Currently the unemployment rate is hovering around 5%, there are approximately 2.9 million individuals working in Arizona. With almost 3 million people actively working, it is safe to assume that millions of Arizonan workers have all had to go through a hiring process when obtaining their job.

For most Arizonans the job search was not quick and easy, as it is often a mentally intense process that is filled with uncertainty, doubt and fear up until they delightfully receive a job offer and eagerly accept it. For some individuals the acceptance of a job offer involved a written contract that laid out their pay and business specific stipulations, but for many others their job offer and acceptance were verbal and included nothing in writing which may affect their job security.

Employees need to protect themselves and their jobs by knowing the following:

  • Whether or not they entered into a verbal or written contract when they began to work
  • Arizona’s at will stance towards employment
  • How their verbal or written contracts can protect them

Verbal Contracts vs Written Contracts

A verbal contract is exactly what it sounds like, it is a verbal agreement for an exchange of goods or services between the two parties. The agreement for the exchange of goods or services between parties is legally referred to by the latin phrase quid pro quo which translates to “something for something” and is the defining characteristic of a contract.

In employment law, a contract consists of an offer from an employer which can either be written or verbal, and then the written or verbal acceptance of the offer by the future employee. Once this offer and acceptance of a job has occurred, the employer and employee have entered into either a verbal or written contract, and this contract can affect the logistics and duration of time for which an employee can work for the employer.

Arizona is an at will state, and follows the guidance of A.R.S. 23-1501 which states that “employment relationship is severable at the pleasure of either the employee or the employer unless both the employee and the employer have signed a written contract to the contrary setting forth that the employment relationship shall remain in effect for a specified duration of time or otherwise expressly restricting the right of either party to terminate the employment relationship.”

A.R.S. 23-1501 expressly states that a written contract can prevent an early termination or the ability of an employee to quit, but it does not mention whether or not a verbal contract can prevent these things. For a verbal contract to prevent an early termination or an employee from quitting, a verbal contract needs to be considered legally binding.

Whether or Not Verbal Contracts are Binding

Most Arizonans employment originates from a verbal offer where the person interviewing them offers them a job which was followed by their verbal acceptance. This verbal offer from an employer and the subsequent acceptance of the job by the employee is considered to be a legal verbal contract that allows for an employee and employer to work together.

Even though a verbal contract can be considered to be a valid contract if the right criteria are met, Arizona’s at will statute for employment requires a written contract to prevent an “at will” firing or resignation. This means that even though a verbal contract can be considered contract, it is not considered to be legally binding and it isn’t sufficient enough to prevent an employee from being fired or quitting.

Criteria For a Binding Written Contract

For a written contract to be considered “legally binding” in the state of Arizona, the contract must fall into one of the following categories:

  • A written agreement signed by both the employer and the employee.
  • A written agreement found in an employee handbook or manual that clearly states that it is intended to be an employment contract.
  •  A written document that the employer signs indicating that you will be employed for a specified certain period of time.

If the written contract does not have any of the above criteria, it is not a binding contract in Arizona.

Criteria For a Legally Binding Contract in Arizona

For a contract to be legally binding in Arizona, the contract must involve the following criteria: an offer, acceptance and consideration. Even though the word “consideration” which means value was not mentioned earlier when describing quid pro quo, these three criteria are the defining characteristics of quid pro quo.

An example of a legally binding employment contract would include the following: an offer for a job with the determined salary by the employer, and the acceptance of the job by the employee. With the offer, consideration in the form of the job and salary and then the acceptance of the offer, this and all agreements with the same criteria are legally binding.

FAQ about Verbal Contracts in Arizona:

Q: Is a verbal contract binding in Arizona?

A verbal contract is not binding in Arizona when it involves employment

Q: Do verbal agreements stand up in court?

Verbal agreements can be considered legal contracts and will stand up in court so long as they do not fall under the statute of frauds A.R.S. Section 44-101 

Q:Is a verbal employment contract legally binding?

A verbal contract is not legally binding.

Q: What is needed for a verbal contract?

A verbal contract consists of an offer and acceptance of goods or services by at least two individuals or parties.

Q:  What makes a contract legally binding?

A contract is legally binding in Arizona if it involves and offer, acceptance of the offer and “consideration” which means value, and this can be money or labor.

What to Do If You Need Help With Contracts in Arizona

If you believe you have been wrongly terminated and that your employer is in breach of contract, an experienced employment law attorney can assist you in ensuring that your employer acts in accordance with the law.

 

Call our Employment Law team at (480) 464-1111 to discuss your case today.

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