Employment Agreements in California—Are They Right for You?
Schlecht, Shevlin & Shoenberger, employment lawyers serving Riverside & San Bernardino Counties
California is an “employment-at-will” state, meaning that an employer can terminate an employee without cause. There are some exceptions to this right to terminate, but generally, unless there is an employment agreement in place, an employee labors at the discretion of the employer. Employment agreements change that dynamic. While they protect the employee, they also restrict the employee’s rights. Because employment agreements have significant ramifications, employers and employees should retain the services of an employment law attorney prior to signing an employment agreement.
Types of employment agreements
There are generally two types of workers—independent contractors and employees.
Independent contractors are more likely to have a contractual relationship with an employer than an employee.
Independent contractors provide services on an “ad hoc” basis, meaning they are under no obligation to the other party beyond their contract for services. They probably have a written contract with the person who hires them. The contract establishes the scope of work, the period of duration for the work, and the compensation. The independent contractor can also perform services for a number of people at once; there is no exclusivity unless the contract contains restrictions. When the contract is complete, the independent contractor has no further obligation to the “employer.”
Employees and employment agreements
Generally, if you are an employee, you know it. A company hires you, pays you wages for a set number of hours a week, provides benefits, and controls your work activity. Employment agreements are the exception rather than the rule for most employees. Employment agreements make sense for the following circumstances:
- The employee has access to confidential or proprietary information, and the employer wants to limit the employee’s ability to share the information
- The employer wants to control the circumstances under which the employee leaves the company
- The employer wants to specify the circumstances under which the employer can terminate the employee
- The employer wants to entice a potential employee to the company by providing a contract
Lawsuits for breach of contract
Contracts with independent contractors and employment contracts are binding on both parties. If one party breaches, the other can sue for damages, specific performance, or any other remedy available under the law. The damages for breach of contract can be quite extensive. Before you sign an employment agreement, contact the employment lawyers at Schlecht, Shevlin & Shoenberger, a law corporation, so they can explain the fine print to you. If you are an employer, our attorneys can help you craft an employment agreement that meets your company’s specific needs.