Unintended Hiring Contracts
Unless you're intentionally entering into a written contract
with an employee that guarantees the position for a set length
of time, we recommend that you avoid making any statements that
could be construed as entering into an employment contract.
Since the employment-at-will
laws in most states give you wide latitude if you need to
fire an employee, you don't want to throw away that privilege by
inadvertently giving special rights to someone.
To avoid this, the offer must be stated as narrowly and as
carefully as possible. Any statement that alludes to job
security can be interpreted by a court as a promise of
job security, which might make it extremely difficult for you to
fire an employee if you need to.
Statements that designate employees as
"permanent" in contrast to those
designating employees as
"probationary" were found to
constitute a contract for long-term employment.
"You will have a long, rewarding and
satisfying career ahead of you" and
"we will pay one-half your moving expenses
now and the balance after one year" were
statements construed as meaning that the
employment relationship was intended to be at
least one year long.
When a prospective employee gives up something of value or
quits another job in reliance upon the employer's promises, the
courts tend to enforce the promises made in job offers more
strictly. While these specific situations may not apply to you,
you should be careful not to make any promises or statements
that will lead the employee to give something up (like a house
or another job) unless you're definitely going to hire him or
At the time of hire, a new employee was told
that he had to furnish his own car for the
position. Since he had no car, he borrowed the
money and went out and bought a car. After he
bought the car, he was informed that someone
else had been hired for the position. The
company was liable for money damages because the
man had relied on their statements, causing him
to buy the car.
In another situation, an individual resigned
from a position she held and turned down another
attractive job offer, relying on the job offer
made by another company. The company refused to
hire her, however, because the necessary,
favorable references were not received. A court
could hold the company to its promise because
the reference question should have been resolved
before the job was promised.
The best protection is watching what you say. Don't make any
statements that imply permanence or even a long-term commitment.
Here's a list of other things not to say:
- "You'll be with us as long as you can do your
- "You will not be fired without just cause."
- "This is a company in which you stay and grow."
- "In this company you'll have lots of job
Here are some more guidelines you can use to minimize your
risk of creating unintentional employment contracts:
- Review all advertisements
and company literature for language that could be even
remotely construed as offering employment of a fixed
- Avoid phrases like "our company family,"
"job security," or "lack of layoffs within
- Include in an offer, whether verbal or written, an
explicit statement that "there are no contracts for a
particular length of service" and make some reference
to "the employer's and employee's right to terminate
the employment at will."
- If the offer is oral, you can further explain that
"employment at will" means that the company or the
employee can terminate the employment relationship at any
time for any reason. Just cause is not necessary.
- If the offer is written, you can either explain the
concept or refer the employee to a handbook
where the employment-at-will doctrine is explained.
- If you wish, you can quote the salary on a weekly or
monthly basis in order to avoid the implication that the
employment offered is for a year's duration.
- Review notes of job interviews
to determine whether any promises were made, implied or
otherwise, that need to be corrected in a formal offer
- Remember that the issue is fundamental fairness.
- If you send a job offer letter (even if it's a form
letter), put a copy in the candidate's personnel file. If
the offer is oral, keep notes of what you said in the file.