About Employment Contracts and Agreements

Regardless of how innocent their titles sound, employment agreements are essentially legally-binding employment contracts once signed by all parties involved.

For example, what's commonly called a severance agreement is a binding employment contract that typically waives an employee's right to sue his or her former employer, in exchange for a "bribe" of severance pay.

Whether it's called an agreement or contract, if you breach it, your employer is likely entitled to fire you, deprive you of pay or a benefit not required by law, sue you, or all of the above. Consult an attorney for legal advice in this situation.

An employment contract may be explicit or implied. So, you might be working under an implied employment contract without knowing it. Additionally, you might have unknowingly signed an explicit employment contract of some sort when you hired on, such as during new-hire orientation. Check all of your new-hire paperwork.

Generally, employment contracts may not waive any of your employee rights that are specifically mandated under state and Federal, employment and labor laws. For example, your employer may not rightfully force you to sign an employment contract that waives your employee rights to overtime pay or the minimum wage mandated by the Federal Fair Labor Standards Act (FLSA).

However, employment contracts and agreements may expand the employee rights you already have. Consequently, if you work under an employment contract or collective bargaining agreement, some of your employee rights might be better than those of employees who do not. Your employee rights might also differ somewhat from the standards explained here at EmployeeIssues.com.

Employment contracts and agreements may waive certain employee rights that aren't specifically mandated under employment and labor laws or related laws. Examples include non-compete agreements, non-disclosure agreements and, as mentioned above, severance agreements.

The courts have traditionally frowned on employers who forced current employees to sign new employment contracts and agreements that waived their employee rights, without the employers having offered some sort of "consideration" (compensation) in return. For new-hires, the courts might deem that just landing a job was compensation enough, depending on which employee rights new-hires had to waive.

Wise employers give employees a reasonable period of time to sign contracts and agreements, so that employees may think it over and consult attorneys if they wish. That's because employers risk contract or agreement enforceability problems if they don't. In fact, certain laws, such as the Age Discrimination in Employment Act (ADEA), specifically require employers to give employees a reasonable period of time to sign any agreements that waive their employee rights under the laws.

If your employer doesn't give you a reasonable amount of time to sign an employment contract or agreement, or otherwise pressures you to sign, then you might have a case for signing under duress. However, the courts in a growing number of states have been permitting employers to essentially coerce employees into signing non-compete agreements under the threat of employment termination, with keeping their jobs as their only compensation. Consult an attorney about this.

Your employee rights generally entitle you to negotiate employment contracts and agreements. An attorney will help you, if you don't feel comfortable negotiating on your own. However, employers might not be willing to negotiate their standard employment contracts or agreements.

Subsequently, be aware that, although it's your right, attempting to negotiate an employer's employment contract or agreement is effectively the same as declining the employer's initial offer through a counteroffer. If the employer rejects your counteroffer, then the employer might not be legally obliged to again make the original offer.

The legalese of employment contracts and agreements can be hard to understand. Still, new-hires and employees often sign anyway to land jobs or receive extra benefits, only to regret it later. If you don't understand the legalese, it's a better idea to consult an attorney than to sign blindly. The same goes if you understand the legalese, but still have questions or doubts about signing.

It's not unheard of for employers to ask current and departing employees to sign the unenforceable. Examples are non-compete agreements that are unreasonable in scope and non-disclosure agreements that "protect" what's already common industry knowledge. It's an intimidation tactic from which such employers benefit, if their employees fall for it.

Despite that you signed it, you still have the right to challenge your contract or agreement in court. If one or more of the clauses within are unenforceable in the court's opinion, then the court will likely either make the entire document null and void or "blue pencil" (strike) just the clauses that are not enforceable.

Whether or not it's enforceable in the first place to your knowledge, an attorney might be able to break your employment contract or agreement without going to court. Consulting an attorney instead of breaking your employment contract on your own will likely cost a fee, but could save you heartache and much more in legal expenses down the road.