working for a rival company or a similar business after they leave their current employer. Some states will not enforce noncompetition<\/span> clauses<\/a>. Those that do will enforce only clauses that are narrowly written and limited to a specific term or geographic area.<\/p>\n

A related term is the non-solicitation<\/span> clause. This prevents former employees<\/span> from taking customers from the employer when they leave the company. For instance, an attorney leaving a law firm would violate a non-solicitation<\/span> clause if they called clients to their new firm.<\/p>\n

An “exclusivity” clause prevents workers from seeking employment while working for the company. Courts frown on exclusivity clauses unless the employee is highly compensated or the clause is very narrowly drawn. These clauses can prevent executives from serving on other corporate boards.<\/p>\n

Intellectual Property<\/span> Ownership Clause<\/h3>\n

Sometimes known as an “assignment” clause, this section makes anything the employee develops during work hours the employer’s property. The employee assigns all ownership rights to the company and waives any right<\/a> to royalties, patents, or trademarks.<\/p>\n

Intellectual property<\/span> covers anything the employee creates during their term of employment<\/span>. It\u2019s often used in the tech industry, where disputes arise between programmers and software companies.<\/p>\n

Procedural and Dispute Resolution<\/span> Clauses<\/h2>\n

A well-drafted contract anticipates potential disagreements and clearly outlines the legal framework for ending the employment relationship<\/span> or resolving disputes. Taking the time to confirm you\u2019ve covered all possible angles can save you time and money down the road.<\/p>\n

Termination Clause<\/h3>\n

A standard part of any employment contract<\/span> is the termination clause<\/a>. The clause should state:<\/p>\n