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Pros and Cons of Having an Employment Agreement

Pros and Cons of Having an Employment Agreement

Posted by Jacob I. Kiani | Sep 18, 2013 | 0 Comments

I. THE PROS AND CONS OF HAVING AN EMPLOYMENT AGREEMENT.

A. Pros of an Employment Agreement

  1. May prevent valuable employees with special skills or knowledge from being lured away by other job opportunities.

  2. If for a specified term, provides increased likelihood that valued employees will stay with the company through the term.

a. Note, however, that courts generally will not order an employee in breach of an employment agreement to remain in the employer's employ. Instead, the employer's remedy will be limited to damages. See Cal. Civ. Code § 3390; Motown Record Corp. v. Brockert, 160 Cal. App. 3d 123, 129 (1984). The prospect of being sued for damages, however, may deter many employees from breaching their contracts.

b. An employer may be able to obtain injunctive relief where: (1) there is a written contract for personal services; (2) the contract provides for minimum compensation as required by statute (see Cal. Civ. Code § 3423(e)); and (3) where the promised service is of special, unique, unusual, extraordinary or intellectual character, which gives it peculiar value the loss of which cannot be reasonably or adequately compensated in damages in an action at law. Cal. Civ. Code § 3423.

  1. Provides a concise summary of the terms and conditions of employment.

  2. Provides the employer with an opportunity to limit the duties the employee may not perform without the Company's approval.

  3. If the information is not written down and there is a dispute or misunderstanding as to the terms of employment, it may be difficult for the employee to prove his/her version of the original agreement.

  4. The individual making verbal promises during hiring may not be authorized by the Company to make certain promises to the applicant/employee, and the Company may refuse to stand behind that individual.

  5. From an employee's perspective, an agreement can provide job security (or at least compensation in the event of a breach).

B. Cons of an Employment Agreement

  1. Binds the employer and the employee to whatever terms are set forth in the contract.

  2. If either the employer or employee wishes to change the terms of the written contract, they may have to renegotiate the contract, which may be a costly and lengthy process.

  3. A written employment agreement is covered by the covenant of good faith and fair dealing, which can penalize employers if they violate the contract or fail to act in good faith towards the employee.

Los Angeles CA Labor & Employment Law Attorney

The Law Office of Jacob I. Kiani is a Labor and Employment law firm located in Los Angeles, California. Los Angeles Labor Lawyer Jacob I. Kiani assists clients in employment law, human resources law, and small business law matters throughout Los Angeles and the surrounding Southern California metro areas including Santa Monica, Hollywood, Downtown Los Angeles, Glendale, West Los Angeles, Beverly Hills, the San Fernando Valley, Chatsworth, San Pedro, Van Nuys, Pasadena, Torrance, Whittier, West Covina, Malibu, Long Beach, the South Bay, Manhattan Beach, Redondo Beach, Huntington Beach, Orange County, Burbank, Thousand Oaks, Encino, Marina del Rey, and the Inland Empire.

Los Angeles Labor Law Practice Areas

General Labor Law Resources

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Human Resources Law - General

Additional resources provided by the author

Los Angeles CA Labor & Employment Law Attorney
The Law Office of Jacob I. Kiani is a Labor and Employment law firm located in Los Angeles, California. Los Angeles Labor Lawyer Jacob I. Kiani assists clients in employment law, human resources law, and small business law matters throughout Los Angeles and the surrounding Southern California metro areas including Santa Monica, Hollywood, Downtown Los Angeles, Glendale, West Los Angeles, Beverly Hills, the San Fernando Valley, Chatsworth, San Pedro, Van Nuys, Pasadena, Torrance, Whittier, West Covina, Malibu, Long Beach, the South Bay, Manhattan Beach, Redondo Beach, Huntington Beach, Orange County, Burbank, Thousand Oaks, Encino, Marina del Rey, and the Inland Empire.

Los Angeles Labor Law Practice Areas

Labor & Employment Law
Wage and Hour Law
Human Resources Law
Business Law & Litigation
Technology Law
Unbundled Legal Services
General Labor Law Resources

U.S. Department of Labor
California Labor Laws and Regulations
California Unemployment Insurance Appeals Board (CUIAB)
California Dept. of Industrial Relations - Labor Law Resources
Find out which wage order pertains to my occupation
Industrial Welfare Commission (IWC) Wage Orders
Wage & Hour Law - Wage Claim Adjudication
Labor Law FAQ
How to File a Wage Claim
Division of Labor Standards Enforcement (DLSE)
California Department of Industrial Relations (DIR)
California Employment Development Department (EDD)
DIR Small Business Portal
Employment Law Fact Sheets
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DFEH Employment Brochures and Posters
Employment FAQ
California Department of Employment and Housing (DFEH)
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DLSE Guide to Retaliation / Discrimination Complaints
List of California Workplace Postings
Services and Public Accommodations FAQ
DFEH Employment Lawsuit Flow Chart
Fair Employment and Housing - Sexual Harassment
Fair Employment and Housing Act - Pregnancy
California Family Rights Act (CFRA)
Fair Employment and Housing Act
Severance Negotiations Law

Top Five Items to Negotiate During Severance Negotiations Besides Severance Pay
Five Tips for Negotiating The Best Severance Possible
Don't Attempt to Represent Yourself in Severance Negotiations
Ten Tips for Negotiating a Better Severance Package
Severance Pay Basic Info Sheet
How to Negotiate Severance
Cobra Basic Info Sheet
How to Get the Best Severance Deal
You're Fired: Now You Can Negotiate a Better Severance Package
Human Resources Law - General

CalChamber HR California
Useful Table of Which HR Laws Apply to California Employers
Link to Free New Hire Forms
Paid Family Leave Poster
Social Security Number Verification Service
Sample Technology and Cell Phone Policy
Paid Family Leave Brochure

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