There are different types of California employment contracts, depending on the relationship between the employee and the employer. The relationship can be defined as employer/employee, or the “employee” may be defined as a contractor. A contractor gets paid via a 1099 form and is typically a business hired by another business. A business can be defined by a single person working for him or herself, even as a sole proprietor.
Subsections in an Employment Contract
No matter what the relationship, a good California employment contact drafted by a Los Angeles labor lawyer should contain all of the following for both employees (salary or hourly) and contractors:
- Definitions – define terms such as total disability, good cause, term of agreement
- Employment – spell out the terms of the employment
- Term – length of employment, including mutual agreement, resignation, death or disability, termination and breach
- Compensation and benefits – describe all of the benefits for the employee, contractor or subcontractor, including base salary, additional compensation, disability benefits, death benefits, other benefits, termination benefits, cash payments, insurance, automobile, events giving rise to benefits and limitation of benefits
- Expenses – this section should explain what expenses the company will reimburse and what expenses are employee, contractor or subcontractor responsibility.
- Intellectual property – this section should outline the company’s rules on any intellectual property. It is basically a non-compete clause.
- Confidentiality clause – outline any company material that is confidential. If all work is confidential, then a general confidentiality clause stating that all work is confidential is appropriate.
- Enforcement – outline damages at law for violations of the employee contract and jurisdictional issues when a lawsuit is filed.
- Legal sections – add in any legal sections such as continuing effect, serverability and compliance with other agreements.
Additional Information for an Employment Contract
Each contract should have the employer’s name and address and the employee’s name and address. Both parties need to sign and date the employment contract. Most employment contacts do not require a witness signature.
In the compensation and benefits section, the possibility of raises should also be outlined. If the contract talks about raises, it should also outline the reasons raises may be given or “overlooked.”
If the signature date is different from the employment date, the employment date should be placed within the term section of the contract.
Care and consideration should be taken when drafting an employment contract with a Los Angeles wage attorney, especially for sales positions. In recent news, Vishay founder Zandman agreed to an amendment to his employment contract. Instead of $370 million to $445 million if he should leave the company pursuant to the terms of his employment contract, he is taking $60 million spread out over five years at termination. His original contract stated that upon termination pursuant to the terms of his contract, he would receive royalties for a certain percentage of the average amount of his sales.
Contracts written in such a way can cause an employer millions of dollars when someone leaves the company pursuant to the terms of his or her contract. Hiring a Los Angeles labor attorney can help an employer draft a solid contract that protects the company’s best interests.