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Basic Training: Unwritten Agreements--Are They Valid?

Posted by Nina Kaufman | April 29, 2010
URL: http://www.entrepreneur.com/blog/218708
verbal-agreement.jpgAre verbal agreements valid?  Does it make a difference if they come up in an employment situation?

Q: What are the laws regarding verbal agreements concerning workers' compensation cases?

A: Generally, most states provide that verbal agreements are enforceable, just like written agreements (except for certain defined exceptions in the law, such as real estate brokerage contracts). The problem with verbal agreements is that, to quote Louis B. Mayer, "They are not worth the paper they're printed on." Any number of issues can arise in the course of an employment agreement--such as expectations concerning working hours, duties, pay structure, entitlement to bonuses, availability of benefits, opportunities for promotion or profit-sharing, etc. With only a verbal agreement, you are reduced to a "he said/she said" situation that can often be difficult to prove.

That said, by law, employers need to have workers' compensation insurance to cover any injuries to their employees. This is usually a state-mandated requirement, so any verbal agreement that your employer gave that there would (or would not) be workers' compensation benefits available to you has no bearing. In fact, in many states, there can be serious penalties levied against an employer for failing to have workers' compensation insurance for covered employees. If you are injured on the job in the proper performance of your duties, you should have a right to avail yourself of workers' compensation benefits. As your next step, I'd recommend that you speak to an employee-side employment attorney who has some familiarity with the workers' compensation laws of your state. This should enable you to get more clarity on your situation and your options.