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.