Overview: Employment contracts set out the duties of the employee and employer, and provide the employer with the opportunity to clarify the relationship. The specific terms required in an employment agreement vary by state and by type of employment or profession. Although the terms of employment contracts may differ, every written contract of employment should be signed by both the employer and the employee.
Some states recognize implied employment contracts when an employer makes statements or takes certain actions that are inconsistent with an at-will employment relationship - even if they are unintentional. If an implied employment contract is found, an employer may be bound by its terms. Therefore, since employment contract law is state driven, employers should check the laws in which they do business in order to avoid creating an implied employment contract.
Trends: Employers continue to be exposed to claims by at-will employees, who claim that their termination of employment was in violation of an implied employment contract based on language contained in an offer letter or employee handbook, or by verbal statements of job security by the employer. Therefore, if an at-will employment relationship is intended, employers must make clear to the employee that he or she is an at-will employee and disclaim any contractual relationship.
Author: Melissa A. Silver, JD, Legal Editor
Updated to include information on Cuevas v. Wentworth Group, which relates to the use of expert testimony as proof in certain claims for emotional distress.
Updated to reflect forthcoming notice requirements under the Seattle Secure Scheduling Ordinance.
Updated to include information on Capeggi v. Arche, Inc., which clarified requirements for valid, written employment contracts as opposed to at-will employment.
Updated to include information on Burt v. Rackner, Inc., d/b/a Bunny's Bar & Grill, which created a new wrongful termination claim based on violations of the Minnesota Fair Labor Standards Act.
Updated to reflect notice-posting requirements under Montgomery County's Earned Sick and Safe Leave law, effective October 1, 2016.
Updated to include expanded protections under the Equal Pay for Equal Work Act of 2016, effective October 1, 2016.
Updated to reflect IRS final regulations defining 'spouse' for federal tax and benefits purposes.
Updated to reflect forthcoming prohibition of noncompete agreements with low-wage workers.
Guidance for HR on the use of employment contracts. Support on creating and enforcing legally binding contracts that cover all the vital areas.