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Employment relationship

State-specific laws What state-specific laws govern the employment relationship? Title 34 of the Labor Code contains the majority of the laws governing employer-employee relationships, including payment of wages. Title 34A of the Labor Code contains laws governing anti-discrimination, workers’ compensation, occupational safety and health, genetic testing and other employment-related laws. Title 35A of the Workforce Service Code includes Utah’s employment security (unemployment) law, new hire registry law and other workforce services laws.

Utah’s Administrative Code includes the administrative rules governing employment issues which can primarily be found in Titles R600-R616 Labor Commission, and Titles R982-R994 Workforce Services.

Who do these cover, including categories of workers? Depending on the specific provision, these laws generally cover employees. Some provisions, including anti-discrimination laws, apply to applicants for employment.

Misclassification Are there state-specific rules regarding employee/contractor misclassification? Utah has no specific independent contractor misclassification law, but defers to the Internal Revenue Service criteria for worker classification purposes.

For workers’ compensation purposes, an ‘independent contractor’ is defined as any person engaged in the performance of any work for another party who, while so engaged, is:

  • independent of the employer in all that pertains to the execution of the work;
  • not subject to the routine rule or control of the employer;
  • engaged only in the performance of a definite job or piece of work; and
  • subordinate to the employer only in effecting a result in accordance with the employer’s design (Utah Code §34A-2-103).

For unemployment insurance, the Utah Code §35A-4-204(3) and corresponding administrative rules also list factors considered to determine independent contractor status (see R994-204 -301 to 401). 

Contracts Must an employment contract be in writing? No, an employment agreement need not be in writing unless, according to its terms, the contract is not to be performed within one year of the agreement being made (Utah Code §25-5-4(1)).

Employee handbooks or personnel policies may constitute an implied employment contract, absent a clear and conspicuous disclaimer stating that the handbook and policies do not establish and are not to be implied to create a contract (Johnson v. Morton Thiokol, Inc., 818 P.2d 997 (Utah 1991)).

Are any terms implied into employment contracts? Every contract contains an implied covenant of good faith and fair dealing which applies to both employer and employee (Brehany v. Nordstrom, Inc., 812 P.2d 49 (Utah 1991)).

Are mandatory arbitration agreements enforceable? Under the Utah Arbitration Act, a written agreement to arbitrate an existing or future controversy arising between the parties to an agreement is “valid, enforceable, and irrevocable except upon a ground that exists at law or in equity for the revocation of a contract” (Utah Code Ann. § 78B–11–107(1)). The policy of the law is to “interpret contracts in favor of arbitration, in keeping with our policy of encouraging extrajudicial resolution of disputes when the parties have not agreed to litigate” (Reed v. Davis County Sch. Dist., 892 P.2d 1063, 1064 (Utah App.1995)). Mandatory arbitration agreements have been ruled enforceable (see Zions Mgmt. Servs. v. Record, 305 P.3d 1062 (Utah 2013)).

How can employers make changes to existing employment agreements? Oral modifications of an existing contractual agreement are permissible (e.g., Kraatz v. Heritage Imports, 71 P.3d 188 (Utah Ct. App. 2003)), but best practice would be to make contractual changes in writing.