An employment agreement is an arrangement or understanding between an employer and employee. This agreement describes the terms and conditions of the employment relationship, and is different from an employment contract. An employment contract is an agreement that, if breached, can be enforced in court by a judge. What this means is that the contract is a legally binding document.
An employment agreement contains essential employment elements, such as rate and frequency of pay. An agreement may also:
- Specify the number of hours to be worked;
- Address benefits of employment;
- Explain medical insurance coverage; and
- Explain life insurance, sick leave, and paid time off.
Many employment agreements contain additional clauses:
- Termination Clause: This addresses what constitutes grounds for termination, and whether an employee can re-apply for their current position or another one;
- Non-Disclosure Clause: This requires an employee to refrain from disclosing the employer’s trade secrets, intellectual property, and/or customer lists to anyone who is not authorized to receive that information;
- Non-Compete Clause: This clause restricts an employee’s right, upon termination, to accept employment with a competing business; and/or
- Dispute Resolution Clause: This states how disputes involving employment will be resolved, and can require involved parties to attend mediation or arbitration in lieu of litigation.
Employment agreements can be entered into before or once the employee starts working. The terms of the employment agreement may be re-negotiated at any point as needed. Additionally, an employment agreement can be either verbal or written; however, the advantage of a written agreement is that there is a reference source in the event of a dispute.
What Is A Breach Of Employment Agreement?
Breach of an employment agreement occurs when either party involved fails to perform their duties, as determined by the contract terms. An example of this would be an employer failing to pay wages as stated in the contract, or denying an employee benefits that they are entitled to. Either the employer and the employee may be held liable for a breach of the employment agreement. Another common breach of employment agreement occurs when the employer terminates the employee in such a way that violates the terms of their agreement.
A common breach for employees occurs when seeking employment elsewhere, before their contract term is up. Additionally, employees may be liable for a breach of contract if they disclose information that is meant to be held privately by the company. Because each contract is different, a breach of contract may occur for several different reasons. This is why having the agreement in writing is beneficial, so there is written evidence of what exactly each party has agreed to.
Once an employee and employer have entered into an employment agreement, they may not end their contractual relationship outside of the methods that are discussed in the agreement. If either party breaks the contract, the nonbreaching party could be entitled to damages and may enforce the agreement in court.
In the event of a breach, there are certain precautionary measures you should take before pursuing legal action. First, you should check your original agreement in order to determine whether any terms were actually breached. You should also ensure that you both signed and agreed to those terms.
Next, approach your employer and discuss the issue with them. The breach may have been unintentional, or you may be able to resolve the issue on your own. Otherwise, you should consult with a professional specialist or an attorney in order to determine whether the contract has actually been breached, and which terms have been violated if so.
Alternatively, you may try a form of mediation or arbitration in order to resolve the issue. However, it is important to note that these types of alternative conflict resolution may not be available to you in your employment agreement, and it is important that you follow any procedures in the employment agreement.
You may need to take legal action against your employer in order to be compensated for any losses resulting from the breach. Most agreements detail what should happen if a breach occurs; and, some agreements could be considered illegal, and would be struck down in court. An example of this would be a non-compete clause. While some states completely prohibit any type of non-compete clause, others place very strict limits on them.
Are There Any Legal Remedies For Breach Of Employment Agreement?
Available remedies largely depend on the type of agreement that was breached, as well as the central focus of the breach. An example of this would be how if a breach involves failure to pay wages, remedies may include a monetary damages award paid by the employer to the employee. This would be in order to reimburse them for the missing wages.
Generally speaking, most contract damages are limited to expectation damages, which are the terms of compensation addressed in the employment agreement. An example of this would be if an employer agreed to pay an employee a specific salary for a specific amount of time, but then attempts to terminate the employee before that time. The employee could sue the employer in order to recover the loss of salary for the remainder of the specified time.
However, in cases such as this example, the employee does have the duty to mitigate; meaning, an employee should immediately seek comparable employment elsewhere. If they are able to secure employment but for less than what they were paid according to their previous contract, they could still seek damages in order to make up the difference. Another potential remedy would be for the employer to reinstate the employee to their former position.
Other common remedies include:
- Re-writing the contract to reflect changes in circumstances;
- The employer being required to change workplace policies;
- Payment for any holiday and/or sick pay that was offered or negotiated, but was not granted by the employer; and/or
- Payment for any travel expenses and/or work related expenses that were owed but not paid.
What Prevents A Breach Of Employment Agreement?
Many states have laws stating that employment agreements need not address matters such as sick leave, vacation leave, and paid time off. Additionally, such laws state that if the agreement does address these matters, the parties are bound by what they agreed to.
Federal and state nondiscrimination laws prohibit discrimination in employment based on:
- National origin;
- Disability; and/or
If an employer discriminates in an employment agreement, the employee may file a complaint with their state department of labor and may be entitled to sue their employer in court.
Although employment agreements are not technically contracts, principles of contract law are what prevent an employer from paying no wages for work performed. An employee may file a lawsuit in court alleging that their employer has been unjustly enriched at the employee’s expense. The court will consider the rate of payment that was provided in the agreement.
Do I Need An Attorney For Breach Of Employment Agreement?
Whether you are an employer or an employee, if you are experiencing a breach of employment agreement, you will need to consult with an area employment contract attorney. An experienced and local lawyer will be best suited to helping you understand your rights and legal options according to your state’s specific contract laws. Additionally, your employment lawyer will also be able to represent you in court, as needed.