California Breach of Employment Contract

November 12, 2018 by

california breach of employment contractContact a California breach of employment contract attorney if you feel the terms of your employment contract are not being honored. Contracts are entered into in the workplace every day. While many employees here in California are considered to be “at will” employees who can be terminated without cause, certain employees do have contracts that specify a particular time frame for work, and that may or may not have options for extensions. If you feel the terms of your contract are not being honored, you may wish to consult with an attorney experienced in such matters to determine how to proceed.

California Breach of Employment Contract Defined

What constitutes a California breach of employment contact? Several elements must exist:

  • You and one or more parties must have entered into a contract;
  • You substantially met the requirements set forth in the contract;
  • If you did not complete all the requirements, you were reasonably excused from them;
  • Your employer did not meet his or her requirements set forth in the contract, or;
  • Your employer acted in a way that was prohibited within the contract;
  • You experienced some harm;
  • The harm was essentially due to the breach of contract.

What is a Material Breach?

A material breach is one that is so significant that it results in substantial damage, or it validates your reason for failing to fulfill your contractual obligations. For instance, let us say you contracted with an employer to redesign a web page and develop advertising materials over the course of one year. You were expecting to be paid monthly, but after three months you had yet to see a paycheck, or worse, you were let go. You are clearly justified in discontinuing your work because the failure to pay you as agreed for the established time period was a material breach.

What is a Non-Material Breach?

On the other hand, a non-material breach of contract generally involves only minor damage that would not entitle the other party to forgo their responsibilities of the contract. For instance, let us say you had agreed to redesign the web page and develop advertising materials by January 1st.  Although you completed most of the job, the finished advertising materials were not available until January 4th. While you did fail to meet the terms of the contract, the damages to your employer are presumably minimal under the circumstances. Ergo, there is no justifiable reason for your wages to be withheld.

California Breach of Employment Contract – Damages

The types of damages recoverable include general damages and consequential damages.

  • General damages are those that come directly out of the breach, such as wages for the job that was done.
  • Consequential damages go beyond what might be expected due to the employment contract breach.  For example, if the breach led to additional unforeseeable costs, they would be consequential damages.

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Employment Breach of Contract in California

February 16, 2017 by

breach of contractEmployment breach of contract in California. Contracts are drafted, negotiated, and signed every day in this country.  Employment contracts in California are sometimes designed to cover a precise time period, with or without options to renew the contract at a particular point. In other situations, teams are involved in collective bargaining for entire groups. What happens when one party does not live up to his or her end of the bargain? That is precisely when having an experienced contract law attorney in your court can make a huge difference.

What is Meant by Breach of Contract?

When one party fails to live up to a legally enforceable contract, or promise, it is breach of contract. In California labor law, an employee handbook or other policy statements might be considered contracts, in addition to more formal documents drawn up between particular parties.  In the case of employee handbooks and written policies, the courts generally have found that statements within them are express promises. Even though California is a right to work state, these express promises must be adhered to.

Implied promises might be based on past history or length of service. It is the type of promise most California employers have with employees who have not negotiated individual contracts.

In determining wrongful discharge, the California Supreme Court ruled that employers must act in good faith when firing a contracted employee. The case of Cotran v. Rollins Hudig Hall International, Inc., 948 P.2d 412 (Cal. 1998) involved an employee who was terminated on the grounds of sexual harassment. Even though the employee denied the accusations, it was found that since the employer had acted based on a true and sincere belief that the harassment had occurred, the termination was not a breach of contract. The foundation for the court’s decision revolved around the idea that an implied contract, or promise, existed between the parties, wherein the employer’s “reasonable” belief in a good cause for termination was sufficient for termination procedures to take place.

In contrast, contracts obtained through collective bargaining are held to a different standard.  Here, employees may not be terminated without proof of guilt. There are seven tests for just cause in due process hearings for these types of employees:

  • The employee must be afforded adequate notification of rules and sufficient warning that the employer is aware of a problem;
  • The issue must be one defined as real by a reasonable person;
  • There must be a complete investigation;
  • The investigation must be impartial and objective;
  • There must be conclusive proof of an infraction;
  • Rules and consequences must be administered uniformly,
  • The discipline or consequences must be reasonable.

[Read more…]

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Can an Employee Be Required to Pay Back the Cost of Their Training if They Quit?

December 27, 2016 by

Pay Back Employee TrainingIt is a common arrangement for an employer to offer to pay for an employee’s education or training, so long as the employee agrees to pay back some (if not all) of these costs if he or she leaves the company within a certain period of time. However, a former employee of a California steel plant recently sued after he was required to pay back the cost of his education – and he argued that these kinds of reimbursement agreements violate state law.

The employee, Floyd Case, worked as a laborer for USS-Posco Industries (UPI), which introduced a program allowing workers to be trained to become Maintenance Technical Electrical workers. The training was provided to each participating employee free of charge, unless an employee voluntarily quit his or her job within 30 months of completing the training. In that case, the employee would be required to pay back $30,000, minus $1,000 for each month the employee worked after the training ended.

Case quit his job two months after finishing the training, and was expected to repay $28,000. He filed a complaint, arguing that the reimbursement agreement he signed violated the California Labor Code, the California Business and Professions Code, and the federal Fair Labor Standards Act. Had the courts sided with Case, the result could have been disastrous for employers, as their reimbursement agreement contracts with employees could have been rendered invalid across the board.

However, Case’s complaint was dismissed at trial, and a California appeals court upheld the dismissal. The ruling, USS-Posco Industries v. Case, asserts that reimbursement contracts like the one signed by Case are valid. However, the ruling also makes it clear that there are certain types of reimbursement contracts that courts should not enforce.

Which Reimbursement Contracts are Valid, and Which Are Not?

The court held that the training program offered by UPI was strictly voluntary and optional, and thus UPI could enforce a contract requiring an employee such as Case to pay back the program’s costs. The court pointed out that Case:

  • Did not incur any losses or make any expenditures when he took part in the training program, as it was paid for entirely by his employer,
  • Was not required to participate in the program,
  • Had other ways of securing a position as a Maintenance Technical Electrical worker, such as devising a training program of his own, or taking the test without a training program, and
  • Understood that he would be required to pay back the costs of the training if he quit his job within 30 months of completion.

If, however, an employee was required to make expenditures in order to perform his or her job, the employer would not be able to recoup these expenses from the employee – even if the employee signed a contract agreeing to reimburse the employer. An example offered by the court is In Re Acknowledgement Cases, in which Los Angeles police officers who quit their jobs after less than five years on the force were required to reimburse the city for their training costs. The policy was ruled impermissible at court, because the officers were required to undergo the trainings. [Read more…]

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New Precedent for California No Rehire Clause – Golden vs. Cal. Emergency Physicians

May 14, 2015 by

No Rehire Clause,New precedent for California no rehire clause – Golden vs. Cal. Emergency Physicians. It’s fairly well-known that the state of California doesn’t look kindly on non-compete provisions in employment contracts. Settlement agreements with “no rehire” provisions have not posed many problems for employers, however – until now. In a case that could have major consequences for California employers, the U.S. Court of Appeals for the Ninth Circuit has ruled that a “no rehire” clause can violate the same California law that prohibits non-compete provisions.

No Rehire Clause Decision

The decision, Golden vs. Cal. Emergency Physicians, was handed down in April 2015. It held that a settlement agreement’s provisions about re-hiring could be considered overly broad – and thus could be found to impermissibly restrain an employee’s professional practice, which is a violation of Section 16600 of the California Business and Professions Code.

What Happened in the Case?

The employee, David Golden, was a doctor employed by California Emergency Physicians Medical Group. He was terminated from his position, and then filed an employment discrimination suit. The parties eventually agreed to settle.

The settlement agreement contained a clause stating that he would waive any and all rights to be employed by CEP, or to be employed at any facility owned by CEP. The clause also stated that if Dr. Golden were to become employed at a facility unaffiliated with CEP, and then CEP bought or contracted with that facility, then Dr. Golden would be terminated without any liability.

Dr. Golden was unhappy with this clause, and refused to sign it. He argued that the clause violated Section 16600, which states that a contract “by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.”

When his case went to the U.S. District Court for the Northern District of California, the court ruled against Dr. Golden. The district court held that because the agreement didn’t prevent him from working for a competitor of CEP (or for a hospital or facility operated by someone other than CEP), then the agreement could not be considered a violation of Section 16600.

This decision, however, was overturned by the Ninth Circuit, which sent the case back to the district court. The Ninth Circuit held that the language of 16600 is broad, and should not be interpreted to apply only to non-compete clauses. The court, however, did not take a stance on whether the agreement actually violated Section 16600.

What Does This Case Mean For You?

If you are an employer in California, and you have signed no-rehire agreements with former employees, there’s no need to panic. The ruling does not prohibit no-rehire agreements altogether. But it does mean that some no-rehire agreements could conceivably be considered violations of Section 16600.

Before you sign any new settlement agreements, it may be wise to ensure that the language you use does not go overboard in restricting the employee’s rights. If you are concerned about the enforceability of your agreements, you may wish to speak to a lawyer. The employment and labor law attorneys at Beck Law P.C., in Santa Rosa, have a great deal of experience with employment contracts. You can call or email them today to schedule a consultation.

Filed Under: California Employment Law, Employment Contract Tagged With: , , ,

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