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Employment Contracts: Federal and State Law Guide

Employment contracts define the terms and conditions of your work relationship with your employer. Most American workers are at-will employees without written contracts, meaning either party can terminate the relationship at any time for any legal reason. However, many workers have express written contracts, implied contracts from employee handbooks and promises, or collective bargaining agreements that modify at-will status. Employment contracts can include provisions for compensation, benefits, duration, termination procedures, non-compete clauses, confidentiality agreements, and arbitration requirements. Federal law establishes baseline rules for contract formation and enforceability, while state law governs most employment contract matters and varies dramatically—some states void nearly all non-compete agreements while others enforce them broadly. Understanding your contractual rights helps you negotiate better terms and recognize when employers breach agreements.

At-Will Employment: The Default Rule

In the United States, employment is presumed at-will unless a contract or law specifies otherwise. This foundational principle governs most employment relationships.

What At-Will Employment Means

At-will employment means either the employer or employee can terminate the employment relationship at any time, for any reason, or for no reason at all, without liability—as long as the reason isn’t illegal.

For employers: They can fire you without cause, without notice, and without severance. They can change your job duties, compensation, or working conditions at will (though changes might create legal issues in some circumstances).

For employees: You can quit anytime without notice or consequences (unless a contract specifies notice requirements or penalties for leaving).

At-will employment provides flexibility for both parties. Employers can adjust their workforce based on business needs. Employees can leave for better opportunities without legal barriers.

Limitations on At-Will Employment

While at-will is the default, significant exceptions limit employers’ power to terminate:

Illegal discrimination: Employers cannot fire workers based on race, sex, age, disability, religion, national origin, or other protected characteristics. This violates Title VII, ADA, ADEA, and state anti-discrimination laws.

Retaliation: Firing employees for reporting illegal conduct, filing discrimination charges, complaining about wage violations, or exercising other protected rights violates anti-retaliation laws.

Public policy violations: Many states prohibit terminations that violate public policy, such as firing employees for serving on juries, refusing to commit illegal acts, or exercising statutory rights. These create “wrongful termination” claims.

Implied contracts: Employee handbooks, verbal promises, and employer conduct can create implied contracts limiting at-will status.

Explicit contracts: Written employment agreements can specify termination procedures, require “good cause” for firing, or guarantee employment for a specified period.

Union contracts: Collective bargaining agreements typically require “just cause” for termination and establish grievance procedures.

Proving At-Will Status

Employers often include at-will disclaimers in offer letters, employee handbooks, and other documents. These clauses explicitly state that employment is at-will and can be terminated by either party at any time.

Example disclaimer:
“Your employment with the Company is at-will. This means you or the Company may terminate the employment relationship at any time, with or without cause, with or without notice. Nothing in this handbook, any company policy, or any verbal or written representation is intended to create or does create a contract of employment for any specified period of time.”

Clear at-will disclaimers help employers avoid implied contract claims. However, employer conduct inconsistent with at-will status—such as promising job security, following specific termination procedures, or making representations about continued employment—can override these disclaimers.

Source: At-Will Employment Overview

Types of Employment Contracts

Employment contracts take various forms, from formal written agreements to informal verbal promises that create binding obligations.

Express Written Contracts

Express contracts are explicit, written agreements between employers and employees specifying employment terms. These are most common for executive-level employees, professionals, and workers with specialized skills.

Common terms in written employment contracts:

Duration: Fixed-term contracts specify employment for a particular period (one year, three years). Until the term expires, neither party can terminate without cause unless the contract allows it.

Compensation: Base salary, bonuses, commissions, equity compensation, and benefits.

Job duties and responsibilities: Description of position, reporting relationships, and expectations.

Termination provisions: Whether employment is for a fixed term or continues indefinitely, what constitutes “good cause” for termination, notice requirements, and severance obligations.

Non-compete clauses: Restrictions on working for competitors or starting competing businesses after employment ends.

Confidentiality and non-disclosure: Obligations to protect company confidential information and trade secrets.

Intellectual property assignment: Agreement that work product and inventions created during employment belong to the employer.

Dispute resolution: Arbitration clauses requiring disputes be resolved through arbitration rather than court litigation.

Entire agreement clauses: Statements that the written contract is the complete agreement and supersedes all prior discussions and understandings.

Written contracts provide certainty about rights and obligations but limit flexibility compared to at-will arrangements.

Implied Contracts from Employee Handbooks

Even without signed contracts, employee handbooks and company policies can create implied contracts limiting at-will employment.

How handbooks create contracts:

If a handbook outlines specific disciplinary procedures (verbal warning, written warning, suspension, termination) and the employer follows these procedures consistently, employees may reasonably expect the employer to follow them. Termination without following stated procedures might breach the implied contract.

Progressive discipline policies: Handbooks stating “employees will receive verbal warning, written warning, and suspension before termination” create expectations that termination won’t occur without these steps.

Tenure-based benefits: Policies granting benefits based on length of service (increased vacation after one year, enhanced severance after five years) suggest employees will remain employed long enough to earn these benefits.

Performance evaluation systems: Regular evaluations with improvement plans suggest termination won’t occur without poor evaluations and opportunity to improve.

Preventing implied contracts: Employers include disclaimers in handbooks stating policies don’t create contracts and employment remains at-will. Courts enforce these disclaimers when they’re clear and conspicuous.

However, disclaimers don’t always prevent implied contracts if employer conduct contradicts them. Consistently following handbook procedures despite disclaimers can create implied contracts through course of dealing.

Verbal Promises and Representations

Oral promises can create binding employment contracts, though they’re harder to prove than written agreements.

Examples of binding oral promises:

  • “You’ll have this job as long as your performance is satisfactory”
  • “We don’t fire people without good cause”
  • “You’ll receive annual bonuses based on company performance”
  • “Your position is secure; we’re not planning layoffs”

These representations, if relied upon by the employee to their detriment (such as turning down other jobs or relocating), can create enforceable contract rights.

Promissory estoppel: Even if an oral promise doesn’t create a traditional contract, promissory estoppel prevents employers from denying promises when employees reasonably relied on them to their detriment. If your employer promised a bonus and you worked additional hours based on that promise, the employer may be estopped from denying the bonus.

Verbal promises face practical challenges—proving what was said, when, by whom, and in what context. Contemporaneous documentation (follow-up emails confirming conversations, notes from meetings) strengthens claims based on oral promises.

Collective Bargaining Agreements (Union Contracts)

Workers covered by collective bargaining agreements have contract rights negotiated by their unions. These contracts typically provide much stronger protections than at-will employment.

Common union contract provisions:

Just cause requirement: Employers must have “just cause” (legitimate, substantial reason) to terminate. This is far stronger than at-will employment.

Grievance procedures: Multi-step processes for challenging discipline and termination, often culminating in binding arbitration.

Seniority rights: Layoffs based on seniority, recalls from layoffs by seniority, and seniority preferences for promotions and assignments.

Wage scales: Specified pay rates based on job classification and seniority, often with scheduled increases.

Benefits: Health insurance, pensions, vacation, sick leave, and other benefits negotiated collectively.

Working conditions: Hours, shifts, break times, safety requirements, and workload limits.

Union contracts are legally enforceable through grievance procedures and labor arbitration. The National Labor Relations Act protects the collective bargaining process and requires employers to negotiate in good faith with unions representing their employees.

Individual Executive Contracts

High-level executives often negotiate individual employment agreements with sophisticated terms:

Golden parachutes: Large severance payments if the executive is terminated following a change in corporate control.

Equity compensation: Stock options, restricted stock units, or other equity awards with vesting schedules and performance conditions.

Change in control provisions: Accelerated vesting or enhanced severance if the company is acquired.

Clawback provisions: Requirement to return compensation if financial results are later restated or if the executive engaged in misconduct.

Non-compete and non-solicitation: Restrictions on post-employment activities, often with significant geographic and temporal scope.

Severance packages: Specified severance payments based on tenure, position, or circumstances of termination.

Executive contracts are typically negotiated individually, often with attorney assistance, and reflect significant bargaining power.

Source: Types of Employment Contracts

What Employment Contracts Can Include

Understanding common contract provisions helps you negotiate favorable terms and recognize problematic clauses.

Compensation and Benefits

Base salary: Fixed annual or hourly compensation. Contracts may specify raises, cost-of-living adjustments, or performance-based increases.

Bonuses: Discretionary (employer decides whether and how much to pay) or non-discretionary (based on objective criteria like sales targets or company profits). Non-discretionary bonuses are more enforceable.

Commissions: Sales-based compensation with specified commission rates, payment timing, and crediting rules.

Equity compensation: Stock options, restricted stock, RSUs, or phantom stock with vesting schedules, exercise prices, and conditions.

Benefits: Health insurance, dental, vision, life insurance, disability coverage, retirement plans (401(k) matching), paid time off, sick leave, and other perks.

Perquisites: Company car, housing allowances, club memberships, or other executive benefits.

Employment Term and Renewal

Duration: Fixed-term contracts specify beginning and end dates. Continuing contracts have no specified end date.

Renewal provisions: Automatic renewal unless either party provides notice, or requirement to renegotiate at term end.

Trial periods: Probationary periods during which either party can terminate more easily, often 90 days.

Termination Provisions

For cause termination: Specifies what constitutes “cause” for termination (gross misconduct, felony conviction, repeated policy violations, performance deficiencies after warnings). Employers must prove cause exists to terminate for-cause.

Without cause termination: Right to terminate without cause but with notice and potentially severance. This maintains some flexibility while providing employee security.

Notice requirements: How much advance notice either party must provide before termination (two weeks, 30 days, 90 days).

Severance obligations: Payments due upon termination, often based on length of service or position. Severance may be contingent on signing releases and non-disparagement agreements.

Post-termination obligations: Continuation or termination of benefits, return of company property, and compliance with restrictive covenants.

Non-Compete Agreements

Non-competes restrict your ability to work for competitors or start competing businesses after employment ends.

Scope: Geographic area (city, state, nationwide, global), industry or competitors covered, and duration (typically 6 months to 2 years).

Consideration: To be enforceable, non-competes generally require consideration—something of value you receive in exchange. Signing a non-compete when you’re hired, with the job itself as consideration, usually satisfies this. Non-competes signed during employment may require additional consideration like a raise or promotion.

Reasonableness: Courts enforce non-competes only if they’re reasonable in scope, duration, and geography, and protect legitimate employer interests (not just suppress competition). What’s “reasonable” varies dramatically by state.

Legitimate interests: Non-competes can protect trade secrets, confidential information, customer relationships, and specialized training investments. They cannot simply prevent you from earning a living in your field.

State law variations: Some states (notably California) void most non-competes. Others enforce them broadly. This is one area where state law dramatically impacts enforceability.

Non-Solicitation Agreements

Non-solicitation clauses prohibit you from soliciting the employer’s customers, clients, or employees after you leave.

Customer non-solicitation: You cannot solicit or service customers you worked with during employment, typically for 1-2 years after leaving.

Employee non-solicitation: You cannot recruit former colleagues to leave and join your new employer or business.

Non-solicitations are generally more enforceable than non-competes because they’re narrower in scope and don’t prevent you from working in your field—just from poaching specific customers or employees.

Confidentiality and Non-Disclosure Agreements (NDAs)

NDAs require you to protect employer confidential information and trade secrets.

Covered information: Trade secrets, proprietary technology, customer lists, financial information, business strategies, and other non-public information.

Duration: NDAs often survive employment termination, sometimes indefinitely for true trade secrets.

Permitted disclosures: NDAs typically allow disclosures required by law or court order (with notice to employer) and information that becomes publicly available through no fault of yours.

NDAs are broadly enforceable because they protect legitimate business interests without preventing you from working. However, overly broad NDAs that classify all information as confidential or prohibit disclosure of illegal conduct may be unenforceable.

Intellectual Property Assignment

IP assignment clauses state that inventions, creative works, and other intellectual property you create during employment belong to the employer.

Work for hire: For works created within the scope of employment, employers own the copyright under federal copyright law.

Inventions: Patents for inventions created using employer resources or related to your work typically belong to the employer under assignment agreements.

Limitations: Some states (California, Washington, Illinois, others) limit IP assignment to inventions created using employer equipment, trade secrets, or time, and relating to employer’s business. Inventions created entirely on your own time with your own resources on unrelated matters may belong to you even with assignment clauses.

Arbitration Agreements

Arbitration clauses require employment disputes be resolved through arbitration rather than court litigation.

Scope: Some clauses cover all disputes (wage claims, discrimination, harassment, breach of contract). Others cover only specific types of claims.

Individual vs. class action: Many arbitration agreements prohibit class or collective actions, requiring individual arbitration.

Arbitrator selection: How arbitrators are chosen, qualifications, and whether parties share costs.

Enforceability: The Federal Arbitration Act favors enforcement of arbitration agreements, but some state laws and recent cases create exceptions for certain employment claims.

Practical effects: Arbitration is private, typically faster than court litigation, and has limited appeal rights. Some studies suggest arbitration favors employers, while others show comparable or better results for employees compared to court.

Federal Contract Law and Enforceability

While most employment contract law is state-based, federal law establishes some baseline principles and prohibitions.

Contract Formation Basics

Under general contract law (applied in federal courts and adopted by states):

Offer: A clear proposal to enter into an agreement with specific terms.

Acceptance: Agreement to the offer’s terms without material modifications.

Consideration: Each party must provide something of value. The job itself is consideration for agreements signed at hiring. For agreements signed during employment, raises, bonuses, or continued employment may constitute consideration.

Mutual assent: Both parties must intend to be bound by the agreement.

Illegal Contract Provisions

Federal and state law prohibit certain employment contract terms:

Waiving minimum wage or overtime: Contracts cannot waive rights to minimum wage or overtime pay under the FLSA. These rights are non-waivable.

Waiving discrimination claims: Contracts cannot prospectively waive the right to file discrimination charges with the EEOC or participate in EEOC investigations (though they can include arbitration agreements).

Waiving safety rights: Contracts cannot waive OSHA rights to a safe workplace or freedom from retaliation for reporting hazards.

Indentured servitude: Contracts creating conditions akin to forced labor or imprisonment for leaving employment violate the Thirteenth Amendment.

Unlawful restraints on trade: Overly broad non-competes that effectively prevent someone from working in their field may violate antitrust principles.

Source: Contract Law Basics

Defend Trade Secrets Act (DTSA)

The DTSA, enacted in 2016, creates federal civil cause of action for trade secret misappropriation. This affects NDAs and confidentiality agreements.

Trade secrets definition: Information that derives economic value from not being generally known, is subject to reasonable secrecy efforts, and includes formulas, patterns, programs, devices, methods, techniques, or processes.

Employer protections: Employers can sue employees and former employees who misappropriate trade secrets for injunctions and damages.

Whistleblower immunity: Critically, the DTSA provides immunity for whistleblowers who disclose trade secrets in confidence to government officials or attorneys for purposes of reporting suspected legal violations. This ensures NDAs cannot be used to silence whistleblowers.

Notice requirement: Contracts entered into or updated after May 11, 2016 must include notice of whistleblower immunity or employers lose the right to recover exemplary damages and attorney’s fees in misappropriation suits.

National Labor Relations Act (NLRA)

The NLRA protects workers’ rights to engage in “concerted activity” for mutual aid or protection, including discussing wages and working conditions.

Illegal contract provisions:

  • Broad confidentiality agreements prohibiting employees from discussing wages
  • Severance agreements conditioning payment on not cooperating with NLRB investigations
  • Non-disparagement clauses so broad they chill protected criticism of working conditions

The NLRB has increasingly scrutinized employment contract provisions that interfere with Section 7 rights, voiding overly broad confidentiality, non-disparagement, and non-compete clauses.

Breach of Contract: When Employers Fail to Perform

When employers violate employment contract terms, employees may sue for breach of contract.

What Constitutes Breach

Breach occurs when an employer fails to perform contractual obligations without legal excuse. Common breaches include:

Termination without cause: Firing employees under “for cause only” contracts without establishing cause.

Failure to follow procedures: Not following progressive discipline or termination procedures required by contracts or handbooks.

Non-payment of compensation: Failing to pay agreed salary, bonuses, commissions, or benefits.

Material changes: Significantly changing job duties, location, or compensation without contractual authority.

Wrongful denial of benefits: Refusing to provide contracted benefits like health insurance or stock options.

Remedies for Breach

Damages: Monetary compensation for losses caused by the breach. This includes:

  • Lost wages: Salary and benefits you would have earned if the contract had been performed
  • Bonus compensation: Bonuses you would have received
  • Benefits value: Cost of benefits you lost

Specific performance: In rare cases, courts may order employers to perform the contract (reinstate you) if monetary damages are inadequate. This is uncommon in employment contracts because courts generally don’t force unwilling employment relationships.

Declaratory relief: Court declarations of the parties’ rights under the contract.

Attorney’s fees: If the contract provides for attorney’s fees to the prevailing party, or if state law allows fee awards in contract cases.

Mitigation of Damages

Employees must make reasonable efforts to mitigate damages by seeking comparable employment after wrongful termination. Earnings from new employment reduce damages owed by the breaching employer.

You don’t need to take substantially inferior positions or relocate unreasonably to mitigate. But sitting idle when comparable work is available may reduce your recovery.

Statute of Limitations

Each state sets statutes of limitations for contract claims, typically 3-6 years depending on whether the contract is written or oral. The clock usually starts when the breach occurs, not when you discover it.

State Contract Law Variations: Dramatic Differences

Employment contract enforceability varies enormously by state, particularly for restrictive covenants like non-competes.

Non-Compete Enforceability by State

California: Voids nearly all employee non-competes except in connection with sale of business or dissolution of partnerships. This policy promotes employee mobility and competition. Attempts to enforce out-of-state non-competes against California residents also fail.

North Dakota: Similar to California, voids most non-competes.

Oklahoma: Very restrictive, voiding most non-competes except for a few narrow exceptions.

States enforcing reasonable non-competes: Most states enforce non-competes if they’re reasonable in scope (geography, time, restricted activities), protect legitimate business interests, and are supported by consideration. “Reasonable” definitions vary:

  • Florida: Statutorily presumes non-competes up to 6 months are reasonable (2 years for protecting trade secrets)
  • Texas: Requires ancillary to otherwise enforceable agreement and reasonable limitations
  • Illinois: Requires employee earn over specified threshold ($75,000 currently, adjusted biennially), receive adequate notice (14 days before employment or additional consideration if during employment), and reasonableness

Blue pencil states: Some states allow courts to revise overbroad non-competes to make them enforceable (“blue pencil” excessive provisions). Others void overbroad non-competes entirely.

Choice of law: If your employer is based in one state and you work in another, which state’s law applies to non-compete enforceability can dramatically affect the outcome. Generally, courts apply the law of the state where you work, but conflicts of law analysis can be complex.

Employee Handbook Contract Creation

States differ on whether and when handbooks create implied contracts:

States recognizing implied contracts from handbooks: Many states allow handbook policies to create binding contracts limiting at-will employment, particularly when handbooks lack clear disclaimers or employer conduct contradicts disclaimers.

States requiring clear mutual assent: Some jurisdictions require more than handbook distribution to create contracts—they need evidence of bargaining or explicit employee agreement to be bound by handbook terms.

Effectiveness of disclaimers: States vary on how clear and conspicuous disclaimers must be to prevent implied contracts. Some enforce boilerplate disclaimers; others require conspicuous, unambiguous language that employees acknowledge.

Covenant of Good Faith and Fair Dealing

Some states recognize an implied covenant of good faith and fair dealing in employment relationships:

Montana: The only state rejecting at-will employment entirely for employees who complete probationary periods, requiring good cause for termination.

California and others: Recognize an implied covenant in limited contexts, preventing bad faith terminations to avoid paying earned commissions or vested benefits.

Most states: Apply the covenant narrowly in employment contexts, if at all, to avoid undermining at-will employment.

Consideration Requirements for Non-Competes

States differ on what consideration supports non-competes signed after employment begins:

Continued employment alone: Some states hold that continued employment is sufficient consideration for non-competes signed during employment.

Additional consideration required: Other states require raises, bonuses, promotions, or other additional benefits beyond continued employment to support mid-employment non-competes.

Timing matters: Non-competes signed at hiring (with the job itself as consideration) are generally enforceable, while those signed during employment face more scrutiny.

State-Specific Employment Contract Guides

Employment contract law varies dramatically by state. Select your state below to learn about state-specific rules on at-will employment, non-compete enforceability, implied contracts, and other contract matters:

West Coast States

  • California – Employment Contracts Hub – Voids virtually all non-competes under Business and Professions Code § 16600, strong at-will disclaimers, Labor Code § 2870 limits IP assignment, broad trade secret protections, implied contract doctrine

  • Washington – Employment Contracts Hub – Limits non-competes signed after January 1, 2020 to employees earning over threshold, reasonableness requirements, statute limiting IP assignment similar to California

  • Oregon – Employment Contracts Hub – Non-competes enforceable if reasonable, statutory requirements for non-competes effective 2020, implied contract recognition from handbooks

Northeast States

  • New York – Employment Contracts Hub – Enforces reasonable non-competes, recent statutory changes imposing notice and consideration requirements, implied contract doctrine, restrictive covenants must protect legitimate business interests

  • Pennsylvania – Employment Contracts Hub – Enforces reasonable non-competes under three-factor test (protects legitimate business interest, reasonable geography/time, not unduly harsh), implied contract recognition

  • Massachusetts – Employment Contracts Hub – Non-Compete Agreement Act effective October 2018 imposes substantial requirements: “garden leave” or other consideration for non-competes, notice requirements, limitations on scope and duration

Southern States

  • Texas – Employment Contracts Hub – Enforces non-competes if ancillary to otherwise enforceable agreement and reasonable, Texas Payday Law affects commission agreements, at-will presumption with limited exceptions

  • Florida – Employment Contracts Hub – Statutory presumptions of reasonableness for non-competes (6 months reasonable, 2 years reasonable for trade secrets), enforces reasonable restrictive covenants broadly

  • Georgia – Employment Contracts Hub – 2011 constitutional amendment allows enforcement of reasonable non-competes, restrictive covenant statute provides guidelines, at-will employment presumption

  • North Carolina – Employment Contracts Hub – Enforces reasonable non-competes protecting legitimate business interests, implied contract recognition limited, at-will employment presumption

Midwest States

  • Illinois – Employment Contracts Hub – Illinois Freedom to Work Act limits non-competes to employees earning over threshold ($75,000, adjusted biennially), requires 14-day notice or additional consideration, reasonableness requirements

  • Ohio – Employment Contracts Hub – Enforces reasonable non-competes, three-part reasonableness test, blue pencil doctrine allows courts to modify overbroad provisions, at-will employment with limited exceptions

Frequently Asked Questions

Can my employer force me to sign a non-compete after I’m already working there?

Your employer can require you to sign a non-compete as a condition of continued employment in most states. However, the non-compete may not be enforceable without additional consideration (like a raise or bonus) in some jurisdictions. Some states require advance notice before presenting non-competes. You can refuse to sign, but your employer may terminate you (unless you have a contract preventing termination without cause).

Are arbitration agreements in employment contracts legal?

Yes, under the Federal Arbitration Act, arbitration agreements are generally enforceable in employment contracts. The Supreme Court has upheld individual arbitration requirements even for statutory claims like discrimination and wage violations. However, some recent legislation and state laws limit enforceability of arbitration agreements, and the NLRB has challenged agreements prohibiting class or collective actions.

What if my employee handbook says employment is at-will but my manager promised job security?

Oral promises can override written disclaimers if you reasonably relied on them to your detriment. If your manager had authority to make such promises and you relied on them (turning down other jobs, relocating), you may have an implied contract claim despite handbook disclaimers. Document any such promises in writing (follow-up emails confirming conversations).

Can I negotiate my employment contract before signing?

Yes, especially for professional and executive positions. Everything is negotiable: salary, bonuses, benefits, stock options, severance provisions, non-compete scope, and more. Many employers present “standard” contracts but will negotiate key terms. Consider having an employment attorney review and help negotiate important contracts.

If I signed a non-compete, am I definitely prohibited from working for competitors?

Not necessarily. Non-compete enforceability depends on your state’s law, whether the agreement is reasonable, whether you received adequate consideration, and whether it protects legitimate employer interests. California and some other states void most non-competes. Even in states that enforce them, overbroad agreements may be void or modified. Consult an employment attorney before violating a non-compete, but don’t assume it’s automatically enforceable.

What happens if my employer breaches our employment contract?

You can sue for breach of contract, seeking damages for lost wages, benefits, and other contractual compensation you should have received. You must mitigate damages by reasonably seeking comparable employment. Some contracts provide for attorney’s fees for the prevailing party. State law statutes of limitations (typically 3-6 years) apply.

Can employment contracts waive my right to sue for discrimination or wage violations?

Contracts cannot prospectively waive your right to file discrimination charges with the EEOC or wage complaints with the DOL. However, arbitration agreements can require you to arbitrate discrimination and wage claims rather than sue in court. Recent laws and decisions impose some limits on mandatory arbitration, but it remains broadly enforceable under the Federal Arbitration Act.

Do I need a lawyer to review my employment contract?

For important positions with significant compensation or restrictive covenants (non-competes, IP assignment, NDAs), consulting an employment attorney is wise. Attorneys can identify problematic provisions, advise on negotiation strategies, and explain enforceability under your state’s law. Many offer flat fees for contract review, often $500-$1,500 depending on complexity.

Related Federal Employment Law Topics

Employment contracts intersect with other employment law areas:

Protect Your Employment Contract Rights

Employment contracts define your work relationship and can protect you from arbitrary termination while imposing restrictions on your future employment. Understanding your contractual rights and obligations is crucial.

Read contracts carefully before signing. Don’t assume you can’t negotiate—many terms are negotiable, especially for professional positions. Pay particular attention to non-competes, confidentiality agreements, IP assignment, arbitration clauses, and termination provisions.

If presented with a contract during employment (non-compete, severance agreement with releases), take time to review it. Don’t sign immediately under pressure. Consider having an attorney review important agreements.

Document oral promises and representations. If managers make promises about job security, compensation, or other material terms, confirm them in writing through follow-up emails.

If your employer breaches your contract—fails to pay agreed compensation, terminates without cause when cause is required, or otherwise violates terms—document the breach and consult an employment attorney about remedies.

Check your state’s law on contract enforceability, particularly for non-competes and restrictive covenants. What’s enforceable varies enormously by state.

Employment contracts can provide significant protections but also impose meaningful restrictions. Understand what you’re agreeing to, negotiate when possible, and enforce your rights when employers breach agreements.

Get Help With Employment Contract Issues

If you need help reviewing an employment contract, negotiating terms, or addressing a contract breach by your employer, consult an experienced employment attorney who can evaluate your situation under your state’s law and explain your options.

Disclaimer: The information provided on this page is for general informational purposes only and does not constitute legal advice. Employment laws vary by state and change frequently. For advice specific to your situation, please consult with a licensed employment attorney in your state. Employment Law Aid is not a law firm and does not provide legal representation.