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Employers may enter into various kinds of written agreements with the employees. These agreements are legally binding and serve the dual purpose of safeguarding both the employer and the employee during the period of employment. Many questions may arise with regards to the terms of the employment contract. Below are a few questions that have been answered: Q. In the state of Texas, can an employment contract stop an employee from quitting the job before a certain period of time has elapsed? This is due to the company having invested heavily on the employee. Further, is there any penalty that can be levied if there is a breach of contract?
A “restrictive covenant” or “non-compete” clause is a clause that restricts employees from quitting the company before the end of a certain period mentioned in the contract. The state of Texas honors such clauses. However, the extent to which such a contract can be enforced depends on the kind of investment made by the employer in the employee and whether or not the employer has kept his/her part of the contract. Due to the complexity of the employment contract, it is best left to the attorney to decipher if the employee needs to pay a penalty due to a breach of contract or not. Q. Once the employment contract has expired, can an employer compel an employee to extend the employment with the company? Also, can an employer change the terms of a contract before it has expired?
An employer cannot compel an employee to continue the employment after the contract period expires. If the employer does so, then one may file a suit of “duress” against the employer. Further, if the employee does not agree to change the terms of the contract when it is still in force; an employer cannot change it. One may be charged for “fraud” if found guilty of changing the terms without consent. Q. If the employee and the employer disagree with a certain clause or clauses in the employment contract, can the attorney of an employee perform the role of an arbitrator?
An employee’s attorney cannot act as an arbitrator and can only represent the employee in such a situation. This is because only a person neutral to both parties can act as an arbitrator. As per the federal and certain state laws, none of the parties involved in the conflict can request for their attorney to act as an arbitrator. Q. Can an employment contract be legally enforced if it was signed by the employer and sent to the employee over an e-mail?
The doctrine of “promissory estoppel” ensures that this kind of contract is legally enforceable. This doctrine means that the party which made the promise is relied upon by the other to honor it to their own “detriment”. Even if the contract was not signed by the employee, he/she can still hold the employer responsible to abide by the terms of the contract. Q. Consider a situation where the employment contract has a non-compete clause which does not mention anything about it being “nation-wide”. Is it possible for an ex-employee with such a contract to start a similar franchise in some other part of the country?
One may face legal consequences if an employment contract is not viewed in its entirety though some clauses are not specific. Hence, even if the contract does not mention “nation-wide” it may have something in the contract that would imply that a similar business cannot be started elsewhere in the country. One would need to hire the services of a lawyer to ascertain the rights and limitations of an employee or an ex-employee after reading the contract. Q. Would an employment contract be valid even after the acquisition of the company by another company?
Generally, an acquisition includes acquiring all the assets and liabilities (employment contract is a part of this) unless there are some mitigating conditions to the contrary. Therefore, all terms of the employment contract will hold good and the employee may ask the new employer to fulfill the terms of the contract. Q. If the contract has not expired, is it possible for an employer to cut the pay of an employee?
An employee’s consent is required for an employer to change the terms of an ongoing contract. If the terms are changed without the employee’s consent, one would be risking a suit for breach of contract. All parties involved in an employment contract need to ensure that they understand the terms of the contract fully. There may be terms that need to be abided by, failing which one may want to enforce the contract. This may lead to confusion. One may speak to an employment lawyer to clear any doubts that he/she may have about employment contracts.
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