Employment Contracts

If you are an executive, professional, or employee with special skills, you probably have an employment contract. An employment contract is a written agreement that details the rights and responsibilities of you and your employer. It also spells out the details about your salary, benefits, how long you will be employed and how or why you can be fired. The contract is signed by both you and your employer.

Although many employees wish they had an employment contract, there are some reasons you may not want one. These contracts can “lock you in” to working for a company for a set period of time or for a set amount of money. If you want to leave before the time is up to start a new job, it may be hard to break your contract. If you think you should be paid more, the only way to do this is to try to renegotiate your contract. This may also be very hard to do. Termination clauses in employment agreements sometimes seem unfair or one-sided in favor of your employer. Your employment contract may give your employer the power to fire you for violating the contract in any way, or at the sole discretion of your employer. The contract may also place certain legal restrictions on you after your employment ends, such as a non-compete clause (preventing you from working at a job that competes with your former employer) or a non-solicitation clause (preventing you from trying to take clients or employees away from your former employer). In addition, employment contracts often state how and where disagreements will be handled (for example, by arbitration in the state where your employer is located) and under which state’s laws. This can make it harder for you to bring or win a case against your employer.

Legal Editor: Daniel S. Braverman, January 2015 (updated June 2020)