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 the removal of the earned paid time off law in Bernalillo County, New Mexico, due to the change in its implementation date from July 1, 2020, to October 1, 2020.
Updated to reflect noncompete restrictions for low-wage workers in Virginia, effective July 1, 2020.
Updated to include notice-posting requirements under the unemployment insurance law, effective July 1, 2020.
Updated to reflect amendment extending protections to interns, effective July 1, 2020.
Updated to reflect an amendment relating to the use of an electronic communication device while driving; revised Chicago Minimum Wage and Paid Sick Leave Rules; and notice-posting requirements in the state Hotel and Casino Employee Safety Act and the Chicago Fair Workweek Ordinance, all effective July 1, 2020.
Updated to reflect amendment relating to the use of an electronic communication device while driving, effective July 1, 2020.
Updated to reflect employee notice provisions under amendments to the Virginia Human Rights Act regarding pregnancy and lactation protections; to include a law restricting noncompete agreements for low-wage workers; and to reflect protections regarding employees' discussion of wages, all effective July 1, 2020.
Updated to include notice-posting requirements in the Seattle Hotel Employee Protections Ordinances, effective July 1, 2020.
Guidance for HR on the use of employment contracts. Support on creating and enforcing legally binding contracts that cover all the vital areas.