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Employment Contracts

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Employment Contracts

Employers extend employment contracts to employees to outline the terms and conditions of employment. These contracts are typically in writing and include the hire date, job title with description, duration of employment if necessary, compensation, and/or any benefits.

Employment Contracts vs. Offer Letters

Not to be confused with an offer letter, employment contracts are legally binding and there are consequences if either party breaks the contract. An offer letter generally refrains from guaranteeing set wages and employment.

At-Will Employment

In California, the relationship between employer and employee is generally considered “At-will”. According to California’s Labor Code, the presumption is that either the employer or the employee may terminate the employment relationship with or without any given cause or prior notice, at any time for any lawful reason. 

 

The term “cause” and how it is defined under California law as “a fair and honest cause or reason, regulated by good faith on the part of the employer” is significant. An employer’s decision to discharge or terminate an employee relies heavily on its ability to prove to a court or jury that it terminated an employee in good faith, based on a fair and honest reason, and that every termination it made was not trivial, arbitrary, inconsistent with usual practices, or related to the needs and goals of their business.

There are exceptions to at-will employment, including:

  • Employees in the public sector whose rights are protected by civil services laws and/or by a “memorandum of understanding” between their union and the agency in charge of addressing disciplinary and termination accords.
  • Employees who are represented by unions and the representing unions have signed a written legal contract, also known as a collective bargaining agreement (CBA) with a “just cause” standard for their termination
  • Employees whose contracts require a “good and/or just cause” for termination.
  • Employees hired by employers who have mentioned anything or engaged in any activities that remove any indications of “at-will” employment.

While there are several exceptions to at-will employment, termination based on discrimination and/or retaliation is unlawful. Employment contracts are a means to modify the at-will presumption, limiting terminations to just cause.

Key Things to Review

  • Job Description: Are the expectations clear or vague? Companies tend to promote vague job descriptions, leaving ample space to modify their positions to cater to their needs. As a job seeker, it is imperative that you request clarification as it pertains to anything, leaving an employer with minimal opportunities to claim you are not fulfilling your job.
  • Term: If there is a term, study it and understand it in its entirety. Does it possess grounds for termination in advance? Are there opportunities for contract extensions?
  • Restrictive Covenants: Pay close attention to non-compete agreements, which will hinder your ability to sustain like-work after termination. This specifically pertains to individuals looking to venture out and enter the industry independently. If you must settle on a non-compete agreement, it is imperative to secure some form of compensation during the “dark period” and to avoid a lengthy non-compete clause.
  • Compensation: Your compensation is more than your wages. Consider bonuses, incentives, commissions, healthcare benefits, retirement benefits, and more.

Seek Help from an Employment Contract Lawyer

Employment contract lawyers and our team at Kohanchi Law can help you with a breach of an employment contract or other potential issues with employment-related contracts or agreements, including the enforceability of non-competition agreements.  

Contact us and Schedule a Free Consultation.

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