Are Employment Contracts Enforceable in California?

If you are offered a job, your prospective employer may also present you with an employment contract to sign as a condition of employment. However, you may wonder if employment contracts are enforceable in California, and what impact an employment contract has on your relationship with your employer.

What Is an Employment Contract?

An employment contract is an agreement between an employer and employee that defines specific rights and obligations for the employment relationship. California is considered an “at-will” state. This means that, by default, an employer may terminate an employee at any time, for any reason, or no reason at all. However, employers may not terminate employees for any unlawful reason, such as terminating an employee based on their race or sex.

Employers typically have broad rights under the at-will system to terminate employees. However, an employment contract can regulate how an employee may be terminated. For example, an employment contract may state that the employee may only be terminated for “cause” and can define what circumstances constitute cause. If an employee is terminated without cause, an employment contract may provide the employee with certain benefits or rights, such as preference in being rehired to another internal position or being paid a severance package.

Employment contracts may also impose express requirements and obligations upon the employee, such as defining job duties or performance targets. The contract may also require an employee to provide advance notice of resignation. Finally, the contract may also require the employee to keep the employer’s proprietary information confidential or not poach other employees or customers.

Are Employment Contracts Enforceable in CA?

The enforceability of employment contracts is governed by California contract law. An employment contract does not necessarily need to be in writing. Instead, the contract may be found enforceable so long as you and your employer had a “meeting of the minds” on the terms of your agreement. In other words, you and your employer understood and agreed to the same terms. In addition, an employment contract generally must be executed by the parties before or on the employee’s start date or when the terms of the employee’s job are materially altered (such as being given a promotion or new job duties).

However, an employment contract may not be found enforceable under certain circumstances, including:

• The contract included unreasonable terms, including terms that violated a law or public policy.  These may include unreasonable limitations on your ability to find future employment.
• The employer exerted undue influence on you to agree to the contract terms
• The employer defrauded you or used misrepresentations and omissions of material facts to induce you to agree to the contract

What Is Considered a Breach of Contract?

A breach of an employment contract may occur when an employer takes action against an employee not permitted under the terms of the contract. For example, while the employer may alter an at-will employee’s compensation, benefits, and job duties at any time if those terms are expressly spelled out in an employment contract, the employer typically cannot alter those conditions of employment without breaching the contract.

Similarly, an employer may breach an employment contract for terminating an employee for reasons other than those expressly authorized by the employee’s contract or for failing to pay compensation and other benefits the employee may be due upon termination.

Why Do I Need a Lawyer?

Before you agree to an employment contract, you should have the terms of the contract reviewed by an experienced employment law attorney. A lawyer can ensure that an employment contract is fair and comports with your professional goals. A lawyer can also check a proposed contract for any provisions not permitted under California law or public policy, such as a non-compete clause.

Contact WZC Law

If you are employed in California and have questions about the enforceability of your employment contract, reach out to the employment law attorneys of Wagner Zemming Christensen, LLP for a confidential consultation. We can help you understand what legal rights and options you may have in your case and discuss what our firm can do to protect your interests.

To learn more about how our firm can help in your case, contact us today.