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Employment Contract Questions

There are a variety of types of contracts employers may enter into with their employees in the US. Employment contracts are legal documents, meant to protect both the employer as well as the employee during the period of employment. Any time there is an employment contract, questions get asked. One of the many questions that can be raised is what a breach of employment contract is. Here are some of the frequently asked questions answered by the Experts about employment contracts.

Is it legal in Texas for an employment contract to restrict an employee from leaving the company within a specific time period due to high investment in the employee or penalize the employee if the contract is breached?

Clauses such as these in an employment contract are called “restrictive covenant” or “non-compete” clauses. Texas is known to honor such clauses, but as far as the legality of the clause in a particular situation is concerned depends upon the type of investment by the employer in the employee and whether or not the employer has kept his or her part of the contract as well. The employee may be liable to pay a penalty if it is found that the contract has been breached, which can only be ascertained by an attorney since each employment contract is special to the particular parties involved.

Can an employer force an employee to work after the employment contract expires and is it legal for the employer to alter the clauses of the contract while the contract is still in force ?

An employer cannot force an employee to work beyond the term of the contract. The employer can be held guilty for the offence of “duress”. An employer cannot alter the terms of the contract while it is in force without the consent of the employee, as this would amount to the offence of “fraud”.

Can an attorney of an employee function as an arbitrator in the event of a conflict between the employer and employee over a certain clause or clauses in an employment contract?

An arbitrator has to be neutral to both parties in the conflict and therefore an employee’s attorney can at best be a representative of the employee, but not an arbitrator. Under federal and certain state laws, neither an employer nor an employee has the right to insist that their lawyers act as arbitrators.

Is an employment contract signed by the employer and sent by e-mail to the employee legally binding?

Such a contract is indeed binding as the doctrine of “promissory estoppel” will come into play. This doctrine means that the party which made the promise is relied upon by the other to honor it to their own “detriment”. The employee would be well within his rights to hold the employer liable even though the former did not actually sign the contract.

Can an ex-employee of a franchise set up a similar business in any other part of the country even if the employment contract has a non-compete clause and does not specifically say "nation-wide''?

An employment contract needs to be considered as a whole, and even if certain clauses are not specific, the implications may be far-reaching. Therefore, just because the contract does not specifically state “nation-wide” does not mean that there would be no other provisions which can prevent a person from starting a similar business in any other part of the country. A Legal Expert can help determine as to what exactly the rights and limitations of an employee or an ex-employee are in this situation by studying the contract.

Can an employment contract be enforced even if the company (employer) is acquired by another?

Since the acquisition of a company would involve all of its assets and liabilities, including employment contracts, and given that there are no mitigating conditions to the contrary, an employee should be able to hold the new employer liable to the provisions of the employment contract.

Can an employer cut the pay of an employee even though there is time left on the contract?

An employer cannot alter the terms of an ongoing contract without giving it in writing and renegotiating the contract with the employee. Unless this is done, the contract holds good and any changes to the contrary will amount to breach of contract.

Both employers and employees need to be well aware of the type of employment contracts they are party to as they could be held liable by one another in the event of a dispute. Doubts may also arise in either or both of the parties as to the legality or validity of the contracts themselves. In such a situation, it is best to ask legal experts for clarity and the way forward.
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