Ohio Employment Contract: Definition, Key Considerations

What is an Ohio Employment Contract?

An Ohio employment contract is a legally binding agreement between an employer and a new employee hired to work for the employer. Employment contracts serve the important purpose of outlining each party’s rights and obligations in the working relationship.

Once an employment contract is executed, the parties are bound by the terms of the agreement. Usually this means that the employee is agreeing to perform the duties laid out in the contract and abide by company policy while the employer is agreeing to compensate the employee with wages and benefits.

Common terms and conditions covered in an employment contract include:

• Job title and duties
• Compensation
• Benefits
• Disciplinary procedures
• Causes for termination
• Company policies and standards

Ohio is one of the many states that follows the laws of “at will” employment. Under at will employment doctrine, employers are free to fire workers at any time without a reason and without advanced notice. One way to be protected from this law is to have an employment contract that outlines causes for termination. An employment contract supersedes at will employment so an employer can only terminate the employee within the confines of the agreement.

Employment contracts can also protect employers using restrictive covenants. A restrictive covenant is a clause that prohibits employees from certain actions like competing against the employer or revealing confidential trade secrets.

Are Employment Contracts Enforceable in Ohio?

Yes. Employment contracts are enforceable in Ohio and are governed by Ohio contract laws. This means that to be enforceable the contract must contain an offer, acceptance of the offer, and consideration. In employment contracts consideration is most often the work performed in exchange for compensation.

If an employment contract contains a non-compete clause, the enforcement of the contract may come into question. Ohio tends to enforce non-compete agreements, but the contract must meet certain requirements.

To enforce a non-compete clause, the following criteria must be considered:

1. The restrictions of the non-compete must be no greater than necessary to protect the employer’s business interests
2. It cannot impose undue hardship to the employee
3. It cannot be injurious to the public

The courts will consider the reasonableness of the agreement to determine whether it should be enforced.

What Are the Legal Requirements for Ohio Employment Contracts?

It is legal for an Ohio employment contract to be in the form of a verbal agreement, but it is highly recommended that the contract is written down and signed by both parties. A written contract avoids misunderstandings, helps settle disputes, and if a dispute reaches the courtroom, the contract is available for evidence.

Employment contracts cannot violate any Ohio labor laws or go against public policy. For example, the contract cannot require an employee to agree to work for less than minimum wage.

Types of Ohio Employment Contracts

Ohio employers use various types of employment contracts depending on the purpose of the contract and the type of employee hired. The following contracts are most commonly used for hiring employees and workers in Ohio:

• Permanent employment contract. The most common type of employment contract used to hire permanent employees. The employee will have regular hours, duties, and compensation.
• Fixed term employment contract. 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.
• Independent contractor agreement. Companies need a specific contract when hiring a contractor or a freelance worker because these workers are not company employees and will be governed by different laws.