The Katz Law Group has nearly 40 years of experience with business and contract litigation in Massachusetts and across New England. Our experience covers both negotiating and preparing contracts to litigating contract disputes. With our extensive business litigation experience, we understand how to handle contract disputes with employees, executives, and independent contractors.
Employment Contract Disputes
Most employer/employee relationships in Massachusetts are “at will,” meaning an employer can terminate an employee for any reason or no reason at all. However, some employee relationships are handled through an employment contract. The contract spells out the rights and obligations of each party and should provide for how to resolve any disputes or breaches of a business contract.
An employment contract dispute can occur at any time, from hiring an employee, to job performance, to post-termination disputes. An employee or ex-employee generally has a dispute when it comes to compensation or termination. An employer generally has a dispute when the employee fails to perform their duties or violates the terms of the contract after leaving the company.
Common areas of employment contract disputes and breaches involve:
- Compensation or Benefits
- Sick Leave or Vacation
- Enforcing Arbitration Agreements
- Employment Contract Modification
- Non-compete Agreements
- Non-disclosure Agreements
- Confidentiality Agreements
- Exclusive Employment
- Post-Termination Actions
- Severance and Separation Agreements
Breach of Employment Contract
A breach of an employment contract occurs when one of the parties to the contract fails to perform their duties. The party who breached the contract is generally liable to the other party for breaking the contract. The terms of the contract, what constitutes a breach, and the remedies for breach should be spelled out in the contract. However, most breaches of contract disputes involve parties disagreeing over whether there was a breach or who was responsible for the breach.
In many cases, a breach of contract can be handled between the parties. The employer and employee may simply agree to terminate the contract. Alternatively, many employee contracts provide for arbitration or mediation to resolve the dispute. If the parties cannot agree on how to handle the dispute, one or both parties may decide to take the case to court.
The remedies in a breach of an employment contract may provide for money damages, termination, reinstatement, or other specific remedies established by the contract. Parties to a contract may be required to mitigate their damages in the event of a breach.
Enforcing Arbitration Agreements
Employers often have an arbitration agreement as part of the employment contract. An arbitration agreement provides that the parties will settle any disputes through arbitration rather than take the case to court. Arbitration has a number of potential benefits for an employer, including saving time and money compared to litigation, the arbitration can be kept private and does not become public record, and disputes involving multiple employees can prevent class-action lawsuits.
However, employers may provide for one-sided arbitration agreements, requiring arbitration of claims brought by the employee but not for claims brought by the employer. Mandatory arbitration agreements may otherwise compel employers to arbitrate claims that they may prefer to handle through litigation.
Some employees and former employees may try and avoid arbitration, preferring to handle the case in court. This may include cases where a number of employees have similar claims disputes and want to bring a class-action lawsuit. In general, arbitration agreements in employment contracts have been found valid. If an employee tries to file a lawsuit under a claim that is covered by a valid arbitration agreement, the employer can enforce the mandatory arbitration agreement.
Employment Contract Changes and Modification
The longer an employee has been with a company, the more likely that there has been a modification to the terms of the employee's contract. This may not be expressly agreed to in a new contract or amendment. In some cases, it could involve a change in a single area of the employment agreement, such as a change in the pension plan, change in vacation policy, or change in employee expectations.
In some cases, a contract may be formed or modified without the employer intending to modify the contract. This may involve oral statements and verbal contracts, changes to policy statements, or updates to employee handbooks.
Non-compete and Nondisclosure Agreements
Nondisclosure and non-compete clauses are common in employment contracts. Non Disclosure Agreements (NDAs) is an agreement that protects against sharing confidential material, trade secrets, intellectual property, or proprietary information. A non-compete clause (NCC) generally provides that one party agrees not to enter into a similar position or start a similar company, or work for a competitor within a certain area.
Non-compete and nondisclosure agreements are not always enforceable. Enforcing these agreements can depend on the language used in the document, the type of job involved, and the extent of the competition and disclosure restrictions.
Violating an NDA or non-compete clause may result in a breach of the employment contract even after the employee has left the company.
Executive and Highly Compensated Employee Disputes
Employment contracts with executives and other highly-compensated employees can be much more complicated and have a lot more at stake. These contracts may also be more ripe for disputes because of the complex terms of measuring performance, expectations, compensation, and what constitutes a breach of contract.
Statute of Limitations on Contract Disputes in Massachusetts
The statute of limitations in an employment contract dispute may depend on the type of claim involved.
- For most breach of contract claims, the statute of limitations is 6 years.
- Claims for unpaid wages is generally 3 years in Massachusetts.
- Contract dispute claims against government agencies may have a different timeline. Contact your employment contract dispute attorney as soon as possible to make sure your claim is filed in time.
Terminating an Employee For Cause
Many employment contracts provide that an employer will not terminate an employee except for cause. “For Cause” can be defined within the contract. However, even if the term is generally defined, the parties may disagree on whether the employer had good cause to terminate the employee. Whether or not there was cause to fire the employee is often an issue for employee contract disputes.
Defining “for cause” may include:
- An intentional act of fraud, theft, or embezzlement;
- Intentional violation of company policies;
- Violation of other criminal laws;
- Breach of employment obligations;
- Failure to substantially perform; or
- Willful conduct that is harmful to the company.
Other Employment-Related Claims
Breach of contract claims in employment often involves other types of legal claims related to employment. This could involve other tort claims, as well as state and federal labor statutes, including:
- Workers' Compensation
- Massachusetts Wage and Hour Laws
- Federal Labor and Wage Laws
- Civil Rights Laws
- Family Leave Laws
Experienced Employment Contract Lawyer in Massachusetts
An employment contract is intended to help reduce the chance of a dispute if one party is not meeting expectations. However, even the best employment contract cannot protect your business from all types of employment contract disputes and litigation. If your business is facing an employment contract dispute or an employee is threatening to file a lawsuit, you need an experienced Massachusetts employment contract dispute attorney. The lawyers at the Katz Law Group represent clients in Massachusetts, Worcester, Framingham, and Marlborough. Contact us online today or call our law office at (508) 480-8202.