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 notice-posting requirements under the Pasadena Minimum Wage Ordinance, effective July 1, 2016.
Updated to include information on the notice-posting requirements under the Wisconsin Bone Marrow and Organ Donation Leave Act, effective July 1, 2016.
Updated to reflect forthcoming notice-posting requirements for certain seasonal employers.
Updated to include whistleblower immunity notice under the federal Defend Trade Secrets Act, effective May 11, 2016.
Updated to include retaliation protections under the state's forthcoming pregnancy accommodations law.
Updated to reflect discipline concerns regarding an employee's right to take unpaid time off to respond to a subpoena, effective June 6, 2016.
Updated to include notice-posting requirements under the state's forthcoming pregnancy accommodations law.
Updated to include two amendments to state distracted driving laws, effective May 27, 2016 and June 3, 2016.
Updated to reflect law protecting employees' personal social media communications, effective June 10, 2016.
Updated to reflect discipline concerns regarding employee social media privacy law, effective June 10, 2016.
Guidance for HR on the use of employment contracts. Support on creating and enforcing legally binding contracts that cover all the vital areas.