Arizona Employment Contract: Definition, Key Considerations

What is an Arizona Employment Contract?

An Arizona employment contract is a legally binding contract between an employer and an employee. Employment contracts can also be used by a company to hire contractors, subcontractors and freelance workers.

The purpose of an employment contract is to protect both parties throughout the working relationship. Employees are protected because the contract outlines the details of the job, scope of work, payment amount, and protects the employee from termination without just cause.

The employer is protected because most employment contracts include non-compete and non-disclosure clauses that protects the company from competition and keeps trade secrets confidential.

An employment contract allows both parties to fully understand each other’s intentions and expectations throughout the duration of the professional relationship.

Are Employment Contracts Enforceable in Arizona?

Arizona is an employment-at-will state and a right-to-work state. Both of these terms apply to different Arizona state employment laws.

• Employment-at-will. Arizona allows either the employee or the employer to terminate employment at any time for any reason as long as the reason does not violate state statutes. The only exception to employment-at-will is an enforceable employment contract. This can sometimes include policies laid out in an employee handbook.
• Right-to-work. Right-to-work prevents employers from forcing employees to join a union if the employer has a contract with a union. Employees in Arizona have the “right to work” without being a part of the union and paying union fees.

What Are the Legal Requirements for Arizona Employment Contracts?

Under Arizona Statutes governing labor, employment contracts are enforceable, but they must be written and signed by both the employer and the employee. Arizona employment contracts can include a variety of terms and conditions, but the terms of the agreement cannot violate state statutes or public policy.

What is Wrongful Termination?

A breach of an employment contract can occur if the employee is wrongfully terminated for reasons not in the employment contract or for reasons that are protected by state or federal laws.

Wrongful termination can include:

• Firing an employee as an act of retaliation (for whistleblower actions or filing worker’s compensation claims, etc.)
• Violating an employee's civil rights
• Missing work due to jury service
• Exercising voting rights
• Non-membership in a labor organization
• Military service

If an employee is fired for any of the above reasons or is fired against the terms laid out in the employment contract, they may have a claim for breach of contract due to wrongful termination and could be entitled to recoup any damages caused by the termination.

Types of Arizona Employment Contracts

Employment contracts come in many forms based on the type of work the company does or the type of employee being hired to complete the job. The three most common types of employment contracts are permanent, fixed term, and consultant agreements.

• Permanent. This is the most common type of employment contract and is used by a company to hire a permanent employee. The employee will have regular hours and be paid an hourly rate or salary. These contracts do not have an end-date and employees benefit from a wide range of labor rights under Arizona state law.
• Fixed term. These contracts are used for workers who will only work for a specific period of time or to complete a specific job. At the end of the contract, employees are either brought into permanent employment or a new contract with a new term is executed.
• Consultant agreement. If a company hires a contractor or a freelance worker, they will most likely execute a consulting agreement employment contract. This contract lays out the terms of the working relationship between the two parties and should expressly state that the worker is not an employee of the company, but an independent contractor.