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Employment Contracts in USA

1. Minimum Requirements

Under United States law, there are no minimum requirements for an employment contract. Also, in most states, no written memorialization of any terms is required. An employment relationship in the United States is presumed to be “at-will,” i.e., terminable by either party, with or without cause or notice. Indeed, a majority of employees in the United State are employed on an “at-will” basis, without a written employment contract, and only with a written offer of employment that outlines the basic terms and conditions of their employment. There are no requirements as to the minimum contents of an offer letter. In some states, such as New York, employers must by law notify employees in writing of some of the terms of employment.
Highly-skilled and compensated employees (e.g., high-level executives) are traditionally employed pursuant to written employment contracts. These contracts specify the basic terms and conditions of employment, such as position, job responsibilities, salary, compensation, incentive pay, and stock options. These also define what conduct will justify termination for cause and provide for severance pay in case of termination without cause.

2. Fixed-term/Open-ended Contracts

No legal provision governs fixed or unlimited term contracts. Unlike many other countries, American law does not limit the duration of a fixed-term employment contract or the circumstances under which the parties may enter into a fixed-term employment contract. In the absence of an employment contract, employment relationships are presumed to be “at-will,” terminable by either party at any time, with or without cause.

3. Trial Period

No legal provision governs a formal “trial period.” However, many employers have an internal policy on trial periods, often referred to as “introductory periods” or “probationary periods.” These internal policies are crafted based on the needs of a particular employer. They generally provide for a formal performance evaluation after an initial stated period of employment (often ninety (90) days).

4. Notice Period

Except in certain mass dismissals or as provided for in an employment contract or a collective bargaining agreement, U.S. law does not impose a formal “notice period” to terminate an individual employment relationship. Employers must give 60 days’ advance notice to affected employees in advance of plant closings or covered mass layoffs.

For more information, please contact Jackson Lewis P.C. our member firm in this country.
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