LEGAL GUIDE
Written by attorney Jacob Iraj Kiani

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

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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 Wage and Hour Law Resources DFEH Employment Brochures and Posters Employment FAQ California Department of Employment and Housing (DFEH) Fair Housing FAQ 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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