An extract from The Employment Law Review, 11th Edition

Basics of entering into an employment relationship

i Employment relationship

As discussed in Section I, absent an enforceable contract, most US employment relationships are governed by the at-will doctrine, meaning that, absent an employment contract providing otherwise, an employment agreement may be terminated for any lawful reason without cause or notice. In fact, owing to the nature of at-will employment, generally, employers may unilaterally change terms and conditions of employment.

Employment may be established via oral agreements, which typically are deemed subject to the at-will employment doctrine, although an employer's unwritten practice of providing certain privileges or benefits, such as paid vacation, may create a legal obligation in some jurisdictions.

Employers and employees also are free to enter into written contracts governing various aspects of the employment relationship, including the term of employment, compensation, location of employment, services to be provided, restrictive covenants and benefits. A written employment contract may be amended by mutual agreement.

Employers may also establish various terms and conditions of employment through policies set forth in an employee handbook or manual. Generally, handbook provisions are not considered an implied contract of employment for any specific duration, especially where there is a disclaimer that the employment relationship is 'at-will'.

ii Probationary periods

US employers are not mandated by either federal or state law to establish probationary periods for new hires, although many employers find them useful, as they provide both the employer and new employee an opportunity to assess whether the arrangement is a good fit for both parties. Often, employees do not receive certain benefits during their probationary period, such as health insurance. Employment during a probationary period typically remains 'at-will' and that status does not change once the probationary period is successfully completed, unless a written contract between the parties specifies otherwise.

iii Establishing a presence

Generally, corporations and even unincorporated companies doing business in the United States must register with federal and state (and sometimes local) authorities, obtain a tax identification number, and pay various business and payroll taxes, such as Social Security and Medicare (at the federal level), and, depending on the state, contributions into unemployment insurance funds, government-mandated disability or family leave insurance programmes, and workers' compensation reserves. Some taxes, such as Social Security and Medicare, also require employers to withhold the employees' share of those taxes from their salary and submit those withholdings to the appropriate government agency. Such taxes and withholdings typically do not need to be paid for bona fide independent contractors.

Depending on the state (and sometimes the county or city) where operations are located, as well as the nature of the business, a company may need to obtain certain licences, pass health and safety inspections, and fulfil other government-imposed obligations to establish a legal enterprise.