Employment contracts must be drafted with care. Paula Barran, an attorney specializing in employment law in Oregon, wrote a great article on the 8 areas that well-drafted employment contracts should address: (1) duties, (2) obligations, (3) timing, (4) payment, (5) extra benefits, (6) parting, (7) prenuptials, and (8) disagreements.
Unless otherwise specified, employment in Massachusetts is “at will.” This means that employees can be terminated for any reason or no reason, so long as the termination is not motivated by the employee’s status within a protected class such as age, race, gender, national original, or handicap. In other words, an employer can not fire you because you are female, 40 years old or older, require medical leave, or because you’re black.
This also means that an employer can legally fire you for an arbitrary and capricious reason. To illustrate the concept of “at will” employment, suppose you are a Red Sox fan. You’ve been with Company A for 20 years. Unbeknownst to you, your new boss is a Yankees fan. You send out a company-wide e-mail celebrating the Red Sox second World Series Championship in just three years. Angered and embarrassed, your boss terminates your employment because you sent the e-mail. Illegal? Not if you’re an “at-will” employee.
Employment contracts create the opportunity to leave behind the precarious world of “at will” employment, at least until the contract the expires. An employment contract should be seen as the equivalent to tenure. The employment contracts that I have negotiated, for instance, typically include a “cause” provision, stating that an employee can only be terminated for “good cause” or “just cause.” As you’ve probably guessed, sending an e-mail celebrating a Red Sox victory would not meet the “good cause” standard.
As Attorney Barran points out in her article, a thorough employment contract will fill many holes, giving both sides security and predictability should the relationship unravel. Regarding payment, for example, a host of questions arise from the employer’s perspective:
When it comes to the payment part, employee compensation, be as rigorous and careful as you can possibly be because sloppy drafting gets expensive. If the employee quits on Jan. 1, are you still obligated to pay the bonus for the previous year when you close the books? Is the employee going to be entitled to a stream of commission income after quitting? Did you promise a “guarantee”? Does that mean the same thing as severance pay, and do you have to pay it after you fire the employee for stealing from you?
Given the complexity and breadth of issues that many employment contracts address, its not a bad idea to have your contract reviewed by an attorney specializing in employment law. You can bet that your company’s attorney has already tinkered with it. Your interests should be protected as well.
The Law Office of Alan H. Crede, P.C.