Pennsylvania Employment Contract: Definition, Key Considerations

What is a Pennsylvania Employment Contract?

A Pennsylvania employment contract is a legally binding agreement that is executed between an employer and a new employee. This agreement describes the employee’s job duties and company policies that must be adhered to, and in return lays out compensation and benefits that the employee will receive in exchange for their work.

Pennsylvania is an “at-will” employment state. Under at will employment, employers have the right to fire employees at any time without cause or reason as long as the termination of employment doesn’t violate any discrimination laws.

The only other exception to at will employment is the existence of a valid employment contract. To supersede at will employment, the employment contract must include one of the following provisions:

1. An agreement for employment for a definite duration
2. A clause stating that an employee can only be fired for just cause
3. Additional consideration
4. Public policy consideration

Once an employee becomes a contracted employee, the terms of their employment are no longer “at will” and are now governed by the terms in the contract.

Are Employment Contracts Enforceable in Pennsylvania?

Yes. Employment contracts are legally enforceable in Pennsylvania. If either party violates the terms of the contract, the damaged party can pursue legal action for breach of contract.

For an employee to assert a claim of breach of contract and enforce an employment contract, Pennsylvania laws requires that a party prove the following four elements:

1. A valid and legally binding contract existed
2. The employee complied with the contract by performing their obligations
3. The employer breached the contract
4. The employee has sustained damages as a result of the breach

Employment contracts can also be enforced by employers against employees. Restrictive covenants like non-compete agreements protect the employer’s business interests by limiting an employee’s actions after a term of employment.

Non-compete and non-solicitation agreements are enforceable in Pennsylvania as long as they are reasonable. When considering reasonableness, courts will look at the duration of the contract, the geographic boundaries in place, and whether the agreement could cause harm to the public.

What Are the Legal Requirements for Pennsylvania Employment Contracts?

The legal requirements for a Pennsylvania employment contract are governed by Pennsylvania contract laws. Contracts can be either written or oral, but all enforceable contracts will contain the following elements:

1. Intent. There must be clear intent that the parties planned to be bound by the contract terms. A signature on a written contract is one way to prove intent. Intent becomes harder to prove for oral contracts.
2. Definite terms. The terms of the contract must be clear to be enforced.
3. Consideration. The agreement must be supported by consideration. Consideration means that something of value is promised by one party to the other in exchange for something else of value. For the purposes of an employment contract, consideration can be the employee’s promise to work for compensation.

While oral contracts are legal, it is highly recommended that all employment contracts are in writing and signed by both parties. The elements of breach of contract are more difficult to prove without a tangible contract putting either party at a disadvantage if enforcement is necessary.

Types of Pennsylvania 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. Some employment contracts include restrictive covenants and sometimes these contracts are separate from the employment agreement.

Some common types of Pennsylvania employment contracts include:

• Permanent employment contract
• Fixed term employment contract
• Freelance agreement
• Subcontractor agreement
• Non-disclosure agreement (NDA)
• Non-compete agreement