In Guam, the employment relationships are primarily governed by two types of agreements: Employment Contracts and Implied Contracts.

Employment Contracts

Employment contracts are formal written agreements between an employer and an employee that outline the terms and conditions of employment. There are two main types of employment contracts:

• Fixed-term contracts: These are contracts that specify a definite period of employment, such as a one-year project.
• Contracts for foreign workers: These contracts often include details regarding visa sponsorship and repatriation upon contract completion.

Guam law adheres to an "at-will" employment doctrine for most positions. This means that in the absence of a written contract, either the employer or the employee can terminate the employment relationship at any time, for any reason, with or without notice.

Implied Contracts

Implied contracts are unwritten agreements that are formed by the employer's actions and the employee's expectations. These can be established through company policies, employee handbooks, or even verbal agreements. An implied contract can be used to enforce expectations about standard workweek and overtime pay, minimum wage, safe working conditions, and non-discrimination policies.

An employment agreement in Guam should clearly establish the rights and obligations between an employer and employee. Here are some essential clauses to consider:

Basic Employment Information

• Parties: The agreement should identify the employer and employee by name and title.
• Job Title and Description: The employee's job title, duties, and responsibilities should be clearly outlined.
• Start Date and Work Location: The commencement date of employment and the primary work location should be specified.

Compensation and Benefits

• Salary and Payment Schedule: The employee's base salary, overtime pay (if applicable), and frequency of payment should be defined.
• Benefits: Any benefits offered, such as health insurance, paid time off (including vacation, sick leave, and holidays), and any retirement plans should be outlined.

Term and Termination

• Type of Employment: The agreement should indicate whether the employment is for a definite term (fixed duration) or indefinite (at-will).
• Termination Clause: The grounds for termination by either party, following Guam's right-to-work laws, should be outlined. Notice periods required for resignation or termination should be specified.

Confidentiality and Intellectual Property

• Confidentiality: The agreement should protect the employer's confidential information and trade secrets.
• Intellectual Property: The agreement should address ownership of intellectual property created by the employee during their employment.

Additional Considerations

• Dispute Resolution: The agreement should establish a process for resolving workplace disputes, such as mediation or arbitration.
• Choice of Law: The governing law applicable to the interpretation of the agreement should be specified.

Probationary periods are a standard feature in employment agreements in Guam, acting as a trial period for both the employer and the employee. This period allows the employer to evaluate the employee's suitability for the role and the company culture, while the employee can assess if the job meets their expectations.

Duration of Probationary Periods

The typical probationary period in Guam is 90 days. This duration provides ample time for both parties to make informed decisions about continuing the employment relationship.

Probationary Period Regulations

While there are no specific Guam laws that mandate probationary periods, government agencies have their own regulations. For instance, the DOA Personnel Rules & Regulations by the Office of the Attorney General of Guam recognizes the use of probationary periods for government employees, with a maximum duration of 12 months, including extensions.

Purpose of Probationary Periods

Probationary periods serve beneficial purposes for both employers and employees:

• Employers: They can evaluate an employee's skills, work ethic, and cultural fit before committing to a long-term employment relationship.
• Employees: They can assess the job duties, company culture, and overall suitability of the position.

Moreover, probationary periods can help:

• Improve Training and Development: Identify areas where the employee may need additional training or support during the initial phase.
• Reduce Turnover: Ensure a good fit between the employee and the company, potentially decreasing turnover rates.

Termination During Probation

During the probationary period, both employers and employees have more flexibility to terminate the employment relationship.

• Employers: Can typically terminate an employee's employment at any time, with or without cause, provided they comply with anti-discrimination laws.
• Employees: Generally have the right to resign at any time without notice.

Employee confidentiality and non-compete clauses are prevalent in Guam employment agreements. They serve to safeguard an employer's legitimate business interests, such as trade secrets and customer lists, while also considering an employee's right to earn a living. This article will explore these clauses and their legal framework in Guam.

Confidentiality Clauses

Confidentiality clauses prohibit employees from revealing an employer's confidential information during and after employment. Guam law acknowledges the enforceability of these clauses to protect legitimate business secrets. However, there are certain limitations:

• Definition of Confidential Information: The agreement must precisely define "confidential information." This definition should be specific and not overly broad to include an employee's general knowledge or skills acquired during employment.
• Reasonable Scope: The scope of confidential information protected should be reasonable and necessary to protect the employer's legitimate interests.

Non-Compete Clauses

Non-compete clauses limit an employee's ability to work for a competitor or start a competing business after leaving the employer. Guam law enforces reasonable non-compete clauses, but with stricter limitations compared to confidentiality clauses. The following factors make a non-compete clause enforceable in Guam:

• Legitimate Business Interest: The employer must have a legitimate business interest to protect, such as trade secrets, customer goodwill, or a specialized workforce.
• Reasonable Geographic Scope: The geographic restriction on competition must be reasonable in scope. This limitation should be tailored to the employer's specific business interests and clientele.
• Reasonable Time Limit: The non-compete period must be reasonable in duration. Guam courts generally consider periods of one to two years to be enforceable.
• Compensation: To be enforceable, Guam law requires that the employee receive some form of compensation for the limitations placed on their ability to work elsewhere. This compensation can be in the form of continued salary during a notice period after termination or a signing bonus.

Important Note: Guam courts will consider the specific facts and circumstances of each case when determining the enforceability of a non-compete clause.