If you have signed an employment contract with your current employer but have found that the job is not a good fit, it can be scary to think about what may happen if you choose to walk away. Breaking an employment contract in California can result in a variety of outcomes as every agreement is unique.
But can you ever break an employment contract in California and leave your job unscathed? It depends. This article will help you better understand California employment contracts, the provisions that may protect you, and those that could leave you facing the consequences.
What is considered a breach of contract?
A breach of contract occurs when you or your employer fail to fulfill obligations as outlined in a signed employment contract. When this happens, one or both parties may want to have the contract enforced on its terms, or will attempt to recover for financial harm caused by the breach. As you can imagine, employment contract disputes often occur and commonly result in lawsuits.
Is an employment contract legally binding?
Every employment contract is different, so it is important for employees to know their status and understand what they have agreed to if they are attempting to get out of a contract legally. A contract may even state that it is okay for an employee to break the agreement under certain contract provisions.
What are the consequences of breaking an employment contract?
If you break your employment contract, you could face profound consequences as an employee. Not only could you lose a substantial amount of money if your employer takes you to court or arbitration (this can cost thousands of dollars), you may also be responsible for paying damages. Breaking employment contracts can also bring on a bad reputation that may make you look untrustworthy to colleagues and unfavorable to potential employers.
What are common employment contract provisions?
If you look closely at your employment contract, you will likely see that it contains clauses that allow either party to break a contract legally. These clauses may also define certain penalties that can occur if either party breaks or violates the agreement. Some common employment contract provisions include:
- Employment Termination Clause
Your employment contract should include a termination clause. Employees in California are presumed to be "at will" which means that you or your employer can terminate the contract at any time for any reason with notice (usually two weeks). Your contract should clearly state whether you are considered an at will employee, or a contractor. The termination clause may also give your employer the right to terminate your contract without notice if you engage in any activity that constitutes violation of the agreement, or if you become permanently ill or hurt and can no longer perform your job duties.
- Liquidated Damages Clause
Your employment contract may include a liquidated damages clause which can help limit risk for each party. Liquidated damages are an amount in damages that an injured party (you and your employer) can collect as compensation due to a breach of contract.
Liquidated damages provisions may not be enforceable, however. If the pre-determined amount of damages outlined in an employment contract is disproportionate to the harm suffered by one of the parties, courts can strike down the clause.
- Arbitration Clause
While the California Supreme Court has repeatedly demonstrated its unfavorable view toward arbitration agreements, arbitration clauses can still be found in some California employment contracts. If you find an arbitration agreement, this means that you and your employer have agreed to dispute any aspect of your employment relationship by submitting the dispute to arbitration instead of a court.
This is a provision that employers use to protect themselves from being sued. And understandably, arbitrators typically side with employers in order to get repeat business later.
Breaking Employment Contracts in California
Sometimes it is in an employee's best interest to break an employment contract due to workplace discrimination, harassment, retaliation, or unsafe working conditions. If your employer is subjecting you to unlawful treatment at work, or violates your employment contract in any way, contact our experienced Los Angeles employment attorneys at Hennig Ruiz for a free consultation today.