A contract is a legally binding agreement between parties. In the instance of employment, this contract would be between the employer and the employee. The employee is offering her time and labor to the employer and in exchange, the employer is offering the employee monetary compensation. A written contract that is signed by both parties is the most common type of an employment contract.

How Are Damages Calculated in Employment Contracts?

The legal remedy for breaching an employment contract is usually expectation damages. For example, if the employer wrongfully terminated an employee, then the employee may be entitled to compensation in the form of lost wages. The employee expected to earn a certain amount prior to termination, therefore she may sue her employer for expectation damages.

If the employee breached the contract, then the employer may also be entitled to compensation. For example, if the contract stated that an employee must give 30 days notice, but the employee only gave a two week notice, the employer could sue for damages. Typically, damages of this sort are calculated by the cost of finding an employee replacement. If the replacement is hired quickly and for the same salary, then damages will be minimal.

Are There Limits to My Recovery?

There are a few limitations that can lessen damages received, or even dismiss a case based on a breached contract:

  • At-Will Employment: An at-will employee may be fired without cause, so long as the employee wasn’t unlawfully fired.
  • Foreseeable Damages: It is foreseeable that in the instance of a breached contract, the employer will have to find a new employee, and that the employee will have to find a new job.
  • Certainty: Verifiable damages must be provable and clear. Also, employment contracts can be modified, therefore, it is important to review the contract and see if damages are even allowed.
  • Duty to Mitigate: The employee has a duty to lessen damages by finding another job, and the employer has a duty to lessen damages by finding a new employee.

Do I Need a Lawyer?

Employment contracts can include multiple clauses and conditions which can cause a great deal of confusion. Consulting an employment lawyer who will review your case may give you a clear outline of where your case stands.