How to Read an Employment Contract

Posted on May 26, 2010 by Tom Crane

My colleague in California, Gene Lee, has written a couple of nice entries about how to read an employment contract.  See this post for part 1 of his series on reading contracts.  Note the information regarding which state law governs the contract.  In today's business world, employment contracts frequently involve two, three states or more.  It can make a huge difference regarding which state law governs.  Just because you are hired in Texas for a Texas employer does not mean Texas will law will govern.  

See Gene's second post for Part 2 of how to read an employment contract.  Note his final advice: a contract helps, but a contract is no substitute for having a lawyer in your corner.  I know many employees essentially draft their own contract.  A self-written or borrowed contract is better than no contract.  But, the best plan is to consult with a trained employment lawyer whenever you sign or draft a contract.  

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An Employer's Promise can Become a Contract

Posted on December 31, 2009 by Tom Crane

 Well, it must be getting ready to snow in July, because the Texas Supreme Court issued a pro employee decision.  See Mike Maslanka's post.    In a 9-0 vote no less, they found in favor of a group of employees who stuck around when an employer was being sold.  Management had told the employees that if they stayed until the comnpany was sold, they would receive 5% of the sales price.  They stayed.  But, the company reneged and refused to pay them the 5%.  The employees sued on basic contract principle: if you take action based on a promise, then that promise becomes a contract.  The company defended on the basis that the employees could have terminated the employees at any time.  Thus, the promise was illusory.  

The Texas Supremes disagreed, finding that if the employer's argument was accurate, then any wage, salary or pension would be illusory.  So, yes, if an employer promises a percentage of the sales price, and the employees rely on that promise, then that promise becomes an enforceable contract.  Venegas v. American Energy Services (Tex. 12/18/09).  

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