3 Things You Should Include in Your Startup’s Employment Contracts (With FREE Template)

by Josh Biggs in Startup on 24th July 2019

The agreements that you make with your labor force during the startup phase of your business will be essential to the longevity of your business. This is not a time to mince words or beat around the bush! Everyone should know what you expect of them, and the benefits that they receive should be spelled out clearly.

The employment contracts that you create will be different from your neighbor’s contracts, even if you are in the same industry. However, there are some overarching themes that all contracts should include. Let’s take a look at what they are with an example of how to use them in real time.

Let’s start off with the goodies: Click here (for an employment contract template) and read on for the top three best practices for your startup employment contracts.

Compensation and Benefits

The biggest mistake here is thinking that all benefits must be monetary in nature. The Millennials that you will probably be hiring are much more concerned about their work environment becoming a more integrated part of their socially conscious lives.

Yes, you still want to talk about medical, dental and vision care, the 401(k), any stock options or fringe benefits. However, you may also want to offer volunteer days, community outreach days or “bring a relative to work” days.

Employee Classification

This is becoming a bigger and bigger issue the more that we move into the “gig economy” and away from the traditional employer – employee relationship of the 1960s. It definitely behooves the startup to strictly define the relationship that the company has with the employee. However, the contract cannot be shaped in such a way that the company actually does not adhere to the federal guidelines of what a contractor is and is not required to do for a company.

Uber and other companies have faced lawsuits because they signed people to independent contractor agreements and treated them like employees, limiting their ability to find other work and creating a dependence on the company that completely negates the value of the term “independent” in the notion of the independent contractor.


The reason that your startup has money to hire new people is because of the ideas that your core group of executives have created. These ideas may not have even grown into the money making behemoths that they can be. However, you won’t be able to take advantage of them unless you protect them from everyone – even the people that you are hiring to help bring those ideas into reality.

Confidentiality is becoming a more important and sophisticated part of contracting because of the more complex relationships between employer and employee/contractor. Does a contractor really have the same liability as an employee? He may not unless you impose it during the contracting stage. The electronic signature is a great (and legally binding, contrary to popular belief) way for you to get this done quickly.

The best practices above will help to ensure that you get the most out of your new hires while protecting your company. The devil is in the details, so make sure that you go through them with a fine toothed comb.

Categories: Startup