What is Employment Contract Law?

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  • Written By: Daphne Mallory
  • Edited By: Melissa Wiley
  • Last Modified Date: 21 March 2020
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Employment contract law is the body of law related to agreements made between employers and employees. Written, oral, or implied contracts often give rise to disputes in an employment relationship, and in some cases the end result is wrongful termination. There are several types of employment contracts, including non-compete agreements, waiver of rights agreements, and severance agreements. An at-will employee is a worker who is offered no employee contract who or is offered a contract but can be terminated at any time. Employment workplace issues pertaining to at-will employees or employees under long-term contracts are often beyond the scope of employment contract law.


Employees often hire attorneys to review a contract of employment to avoid legal pitfalls and to ensure that their rights are protected and that the contracts are in their best interests. For example, an employee may have waived his rights to trial in the contract and must go to arbitration where a panel of judges decides the issues. Attorneys representing both sides of an employment contract law dispute often have to litigate on breach of contract matters, but some employment contracts call for alternative dispute resolution methods in lieu of litigation. Non-compete agreements are also significant for employees and employment contract law, because in those agreements employees often agree not to work for existing or future competitors for a specified length of time. Once a non-compete agreement is signed, courts often enforce it unless it’s shown to be too restrictive under regional employment contract laws.

Employers often use attorneys to ensure that the contracts they offer are in compliance with national and regional regulations and laws, such as anti-discrimination laws. They often use employment contract law as a way to protect their business. For example, a non-compete agreement may include a restriction on the employee to solicit the employer’s customers for a period of time after the employment is terminated. The rationale is that if there is no such restrictive covenant, employees could steal customers away and cause the company to suffer losses. Waiver of rights agreements are often contained in severance agreements to shield employers from future lawsuits from employees after paying them additional monies upon termination.

Employment contract law also includes independent contractor matters. Some employers run the risk of an independent contractor being classified as an employee for tax purposes. Disputes may arise between employers and government tax agencies concerning the independent contract, as well as whether the employer’s actions contradict the contractor status.


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