Employment Contracts



Standard employment agreements with lower-ranking employees, including offer letters, form contracts, acknowledgment of receipt forms in employee handbooks, application forms, and other documents like employee handbooks, may inform an employee that employment will be at will and, through the employees’ signatures, reflect their agreement to this status. When an employee has signed a form agreeing to at-will employment, the Court is likely to award Summary Judgment in the employer’s favor.

Confidentiality Agreements

Confidentiality agreements protecting and preserving trade secrets and other valuable confidential information are valid to the extent that they are reasonable.

Covenants Not To Compete

A covenant not to compete once employment has terminated is generally unenforceable in California. Unless, the noncompetition agreement is made in connection with the sale of a meaningful percentage of the employer’s ownership so that it is plain that corporate goodwill is part of the sale price, a noncompetition agreement will not be enforceable and should not be included in an employment contract.

Indemnification of Employees

An employer is bound to “indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties as such, or of his or her obedience to the directions of the employer.”

The Effect of Mergers, Transfers or Dissolutions

Employees may claim a breach of contract if the business entity is changed on the basis either that he or she contracted with a particular entity or that the employer can no longer fulfill its obligations under the contract.

Arbitration Agreements

Many employers require arbitration agreements that compel employees to arbitrate claims instead of having their claims heard in court. However, these arbitration agreements are only enforceable if they:

  • · provide for a neutral arbitrator;
  • · provide for more than minimal discovery;
  • · require a written arbitration award;
  • · provide for all of the types of relief that would otherwise be available in court; and
  • · require the employer to bear the expenses associated with access to the arbitration forum.
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