Federal & State Regulations | Employment contracts - California

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Summary of differences between federal and state regulations

Federal law generally does not regulate employment contracts between employers and employees with one exception: contracts that require the joining or refraining from joining of a labor union as a condition of employment. On the federal level, these contracts are governed by the National Labor Relations Act. States may have a corresponding provision and may also have additional provisions regarding employment contracts.

California law has a similar provision to the federal law relating to union membership and also additional provisions.

Union membership

An employer may not enter into any contract, either oral or written, with any employee regarding joining or not joining a labor union or employer organization. Cal. Labor Code §§ 921 - 922

Copy of document

An employee or applicant who signs any document related to obtaining or holding employment shall receive a copy of that document upon request. Cal. Labor Code §432

Illegal conditions

No employer may require an applicant or employee to agree in writing to any illegal term or condition of employment. Cal. Labor Code §432

Wage disclosure

No employer may require an employee to sign a document denying the employee’s right to disclose the amount of wages he or she receives. Cal. Labor Code §232

Contracts for commissions

An employer that has no permanent place of business in the state of California must have a contract in writing for all employees who work within the state if payment of wages involves commissions. The contract must detail the method for computation and payment of the commissions. Temporary, variable incentive payments that increase, but do not increase, however, are exempt from this requirement. Each employee must receive a signed copy. Cal. Labor Code §2751

Breach of duty

An employer can terminate an employment which is for a specified term in case of a “willful breach of duty” of the employee or if the employee demonstrates an ongoing neglect toward, or inability to perform, his or her job. Cal. Labor Code §2924

An employee who is contracted for a specified term of employment may terminate it at any time in case of any “willful or permanent breach” of the employer’s obligations to the employee. Cal. Labor Code §2925