Employment Contracts

Under labor laws, employee contracts are agreements between employers and their employees that give both parties certain rights and responsibilities. The contract of employment may outline terms of employment, including when the employee may take vacation or sick leave, wages and overtime pay, benefits, termination, and intellectual property, among others. The terms may vary greatly from job to job – indeed, many jobs do not even require contracts – but the more specialized the job, the more likely it is to require an employer-employee contract. The employee may choose to challenge the contract before signing it, which usually entails bargaining for better terms in the contract. An employee with a highly specialized or competitive skill set is more likely to succeed in convincing the employer to raise pay or add benefits.

Legal Issues

Contract laws in the United States are largely unspecific and vary from state to state; however, there are several laws that indicate how an employer may go about recruiting, interviewing, and hiring a new employee. The employer must avoid discrimination pertaining to skin color, sex, age, disability status, or pregnancy status. Employers in the United States must also follow immigration law when it comes to hiring immigrants; employers are prohibited from hiring persons who reside illegally in the United States. They are also prohibited from hiring children. Child labor laws vary from state to state, but in general employers are not allowed to hire children under the age of twelve. Other legal issues for employers to consider when hiring include privacy rights and intellectual property rights.

Affected Groups

Employment contracts are designed to protect both parties involved in the exchange of a particular service for pay; however, in most cases they are preferential to the party who drafted the contract. For most employers, a contract is a way of securing an employee for a given period of time. The contract may include incentives to deter the employee from breaking the contract before the period is up, such as a bonus or a higher wage. It is important that the potential employee reviews the contract with a legal professional in order to ensure that he or she is aware of the terms and understands them. Contracts may also be of use after the employee-employer relationship is terminated, for instance if the employer fails to make pension payments.

Challenges

The main challenge with a contract is that both parties be aware of what they are signing. The drafter of the contract is less likely to have this problem and in the case of employment contracts most often the drafter is the employer. Potential employees may make the mistake of assuming that most contracts are standard and that they don’t need to review the contract in detail. However, this can lead to distress later on, when the employee may feel taken advantage of by certain terms. For instance, the potential employee may believe that he or she is being hired as an employee; however, the contract indicates their position as an “independent contractor” to the company. While an independent contractor, or freelancer is considered as having their own business and can therefore write off expenses, they may not be eligible for inclusion in pension or benefit plans.