Key Clauses Every Employment Agreement Should Contain
Dec. 1, 2025
Employment agreements are more than formalities—they set the tone for the entire working relationship between employer and employee. A well-drafted agreement protects both sides by defining rights, specifying responsibilities, and preventing future misunderstandings.
At McCarter | East PLLC, we help employers and employees across Murfreesboro and Woodbury, Tennessee, craft and review contracts that safeguard their interests. As experienced employee law attorneys, we understand that clarity and precision are the foundation of a fair and enforceable employment contract.
Our office is located just two blocks from the courthouse in downtown Murfreesboro, giving us close access to the region’s legal resources and allowing us to respond quickly to any disputes that may arise.
We advise clients on structuring agreements that comply with Tennessee law while promoting transparency and trust in the workplace. Below, we discuss the key clauses every employment agreement should include—and why each one matters. Keep reading to learn more.
Job Title, Duties, and Responsibilities
The first and most basic component of any employment agreement is a clear definition of the employee’s position and duties. This section should specify the official job title, describe primary responsibilities, and identify the department or supervisor to whom the employee reports.
Without this clarity, disagreements may arise over performance expectations or the scope of authority. By defining the role upfront, both parties understand what is required and how success will be measured.
We often recommend that employers include a flexible clause allowing for reasonable modifications to job duties as business needs evolve. This prevents the need to renegotiate the entire agreement each time responsibilities change.
Compensation and Benefits
Few topics are as important as how and when employees are paid. A well-written employment agreement should spell out all details related to compensation, including:
Base salary or hourly wage: Amount, pay frequency, and payment method
Bonuses or commissions: Eligibility, calculation methods, and timing of payments
Benefits: Health insurance, retirement plans, paid leave, and other perks
Expense reimbursements: What qualifies and how claims are submitted
We also emphasize including language that clarifies when salary reviews or adjustments will occur. We make sure that compensation terms comply with wage and hour laws while reflecting the full scope of the employment relationship.
Term of Employment and Termination Conditions
Another essential clause outlines the duration of employment—whether the position is at-will or for a specific term. Tennessee is an at-will employment state, meaning either party may terminate the relationship at any time, with or without cause. However, clear contract language can limit or define that right.
We recommend including details such as:
Notice periods: How much advance notice is required from either party
Grounds for termination: Examples of cause, such as misconduct or violation of company policy
Severance provisions: Whether the employee will receive additional compensation upon termination
We help our clients strike the right balance between flexibility and fairness. Employers need protection from sudden departures, while employees should have predictability and transparency regarding termination.
Confidentiality and Non-Disclosure Clauses
Protecting proprietary information is critical for any business. A confidentiality clause prevents employees from sharing sensitive data, trade secrets, or client information with outsiders during and after employment.
Effective non-disclosure language typically covers:
Trade secrets and intellectual property.
Client lists, pricing structures, and marketing strategies.
Internal processes and operational data.
We draft these clauses carefully to comply with Tennessee’s Uniform Trade Secrets Act and to withstand court scrutiny if violated. We also advise employees on how to recognize reasonable restrictions versus overly broad language that could unfairly limit future opportunities.
Non-Compete and Non-Solicitation Clauses
Many employers want to prevent former employees from immediately competing or soliciting clients after leaving the company. However, Tennessee courts closely examine these clauses to confirm they’re fair in scope, duration, and geographic reach.
A valid non-compete or non-solicitation clause should specify:
Duration: Typically six months to two years, depending on the industry
Geographic range: Limited to areas where the employer conducts business
Restricted activities: Clear description of what constitutes competition or solicitation
We regularly advise businesses and workers on the enforceability of these restrictions. We understand that the goal is to protect legitimate business interests—not to unfairly limit someone’s ability to earn a living. Our proximity to the courthouse in Murfreesboro allows us to act quickly if disputes arise over restrictive covenants.
Dispute Resolution and Governing Law
No one enters into an employment relationship expecting conflict, but disagreements can happen. An effective employment agreement includes a clause describing how disputes will be resolved. Common options include:
Mediation or arbitration: Alternatives to litigation that can save time and cost
Venue selection: Designating where disputes will be heard—often the county where the business operates
Governing law: Stating that Tennessee law applies to the agreement
As employee agreement attorneys, we help clients understand the advantages and drawbacks of each approach. Arbitration, for instance, can provide privacy and efficiency but may limit appeals. Litigation, while public, offers broader procedural rights. We draft language that aligns with each client’s goals and risk tolerance.
Intellectual Property Ownership
For companies in technology, design, or creative industries, intellectual property ownership is a key concern. The employment agreement should clearly state who owns inventions, designs, or works created during employment.
We often include “work-for-hire” language confirming that any creations made by the employee in the course of their job belong to the employer. However, we also make sure the agreement respects the employee’s right to retain ownership of personal projects developed on their own time, without using company resources. We help employers and employees define this boundary clearly to prevent future disputes over intellectual property rights.
Compliance With Company Policies
An employment agreement should reference the company’s policies and procedures, including employee handbooks, ethics codes, and workplace conduct standards.
We recommend language that confirms employees have received and agree to follow these policies. Doing so helps employers enforce consistent standards across the organization. It also gives employees a clear understanding of expectations and disciplinary procedures.
This section can also address topics such as:
Attendance and performance standards.
Use of company technology or vehicles.
Anti-harassment and discrimination policies.
We make sure these references align with both state and federal employment laws to protect our clients from unnecessary liability.
Compensation After Termination
One area often overlooked is how final compensation will be handled after employment ends. A thorough agreement should address payment for unused vacation, outstanding commissions, or pending bonuses.
We also include clear language about how and when company property—such as laptops, keys, or confidential materials—must be returned. By outlining these details, both parties avoid confusion during what can already be a stressful transition.
Our proximity to the Murfreesboro courthouse allows us to resolve disputes swiftly when disagreements arise over unpaid wages or final compensation. As employee agreement attorneys, we help clients understand their rights and obligations before issues escalate.
Indemnification and Liability Clauses
In some industries, employees may face personal liability for actions taken within their job duties. Indemnification clauses protect employees by confirming that the employer will cover certain legal costs if they’re sued for actions performed in good faith during their employment.
Similarly, employers may include indemnification language requiring employees to compensate the company for damages caused by intentional misconduct or negligence. As employee agreement attorneys, we draft balanced clauses that protect both sides while remaining compliant with Tennessee contract law.
Remote Work and Hybrid Arrangements
With the rise of remote work, employment agreements increasingly include clauses outlining expectations for off-site employees. These provisions can address:
Work hours and communication protocols.
Use and protection of company equipment.
Confidentiality and data security for remote work.
Reimbursement for home office expenses.
We help clients adapt traditional employment language to modern work environments. Clear guidelines help avoid disputes about productivity, security, and accountability when employees work outside the office.
Protect Your Rights as an Employee
At McCarter | East PLLC, we understand that employment agreements are more than paperwork—they’re the foundation of mutual respect and professional stability. Located just two blocks from the courthouse, we’re ready to meet with you and review your situation. As dedicated employment law attorneys, we assist employers and employees throughout Murfreesboro, Tennessee, with drafting, negotiating, and enforcing employment contracts. If you’re starting a new position, hiring new staff, or facing a dispute related to an employment contract, we’re the firm to call. Give us a call today to learn more about how you can protect your rights with a well-crafted agreement built to last.