Do I need an employment agreement for hourly employees?

Yes, even for hourly hires. The agreement clarifies pay rate, overtime classification, schedule expectations, confidentiality, and termination terms. It doesn't have to be long — a one or two page agreement covers most small-business hires.

What's the difference between an employment agreement and an offer letter?

An offer letter is the headline summary (role, salary, start date) that the candidate accepts. The employment agreement is the full set of terms governing the relationship. Many small businesses combine them — the offer letter incorporates the employment agreement by reference.

Are non-competes worth including?

It depends on your jurisdiction and the role. California broadly bans them; many states allow them with limits; the FTC has been moving toward federal restriction. For most small business roles, confidentiality and non-solicit clauses give you the protection you actually need without the enforceability risk.

Employment Agreement for Small Business Owners

Hire your team with a contract, not a handshake.

An employment agreement built for small businesses making their first or fifth hire — clear role, compensation, confidentiality, and termination.

Create your employment agreement

Free to start — No credit card required

Hiring is one of the most legally exposed things a small business does. Wage-and-hour, classification, harassment, termination — all of them have a contract at the foundation. A clean employment agreement isn't just paperwork; it's the document that protects you from the most common (and most expensive) HR claims.

Why small business owners need a employment agreement

Clear role, hours, and compensation prevent wage-and-hour disputes.
Confidentiality clauses protect customer lists and operating know-how when employees leave.
At-will language (where applicable) preserves your ability to manage the team.
Defined termination process reduces wrongful-termination exposure.

Common scenarios

First W-2 hire

Standard at-will employment with base salary, benefits reference, confidentiality, and termination terms.

Manager or senior hire

Same template plus optional severance, longer notice period, and explicit confidentiality and non-solicit obligations.

Convert long-term contractor to employee

When a contractor relationship has drifted into employment territory, this agreement formalizes the transition cleanly.

Clauses to pay attention to

Role, duties, and reporting

Compensation and benefits

Hours and overtime classification

Confidentiality and non-solicit

At-will employment (where applicable)

Termination process and final pay

Common questions

Do I need an employment agreement for hourly employees?: Yes, even for hourly hires. The agreement clarifies pay rate, overtime classification, schedule expectations, confidentiality, and termination terms. It doesn't have to be long — a one or two page agreement covers most small-business hires.
What's the difference between an employment agreement and an offer letter?: An offer letter is the headline summary (role, salary, start date) that the candidate accepts. The employment agreement is the full set of terms governing the relationship. Many small businesses combine them — the offer letter incorporates the employment agreement by reference.
Are non-competes worth including?: It depends on your jurisdiction and the role. California broadly bans them; many states allow them with limits; the FTC has been moving toward federal restriction. For most small business roles, confidentiality and non-solicit clauses give you the protection you actually need without the enforceability risk.

← All resources for small business owners See the full Employment Agreement guide →

Ready to create your employment agreement?

Generate a employment agreement tailored for small business owners — jurisdiction-aware, fully editable, and ready in minutes.

Create your employment agreement

Free to start — No credit card required