Employment Contracts

An employment contract is a written agreement, negotiated and signed by both employer and employee, that establishes the rights and obligations of the parties, along with the terms of employment (e.g., specific responsibilities and/or goals), including salary, benefits, length of employment, reasons for termination (relevant anti-discrimination laws apply to employees with contracts) and assigning rules for resolving disputes between the parties. Employees working under employment contractors are not at will employees. Because most employment contracts are entered into by executives, professionals and other individuals with special skills, the employee who signs an employment contract is always exempt from wage and hour rules under the Fair Labor Standards Act.

How do I know if an employment contract is right for me?

There are a number of pros and cons when it comes to deciding whether to enter into an employment agreement. Consider the following and consult an employment lawyer before you sign:

  • Employment contracts “lock you in” for specified periods of time. If a better job comes along while you are under contract, you may be restricted in your ability to change jobs, especially if the contract contains a restrictive covenant, such as a non-competition clause. (That’s when you agree not to work for a competitor of your employer or open your own business in the same field as your employer for a specified period of time after termination of the contract).
  • If you become dissatisfied with the terms of your contract (for example, you realize you are being underpaid for your services), the only way to address the problem is by trying to get your employer to renegotiate the contract. Your employer can refuse.
  • Termination clauses can be very harsh and may give the employer the right to terminate if you violate the contract in any way.
  • Employment contracts, especially in the securities industry, often pre-determine how disputes will be resolved (for example, by arbitration) or under which state’s laws. If the state is not considered employee friendly, this can put you at disadvantage in dispute resolution.

I think I need help with an employment contract:

  • Gather relevant documents, including any proposed terms of an agreement.
  • Do not sign anything. If you have already signed an agreement, make sure you have an original copy.
  • Consult an experienced employment lawyer.

Changes may occur in this area of law. The information provided is brought to you as a public service with the help and assistance of volunteer legal editors, and is intended to help you better understand the law in general. It is not intended to be legal advice regarding your particular problem or to substitute for the advice of a lawyer.

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