Businesses could not exist without contracts. These agreements dictate every aspect of a company, including employment contracts between employees and employers. When one or both sides do not live up to the obligations of a contract, a breach of contract occurs. If you believe that your employer has breached your employment contract or you have been accused of breaching a contract in the Baltimore area, the experienced employment lawyers at HKM Employment Attorneys, LLP are here to help. Call or contact the office today to schedule a consultation and learn more about your legal options.
What is a Breach of Contract?
A breach of contract happens when one party fails to uphold a part or entirety of a contractual agreement without a legitimate legal excuse. A breach can also occur when one party disagrees with the terms of a contract or in how the contract obligations should be fulfilled. In the workplace, contracts control every aspect of a company and the employees who work there. Contracts exist between the employer and vendors, customers, clients, independent contractors, and the employees. Although Maryland is an at-will employment state, some positions are negotiated with an employment contract between employer and employee. When the terms of an employment contract are breached by the employer, an employee may have a claim for damages.
Common Breaches of Employment Contracts
Contracts between employees and employers are breached more often than most workers realize. There are many ways in which an employment contract is breached, but certain occurrences happen more often than others. Some of the most common breach of contract claims in employment law include violations of the following terms:
- Non-compete agreements: An employee may disagree with the terms set out in a non-compete agreement, and the court often finds this type of clause unenforceable when an employer makes the terms too broad and the length of time too long.
- Failure to remit severance pay: If an employer agrees to pay severance upon the end of a worker’s employment and fails to do so, they are in breach of contract. It is recommended that severance agreements are negotiated at the same time as an initial employment contract so that all parties know what to expect when the working relationship ends.
- Wage and hour violations: This is one of the most common breaches, when an employer fails to pay the proper wages or salary to its employees or when an employer fails to pay its workers on a regular basis. Wage and hour breach of contract claims may be brought by an individual worker or as a class of employees whose interests are being breached.
- Wrongful termination: An employee can also sue for breach of contract if they were wrongfully terminated from their position. This could be in violation of negotiated terms in an employment contract or because of discrimination or harassment in the workplace that resulted in an illegal firing.
Types of Contract Breaches
Contract breaches come in many forms, but there are four main types of breaches that can occur in an employment contract. The first is a minor breach, also known as a partial breach of contract, which is when one side fails to fulfill a portion of the contract. The second is a material breach, or total breach, which occurs when a party refuses to uphold any of their side of the agreement or refuses to fulfill one portion that effectively renders the entire contract breached.
The third type of contract breach is an anticipatory breach, which occurs when one party realizes early that the contract obligations will not be fulfilled as originally agreed upon in the contract, such as recognizing that a deadline will not be met. The last type of contract breach is a fundamental breach, which occurs when one party fails to complete a term in the agreement that was essential to the contract. In employment contracts, this could be failing to provide an agreed upon reference or violating a confidentiality agreement about intellectual property.
Remedies for a Breach of Contract
There are many different remedies, or outcomes, to a breach of contract claim. The most common breach of contract remedy is money damages to the party injured by the breach. The amount of compensation is determined by whether it is a partial or total breach as well as whether punitive damages are necessary. Compensatory damages provide money for the actual cost of the loss caused by the breach of contract, whereas punitive damages are awarded only when there has been willful and wanton egregious behavior on the part of the employer that deserves additional punishment and serves to deter other employers who would consider engaging in similar conduct.
Another remedy for a breach of contract claim is restitution, which restores the employee to the position they were in before the contract occurred. This option is typically used when the court determines that the contract was void or that the employee lacked the capacity to enter into the contract when it was signed.
A third remedy for a breach of contract claim is rescission, where the contractual obligations of both employee and employer are terminated by the court. This option is normally used when there was fraud, duress, mistake, or undue influence used in the signing of the original agreement. Reformation of a contract is another remedy that is used to correct or reform inequitable clauses within the contract without throwing out the entire agreement.
The last option for breach of contract remedies is specific performance, where the court orders the party in breach to fulfill the terms of the agreement. This is only used when money damages are not adequate to compensate for the harm caused by the breach. It is most often appropriate when a unique item or real estate is involved in the contract breach. To learn more about the remedy options for your breach of contract claim, talk to our office today.
Talk to Our Experienced Lawyers Today
At HKM Employment Attorneys, LLP in Baltimore, we take breach of contract claims seriously and will zealously advocate for your interests in a breach of contract claim. If you would like to learn more about your legal options and receive a consultation of your case from one of our knowledgeable employment law attorneys today, call the office or contact us now.