If you have an employment contract and your employer breaches it, you likely have the right to sue and collect “damages” to compensate you for your financial loss. There are several different types of damages that may be available to you, depending on the terms of your contract and the type of breach by your employer.
The first step is understanding whether you have a legally binding employment contract with your employer. The most common form is a written document outlining the agreement between employee and employer, which is signed by both parties. However, it is possible for an employment agreement to be made verbally or implied by the actions of the employer. For example, if the employer provides the employee with a handbook stating a policy that employees will be terminated only for cause. The employee has the right to rely on the policy as a term of his/her employment.
Next, it must be determined how the employer breached the employment agreement. One of the most common claims is that the employer wrongfully fired the employee. For example, if the contract states that the employee cannot be terminated within one year except for good cause, and the employee has proof that good cause did not exist, there is a breach of contract. It is important to understand that if your employment contract states that you are an employee “at will,” this means that you can be terminated (or you can quit) at any time for any reason that is not illegal.
Finally, you must identify the damages you suffered as a result of the employer’s breach of the contract. Below are a few types of damages to consider:
● Expectation Damages. An employee can recover what he/she expected to gain from the contract. In other words, an employee can recover the amount he/she would have received under the contract if the employer had performed as promised. An employee has a duty to “mitigate” the damages incurred, which means he/she must take reasonable measures to minimize the amount of financial loss incurred (such as getting a new job).
● Liquidated Damages. If the contract includes a provision for liquidated damages, then the breaching party must pay the other party a specified sum. Liquidated damages are provided for in a contract when the parties agree that it may be difficult to put a value on the damage that can be caused by a breach. This type of clause is rarely included in employment contracts.
● Punitive or Pain and Suffering Damages. You are not entitled to recover punitive damages or pain and suffering damages in a breach of contract case.
● Attorneys’ Fees and Costs. An employment contract may provide that the prevailing party in a lawsuit for breach of the contract is entitled to recover attorneys’ fees and costs. If your agreement does not include this provision, the employee will be obligated to pay for his/her own legal expenses.
If you have an employment contract and you believe your employer has breached it, contact one of our experienced attorneys for assistance. We can review your contract and help you understand what damages you are entitled to recover. Contract our office today to schedule an initial consultation.