Can I break a contract with employment agency without paying them money?

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Can I break a contract with employment agency without paying them money?

I signed a contract with employment agency that states if I did not work with their client company for at least

3 months then will have to pay a fee equivalent to 1 month’s salary. Is this considered as penalty clause or

compensation?

Asked on March 3, 2019 under Employment Labor Law, Alaska

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 2 years ago | Contributor

The amount you describe may be unenforceable as excessive. One your state's laws (Alaska Statutes or AS Section 45.02.718, "Liquidation or Limitation of Damges") says that:
 
"(a) Damages for breach by either party may be liquidated in the agreement but only at an amount that is reasonable in the light of the anticipated or actual harm caused by the breach, the difficulties of proof of loss, and the inconvenience or nonfeasibility of otherwise obtaining an adequate remedy. A term fixing unreasonably large liquidated damages is void as a penalty."A month of salary under the circumstances you describe is far in excess of the loss the agency would suffer, as adjusted by any issues in proving the loss (of which there probably are few or none--this is a straightforward matter) or the "nonfeasibility of a remedy"--since there is nothing nonfeasible about a claim for a monetary loss. As such, this is likely an unenforceable penalty.


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