Do You Have an Implied Contract of Employment?

Posted by Sessions & Kimball |

When you begin working with an employer, there are various ways to formalize the employer-employee relationship. In some cases, this includes a formalized written contract signed by both the employer and the employee. However, there are also times when a verbal agreement occurs between the two parties. There are even times when there is no contract in writing or a verbal agreement, but there could still be an implied contract in place.

The Essential Terms of an Implied Contract

An implied contract is still a contract. Just like an oral or written contract, an implied contract will have terms or agreements between the employee and the employer. There are essential terms that need to be established for an implied contract to exist, including:

  • The implied contract between the employee and the employer must contain an agreement not to terminate the employee without proper cause. This is an important term that could ultimately give the employee the right to sue for wrongful termination in certain circumstances.
  • The implied contract may govern other terms of employment, including health insurance benefits, retirement benefits, sick leave, paid vacation, and more.

How is an Implied Contract Created?

In determining whether or not an implied contract exists, the courts will examine the conduct of the employer and the employee to determine whether or not there are any unspoken understandings in place. They will also look at whether the parties acted in a way that suggests that there was an implied contract in place. There are various types of evidence that can be used when determining whether or not an implied contract was created, including whether:

  • The employee has worked for the employer for a significant amount of time.
  • The employee has received performance evaluations and recommendations from the employer.
  • The employee has received promotions, raises, or bonuses.
  • The employer made any statements to the employee, assuring them that their job is secure.
  • The employee has received training, has a personnel manual, or has an employee handbook.
  • The employer has a policy for the proper termination of employees and under what grounds they can be terminated
  • The employer offers various types of benefits, including retirement programs, medical benefits, paid time off, etc.

Even if an employee works in an at-will state and is operating under the agreement that they will be an at-will employee, this does not necessarily mean that there was no implied contract in place. If you are found to have an implied contract with an employer, one that states that you can only be terminated for good cause, it is still possible to lose a job through termination for poor performance or for a good faith business reason. However, if you are terminated by the employer for what you believe to be in non-legitimate reason, this could lead to a wrongful termination lawsuit.

Contact an Employment Law Attorney Today

If you have any questions about whether or not you have an implied contract with your employer, or you think your employment status has been misclassified, you need to speak to an attorney as soon as possible. It is better to speak to an attorney earlier rather than later, particularly if you think your contract could result in payment complications or termination issues later on. A skilled lawyer will be able to examine the facts of your situation and help determine whether or not you have an implied contract and what your next steps should be moving forward.