When you enter into some type of contractual agreement, you plan to unhold your legal obligation and expect that the other party will do so, too. Unfortunately, entering into any type of contract can be risky, even with an employer who you believed that you could trust. When this happens, it is important to understand breach of contract with the help of an employee contract lawyer.
At Shegerian & Associates, our employment contract lawyers are dedicated to helping hardworking people across California understand their rights, enforce contractual agreements with employers, and hold those employers who have breached contracts accountable. Here’s what you need to know about breach of contract in California and how we can assist you.
Establishing the Existence of an Employment Contract
In California, employment contracts are legally binding contracts that establish an employee-employer relationship. Employment contracts are created in one of three ways: written, oral, or implied.
When a breach of contract occurs, it means that either the employer or employee has failed to perform at least one of the terms specified in the contractual agreement. It’s important to keep in mind that all employment law contracts can be terminated by any of the following actions:
- Expiration or extinction of the subject matter of employment
- Death or legal incapacity of the employee
- Expiration of the employment contract’s appointed term
Any discussion of breach of contract begins with an explanation of “at-will” employment. According to California Labor Code 2922, this term describes the fact that an employer has the right to hire or fire someone for any reason with or without good cause subject to certain exceptions.
However, when an employer hires or fires someone based on certain protected categories and characteristics, it is a violation of anti-discrimination law. These laws protect all employees from discrimination on the job and apply to specific types of discrimination known as protected categories. Typically, protected categories include race, color, national origin, sex, religion, age, disability and sexual orientation.
Additionally, the at-will employment doctrine does not apply when there is a valid employment contract between an employer and employee. When an employer breaks the contract that has been created between employer and employer, doing so is considered breach of contract and an at-will employment defense is not applicable.
Exploring the Terms and Validity of a Contract
The provisions of a contract can be numerous, and there are no limits to the number of terms or conditions a written employment contract may contain. There are several elements that must be met for an employment contract to be considered legally valid. These include:
- Offer and Acceptance. This means that one party (typically the employer) makes an offer to another party (the employee) and that offer is accepted.
- Consideration. The two parties agree on an exchange of value, such as work for a monetary payment.
- Legality. The exchange of work defined must be legal.
- Capacity. Both parties must be old enough and mentally fit to enter the agreement, and it must not be signed under duress, coercion, misrepresentation, or the influence.
Some details that may be included in an employment contract include job title, salary, benefits, vacation and sick leave time, confidentiality clauses, dispute resolutions, termination clauses, and severance details. An employment contract may also contain a length of service provision which dictates the duration of employment.
For example, if an employment contract contains a term of 5 years for employment, the employee is under contract for that time period and cannot legally quit or be fired. In some instances, this employer may not be allowed to work for another company.
A “Good Cause” for Termination
It is possible for any term or condition listed in a contract to be applicable with certain exceptions. A common exception to a length of service provision is termination for “good cause.” When an employment contract contains an “good cause” exception, this means that an employee can be fired for any reason defined in the contract as such.
The definition of “good cause” in a written employment contract is, then, extremely important, as it can determine whether or not there has been a breach of contract based on the terms of the agreement between an employer and employee.
It is not uncommon for an employee and employer to hold different views on what is considered a “good cause” for termination. If an employee sues because he believes that there was no good cause for him to be fired, the court will examine the terms of the written contract to determine whether or not there was a breach in violation of the contract terms.
Dealing with Bad Faith Breach of Contract
When an employer places unreasonable clauses within a written or implied contract, the employee may be able to hold the employer accountable for bad faith. Bad faith breach of contract occurs when an employer makes a clearly unreasonable interpretation of the contract, thus violating its terms.
For instance, an employment contract may contain a condition that terminates employment when or if an employee removes company property from the premises. Provisions like these are meant to prevent stealing, and typically apply when an employee takes a piece of equipment or confiscates company information.
If the employer fires a worker under this provision for taking home a memo or letter, this could be considered an act of bad faith. Clearly, firing someone for taking home a memo is an unreasonable interpretation of the contract provision and a breach of contract did not occur to the extent or nature that the contract specifies.
Breach of Contract Damages
It can be devastating when your employer fails to uphold the employment contract that you both legally agreed to uphold. The good news is that you have a legal right to pursue damages and recover monetarily by the assistance of an employee contract lawyer. It is important to note that an employee can only recover the amount he or she would have earned had there been no breach of contract.
These damages are called restitution damages since they are meant to make the employee “whole” by placing him back in the position he or she would have been in had there been no violation of the law. In other words, there are only certain compensatory damages an employee may sue for under breach of contract claims. These typically include:
- Lost wages and benefits
- The amount that the employee would have earned in the future
Breach of contract is an issue for the experts, and a Shegerian & Associates employment contract lawyer possess both the experience and skill to handle such cases. Let us guide you through the successful resolution of your case. Contact us today for a no-fee, no-obligation evaluation today!
On the other hand, examples of bad faith include: Failure to uphold legal or contractual obligations unethically or without just cause. No intent to follow through on a legally binding agreement. General dishonesty to the client or clients.
Damages awarded for breach of contract can vary depending on the circumstances of the case. Typically, the damages awarded include, but are not limited to: compensatory damages, consequential damages, liquidated damages, punitive damages, nominal damages, and restitutionary damages.
No, a breach of contract does not automatically make the contract void. A contract remains valid and enforceable even if one party breaches it. However, the non-breaching party may be entitled to remedies such as damages or specific performance to address the breach.
To prove a breach of contract, you must demonstrate the following:
- The existence of a valid contract
- The plaintiff's performance or willingness to perform under the contract
- The defendant's failure to perform their obligations under the contract
- Damages or harm suffered by the plaintiff as a result of the breach
The length of a breach of contract claim can vary depending on various factors such as the complexity of the case, the jurisdiction, the amount of evidence, and the willingness of the parties to settle. In general, breach of contract claims can take several months to several years to resolve, depending on the circumstances. To learn more, consult with an employment contract attorney.