An employment contract is an agreement between an employer and employee regarding the employee's term of employment. It can be implied, oral, or written, involving a lengthy physical contract that the employee signs. The terms laid out in the contract depend on what was agreed upon when the employee confirmed that they would take a position.
Most U.S. employees work at will. That means that they can quit or be terminated for any reason, if the termination is legal and isn't because of retaliation or discrimination. Almost every state follows the at-will employment rule with the single exception of Montana.
In Montana, after an employee has completed the employer's probationary period or has worked for the employer for six months if no probationary period is in place, the employee can only be fired with good cause. Outside of Montana, at-will employment is assumed unless the employer and employee agree on a different relationship.
It is also worth noting that even in at-will states, there can be other exceptions (i.e., public policy, implied contract, etc.) which can limit an employer’s ability to terminate without cause.
Contracts will itemize the wage, salary, or commission that the employer and employee agree upon.
The contract will state the responsibilities of the potential employee so they are clearly understood and documented.
This section will outline the expected time the employee will need to show up for work and number of hours they are expected to work.
The contract may specify the length of time that the employee agrees that they will work for the company. The agreement could be set for a specific period or could state that employment is ongoing.
Employment contracts will likely contain a clause regarding confidentiality, which means the employee will be obligated to keep certain information confidential. This may include business practices, custom information, and other things.
The contract will outline the benefits being offered to the employee, which may include health insurance, PTO, retirement plans, and other benefits.
If there's an initial period during which either party can terminate the employment without the usual notice.
Restricts the employee from working for competitors or starting a competing business for a specified duration and within a certain geographic area after leaving the company.
Prevents the employee from soliciting the company's clients or employees for a specified period after departure.
Reasons the employer can terminate the contract, such as misconduct or poor performance. This may include a notice period and severance.
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