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To Sign or Not to Sign: Understanding Types of Employment Contracts and Their Implications

“You’re hired … sign on the dotted line” if you hear this phrase, stop! Take a second to read your employment contract.

A well-versed hiring manager or boss will take time to go over it with you, but sometimes you have to do it yourself. Your employment contract goes over everything – including what your duties are and why/for what someone can fire you.

If you sign it and try to protest something that was on the contract you signed – it won’t play in your favor.

Want to learn more about the types of employment contracts? Read below (before you sign!)

The Types of Employment Contracts

Most “employment types” have to do with how your employer categorizes you for taxes. If they can get away with it or that’s their business model, they’ll hire you as an independent contractor – which means they don’t pay you any employment taxes.

You’ll have to pay for those yourself. Here are the main types of contracts.

  • Employee Contracts
  • Freelance or Independent Contractor
  • Zero-Hour Employees
  • Seasonal Employee Contracts

Each type of contract gives you different levels of and different types of rights. Here’s a general sense of what you can expect.

Employment Contracts

If you’re getting a job, job – as in one you plan on working for a while full or part-time, this is likely what you’ll sign. It means that the agency has to pay taxes on you as an employee and that they’ll report your earnings to the government.

These businesses are required, by national law, to give you certain rights like minimum wage and workers compensation. It’s the idea job contract if you’re trying to do this job for the rest of your life.

Seasonal employment contracts have the same terms – but they have an end date. The end date may be specific or it could be up to the employer’s discretion.

Freelance or Independent Contracts

These contracts are a lot more flexible and if you sign one, you better learn how to save some money. You’ll get exactly what you earned on your paychecks, which is liberating.

But if you don’t save any of that, the IRS will bill you for back taxes – IE what the employer didn’t take out of your check.

You have fewer rights with this type of contract. The only set rights you have are the ones you’ve both agreed upon that are on the page you sign.

So make sure you read the terms well and suggest what else you’d like!

Zero Hour Contracts

A zero hour contract is like halfway between freelance and a true employment contract. The employer doesn’t have to give you a minimum amount of hours – or technically minimum wage.

Though most employers will – or else no one would pick up those jobs! You can leave these jobs at any time and you do not enter into non-competes.

These are all types of at will employment, though leaving some of these contracts is harder than others.

Know What You Sign

If you didn’t follow these instructions and signed into something you can’t fulfill – you may need a lawyer. Some people are very strict when it comes to types of employment contracts, while others will work with you.

Need to see some service contract examples? We have prewritten ones here