Wrongful Termination |
June 30, 2017

What is Breach of an Employment Contract – What Should I Do Now?

Employees may want to seek legal advice from a San Francisco wrongful termination lawyer when an employer does not keep promises made in an employment contract

wrongful termination lawyer explains breach of contract and the importance of employment contractsAn employment contract is an agreement between an employer and employee with respect to the terms and conditions of the employee’s employment.

Employers and employees make employment contracts to assure that certain terms of employment will be clear and binding. An oral agreement may be sufficient if the agreement is simply to pay a specified wage for specified work, but it is helpful to place more complex agreements in writing. A written contract helps both the employer and the employee avoid misunderstandings about the terms of employment, and helps avoid disputes whether the promises were made.

Terms of Employment Contracts

Most employment agreements provide for at-will employment, which allows the employer to terminate the employee at any time for any reason or no reason, provided that the reason for the termination decision is not unlawful.

However, in certain instances, a written employment contract, particularly for an executive or professional employee, may include terms such as:

  • Compensation, including any guaranteed bonuses or performance incentives
  • Benefits to which the employee is entitled
  • The amount of notice the employer or employee must give before ending the employment relationship
  • Reasons (such as “just cause”) for which an employer can terminate the employment relationship
  • A dispute resolution procedure or other rights an employee might have if an employer claims that cause exists to terminate the contract
  • A non-disclosure provision that protects an employer’s trade secrets and other confidential information

In addition, when compensation is based on commissions, California law requires the employer to give the employee a written contract. At a minimum, the contract must specify how commissions will be calculated and when they will be paid.

Breach of Contract

A breach of contract is a failure to abide by a material term on the contract. A material breach is one that affects a significant right or condition of the contract. In simpler language, when an employer breaks a significant promise that is included in a contract, the employer has breached the contract.

Examples of breach of an employment contract include:

  • Failing to pay compensation or benefits that are promised in the contract
  • Failing to reimburse expenses that the contract authorizes the employee to incur
  • Failing to provide resources that the contract guarantees (such as the use of laboratory equipment)Terminating employment without cause if the contract requires cause for a termination

Any other duty imposed upon an employer by a contract may lead to a breach of contract if the employer fails to fulfill that duty.

Non-Compete Agreements

In most states, an employer can enter into a non-compete agreement with an employee, either as part of a comprehensive employment contract or as a stand-alone agreement. While state law usually limits the scope and duration of a non-compete agreement, most states allow employers and employees to make an agreement that places some restriction on the nature of similar employment an employee can accept after current employment ends.

California is an exception to the general rule. In California, a non-compete agreement is rarely enforceable. Even if a California employee signs an employment contract that limits the kind of work an employee can accept after employment ends, that agreement is probably not binding. Employees who have been asked to sign, or who have signed, a non-compete agreement in California may benefit from asking a California employment lawyer about the validity of that agreement.

What to Do After a Breach of Contract

If the breach involves a relatively minor term of the contract that an employee does not care much about, the employee can elect to ignore the breach. In some cases, an employee may decide not to disrupt a peaceful relationship with an employer by making an issue about a breach that isn’t important to the employee.

When a breach is more significant, however, the employee may have several options. The employee might bring the breach to the employer’s attention and ask the employer to keep the promise made in the contract. The employee might try to negotiate with the employer if the employer feels that the contract was not breached or if the promise was not fulfilled for a reason that the law arguably allows. The employee might want an experienced San Francisco employment lawyer to negotiate on the employee’s behalf.

An employee can also pursue legal remedies, such as suing the employer for damages or for an order requiring the employer to keep its promise. The specific remedy that may be available will depend on the facts of the case.

If the breach also involves a violation of California law, such as wage and hour laws or prohibitions against discrimination, the employee might pursue remedies for those violations instead of, or in addition to, a breach of contract lawsuit.

Making decisions about the best way to address a breach of contract can be difficult. An experienced employment lawyer in San Francisco is well-positioned to steer executives and other employees though the complex maze of rights and remedies that are associated with a breach of contract. Employees and executives who need legal advice can contact Minnis & Smallets by calling 1-415-551-0885 or by using our online contact form.