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 forthcoming law protecting employees' personal social media communications.
Updated to reflect discipline concerns regarding forthcoming employee social media privacy law.
Updated to reflect forthcoming discipline concerns under the Workplace Privacy Act.
Updated to reflect employee communications protections in forthcoming Workplace Privacy Act.
Updated to include notice-posting requirements under forthcoming amendments to unemployment insurance law.
Updated to reflect caregiver status protections in New York City, effective May 4, 2016.
Updated to reflect forthcoming notice-posting requirements under the San Francisco Paid Parental Leave Ordinance.
Updated to reflect forthcoming amendments to equal pay law expanding coverage to employers that employ two or more employees.
Updated to include forthcoming requirements regarding post-termination restrictive covenants and notice-posting requirements.
Updated to include retaliation protections under the state paid family leave benefits law.
Guidance for HR on the use of employment contracts. Support on creating and enforcing legally binding contracts that cover all the vital areas.