Employment agreement (hourly)

What is an employment contract for hourly paid employees?

An employment contract for hourly employees outlines the essential terms governing an individual's employment within a company. In addition to stipulating details like job duties, working hours, and compensation, this contract may also cover confidentiality and the protection of intellectual property rights.

When is an employee considered hourly paid?

Hourly paid employees are compensated based on the number of hours they work during a specific pay period. This payment method is often used for roles where the workload may vary weekly, or employees are engaged in primarily time-based tasks. 

For example, servers, retail sales associates, or customer service representatives are often paid by the hour. Their earnings are calculated based on the hours they clock in at work, and they may receive overtime pay if they work more than a certain number of hours in a week.

Here’s an example. A retail store hires Sarah as a sales associate. She is paid an hourly wage for her work. Her employment contract outlines that she is expected to work 20 hours per week, with a schedule determined by her manager. Sarah's hourly rate is $12 per hour, and she receives overtime pay for any hours worked beyond 40 hours in a week.

In addition to her hourly wage, Sarah is entitled to paid time off, including vacation and sick leave, as outlined in the company's policies. After completing a three-month probationary period, she is also eligible for participation in the store's health insurance plan.

Sarah's employment contract specifies her job duties, which include assisting customers, restocking shelves, and maintaining the cleanliness of the store. It also provides confidentiality and intellectual property provisions, ensuring Sarah understands her obligations to protect sensitive company information.

If either Sarah or the employer wishes to terminate the employment relationship, they must provide two weeks' notice according to the contract terms. In the event of termination without cause, Sarah would receive severance pay based on her length of service with the company.

Can a salaried employee be paid by the hour?

Yes, a salaried employee can be paid by the hour under certain conditions, And those conditions will vary based on your country and state. 

Hourly paid salaried employees may include students, on-call substitutes, and individuals working part-time with varying hours during the pay period. These employees receive compensation based on the hours worked, even though an overall salary policy covers them. They enjoy protections related to termination, illness, and other employment matters.

What to include in an hourly employment contract

Personal Details

Provide details about your organization and the client — such as your name as the independent contractor, the client’s name, and the start date. 

Scope of Work

This segment of the service agreement is paramount for independent contractors opting for hourly compensation. It's where you delineate the precise details of the work you're contracted to execute.

Schedule and Dates

This section provides information regarding when you'll achieve the milestones outlined in the scope of work. This gives you and the client a comprehension of the project's duration and when specific aspects will be completed.

Payment Details

It's crucial to emphasize here that your client isn't merely compensating you for the hours devoted to working on their project but also for all hours expended on providing other services pertinent to the project. You should include tasks like emailing, making phone calls, and even doing research. 

Changes and Revisions

This contract clause elucidates how you'll manage revisions or alterations to the original contract.

Legal Liability

This clause safeguards you against bearing responsibility for any damages claimed by the client or a third party arising from the services rendered. 

Copyright

Creative endeavors often become subject to intellectual property disputes, underscoring the importance of preemptively addressing this aspect. This provision also protects the confidential information of your client’s company and yourself as the independent contractor.

Termination

This clause serves as your contingency plan—outlining the course of action if either party opts to discontinue the project, including any repercussions for the terminating party.

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