Employment Agreement vs Compensation Agreement

It is critical to understand the difference between an employment agreement and a compensation agreement. Employment agreements are typically limited to relationships between the employers and employees. While the compensation agreements are usually with non-employees, such as independent contractors, agents, and other persons who perform services or supply products. Critically important to understand the specific relationship because it can affect the remedy. For example, an employee who has a wage claim can not only sue under a contract but has a separate statutory right, that provides them with additional remedies. In other words, they can recover their attorney fees and costs on top of the amount of monies that they secure in an unpaid wage claim. Whereas by contrast in the compensation agreement, there’s a limitation on what that third party can recover except what is specifically stated in the contract. Consult your business lawyer to understand the best type of language for your agreement.

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