3 ways employment contracts become invalid

Validity of employment contractsAn employment contract is generally the exception, and not the rule, for employers and employees. However, when a company does ask you to sign an employment contract you should make sure you understand exactly what the terms and conditions are. Many times, courts will find a contract to be invalid. Read on to learn 3 ways a contract can become invalid.

Employment contracts usually outline:

  • information about the employee's responsibilities,
  • employee benefits (health insurance, vacation policies, etc.),
  • grounds for termination,
  • non-compete agreements once the employee leaves.

Has your employer asked you to sign an independent contractor agreement?
Our firm has seen many cases where employers had employees sign independent contractor agreements. State laws vary when it comes to contract statutes, but the federal Fair Labor Standards Act usually makes these types of contracts unenforceable, especially if you are found to be an employee, not an independent contractor.
Has your employer misclassified you as an Independent Contractor?

3 ways employment contracts become invalid

1. Signing under Duress
If someone pressures you into signing a contract against your will this is considered signing under duress. Duress is using force or pressure, whether it is physical or mental, to make someone sign a contract. Forcing a person to sign a contract under duress automatically invalidates the contract.

Forms of duress can include:

  • Threatening to fire an employee if they do not sign the contract,
  • Physically threatening a person to sign a contract,
  • Threatening to cut pay if person does not sign, 
  • Threatening to file criminal actions unless the employee signs.

2. Capacity of the Parties
A legal agreement requires both parties to be mentally competent upon signing. Minors (under 18 years) cannot enter into legal contracts, but some states have different ages (Mississippi = 21, Alabama = 19). Mentally-ill persons and intoxicated persons are also usually not held accountable to contracts they have signed. If either party was impaired by drugs or alcohol and unable to understand what they were signing the contract can be invalid.

Our firm recently filed an injunction in a wage and hour case against an employer who allegedly forced workers to sign a contract under hostile and deceptive circumstances. The employer’s alleged actions resulted after workers filed a lawsuit against the company for misclassifying employees as independent contractors. When the employer learned of the suit, he allegedly tried to have workers sign a contract to waive their rights to join the suit when the workers were intoxicated. Workers claimed they were terminated or threatened with termination for not signing the document. The employer’s actions are considered employer retaliation.

3. Fraud
When one party intentionally misrepresents important facts in a contract it can be considered invalid.

In employment contracts, fraud can consist of an employer failing to meet contractual agreements, or misrepresenting employment terms or conditions. For example, if you signed a contract for a 2-year employment term, an employer could be found in breach of contract if they terminate you before that term has ended.

Do you have employment questions?
If you have questions about employment law or independent contractor agreements send us a contact form with your question. Our employment lawyers are familiar with all aspects of the Fair Labor Standards Act and we represent workers nationwide in wage and hour cases. You can call our office at 888-449-2068 for a free case review. We work on a contingency fee basis, which means if we don’t make a recovery in your case, you don’t owe us anything.