Is My Employment Contract Binding?

In most cases, employment contracts are binding.

Employment contracts are usually legally binding, unless there are circumstances that might negate the terms of the contract, such as providing false information or withholding information. Be mindful of what you say, since oral contracts can be enforced under the law.

Types

When it comes to employment contracts, there are two kinds to consider: explicit and implied. An implied contract arises if there isn't an actual contract drafted with terms and conditions spelled out. For example, if an interviewer tells you that you'll be happy working there and welcomes you aboard, that's an implied contract. Later on, when there is paperwork to be filled out and conditions explained, that becomes an explicit contract. Another example of an implied contract is if the employer tells you that you'll be making a certain amount each year. This can be construed as meaning you'll be employed for at least a year.

Laws

Employment contracts are binding agreements between the employer and the employee. However, the conditions of the contract have to fall within the boundaries of state and federal law. You can't ask an employee to sign a contract that waives his right to get paid the minimum wage. On the other hand, you can sign a contract that says that you'll pay an employee more than the federal minimum wage.

Non-Compete

Some employers might ask you to sign a non-compete agreement. This basically means that if you leave your job, you can't work for a competitor --- or go into business for yourself. There are courts that are deciding against non-compete clauses, however. These courts feel that signing a non-compete clause at the beginning of employment isn't fair, since the employer has all of the power in the relationship. In fact, some states --- California, for example --- frequently will not enforce non-compete clauses.

Severance

If you're getting close to retiring and the company decides to let you go, you might be asked to sign a severance agreement. Basically, you'll be offered a certain sum of money, and in return, you'll just sign a contract that waives any other rights you might have, including the right to sue the company on the basis of age discrimination. However, if you signed the severance agreement without fully understanding the implications of what you were signing, a court might allow a suit to be filed. If that happens, you are not required to return the severance package.

References

• Employee Issues: About Employment Contracts and Agreements; Copyright 2011 EmployeeIssues.com
• FindLaw: Avoiding an "Implied" Contract or Drafting a Favorable One: A Primer; Nancy A. Newark, Copyright 2005 Burns & Levinson LLP
• Lawyers.com: Non-Compete Contracts; Copyright 2010 LexisNexis
• U.S. Equal Employment Opportunity Commission: Understanding Waivers of Discrimination Claims in Employee Severance Agreements; Copyright 2009 EEOC