Are Employment Agreements Legally Binding?

Employment agreements, or employment contracts, outline the exact nature of a person’s relationship to the company they will work for. While these employment agreements do hold up as contracts, it’s important to understand just how legally binding they really are.

What an Employment Agreement Includes

Typically, an employment agreement will include language to let you know several things. These agreements often come with or as part of an employee handbook. As such, the agreement can give information on health benefits, expected employee conduct, how to address employee grievances, etc.

Maybe most important, these employment agreements often outline how an employee can lose or give up their employment status. These agreements can be as short as a sentence or as long as a multipage document.

Why Companies Use Employment Agreements

An employment agreement helps to establish concrete rules regarding someone’s employment. With such an agreement, both the employer and employee will have written documentation that spells out exactly what responsibilities each party should expect of the other.

Employers use these agreements to mitigate possible future disputes and as protection against liability. These agreements also allow an employer some control over an employee’s actions. That’s why employment agreements and contracts also come with nondisclosure agreements, noncompeting clauses, and other methods to protect their reputation, assets, and trade secrets.

When Employment Agreements Become Legal Concerns

Employment agreements are legally binding. These are contractual agreements, often acknowledged and signed by potential employees. However, the contracts are only legally binding if they don’t violate some other aspect of employment law.

For example, if the agreement says employment is at will, it doesn’t mean the employer can terminate employment for literally any reason. Discrimination is still against the law, so it cannot become grounds for termination.

Read over the terms of your employment agreements closely. If you’re in a position to negotiate terms, don’t hesitate to do so. If any accusation of violating an employment agreement comes up, speak to a legal professional. This also applies if you think the employee is violating the agreement.

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