Practicing for 20+ years Austin Employment Lawyer and Houston Labor Attorney Jack Nichols fights to enforce your rights under your employment contract.
What is “At-Will” Employment or an “At-Will” Employee?**
Generally, in absence of a contract, private employment in the State of Texas is considered to be “at will.” This means that a private employer can fire an employee for almost any reason, or no reason at all. Similarly, an employee can quit for any reason, or no reason at all.
However, there are exceptions to the “at-will” rule which have been created by state and federal statutes and common law which make it illegal to fire an employee under certain circumstances. These include, but are not limited to situations when the motive for terminating an employee is based in discrimination, retaliation and/or other illegal factors, many of which are discussed elsewhere on this website. Please visit the Homepage for other examples. Another exception to the “at-will” rule is where there is an Employment Contract.
What is an Employment Contract?**
In order create a valid Employment Contract which modifies the “at-will” status of an employment relationship, the employer must orally or in writing, unequivocally indicate a definite intent to be bound not to terminate the employee except under certain circumstances. General, indefinite statements will not serve to limit an employer’s right to discharge an employee. Thus, an agreement to modify the at-will employment relationship must be (1) expressed, rather than implied, and (2) clear and specific. Likewise, an employer’s written or oral statements may not modify an employee’s at-will status unless there is a definite, stated intention to do so. The critical factor in determining the validity of an agreement to modify at-will status is whether an employer has unequivocally indicated a definite intent to be bound not to terminate the employee except under clearly specified circumstances.
Generally, in Employment Contract, an employer alters the “at-will” relationship by agreeing to employ an employee for a specific period of time, for a stated amount of compensation and by indicating a definite stated intent to be bound not to terminate employee except under specific circumstances and absent an agreement on what would encompass good reason or good cause for termination. However, a contract may contain many additional terms. A contract can be either written or oral.
For such an oral employment contract to exist, oral statements must show that the employer intends to make a binding contract of employment; the employer must unequivocally indicate a definite intent to be bound to not terminate the employee except in clearly specified circumstances.
How to Prove a Claim for Breach of an Employment Contract?**
To prove a claim for breach of contract, an employee must prove: (1) the existence of a valid contract (as described above); (2) the employee performed or tendered performance; (3) the employer breached the contract; and (4) that the employee was damaged as a result of the breach.
What are an employer’s Defenses to a Claim of Breach of Employment Contract?**
Generally.** An employer may have several defenses to a claim of breach of an employment contract. Some defenses are factually based, such as when an employer has proof that an employee’s description of the facts is not true. The following defenses, which are much more legally technical, may be available depending on the facts of each case:
- Denying the existence of an enforceable contract;
- Denying the breach;
- Expiration of the statute of limitations;
- Prior material breach by the employee;
- Repudiation (refusal to perform by the employee) of the contract;
- Revocation (employer revoked their offer to enter into the contract before it was accepted by the employee) of the contract;
- Lack of Capacity (because the employer was a minor or was mentally incapable to enter into the contract);
- The contract is illegal;
- The contract is void because it is against public policy;
- The employee fraudulently Induced the employer to enter into the contract;
- Lack of consideration or failure of consideration for the contract;
- The employer entered into the contract under duress;
- Unilateral or mutual mistake when entering into the contract;
- The contract is barred by the Statute of Frauds;
- The employee failure to perform conditions precedent to the employer’s performance under the contract;
- The employer’s performance under the contract was impossible;
- The parties entered into a new contract which the employer satified;
- Enforcement of the contract is barred by novation (replacement of the existing obligations or parties due under the contract);
- The contract was unconscionable;
- The contract was Modified;
- The employee ratified the employer’s breach;
- The employer’s performance under the contract was waived by the employee;
- The employee failed to mitigate his damages;
- The employer is entitled to offset the amounts owned to the employee;
- Enforcement of the contract would act as an illegal penalty;
- The employer’s liability was limited by a provision of the contract;
- The employer is immune from suit;
- The employer’s duty to perform was discharged because of an act by the employee; or
- The person who entered into the contract fro the employer was not an authorized agent.
Other defenses may be available depending on the circumstances.
What Damages may an Employee Recover for Breach of an Employment Contract?**
The following damages may be available to an employee who successfully sues and employer for breach of an employment contract depending upon the circumstances:
- Benefit of the Bargain Damages: The amount to put the employee in as good a position as if the employer performed under the contract;
- Reliance Damages: The amount necessary to recover the expenditures made by the employee in reliance on the employer’s promise to perform;
- Specific performance: An order for the breaching party to perform as required under the contract;
- Liquidated Damages: An amount previously agreed to in the contract; and
- Attorney’s fees and costs.
The employer may seek to reduce the employee’s damages by utilizing some the defenses described above.
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