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 a state supreme court ruling on arbitration agreements.
Updated to include FAQs released by the State providing guidance on nondisclosure agreements and arbitration clauses.
Updated to reflect law limiting the use of employment contracts for certain claims, effective October 1, 2018.
Updated to reflect Massachusetts noncompete law requirements, effective October 1, 2018.
Updated to reflect notice-posting provisions under the statewide smoking ban, effective October 1, 2018.
Updated to include expanded notice-posting requirements under the San Francisco Fair Chance Ordinance, effective October 1, 2018.
Updated to include the Disclosing Sexual Harassment in the Workplace Act of 2018, effective October 1, 2018.
Maryland's ban on sexual harassment waivers in employment contracts and a Massachusetts law governing noncompetition agreements top the list of new October 1 compliance requirements affecting employers.
Guidance for HR on the use of employment contracts. Support on creating and enforcing legally binding contracts that cover all the vital areas.