Employment Contracts in California: Your Rights

An employment agreement is a legally binding contract between an employer and an employee that defines the terms of their working relationship.

At The Kanda Firm, we can help employees ensure that employment agreements are fair, legally compliant, and reflective of their best interests. In California, employment contracts are legally binding agreements that define the relationship between employers and employees. These agreements can be written or oral, but written agreements are essential for enforceability in court. Employment agreements typically include terms related to compensation, benefits, job responsibilities, and termination conditions. If either the employer or employee fails to meet their obligations, a breach of contract occurs. This breach can result from a failure to comply with the agreed-upon terms, whether verbal, implied, or written.

For example, an employee may face termination without just cause, or an employer may fail to uphold other terms of the contract. In some cases, what may seem like a breach could simply be a modification of the contract, such as adding a new term or condition.

No matter the situation, The Kanda Firm can help you navigate complex contract disputes and work to secure the compensation you deserve. Our team specializes in representing employees in California facing employment contract breaches, helping them pursue damages and legal remedies.

Is it Possible to Negotiate a Better Employment Contract?

Yes, many employment agreements can be negotiated. Employees with significant expertise or skills often have greater bargaining power, especially if an employer is eager to hire them.

Key Negotiation Areas:

• Compensation: Base salary, bonuses, or equity options.

• Benefits: Health insurance, retirement plans, or paid leave.

• Job Security: Limitations on at-will termination or severance payments.

• Performance Terms: Metrics for bonuses or raises tied to specific achievements.

• Cause Definition: Clarifying or limiting what constitutes “cause” for termination.

• Severance Packages: Including severance pay or benefits for involuntary termination.

Our attorneys can assist employees in negotiating favorable terms and help employers structure contracts to avoid future disputes.

• Drafting, reviewing, and negotiating employment agreements.

• Ensuring compliance with California employment laws.

• Assisting with executive and severance agreements.

• Identifying misclassification issues and protecting workers' rights.

Damages for Employment Contract Breaches in California

Under California law, when an employment contract is breached, the non-breaching party is entitled to damages that compensate for any losses directly caused by the breach. However, damages must be clearly ascertainable for the claim to be valid. The amount of compensation awarded is intended to make the aggrieved party whole, reflecting the harm caused by the failure to perform the contract's terms.

Service Contracts vs. Employment Contracts

A service contract is typically used by businesses engaging independent contractors for specific tasks or projects. Unlike employment agreements, service contracts do not establish an employer-employee relationship.

Key Differences:

• Independent contractors are not entitled to employee benefits like overtime pay, health insurance, or paid leave.

• Service contracts often include less favorable terms for contractors compared to employees.

Misclassification Risks

In some cases, businesses may misclassify employees as independent contractors to avoid paying overtime, benefits, or payroll taxes. If this occurs, the service contract might serve as evidence of an employment relationship. If you believe you have been misclassified as an independent contractor, contact The Kanda Firm for legal advice.Termination Agreements

An employment contract can be terminated under several circumstances, including:

• Extinction of the subject matter of employment

• Death or legal incapacity of the employee

• Expiration of the agreed-upon contract term

In situations where the employment contract does not specify a term, either party may terminate it with proper notice. However, if the contract is for a specified term, the employer may terminate it if the employee commits a willful breach of duty or consistently neglects their responsibilities. Similarly, an employee may terminate the contract if the employer breaches their obligations, especially in cases of willful or habitual neglect.

Separation Agreements

Separation agreements are important tools for both employers and employees, offering legal protection and reducing the risk of future disputes. These agreements help clarify the terms of an employee’s departure, whether voluntary or involuntary, and can address severance pay, legal liabilities, and the prevention of litigation. If you or your company is considering a separation agreement, consulting with an experienced attorney is crucial to ensure that all potential legal issues are addressed. An attorney can assist with drafting the agreement, identifying legal concerns, negotiating terms, and ensuring its enforceability.

Non-Compete Agreements

In Los Angeles, non-compete agreements are used by employers to prevent former employees from joining competitors and sharing trade secrets. However, California law generally prohibits non-compete clauses, except in very specific circumstances. These agreements, which restrict an employee’s ability to work for a competitor, can be deemed unenforceable unless they meet specific legal requirements. Employees facing non-compete issues should consult with an experienced employment law attorney to understand their rights and potential legal remedies.

Determining Employee Status

Under California law, it’s important to distinguish between employees and independent contractors. While employment contracts generally establish an employer-employee relationship, certain situations may classify a worker as an independent contractor. The key factor in determining this relationship is whether the employer has the "right to control" the manner and means by which the worker performs their duties. Other factors include whether the work is supervised, the length of the employment, the tools used, and the worker's skill set. Understanding whether you are classified as an employee or independent contractor is essential for understanding your legal rights under California employment law.

Employment Contract Disputes

Employment contract disputes commonly arise when one party believes the other has breached the terms of the agreement. A breach is considered when the contract’s performance does not proceed as agreed. While modifications to an employment contract may seem like a breach, they often reflect updated terms rather than a violation. Major breaches occur when a party fails to perform a significant term of the contract, while minor breaches are less severe and may not result in the termination of the contract. In the case of a major breach, the non-breaching party may consider the contract terminated, while minor breaches may be forgiven or resolved without ending the contract.

Contract and Negotiation FAQ’s

1. Is there a difference between a service contract and an employment contract?

Yes, service contracts are for independent contractors and do not establish an employer-employee relationship. Employment contracts are specifically for employees and must comply with labor laws. Misclassification of employees as independent contractors is illegal and could result in penalties for the employer.

2. Is it possible for an employee to negotiate a better employment contract?

Yes. Employees with unique skills or experience may negotiate for better compensation, benefits, severance terms, or other favorable conditions.

3. What terms may be negotiable in an employment contract?

• Compensation (salary, bonuses, equity).

• Benefits (health insurance, retirement plans, paid time off).

• Job security provisions, such as severance packages or limits on termination.

• Definitions of “cause” for termination.

• Relocation expenses or signing bonuses.

4. What should I do if I think I’ve been misclassified as an independent contractor?

Seek legal advice immediately. Misclassification could mean you’re entitled to overtime pay, benefits, and other employee rights.

5. Can The Kanda Firm help with executive contracts?

Yes, we provide tailored legal services for executives, ensuring that employment contracts address compensation, benefits, and other critical terms.

6. What are the advantages of having a lawyer review an employment contract?

A lawyer ensures the contract is fair, legally binding, and protects your interests. They can also identify unfavorable terms and suggest changes to avoid future disputes.

Whether you need help drafting, negotiating, or reviewing an employment agreement, The Kanda Firm is here to protect your rights and interests. Contact us today for a consultation!

If you are facing any employment contract dispute in California, contact us today to understand your rights and options.

We are here to help protect your interests and guide you through the legal process.