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 reflect IRS final regulations defining 'spouse' for federal tax and benefits purposes.
Updated to reflect forthcoming prohibition of noncompete agreements with low-wage workers.
Updated to include detailed information on the forthcoming state Act to Establish Pay Equity, which strengthens existing equal pay laws.
Revised policy to reflect minor edits made as part of a regular review for compliance with the National Labor Relations Board’s opinions regarding employer policies.
Updated to include detailed information regarding the forthcoming state Act to Establish Pay Equity, which strengthens existing equal pay laws.
Updated to include information on Swindol v. Aurora Flight Sciences Corp., which concerns a statutory equivalent of a public policy exception to the employment at-will doctrine.
Updated to include information on Swindol v. Aurora Flight Sciences Corporation, which confirmed a statutory equivalent of claims for wrongful termination in violation of public policy.
Guidance for HR on the use of employment contracts. Support on creating and enforcing legally binding contracts that cover all the vital areas.