Implied Contract Employment Law

What is an Employment Contract?

An employment contract is an agreement created between an employee and the employer. The company and worker are both given certain rights, responsibilities, and conditions that are established in the contract. It can be expressed orally, written, or implied.

What is Included in an Employment Contract?

The employment contract may include:

• Salary, wages, and commission, if applicable.
• Schedule of days and hours expected to work.
• Length of employment
• General duties and tasks required of worker
• Confidentiality statement or non-disclosure agreement
• Points of communication
• Benefits for the employee
• Non-compete agreement to avoid any future competition
• Other work-related terms and conditions

Definition of At-Will Employment Contracts

In the United States, the majority of the people work at will; they can quit when they want, or get fired at any time for whatever legal reason. Employees in Montana, however, can only be fired for a good reason after working six months. Other states do not follow this probationary period rule.

Some at-will contracts state that the employee understands that their employment is at will and that they can be fired at any time. While they can be fired at any time, the employee can still enforce the terms of the agreement. If the company fails to uphold their part of the agreement, the employee can sue.

Types of Employee Contracts

• Written. This is usually a physical document with set employment terms. It can define your job, responsibilities, benefits, and other important details for your convenience. Confusion is often avoided with this type of contract because everything is laid out for you to easily understand.
• Oral. This is spoken between an employer and the employee. Terms can be laid out and the employee only has to agree to them for it to be valid. They hold the same power as written agreements, but their existence is harder to prove. It can be your word against your employer's word.
• Implied. This can be any combination of what an employer has said and written down. An employee may prove the contract exists by pointing to certain policies, statements, and actions to show that he believed he would only be fired under good reason. The contract, however, may only come up after the employee is fired. Not all states find implied contracts to be real.

Types of Implied Contracts

• Implied In-Fact Contract. This is created based on facts between the parties involved. Certain circumstances or conduct may imply that there was an agreement, such as a sequence of routine events between the parties.
• Implied At-Law Contract. This type contains conditions or circumstances enforced by the law. One party will receive what is due to them even if neither party had the intention to enter a contract. This can also be called a quasi-contract.

Factors Courts Consider Whether an Implied Employment Contract was Created

Some factors the court may look into to see if there was an implied contract include:

• If job security was assured to the employee
• If the right to fire at will is limited by the company's policies
• How long the employee has worked for the employer

Common Law Implied-Contract Exception to At-Will Employment

If an implied contract is created and put in place, terminations are prohibited, unlike at-will employment. Oral or written suggestions can be used, even if the employment doesn't have a contract in place. The suggestions would then make for an employment contract.

How the Implied-Contract Exception is Treated by Courts

Courts around the country have found employee handbooks can make for an implied contract. For instance, the use of discipline on an employee are implied in the handbook, which shows specific procedures. Job security in the future may not be backed up by how long you have worked in the company or the amount of raises received.

Courts may also look to see if there is any disclaimer language found within the evidence to see if there was an implied contract. Some cases involving implied contracts are being looked at more closely and strictly than they were before.