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Nonprofit Employment Contracts

Legal Counsel for Philanthropy and the Nonprofit Sector

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Nonprofit Employment Contracts

Although most nonprofit employment relationships are at-will and permit either the employer or the employee to terminate at any time, some workers are hired under an employment contract. These tend to be high level employees, such as executives and managers. The existence of a contract is beneficial on both sides, providing the employer the advantage of a minimum time commitment from the employee, and providing the employee assurance that he or she will not be let go before the end of the term without cause.

The contents of an employment contract will vary depending on the unique circumstances of the organization and position, but the following is a list of provisions one might expect to find in a typical employment contract.

  1. Term of Agreement:

    Stating the start and end date of the employment relationship, and indicating whether and under what circumstances the contract may be renewed.

  2. Position and Responsibilities:

    Designating the employee's position and describing his/her responsibilities, including to whom he/she will report.

  3. Definition of "Cause" for Termination:

    Describing the conditions under which the employer may terminate the relationship - usually for failure to satisfactorily perform

  4. Evaluation:

    Setting forth the timing and process for periodic performance review.

  5. Compensation:

    Setting base salary and indicating whether a mandatory or discretionary bonus will be paid, and if discretionary, the bonus triggers.

  6. Benefits:

    Describing all employer-sponsored benefits to which the employee will be entitled, including eligibility requirements and enrollment windows.

  7. Severance:

    Stating whether the employer will offer severance in the event of termination, under what circumstances, and how much.

  8. Intellectual Property:

    Indicating that materials created by the employee in the course of performing his or her responsibilities are "works for hire" and the property of the employer.

  9. Confidentiality:

    Prohibiting the employee from disclosing certain private and sensitive information about the employer and its business the employee will have access to in performing his/her responsibilities.

  10. Arbitration:

    Requiring disputes under the employment contract to be resolved through arbitration rather than litigation.

It is advisable for employers to seek competent legal review of all employment and other contracts.

Additional Resources

For more information regarding Employment Contracts, refer to the following resources:

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