Michigan Employment Contract: Definition, Key Considerations
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What is a Michigan Employment Contract?
A Michigan employment contract, sometimes called an employment agreement is a legally binding document that is entered into by an employer and a new employee hired to work for a company. This agreement establishes the rights and obligations of each party throughout the employment relationship.
It is common to find the following issues negotiated in an employment contract:
- Compensation
- Job title and list of duties
- Employee benefits
- Employment start date
- Duration of employment
- Procedures for discipline and grievances
- Causes for termination
Michigan is an “at will” employment state. This means that all working relationships are considered to be “at the will” of both parties. An employee can leave a job at any time for any reason and likewise, an employer can fire an employee at any time for any reason.
There are two exceptions to the at will employment rule: the public policy exception and the implied contract exception.
Public policy exception. Prevents an employer from firing an employee if the termination involves an employee’s compliance with state laws like refusing to commit a crime or exercising a legal right.
Implied contract exception. Prevents an employer from firing an employee when there is an implied contract between the parties. An implied contract is created based on the representations and conduct of the parties and doesn’t require a written document.
Outside of these two exceptions, the only way to an employee can protect their job is to have a legally enforceable employment contract that outlines specific causes for termination.
Are Employment Contracts Enforceable in Michigan?
Yes. Employment contracts are enforceable in Michigan, but certain provisions of employment contracts must follow state laws to be enforceable. The employment contract clauses that are most regulated are restrictive covenants that limit an employee’s ability for future employment like a non-competition clause.
A non-competition clause prohibits an employee from working for a company’s competitor or starting a competing business after ending their employment. To be enforceable in Michigan, non-compete agreements must be reasonable. A reasonable clause will balance the need to protect an employer’s business interests without depriving an employee of their right to work and earn a living.
Courts will determine reasonableness based on the following factors:
- Type of employment. The non-compete cannot be overly broad in limiting employment opportunities.
- Geographic area. Non-compete agreements must define a geographic area that the employee cannot work within. If this area is too large, it will be deemed unreasonable.
- Duration. Michigan Courts have consistently ruled that non-compete agreements with durations exceeding three years are unreasonable. The most common reasonable duration is one year.
- Legitimate business interest. The employer must show that the non-compete serves a legitimate business interest like protecting trade secrets or customer lists.
What Are the Legal Requirements for Michigan Employment Contracts?
The legal requirements for Michigan employment contracts are very lenient. An employment contract does not have to be in writing. As long as one of the parties can prove the terms of a contract, oral employment contracts are legally enforceable.
In addition, clauses in employee handbooks may also constitute as an employment contract and give rise to certain legal rights for employees. For this reason, employers should include language in their handbook that states that the document is not a contract.
Types of Michigan Employment Contracts
There are several types of employment contracts commonly used in Michigan including:
- Permanent employment contract. Used by a company to hire a permanent employee with regular hours and compensation.
- Fixed term employment contract. Used when hiring employees who will only work for a specific period or to complete a specific job.
- Contractor agreement. Any worker who is not considered a legal employee will fall into the category of a contractor, consultant, or freelancer. These types of workers are subject to different rights and laws than regular employees.
Frequently Asked Questions
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Meet some of our Michigan Employment Contract Lawyers
Curt B.
Curt Brown has experience advising clients on a variety of franchising, business litigation, transactional, and securities law matters. Mr. Brown's accolades include: - Super Lawyers Rising Star - California Lawyer of the Year by The Daily Journal - Pro Bono Attorney of the Year the USC Public Interest Law Fund Curt started his legal career in the Los Angeles office of the prestigious firm of Irell & Manella LLP, where his practice focused on a wide variety of complex civil litigation matters, including securities litigation, antitrust, trademark, bankruptcy, and class action defense. Mr. Brown also has experience advising mergers and acquisitions and international companies concerning cyber liability and class action defense. He is admitted in California, Florida, D.C., Washington, Illinois, Colorado, and Michigan.
"I was very impressed with the responsiveness and knowledge brought to my situation."
Ari G.
Ari is a transactional attorney with substantial experience serving clients in regulated industries. He has worked extensively with companies in regulated state cannabis markets on developing governance documents (LLC operating agreements, corporate bylaws, etc...), as well as drafting and negotiating all manner of business and real estate contracts.
Evan F.
Evan Ficaj Law Firm empowers Michigan entrepreneurs with personalized legal solutions in M&A, LLC, business, contract, entertainment, trademark, and copyright law.
June 15, 2023
David T.
David Trentadue has been practicing law since 1994. He received his Bachelors’ Degrees in History and Political Science from the University of New Orleans and his Juris Doctor, cum laude, from the Thomas M. Cooley Law School. Currently in private practice, his areas of concentration include Estate Planning, Probate and Trust Administration, Real Estate, Business Formations and Corporate Governance. He is licensed in all state and federal courts in Michigan. He is also a Licensed Title Examiner
Andy K.
Licensed in MI since 2010. Practiced SSDI appeals and auto negligence for over a decade until 12/2022 when I left largest personal injury firm In MI to open my own estate planning firm. Looking for part-time contract/remote work to supplement income as I build my own practice.
May 30, 2023
Jocelyne U.
Jocelyne Uy graduated from law school in 2002 where she began her career in insurance defense where she practiced a wide range of issues relating to insurance policies and claims. Identifying a need for representation for those working cross border, Jocelyne understood the unique interplay of the laws of Canada and the U.S. and started her first firm in Michigan focusing on Canadian American immigration and tax law. Jocelyne and her partner realize that Nevada residents continuously face challenges in finding affordable and accessible representation to assist with their debt issues. Because of these challenges and continuous shifting economy, they are committed to assisting anyone who finds themselves struggling to handle the debt and credit cycle that often feels hopeless and endless. Jocelyne's firm has assisted clients in post-COVID financial crisis ranging from credit card debt, student loan debt, and COVID unemployment repayment hearings.
June 20, 2023
David M.
Michigan and USPTO licensed attorney with over 20 years of experience on counseling clients in the fields of intellectual property, transactional law, technology involvement, negotiations, and business litigation.
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What's probationary period in an employment contract?
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Diane D.
A period of time to evaluate you and to show that you're a good fit for the job and that you are fully qualified for it. At the end of the probationary period, they will either keep you on or terminate you.
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Donya G.
Hello, Congratulations on your business. Here are some things that need to be in the agreement - amount you will pay them, when you will pay, the term of the employment, confidentiality, non solicit. Since you have never done this before, I would like to suggest that you hire an attorney to get it done to ensure it is done correctly. I am a NY attorney with over 20 years of experience. I assist small businesses like yours with their employment, vendor, investment and all their contract needs. I would love to assist you. You can contact me on the Contracts Counsel website or on my personal page - Donya Gordon Looking forward to talking to and working with you Sincerely Donya Gordon
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What's the arbitration agreement in an employment contract?
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Gagandeep K.
An arbitration agreement is a legally binding contract between two parties or more so in this case between you and the employer. In the Arbitration Agreement both parties agree to use alternative dispute resolution (e.g., mediation, settlement conferences, neutral evaluation, arbitration) rather than pursuing civil court litigation in case a dispute arises. The Arbitration Agreement typically describes the scope of the disputes covered as well as the process, procedure and other requirements related to arbitration. You can read more about Arbitration Agreement here https://www.contractscounsel.com/t/us/arbitration-agreement.
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Jeffrey K.
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