An employment contract is an agreement formed between an employer and employee regarding an employment situation, which contains terms and provisions regarding the employment relationship. An example of this would be how the contract might state that the employee will work for the employer for a certain number of hours in exchange for an hourly wage or yearly salary.
An employment contract could also specify benefits, such as paid time off or the provision of health insurance. However, in order to be considered legally valid, the contract must state what grounds for termination, as well as how much notice each party must give if they wish to terminate the contract.
Employment contracts are not entered into in every employment situation. However, if the employment is not informal, it is generally good to have one in place. While employment contracts do not have to be written in order to be enforceable, if a dispute arises between an employer and employee, the contract is available to help resolve the dispute.
An employment contract becomes legally binding when specific requirements are met:
- Offer and Acceptance: One party must make an offer to another party, and that offer must be accepted;
- Consideration: The two parties must agree to exchange something of value. In the employment context, this generally means that the employer offers monetary value in exchange for the employee’s labor and expertise;
- Legality: The exchange that is defined in the contract must be legally enforceable. What this means is that a contract for the employee to work in the employer’s illegal drug trade business would not be allowed, and no court would enforce the contract; and
- Capacity: Both parties must be old enough and considered to be mentally fit enough in order to enter into a contract.
Some courts have held that an employee must have time in which to contemplate the terms of the employment contract before starting the job. What this means is that handing the employee the contract to sign after the employee has begun working, or on the first day of the job, is not considered to be good practice should any issues arise later on.
Additionally, as with any contract, the agreement may not be signed as a result of:
A sales representative is an example of the type of employee who is likely to have a formal written employment contract. The contract might identify the key accounts to which the sales representative will sell the employer’s products or services, as well as specify other duties such as attendance at sales meetings and training sessions. The contract will specify the salary and the commission that the sales representative will be paid, as well as sales goals.
Once an employment contract has been made, it is binding on both the employer and the employee. What this means is that if either party fails to perform as promised in the contract, that party can be held legally responsible in court.
What Happens If An Employment Contract Is Breached?
A party commits a breach of an employment contract if they fail to do what is promised in the contract, or if they do an act that is prohibited by the contract.
An example of this would be how a contract might require an employee to give 30 days notice if they plan to terminate their employment. If they leave without giving 30 days’ notice, it is considered to be a breach of the contract, and the employee may have to pay money damages to the employer for this failure.
A valid employment contract can be enforced in a court of law, although some contracts specify a different process for resolving disputes associated with the contract. The contract could state that the parties must go through arbitration or mediation rather than turning to a court of law if one party claims a breach of the contract.
In terms of breaching an employment contract, it is important to seek the advice of an employment contract lawyer to represent your best interests. When negotiating an employment contract, pay attention to the terms and conditions for resolution of disputes or claims of breach. The contract may require the parties to forfeit important rights, such as the right to trial by jury.
What Is A Covenant Not To Compete?
Generally speaking, by signing a covenant not to compete, an employee agrees that when they leave their employer they will not go to work for the employer’s direct competitors. The employee will sometimes receive compensation for signing the agreement, which are also known as “non-compete clauses.”
Businesses that most commonly use covenants not to compete include those handling:
- Highly confidential materials;
- Client demographic or information databases which an employee can access;
- Businesses with a direct competitor;
- Trade secrets; and/or
- Trademarks and copyrights.
Some examples of the most common restrictions in a covenant not to compete agreement may relate to:
- Time Frame: After the employee leaves their former employer, the employee must refrain from working for the competitor for a certain period of time. This must be specified in the employment contract;
- Type of Business: Working in certain industries and businesses, generally related to that of the employer, may be prohibited; and
- Location: The employee may not be allowed to work for a competitor within a specified geographic location.
It is difficult to determine whether a judge will enforce a non-competition agreement. While the secrets of an employer are considered to be valuable, the legal system also places considerable value on a person’s freedom to pursue other employment. In order to be enforceable, courts generally require that a covenant not to compete be reasonable.
A covenant not to compete will be considered unreasonable when:
- It lasts for too long, as depending on the trade of the employer, a court will determine how much time is appropriate.;
- The geographic area that it covers is too large;
- The types of business that it covers are too far-reaching; and/or
- The employer does not have a legitimate business interest in enforcing the covenant not to compete.
Are Covenants Not To Compete Valid In Florida?
Unlike most other states, Florida maintains statutes governing all aspects of covenant not to compete law. Florida statutes are considered to be relatively liberal in upholding covenants not to compete. However, United States law generally disfavors restraints on trade and freedom, and California statutes specifically forbid covenants not to compete.
In order for a covenant not to compete to be valid in Florida, the following requirements must be met:
- Geographical Limitation: The covenant must be reasonable in terms of distance from the original employer. Florida rule provides that the area must be where the employer conducts business; for a nationwide employer, a nationwide covenant not to compete may be upheld;
- Time Period: The covenant must not prohibit an employee from similar work for an unreasonable amount of time. Florida statutes hold restraints of less than 6 months to be reasonable, while more than 2 years are considered to be unreasonable. Additionally, the judge has discretion to determine the reasonableness of time periods in between 6 months and 2 years; and
- Area of Work: The field or area of work must be defined in a reasonably narrow way. An example of this would be how a network designer of a certain network type should not be prohibited from working in the IT industry as a whole. Additionally, a Florida covenant not to compete must protect certain “legitimate business interests.” These include relationships with customers, confidential information, and trade secrets.
The defining difference in Florida’s non-competition laws would be that a judge is required to “blue-line,” or cross out certain provisions of an overly broad covenant not to compete, in order to protect the employer’s interests.
Unlike other states, Florida employers are entitled not only to an injunction prohibiting the former employee from working for a competitor, they are also entitled to monetary damages and attorney’s fees. This is why employees should exercise caution before signing a covenant not to compete in Florida.
Do I Need A Lawyer For Help With Florida Law On Covenants Not To Compete?
A Florida employment contract lawyer can review and negotiate a fair employment contract for you. Additionally, an experienced contract attorney can help you understand your legal rights and options under Florida employment law, and will also be able to represent you in court, should legal action become necessary.