Breach of Employment Contract

Most employees do not sign employment contracts, but if they do, it is important to understand the effects of the contract and the requirements imposed upon both employee and employer. If an employee has a contract with his or her employer, the employee cannot simply quit the job without consequences, and the employer likewise cannot fire the employee without cause.

Employment Contracts

Generally, employment in Maryland is at-will. This means that the employee can quit and the employer can fire the employee at any time, for any reason. There is an exception, however, for termination that goes against public policy, such as firing an employee because of race or pregnancy, or because the employee filed a workers’ compensation claim.

But some employees have employment contracts that spell out the terms of employment. An employment agreement is legally binding on both the employee and employer. Often, they include provisions such as statements of the grounds for termination, non-compete agreements, confidentiality agreements, severance packages, or freelance policies.

Termination

If an employment contract is for a specific duration, then an employer may terminate the employee before that time is up only for cause. What constitutes cause may be defined in the contract. If it is, the listed reasons are the only available cause for termination, and if one of those reasons occurs, the employer may terminate the employee. But if it is not, then in order to fire the employee, the employer must prove that the employee breached the employment contract.

Non-Compete Agreements

Often, an employment contract will include a non-compete provision. Non-compete provisions generally forbid employees who quit from competing with their former employers for a certain time, and within a certain geographic restriction. As long as the terms are reasonable, non-compete provisions will generally be upheld by Maryland courts.

Implied Contract

Sometimes, an employer’s oral assurances of continued employment can constitute an implied employment contract. For example, if an employer tells an employee that he has a job as long as his performance is satisfactory, this may constitute an implied contract. Implied contracts are legally binding, just as are signed employment contracts.
Further, statements in company manuals or handbooks can create an implied contract. Thus, if an employer violates the terms of the handbook, the employer can be held liable for breach of contract, even though no official contract was actually signed. If an employer wants to avoid being bound by the terms of the handbook, the employer should expressly state that the handbook does not affect the at-will nature of the employment.

Breach

Both employees and employers sometimes breach employment contracts, and the wronged party will have the right to pursue a civil suit. Usually, the wronged party may recover compensatory damages from the breaching party. This means that the wronged party may recover the money that he or she would have gotten, had the breaching party fulfilled the contractual obligations. For an employee, compensatory damages may include the amount that he or she would have been paid under the contract. For an employer, damages may include the extra costs of hiring a new person to do the job.

Consult with an Experience Maryland Lawyer Today

Employment contracts can be complex documents, and it is important to be sure you understand what you are signing. Please contact the Baltimore employment law attorneys at The Casper Firm to schedule a free initial consultation.