Why Every Business Needs Employment & Contractor Agreements

As your business grows, you’ll need people to help you — whether that’s employees or independent contractors. But simply agreeing on pay and a start date isn’t enough. Clear, legally sound agreements protect both your business and your workers, reducing the risk of disputes, fines, or even lawsuits.

Employment Agreements: Protecting the Employer–Employee Relationship

An employment agreement or offer letter sets the tone for the relationship between your company and an employee. It can cover:

• Compensation & Benefits → Salary, bonuses, PTO, health coverage.

• Job Responsibilities → Clear expectations for the role.

• Confidentiality & Non-Compete Clauses → Protecting sensitive business information.

• Termination Procedures → What happens if the relationship ends.

Why it matters: Without a written agreement, misunderstandings can escalate into expensive disputes. A well-drafted employment agreement builds trust, sets expectations, and keeps your business compliant with labor laws.

Independent Contractor Agreements: Avoiding Misclassification Risks

When hiring freelancers or consultants, it’s essential to put the relationship in writing. A contractor agreement typically includes:

• Scope of Work → What the contractor is responsible for delivering.

• Payment Terms → Rates, timing, and invoicing.

• Intellectual Property Ownership → Ensuring your business owns the work created.

• Confidentiality Clauses → Keeping sensitive data secure.

Why it matters: Misclassifying an employee as a contractor can trigger IRS penalties, back taxes, and legal exposure. A strong contractor agreement makes clear the independent nature of the relationship and protects your company from liability.

The Risks of Skipping Agreements

• Employees may claim promises were made that were never documented.

• Contractors may keep IP rights if ownership isn’t clearly assigned.

• Misclassification issues can bring audits and fines.

• Disputes can lead to costly litigation.

How Liermo Law Can Help

At Liermo Law, we provide flat-fee drafting and review of employment agreements, contractor agreements, and related HR documents. As part of our subscription counsel services, we also:

• Audit your worker classifications

• Update agreements as laws change

• Provide ongoing HR compliance guidance

This means your business can grow confidently, knowing your team relationships are protected and compliant.