Contracts In Employment Law

People mistakenly believe that contracts must be written and must be expressly entered into, but that's not the case. Oral contracts, if they can be proven, are every bit as valid as written contracts in most cases. Additionally, the law recognizes that people can enter into contracts even if they do not mean to if their behavior indicates that they've acted as though they were contractually bound.

In employment law, specific employment contracts with employees are relatively rare. However, employees often are given handbooks, and these handbooks potentially could bind employers contractually. When an actual contract is made between and employer and employee, then that creates a right in the employee. If, for example, the contract states that the employee may not be fired without cause for one year from the date of beginning employment, then the employee would have a cause of action if he or she is fired without cause six months later. Contracts for "permanent" employment generally are still at-will because they're indefinite, as no one really believes that employment can truly be permanent.

When there is an express contract, the elements that an employee must prove in a wrongful discharge claim are typical of any breach-of-contract claim:

  1. The existence of a contract.
  2. Performance by the employee or justification for non-performance.
  3. Employer's failure to perform.
  4. Damages.

Implied contracts are different from express contracts in that the parties show their agreement to enter into a contract by conduct rather than words in a written agreement. If there's ever a conflict between an express and implied contract, then generally the terms of the express contract win. In Colorado, whenever an implied contract is found, it's generally based on an employment manual, which is why these manuals must be so carefully written. Lawyers can be very creative in finding contracts where employers did not think they existed. Employees who want to prove the existence of an implied contract generally must show that the employer made an offer, and that the employee accepted it by either accepting employment initially or considering to work there after the offer was made. For example, let's say employee is working for company for $40,000 per year, but then informs employer that he or she wants to leave because of an offer to take another job for $60,000. The employer then offers the employee a salary of $70,000 to stay. The employee agrees and decides to stay. A contract has been formed at that point.