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 San Carlos notice-posting requirements.
Updated to include notice-posting requirements under the Colorado Overtime and Minimum Pay Standards (COMPS) Order, effective March 16, 2020.
Updated to reflect the forthcoming law limiting the use of nondislcosure agreements.
Updated to reflect forthcoming law limiting nondisclosure agreements.
Effective May 20, 2020, the "Protect Our Voices Act" will prohibit private employers in New Mexico from requiring an employee to sign a nondisclosure provision of a settlement agreement relating to claims of sexual harassment, discrimination or retaliation.
Updated to reflect notice-posting requirements in the amended Pinellas County Wage Theft and Recovery Ordinance, effective February 7, 2020.
Updated to include notice-posting requirements in the Seattle Hotel Employee Protections Ordinances.
Updated to reflect amendments relating to the use of mobile electronic devices while driving, effective February 23, 2020.
Updated to include amendments to the New York State Human Rights Law, effective February 8, 2020.
Guidance for HR on the use of employment contracts. Support on creating and enforcing legally binding contracts that cover all the vital areas.