Managing US Staff Contracts Using the Assistance of Open HRMS

Employment Contract plays a crucial role in establishing rules, regulations, rights, and responsibilities between an employee and employer. We can simply define an employment contract as a signed contract or agreement between an employer and an employee. An employment contract usually covers all necessary information related to the duty of the employee within the company. It precisely puts forward the terms and conditions that the employee should follow while being in contract with the company. A regular contract specifies the salary or wage of the employee, their working schedule, commission allocated for extra hours, duration of the contract, duties and responsibilities of the employee, and additional benefits like health insurance, paid leave, and vacation.

If you are planning to start a business or looking to invest in a US-based company, it is necessary to have some basic knowledge about how they manage employee contracts in this country. The nature and pattern of the employment contract may differ depending on the role of the employees for which they are being hired. A proper employee contract will help to clarify job duties, spell out the responsibilities and rights of both parties, and offer job security for the specified time period.

Here, we will detail the elements included in an employment contract in the US and how we can use Open HRMS to manage this.

Working without any contract

Before entering into the elements of a US contract, you must know that not all occupations in the USA demand an employment contract. In the laws of the United States, there are no minimum requirements specified for an employment contract. Whenever a company hires an employee or establishes an employee-employer relationship, the law of the US doesn't demand to have a written contract between two parties. Then, you must wonder how the employees work in a company without any contracts. Well, in many companies, the employees work as “at-will employees,” which indicates that they are not under any work contracts or agreements of the company. It is the most ordinary type of employment contract in US companies.

In the case of the “at-will employees”, the employer and employee possess the right to terminate their employment at any time of their employment. Just like in many other countries, the offer letter can’t be considered the same thing as an employment contract in the US. The employee can be quit or fired during any time of employment without any notice or warning.

This is the case for regular employees in US companies. But, professionals and highly qualified and skilled employees will definitely have an employment contract in the US to maintain a healthy relationship with the company and secure their future.

Common Sections in Employment Contract

Commencement Date: Indicates the date on which the employee commenced work with the respective employer or company.

Job Title and Description: Gives details related to the role or duty of the employee in the company and a brief description of work.

Salary or Wage: Specify the salary or wage offered by the employer for the job for which the employee is being hired. Sometimes, it also specifies commission. 

Work Schedule: Mentions the days and hours that the employee is expected to work

Duration of Employment: Refers to the period of time that the employee agreed to work under this contract.

Employee’s Responsibilities and Other Policies: Covers information regarding the rules and regulations of the company that the employee must be followed during the contract period. It also details the responsibilities and duties of the employee in the company.

Benefits & Compensation: Includes additional benefits offered by the company such as health insurance, paid leaves, vacation, compensation, hike in salary, and many more. 

Confidentiality Agreement: Contains the statements regarding confidentiality. In some cases, you are requested to sign a separate non-disclosure agreement. It will outline the things that should be kept confidential to protect the trade secrets and crucial business information of the company.

Termination of Employment: Defines the reasons for termination of the employee from the company.

No matter whether the employment contract is “at-will” or the employee is under a written employment contract, both the employee and employer have the right to negotiate the terms and request modification in the contract since there is no particular federal, state, or local law exists to demand minimum requirements in employment contracts.

Types of US Employment Contracts

You can find significant variations in the employment contracts in the US and some of them are discussed below.

Fixed Term and Open Ended contracts

In the US, there is no particular employment law that argues for fixed or flexible contracts. You can find that some contacts come under fixed terms while others are open-ended contracts. The duration of the contract period is not governed by any legal provisions. The employment relationship falls under the “at-will” category in the lack of a fixed-term contract.

Trial Period

Some companies set a trial period for new employees to monitor their efficiency and performance. This period is also known as a probationary period of employment. At the end of the probationary period, the employer will review the employee's performance. If the employee shows excellent performance during this specific period of time, the chances are high of getting promoted to a regular employee. Note that no employment laws in the US demand a trial period for employees. But, companies prefer to set an introductory period or trial period for employees to evaluate their excellence in assigned duties.

Notice Period

The notice period defined in the employment contract will clarify the amount of time provided by the employer before terminating the employee. According to the employment law of the US, it doesn’t force any formal notice period to close an employment relationship between two parties. As we mentioned earlier, most of the employees are under the “at-will’ contract, where both parties can terminate their terms at any point of time without any cause.

If you are confused about managing employee contracts after knowing about the features of the US employment contract, here comes Open HRMS to help you. This human resource management software will assist you to create contracts for the employees by clearly defining the contract period, notice period, salary structure, working schedule, job position, overtime pay, and other allowances. Have a look at the following blog to explore more about Open HRMS Software. How to Select HR software for a US Company.