Family Employment Agreement Template
What to include in your child's employment agreement to satisfy IRS documentation requirements.
Quick Answer
A family employment agreement should include: both parties' names, job title and duties, hourly rate or salary, expected hours, start date, and signatures from both employer (parent) and employee (child). This document establishes the bona fide employment relationship the IRS requires.
Why You Need an Employment Agreement
The IRS requires a "bona fide" employment relationship between you and your child. An employment agreement is the first piece of evidence that this relationship exists.
Without one, an auditor might argue that you're simply giving your child an allowance and calling it wages. The agreement proves intentionality. You're treating this like real employment because it is.
With Agreement
- Clear terms of employment
- Documented job responsibilities
- Agreed-upon compensation
- Signed by both parties
Without Agreement
- Looks like an allowance
- No proof of job duties
- Harder to defend in audit
- May disqualify Roth IRA
What to Include
1. Parties
Full legal name of the employer (you or your business) and the employee (your child). Include your child's date of birth.
2. Job Title and Duties
A clear job title (e.g., "Office Assistant", "Yard Maintenance Helper") and a detailed list of duties the child will perform. Be specific, not "helps around the house" but "vacuums all carpeted rooms, empties trash cans, organizes garage."
3. Compensation
Hourly rate or salary amount. Include pay frequency (weekly, bi-weekly, monthly). The rate should be reasonable for the child's age and the work performed. See: What is Reasonable Compensation?
4. Hours and Schedule
Expected hours per week and general schedule (e.g., "approximately 3-5 hours per week, primarily on weekends"). This doesn't need to be rigid, but should reflect reality.
5. Employment Terms
Start date, employment type (at-will is typical), and any conditions. You can also note that the child agrees to maintain time records of work performed.
6. Signatures
Signature lines for both the employer and the employee, with printed names and dates. Yes, your child should sign. Even young children can make a mark that indicates agreement.
Sample Template Outline
Here's what a basic family employment agreement looks like. You can create your own based on this structure:
FAMILY EMPLOYMENT AGREEMENT
This Employment Agreement is entered into as of [DATE] between:
Employer: [YOUR NAME / BUSINESS NAME]
Employee: [CHILD'S NAME], DOB: [DATE OF BIRTH]
1. Position and Duties
Employee is hired as [JOB TITLE]. Duties include:
• [DUTY 1]
• [DUTY 2]
• [DUTY 3]
2. Compensation
Employee will be paid $[RATE] per hour, paid [FREQUENCY].
3. Hours
Employee is expected to work approximately [X] hours per week.
4. Employment Type
This is at-will employment effective [START DATE].
5. Time Records
Employee agrees to maintain accurate time records of all work performed.
________________________
Employer Signature / Date
________________________
Employee Signature / Date
Pro Tips
- Create a new agreement each year with updated rates and duties as your child grows
- Keep it simple: a one-page agreement is sufficient for most families
- Be specific about duties: vague descriptions like "helps out" won't hold up
- Store signed copies safely: you may need them years later for audit purposes
Skip the Template Hassle
employkids generates customized employment agreements automatically based on your child's age, assigned tasks, and pay rate. Plus work logs, payment tracking, and year-end tax documents.