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Employment Contract in the US

Employment in the United States is state law, and in every state except Montana the default is at-will: either party may end the relationship at any time for any lawful reason. Montana's Wrongful Discharge from Employment Act instead requires good cause once an employee has completed a probationary period. No state requires a written employment contract, but California and New York both require a separate written pay-rate notice at hiring.

Governing law

State common law and state labor codes govern formation and termination. Federal statutes, principally the Fair Labor Standards Act, set wage and hour floors that no contract can waive.

Fair Labor Standards Act, 29 U.S.C. § 206

What a employment contract has to contain in the US

  • The federal minimum wage is $7.25 an hour for covered employees, and no contract may set a lower rate for covered work.

    29 U.S.C. § 206(a)(1)(C)

  • Covered non-exempt employees must receive at least one and one-half times the regular rate for hours worked beyond forty in a workweek.

    29 U.S.C. § 207(a)(1)

  • California codifies the at-will default: employment having no specified term may be terminated at the will of either party on notice, and a specified term means a period greater than one month.

    California Labor Code § 2922

  • In Montana a discharge is wrongful if it was not for good cause and the employee had completed the probationary period, if it retaliated against refusal to violate public policy, if the employer materially violated its own written personnel policy, or if it was based solely on the employee's legal expression of free speech.

    Mont. Code Ann. § 39-2-904(1)

  • New York employers must give each new employee written notice of pay rate and related particulars in English and in the employee's identified primary language, and keep a signed, dated acknowledgement for six years.

    New York Labor Law § 195(1)

  • California employers must give a written notice at hiring listing pay and overtime rates, allowances claimed against minimum wage, the payday, employer name and addresses, the workers' compensation carrier and paid sick leave rights.

    California Labor Code § 2810.5(a)(1)

Form, notarisation and registration

What catches drafters out

  • A Montana contract silent on probation carries a presumptive probationary period of 12 months from the day work begins, and the original period plus extensions may not exceed 18 months.

    Mont. Code Ann. § 39-2-910

  • Montana's wrongful discharge regime does not apply to an employee covered by a written collective bargaining agreement or a written contract for a specific term.

    Mont. Code Ann. § 39-2-912(1)(b)

Employment Contract in the US: common questions

Does a US employment contract have to be in writing?
No statute reviewed requires an employment contract to be written. The constraint is the statute of frauds: New York General Obligations Law § 5-701(a)(1) makes an agreement that by its terms cannot be performed within one year void unless it is in writing and subscribed by the party to be charged. A fixed term of a year or more therefore needs a signed writing in New York.
Is employment at will in every US state?
California Labor Code § 2922 states the at-will default: employment having no specified term may be terminated at the will of either party on notice. Montana is the exception. Under Mont. Code Ann. § 39-2-904(1)(b) a discharge is wrongful if it was not for good cause and the employee had completed the probationary period, and § 39-2-910 supplies a presumptive 12-month probationary period where the contract is silent.
What must a US employer hand a new hire in writing?
This is set by state law. New York Labor Law § 195(1) requires a written pay notice in English and in the employee's primary language, with a signed acknowledgement kept for six years. California Labor Code § 2810.5(a)(1) requires a written notice covering pay and overtime rates, allowances, the payday, employer identity and addresses, the workers' compensation carrier and paid sick leave rights. Neither is satisfied by the employment contract alone.

Sources

Every statement on this page is drawn from one of these. All were fetched on .

The same document elsewhere

Other US documents

Employment Contract: the jurisdiction-neutral guideBack to Document Library