Employment Agreements Explained

Employment Agreements Explained

Confusion tends to exist among people about what constitutes an agreement. An agreement does not necessarily have to be in writing. It can also be oral. However, in the employment context, most employment relationships are not based on a written contract. An employee can be hired and fired at-will for any reason in this state that does not violate discrimination, retaliation or other similar statutes. “Under the American common-law rule, when the length of the master/servant relationship is unspecified by contract, either the employer or employee can terminate the employment without liability.” Without a written agreement specifying otherwise, employment can be terminated by either party at any time.

In some states, this doctrine has been modified by exceptions that restrict the grounds for termination. The exceptions generally rest on three distinct theories: (a) Public policy tort, (b) Tortious breach of an implied covenant of good faith and fair dealing and (c) Implied contract that restricts the employer’s power to discharge. Also, there may be a written employment contract restricting the right to terminate instead of an at-will employment arrangement by operation of law.

The Oklahoma Supreme Court has stated that the parties to an employment contract may restrict the employer’s power to discharge an employee at-will. See generally Hinson v. Cameron, 1987 OK 49, ¶10, ¶12, ¶14 (Ok.Sup.Ct. 1987). The Oklahoma Supreme Court stated in Hinson that various factors, including statements in employer handbooks and an employee’s detrimental reliance on the employer’s past practices, may be considered to determine whether an implied contract right to job security exists. Id. at ¶14. It has also held, though, that an implied obligation of good faith and fair dealing typical in most contracts is not applicable in light of the “managerial discretion of companies.” Therefore, implied agreements may be allowed as a matter of law based on the particular facts in any situation to modify an employer’s ability to terminate at will.

Express employment agreements may govern an employment relationship when the agreement is specifically in writing, however at times an implied contract can be inferred from other written materials provided by the employer. Though the Courts do not typically favor implying a contract in derivation of the employment-at-will doctrine, it is possible for an attorney’s careful consideration.

If you wish to read more on the topic please take a look at Ms. Cinocca’s full paper on Employee Discharge Documentation in Oklahoma: FMLA Overview Litigation. For more information on Employment Law check out our website and helpful video on employment law cases!

UPDATE: Significant changes to employment law have occurred since this was written. As such, you should take this as general guidelines, referring any specific questions to us so we may advise you as to your particular facts and updates or changes in the law.