There are occasions when an employer desires to contractually tie an employee to it for an extended period of time. These situations typically involve unique individuals who have special talents that cannot be easily replaced, such as with professional athletes or certain persons in the entertainment business. In those situations, a term employment contract is often used. But there are limits to how long such a contract can remain in place and still be enforceable.
To be clear, we are not talking about a brief employment contract or an employment relationship that is at-will and is ongoing in nature; generally speaking, nothing prevents an employee from working with an employer for years and years as long as the relationship is desired by both parties. The problem arises when an employer attempts to enforce a contract for personal service beyond seven years in length.
Pursuant to California Labor Code section 2855, and except for certain contracts pertaining to the production of “phonorecords”, seven years is the maximum length for a contract to render personal service. An employee may voluntarily elect to continue to work under a contract requiring personal service beyond seven years, but an employer cannot enforce a contract against an employee beyond seven years from the date of commencement. Similarly, a contract cannot be enforced against an employer beyond seven years from the date of commencement. Neither options to renew the contract nor gaps in service due to lack of work will allow the contract to extend beyond this limit; courts have held that the seven-year bar is absolute and cannot be waived as it is a matter of public policy.
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