Fixed-Term Employment Agreement — United States

Overview

A fixed-term employment agreement engages an employee for a defined period rather than on an indefinite, at-will basis. This is a meaningfully less common arrangement in the United States than in jurisdictions such as France, whose CDD (contrat à durée déterminée) is a heavily regulated statutory category with mandatory end-of-contract indemnities, permitted-use restrictions, and conversion-to-permanent rules. The United States has no equivalent statutory regime: a fixed-term agreement is simply a contract in which the parties agree to depart from the default at-will rule for the stated term, and its consequences — particularly what happens if either party wants to end the relationship before the term expires — must be spelled out entirely by contract, since there is no statutory fallback. When to use it: for a role with a genuinely defined duration — a specific project, a maternity/medical leave replacement, a grant-funded position, or a fixed engagement tied to a season or event — where both employer and employee want the certainty of a defined start and end date rather than open-ended at-will status. Parties: the employer (company) and the employee (individual). Early termination: because there is no statutory CDD-style regime, the agreement must state explicitly what happens if either party wants to end the relationship early — whether early termination is permitted at all, on what notice, whether it requires "cause," and what compensation (if any) is owed to the employee if the employer ends the term early without cause. Leaving this silent risks a court either treating the fixed term as guaranteeing employment through its end date (exposing the employer to a breach-of-contract claim for the remaining term's wages if it terminates early without a matching contractual right) or, conversely, undermining the fixed-term structure the parties intended if a state's default at-will presumption is found to still apply. Automatic conversion at expiry: unlike a French CDD, a US fixed-term agreement does not automatically confer any right to conversion into permanent employment, nor any statutory end-of-contract indemnity — if the parties want either outcome, it must be negotiated and stated expressly. Classification and compensation: as with any US employment relationship, the position should be classified as exempt or non-exempt under the federal Fair Labor Standards Act and applicable state wage-and-hour law, and benefits eligibility (which may differ for a fixed-term hire under the employer's benefit plans and under the federal Affordable Care Act's measurement rules for large employers) should be addressed. Renewal: if the parties want the option to extend or convert the engagement at the end of the term, that should be an explicit, separately negotiated option rather than assumed. Common pitfalls: failing to state the consequences of early termination, leaving the employer exposed to a breach-of-contract claim for the balance of the term; assuming a statutory indemnity or automatic renewal right exists (it does not, absent express contractual language); and using this document for what is, in substance, an ordinary at-will hire with an aspirational rather than a genuinely fixed end date.

Information to customize

• Employer's name or entity name

• Employer's address

• Employee's full name

• Employee's address

• Job title

• Job duties and reporting line

• Governing state

  Contract interpretation and wage-and-hour rules vary by state; there is no federal fixed-term employment statute.

• Start date of the fixed term

• End date of the fixed term

• Reason for the fixed-term engagement

  E.g. specific project, leave replacement, grant-funded position, seasonal engagement.

• Early-termination terms and consequences

  Whether either party may end the term early, on what notice, and what (if anything) is owed as a result.

• FLSA classification

  Exempt (no overtime) or non-exempt (entitled to overtime).

• Base salary or wage rate

• Pay frequency

• Renewal or conversion option at expiry (if any)

• Date of signature

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Frequently asked questions

Is a fixed-term employment agreement common in the US?

It is far less common than at-will employment, and there is no statutory fixed-term category like France's CDD. A fixed-term agreement is simply a contract that departs from the at-will default for a stated period, with all consequences governed by the contract itself.

What happens if the employer wants to end the agreement before the term ends?

It depends entirely on what the agreement says. Without an express early-termination clause, ending employment before the stated end date can expose the employer to a breach-of-contract claim for wages through the remainder of the term — this template requires the early-termination terms to be spelled out explicitly.

Does the employee get any payment when the fixed term simply expires on schedule?

No, unless the agreement expressly provides for it. Unlike some statutory fixed-term regimes elsewhere, US law does not impose an automatic end-of-contract indemnity.

Does the employee automatically become a permanent employee at the end of the term?

No. There is no automatic conversion right under US law. If the parties want the option to convert to indefinite employment, it must be negotiated and stated expressly in the agreement.

Can a fixed-term employee still be an at-will employee?

Not in the way the term is typically used — the point of a fixed-term agreement is to depart from at-will status for the stated period. If the agreement doesn't clearly state that fixed-term status modifies at-will status, the intended protection may not hold up.

Does this agreement need to be reviewed by an attorney?

Yes, particularly the early-termination clause, since that is where fixed-term agreements create the most legal exposure in the absence of any statutory fallback.

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