Employment Contracts in California

The Role of Contracts in California Employment

While California is known as an “at-will” employment state, meaning employers or employees can generally terminate the relationship at any time for any lawful reason, this principle can be modified by an employment contract. An employment contract is a legally binding agreement that sets out the specific terms and conditions of the employment relationship, potentially offering greater job security and clarity on expectations for both parties.

Understanding the terms of an employment contract before you sign, and knowing your rights under an existing agreement, is crucial. At Brightwood Law Group, we help employees navigate the complexities of employment contracts to protect their interests. The following is an overview of common types of employment contracts, key terms, and important legal considerations for California employees.

What is an Employment Contract?

An employment contract is a formal agreement between an employer and an employee that details the mutual rights and responsibilities related to the job. It can define aspects such as job duties, compensation, duration of employment, and conditions for termination, potentially overriding the default “at-will” status.

While written contracts are most common for formal agreements, employment contracts in California can also be oral or, in some circumstances, implied by the conduct and communications of the parties.

Types of Employment Contracts in California

  • Written Employment Agreements: These are formal documents signed by both the employer and employee. They are often used for executive positions, highly skilled professionals, or for roles with specific terms of employment. Note that even if you receive a document titled “employment agreement” it likely contains language that an “at will” relationship has been established. Even if an employer has laid out certain terms of employment like your position, pay, or start date, does not mean there is a contract that overrides the “at will” status. 
  • Oral Employment Agreements: An employment contract can also be formed through verbal promises or agreements. For example, an employer might verbally promise an employee a certain salary or job security for a specific period. While oral contracts can be legally binding in California, proving their exact terms can be challenging if a dispute arises. 
  • Implied Employment Contracts: Even without a formal written or explicit oral agreement, an “implied contract” limiting an employer’s right to terminate an employee at-will can sometimes arise from the employer’s conduct and the overall employment relationship. Again, implied employment agreement can be challenging to prove. Factors that a court might consider in determining if an implied contract exists include:
    • The employer’s personnel policies or employee handbook provisions (e.g., disciplinary procedures that suggest termination will only occur after certain steps are taken).
    • The duration of the employee’s service (long-term employment can sometimes contribute to an expectation of continued employment).
    • Actions or communications by the employer reflecting assurances of continued employment or job security (e.g., consistent promotions, positive performance reviews, lack of criticism).
    • Established industry practices. An implied contract might suggest that an employee will only be terminated for “good cause,” even if this was never explicitly stated. Many employees are unaware that such implied agreements can be legally recognized and can provide significant protections.

What Key Terms Should I Look for In My Employment Contract?

When reviewing an employment contract, pay close attention to the following common provisions:

  • Job Duties and Responsibilities: A clear description of your role, responsibilities, and reporting structure.
  • Compensation and Benefits: Details about your salary, bonus potential (including how it’s calculated and when it’s paid), stock options or equity, health insurance, retirement plans, vacation time, and other benefits. 
  • Term (Duration) of Employment: Specifies if the employment is for a fixed period (e.g., one year, three years) or if it is “at-will.”
  • Grounds for Termination: Outlines the conditions under which either you or your employer can end the employment relationship. This may include “for cause” definitions (e.g., misconduct, failure to perform) or provisions for termination “without cause” (often with notice or severance).
  • Severance Provisions: Details any severance pay, continuation of benefits, or other compensation you may be entitled to if your employment is terminated under certain circumstances (e.g., termination without cause, change of control).
  • Confidentiality and Non-Disclosure Agreements (NDAs): Clauses designed to protect the employer’s trade secrets, proprietary information, and other confidential business data including the employer’s clients.
  • Non-Compete Clauses: Important Note: In California, non-compete agreements (clauses that restrict an employee from working for a competitor after employment ends) are generally void and unenforceable, with very limited exceptions.
  • Intellectual Property (IP) Rights: Defines who owns inventions, creations, or other intellectual property developed during your employment.
  • Dispute Resolution: May specify how disputes will be resolved (e.g., mandatory arbitration instead of court litigation) and which state’s law will govern the contract (choice of law).

When Does a Breach of Employment Contract Occur?

A breach of an employment contract occurs when either the employer or the employee fails to fulfill a material term of the agreement.

  • Employer Breach: Examples include terminating an employee before the end of a fixed term without good cause as defined in the contract, failing to pay agreed-upon compensation or bonuses, or significantly changing job duties in a way that violates the contract.
  • Employee Breach: Examples include quitting before the end of a fixed term without justification as allowed by the contract, or violating a material term like a valid confidentiality provision.


If a breach occurs, the non-breaching party may be entitled to legal remedies, typically monetary damages to compensate for the losses suffered due to the breach.

I Have Been Given an Employment Contract, Now What?

  • Review Carefully Before Signing: Never sign an employment contract without thoroughly reading and understanding all of its terms. Pay attention to what your obligations are and what rights you are potentially waiving. This especially applies if the employment contract requires you to sign an arbitration agreement. Arbitration agreements are generally unfavorable to employees and do not allow for your case to be decided by a jury. 
  • Negotiate Terms: Especially for executive or professional roles, many terms of an employment contract may be negotiable. Don’t hesitate to seek clarification or propose changes. If you need help negotiating terms, compensation, restricted stock unit, and more, contact us for a free consultation to determine if we are able to help. 
  • The “At-Will” Presumption: Remember that in California, employment is presumed to be “at-will” unless a contract (express or implied) clearly states otherwise and limits the employer’s ability to terminate.
  • Unenforceable Clauses: Be aware that certain contract provisions, most notably non-compete clauses, are generally void and unenforceable in California. If you believe you have been presented with a contract that had unenforceable provisions, contact us for a free consultation to determine if we are able to help.
  • Don’t Be Afraid Seek Legal Advice: It is highly recommended to consult with an experienced California employment attorney, like Brightwood Law Group, to review, draft, or negotiate an employment contract. 

How Can Brightwood Law Group, PC Assist with Employment Contracts?

Brightwood Law Group, PC provides skilled legal counsel to employees on all matters related to employment contracts. We can help you by:

  • Drafting and Reviewing Employment Agreements: We carefully review proposed contracts to ensure your rights are protected and the terms are clear, fair, and legally compliant. We can also assist in drafting agreements.
  • Negotiating Contract Terms: We advocate on your behalf to negotiate favorable terms regarding compensation, benefits, job security, severance, and other key provisions.
  • Advising on Your Rights and Obligations: We help you understand your rights and responsibilities under an existing employment contract.
  • Representing You in Breach of Contract Disputes: If your employer has breached your employment agreement, we will assess your claim, explain your options, and provide strong representation in negotiations, mediation, arbitration, or litigation to recover the damages you are owed.
  • Assisting with Severance Agreement Review and Negotiation: We help ensure any severance package offered is fair and that you understand the terms of any release of claims. (See our page on Severance Review and Severance Negotiation).


Whether you are starting a new job, negotiating terms, or facing a potential breach of your existing employment contract, knowledgeable legal guidance is essential. Contact Brightwood Law Group, today for a free consultation to determine if we are able to represent you and pursue legal action.

For specific issues related to leaving your job, see our pages on Severance Review and Severance Negotiation.

Understanding your overall pay rights is crucial. Visit our California Wage and Hour Laws Overview.

Paid Family Leave
Severance Review and Severance Negotiation