California Employment Contracts: Two Things To Know

Maintaining protective employment contracts is important. Some have favorable terms which minimize the likelihood of being terminated without cause while also ensuring you get a respectful severance payment and health benefits should you be laid off. Below are lists of additional features that are common in an employment contract in California.

Fixed Term Labor

Employment agreements typically enable employees to negotiate fixed-term labor, which may be renewed. This means that the employee will still be paid based on their contract even if they are terminated early, since it covers a fixed period.

Good Reason Termination Provision

It should first be noted that California is one of the “at-will” job states, which means employers can let go of workers for any reason, without giving them notice, and this usually doesn’t change even with an employment agreement in place. However, three exceptions do exist, and this is when unionized workers are covered via collective bargaining arrangements, unlawful discharges and instances where non-union workers negotiate an agreement that restricts the employer’s ability to fire or provides specific benefits if it happens.

This is where a good reason termination provision comes in. Even if an employer in the state of California is able to let an employee go without giving them cause or reason, if they’ve signed a contract agreement that has a good reason termination provision, this means that certain benefits would be automatically activated. An example of this would be the employer having to pay the employee severance pay for a specific period of time. When instituting the cause provision within a contract, it is essential to narrow its definition.

Additional Provisions

Additional perks which are commonly added to executive or C-suite level employment contracts include sign-up bonuses, relocation benefits, guaranteed first-class or business travel, financial planning, tax equalization if employed overseas, vehicle allowance as well as outplacement service.

Provisions That Should Be Avoided

There are also contract provisions that should be avoided. For instance, some employers might try to input provisions that require employees to defend certain court claims in a state other than California, or which prohibit competition against them once you’ve left their company. Read your contract carefully before signing to determine if any such clauses are present and if so you’ll definitely want to reject it. If you’re confused by certain terms or verbiage, it is recommended to speak with an attorney who can clear things up.

What Should You Do if the Contract is Breached?

The rights which California workers have under contract are usually governed via state contract law. The exceptions to this include welfare or retirement benefits which are governed via ERISA, or the Employee Retirement Income Security Act, while Internal Revenue will govern tax treatments for payments rendered within the work contract. Employers may implement caps on paid off time or accrued vacation time, and they can even reduce the salary of employees that are at will. However, if you’ve signed a strong contract that has a For Cause, and the employer still breaches it, you may have grounds for litigation.