Employment contracts are an integral component of an employment relationship. For an employee, a contract can offer job security and clearly outline their rights, responsibilities, and compensation. Having a solid understanding of the different types of employment contracts is crucial for employees to negotiate favorable terms, protect their interests throughout the employment relationship, and identify any potential breaches. Importantly, in the event an employer breaches an employment contract, an employee may be entitled to seek a legal remedy.

Key Takeaways

• An employment contract is a crucial legal agreement between an employer and employee that establishes the conditions of employment and outlines each party’s responsibilities.
• There are various types of employment contracts that are recognized in California, including permanent contracts, temporary contracts, part-time contracts, and specific written contracts for freelancers.
• While written contracts are the most likely to be upheld in the event of a dispute, California law also permits implied contracts and oral contracts.

What is an Employment Contract?

An employment contract is a legal agreement between the employer and the employee. It outlines the conditions of employment and obligations of each party. These agreements help ensure employees understand their role while mitigating risk for employers. They can also specify compensation, benefits, the employer’s time-off policy, and grounds for termination. In addition, many employment contracts include confidentiality agreements, non-compete clauses, and dispute resolution methods.

What are Some Common Types of Employment Contracts?

There are various types of employment contracts that can be used in California, depending upon the needs of the employer and the specific relationship with the employee. These types of contracts reflect the specific work arrangement and are subject to the requirements of California law. Some common types of employment contracts can include the following:

• Permanent employment contract: Also referred to as “at-will” employment contracts, this type of agreement indicates a continuous position with no specific end date. Employment continues until the employee resigns or is terminated.
• Temporary employment contract: A temporary employment contract is a short-term contract with a limited duration. These types of contracts may be used for agency temps, seasonal workers, or to cover an employer’s short-term needs.
• Fixed-term employment contract: A fixed-term employment contract is a type of temporary contract that has a fixed start and end date. These types of employment contracts may involve project work or be used to cover a permanent employee’s position during parental leave. A company may extend a fixed-term arrangement when the contract has expired.
• Part-time employment contract: A part-time employment contract is used for employees who work fewer hours per week than full-time employees. These types of contracts can provide flexibility but may not come with the same benefits a full-time employee is offered.
• Freelancer contracts: California law requires written contracts for solo freelance workers when the work values $250 or more over a 120-day period. These contracts must include an itemized list of services to be provided, the total value, as well as the rate, method, and date of payment.

Written contracts are the most formal types of employment contracts and the kind that is most likely to be upheld in the event of a dispute. However, implied and oral contracts are also permitted in many cases. While implied contracts are formed by the pattern of conduct of the parties and the circumstances surrounding the employment relationship, the lack of explicit terms can often lead to misunderstandings and conflict.

Oral Employment Contracts

California allows for the enforceability of oral employment contracts in many cases (except for freelancers). These types of employment contracts lack the written documentation of formal agreements but are still legally binding if they meet specific criteria. For a verbal contract to be valid under California law, there must have been a clear offer and acceptance, an exchange for something of value (consideration), and mutual intent of the parties to form a binding agreement.

Notably, challenges can arise when it comes to proving the terms of oral employment contracts. The outcome of a dispute often hinges upon witness testimony, digital communications, company documents, and the performance of the parties.

What Happens if an Employer Breaches an Employment Contract?

If an employer fails to uphold the terms of the employment contract, they may be held liable for breach of contract. Although California is an at-will employment state, an employer is still bound by the terms of the agreement they entered into. Common breaches of employment contracts by an employer can include:

• Failure to pay the agreed upon compensation, bonuses, or overtime
• Wrongfully terminating an employee without following the procedures outlined in the contract
• Unlawfully reducing compensation
• Failure to provide the agreed upon benefits
• Withholding accrued vacation time or paid time off
• Changing an employee’s job duties without their consent
• Terminating without proper cause (only if the contract specifies certain grounds for termination)
• Failure to provide severance pay

If an employer’s breach of an employment contract causes an employee to suffer financial harm, they may be entitled to pursue legal action to recover their damages. In order to prevail in a lawsuit, an employee would need to show that 1) a valid contract existed; 2) they performed in accordance with the contract terms; 3) their employer breached the contract; and 4) they suffered damages as a result of the breach. It’s crucial for an employee to have an experienced employment law attorney who can help prove each element of a breach of contract claim and assist with securing the compensation they are entitled to.

Contact an Experienced California Employment Law Attorney

Whether you have been presented with an employment contract that requires review or your employer has breached an agreement, it’s essential to have a skillful employment law attorney by your side who can ensure your rights are safeguarded. The attorneys at Optimum Employment Lawyers provide trusted counsel for a broad scope of employment issues in California, including those involving employment contracts. Contact us online or by calling (949) 391-2327 to schedule a consultation to learn how we can help.