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Understanding the Various Employment-Related Agreements

There are various different types of contracts or agreements that you may be exposed to during your employment, regardless of the type of industry in which you may work. As with any contract, you need to be careful that you understand all of the terms (including the “small print”) before you sign. If the contract is found to be valid, you will likely be bound to it regardless of whether you truly understood it. When contracts are involved in employment, the risk can increase because your livelihood may be in the balance. Here are a few of the most common types of employment-related agreements and what you should know about them.

What are contracts of employment?

An employer and employee can enter into either an express or implied agreement that modifies the “at-will” employment relationship presumed by Alabama law. An express agreement is usually written and sets forth the specific terms of the employment relationship. An implied agreement can be created by representations made to the employee which constitute an offer of employment. In Alabama, to be enforceable, an employment contract must be in writing, unless it is capable of being performed within a year. An employment contract can limit the employer’s ability to terminate the employee for any reason. It can also limit the employer’s ability to discharge the employee at any time. Usually, these contracts will set forth specific types of events or circumstances justifying termination.

Contracts created by Employee Handbooks

Alabama Courts have determined in case law that certain statements included in Employee Handbooks can constitute an actual or implied contract that modifies the at-will status of an employee. If the language in an employment policy or handbook (or any other official document) is specific enough to constitute an offer communicated to the employee, that offer of employment is accepted when the employee continues to work after receiving the offer. The offer is considered communicated to the employee when handbook or policies containing the offer are issued to the employee.

What about Non-Compete Agreements?

It may be very likely that, when you were first employed at your current job, you were required to sign a non-compete agreement. Your employer can refuse to hire you, or later fire you, for refusing to sign one. So, many people get bullied into signing it because they need the job. What do you do when the time comes to leave that job?

If you lose your job or decide to leave, and you signed a non-compete agreement, you really only have two options: either find a job that does not compete with the former job or be prepared to defend a lawsuit if your new job competes with your old one. Although there are several arguments that can be made for finding such an agreement unenforceable, if you lose you may be required to pay attorney’s fees or liquidated damages, depending on the terms of the agreement you signed.

What can make a non-compete agreement unenforceable?

Since there are several requirements that must be met before a non-compete agreement is considered valid in the first place, those same requirements, when not met, can make the agreement unenforceable. Following are a few examples:

• There is no legitimate business interest to protect.

• The time restriction is unreasonable.

• Confidential information is essentially open to the public.

• Public health or safety would not be served

What You Should Know About Severance Agreements

When an employee’s term of service is ending, whether voluntarily or involuntarily, many employers offer those employees severance agreements in exchange for some form of compensation. Generally speaking, a severance agreement is a contract between the employer and the departing employee, where the employee receives money for agreeing to waive his or her rights to claims against the employer. This is much like the waiver and release language often included in settlement agreements. Not all severance agreements require release or waiver of claims but instead are meant to be a financial gift in order to hold the employee over until he or she is able to find a new job.

However, based on several lawsuits filed by the EEOC regarding severance agreements, employers and employees should beware of “overly broad” severance agreements. The EEOC has denounced the inappropriateness of broad severance agreements that severely restrict employees’ rights to file discrimination charges and to cooperate with the EEOC.

If you feel you have been the victim of discrimination or retaliation in the workplace, or if you have any other questions regarding your employment rights, please contact the experienced employment law attorneys at Wrady & Michel, LLC. You can contact us either online or by calling us at (205) 265-1880. We are here to serve you!