How and Why to Use Employment Agreements in Arizona
December 4, 2020
How and Why to Use Employment Agreements in Arizona
An employment agreement specifies the terms of the working relationship between an employer and an employee. A well-drafted employment agreement will explain exactly what the employee is expected to accomplish, as well as what the company will do for the employee. In addition, an employment agreement should explain how disputes will be settled and how violations of the agreement will be dealt with.
Other areas that an employment agreement should cover include:
– The employee’s starting date
– How long the employment relationship will last if the parties have a fixed period of time in mind, or otherwise a statement of the at-will nature of the relationship
– Any probationary period that applies
– The employee’s compensation, including how raises and bonuses can be earned
– What benefits will be afforded, such as health insurance, vacation, and sick leave
– When and how the employee can be terminated
– Any non-compete clause that restricts where the employee can work if he or she leaves the company for any reason
– Protection of trade secrets and other proprietary information
– A statement that all of the employee’s work produced during the course and scope of employment is owned by the company
– A statement providing that any patents that the employee procures during the course and scope of employment must be assigned to the company
– Miscellaneous legal issues, such as choice of law and arbitration clauses
Although employment agreements are not required in Arizona, there are several reasons for a company to have them with at least some of its employees. In particular, an employment agreement clarifies the type of employment relationship in question, helps eliminate confusion about roles and responsibilities, and reduces the risk that an employee will sue the company over some sort of disagreement such as when raises are given, how performance is evaluated, or how many sick days are allowed.
In addition, an employment agreement can bind an employee to the company for a specific period of time, which is helpful if the company plans to spend a lot of time and money training that employee. Employment agreements are especially useful for higher-level employees who have access to proprietary or confidential information. Sales and marketing personnel also might be good candidates for employment agreements. That said, employment agreements generally are not needed for middle managers or people below them.
Types of Employment Agreements
Arizona recognizes several types of employment agreements, all of which have different characteristics and are appropriate for different situations. These include:
A permanent employment agreement can be either express or implied. It applies when an employee is hired full-time or works regular part-time hours and is paid an annual salary or on an hourly basis. Permanent employment contracts are not permanent per se; rather, they do not have an express end date but are considered to be in force while the person is employed with the company.
In addition, under A.R.S. 23-1501, either the employer or the employee may sever their working relationship “unless both the employee and the employer have signed a written contract to the contrary setting forth that the employment relationship shall remain in effect for a specified duration of time or otherwise expressly restricting the right of either party to terminate the employment relationship.”
This means that unless it states otherwise in writing, a permanent employment contract does not change the “at-will” nature of most employment relationships in Arizona. Arizona courts likewise have held that employment contracts for an indefinite period of time are presumed to be terminable by either party with or without case. See, e.g., Wagner v. City of Globe, 150 Ariz. 82.
Some employees are hired with the expectation that they will only work for a specific amount of time. These employees can be provided fixed-term employment contracts, which often can be renewed at the end of the stated employment period if both parties so desire. Fixed-term employment contracts make it easier for companies to terminate employees at the end of their contract term or hire short-term employees, such as for seasonal work.
If an employee works sporadic hours based on the employer’s needs, he or she may receive a casual employment contract. This type of contract is signed with the understanding that the employee’s work schedule will be irregular. If an employee works enough hours under a casual employment agreement, he or she will usually be entitled to some benefits given to full-time employees, such as health insurance.
Consultant or Independent Contractor
Consultants and freelancers are usually hired for particular projects and often are issued consultant agreements pertaining to those tasks. These projects can be one-time affairs or entail ongoing work. Consultant agreements describe the employment relationship, including confidentiality requirements, non-solicitation requirements, etc.
Contact Counxel Legal Firm
The laws pertaining to employment agreements can be complicated and fact-specific. If you would like to talk to an attorney about drafting an employment agreement, or whether you need one at all, contact Counxel Legal Firm at 480-536-6122 or at email@example.com.
This article is intended for informational purposes only and does not constitute legal advice for your specific situation. Use of and access to this article does not create an attorney-client relationship between you and Counxel Legal Firm. Please contact firstname.lastname@example.org or 480-536-6122 to request specific information for your situation.
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