Employment Contracts and Benefits: A Guide for New Employees

Learning About Employment Contracts and Benefits

Congratulations on the new job! The fact your new employer is offering you a contract of employment usually means they anticipate you being a highly valued employee and team member. It also suggests that you will likely be offered a generous employee benefits package.

This Article Will Cover Two Main Employment Topics:

• The Legal Meaning of Employment Contracts

• Types Of Employee Benefits

Words of Caution

If this is your first employment contract there is much to know if you want to avoid unnecessary misunderstandings later in the employment relationship. Employment contracts are legally binding and are almost always drafted in favor of the employer.

Chances are the agreement was drafted by your employer’s lawyer and will place emphasis on protecting the employer’s rights while emphasizing that the employee’s legal obligations to the company are unambiguously stated.

Put another way, be prepared to be asked to sign a one-sided employment contract.

Never Sign A Contract On The Spot: Ask the employer if you could take the employment agreement home to review. Not only should you carefully review the contract terms but also the kinds of benefits the company will be offering you. Even better, have an employment lawyer review the agreement.

Purpose of An Employment Contract

An employment contract is a specific agreement between the employer and employee, which includes the employment terms and conditions of their employment relationship.

In essence, by having an agreed contract of employment, both employee and employer know what to expect from the employment relationship.

Contracts Must Have Three Basic Elements

Under the law of contracts, for a contract to be binding, (including employment contracts) it must contain three essential elements to be enforceable:

• An unambiguous offer
• An unconditional acceptance of the offer
• A mutual exchange of consideration

While the above first two essential elements are straightforward, the third requires further explanation:

Consideration

Consideration means that both sides of the contract must be giving up and gaining something from the employment arrangement: The employer is paying a wage in consideration of receiving the employee’s labor. Both employer and employee are receiving something and giving up something of value. This is called consideration.

What Terms Do Contemporary Employment Contracts Usually Include?

Today, the usual terms of a written employment contract include much more than just the basics. They include the specific duties, rights, and obligations of the parties as they relate to the following:

• Length of employment
• Defined scope of employment
• Stated compensation
• Scope of defined employee benefits
• What constitutes termination for cause
• Paid holidays observed
• Privacy policy
• Non-compete clause

Pay What You Promised! If you have a contract, written or otherwise, should your employer later inform you that they will need to pay you less than what was agreed to, you have the right to reject the offer, suspend work, and sue the employer for breach of contract. However, if you continue to work and accept the reduced pay, you may have impliedly agreed to have revised the lower payment terms.  There are ways around this, but you will need the advice of counsel on how to proceed under these circumstances.

Employment Contracts Need Not Be in Writing

Most people believe employment contracts must be in writing to be enforceable. This is not the case. Verbal agreements of employment are also considered to be legally binding.

Verbal Contracts Exceeding One Year

In most states, verbal contracts are as enforceable as written ones. Only contracts for an extended period (such as a year or more) must usually be in writing to be legally valid.

The problem with verbal contracts is that they are hard to prove if the other side denies making a contract or disagrees with you regarding its terms.

Many small employers, however, are reluctant to put employment agreements in writing unless they are for administrative or executive employees in high-level positions.

Employment At Will

If there is no formal written contract, the employment is usually considered an “employment-at-will,” which means either the employer or the employee can legally terminate the employment relationship at will, at any time, with or without cause.

However, an employer may never terminate an employee for an illegal reason, such as a termination based on race, religion, gender, etc.

 Benefit Plan Details Usually Explained In Booklet Form

Assuming you have accepted your employment offer, you should become familiar with the types of benefits that will be available to you.

Now that you understand the basics, let’s cover the types of benefits you will likely receive:

Types Of Employee Benefits

Most employee “benefits” include health, dental, vision, life, and disability insurance – with the insurance premiums paid partly or entirely by the employer – as well as pension and retirement benefits.

Unfortunately, most employers generally don’t have to offer any benefits to their employees. Some jobs come with benefits, and some do not. However, if you do get benefits, your employer must follow specific rules required by law.

ERISA Protections

The federal law regulating health and retirement benefits is called “ERISA.” It is a very complex area of the law, so you should contact an employment lawyer if you have a problem with your benefits.

Right to Health Benefits

Employers usually don’t have to offer health benefits to all employees, including their full-time employees. But, if your employer does offer health benefits, the employer must make good on his promises to pay your premiums. Also, he may require you to contribute part of the premium assuming you are informed of this in advance.

Must all Employees Get The Same Health Benefits?

Normally, no. Your employer may give some employees better health benefits than others, as long as his decision is not based on unlawful discrimination – such as refusing to provide disabled workers any benefits.

Cancellation of Health Insurance Benefits

Employment law states that your employer can only drop your health insurance plan with notice. He must let you know ahead of time. If he gives you notice that he will lower your insurance, you should think about getting necessary health care as soon as you can – before the health insurance plan ends.

Being Dropped from The Health Program

If your employer doesn’t drop his entire health insurance plan but merely drops you from the program, you might be entitled to continue your health insurance benefits anyway – under a law called “COBRA.”

Consult With an Employment Lawyer

Should you have specific questions or require additional information about your legal rights and obligations, we strongly advise you to consult with a verified online Employment-Labor about your issues as soon as possible.