I recently had a client ask me to write contracts for all of their employees. Curious, I asked why they wanted contracts in place. Their answer was simple: “We’re giving everyone raises, and we want to document it properly.”
The Problem with Calling It a Contract
While the intent was good, labeling these documents as “contracts” could have created unintended legal risks. In states like ours, most employment is “at-will”, meaning either the employer or employee can end the relationship at any time (as long as it’s legal). Calling something a “contract” can accidentally imply guaranteed employment, which can open the door to disputes or even lawsuits later on.
The Safer Solution
I explained the difference and recommended using compensation agreements instead. These documents clearly outline the raise or pay structure without jeopardizing the at-will status. The client immediately understood the benefit — and was relieved to know they could still accomplish their goal without taking on extra risk.
A Grateful Client
The best part? They were even more appreciative when I offered to draft the compensation agreements for them, ensuring the wording was clear, compliant, and protective for both them and their employees.
Sometimes, the smallest change in terminology can make all the difference — and save a business from major headaches down the road.
