Employment agreement enforceable?

UPDATED: May 27, 2019

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Employment agreement enforceable?

I signed a contract with a company for performing IT work for a client. I would be an hourly temporary worker working on an hourly rate. The agreement states that the company can claim $10,000 as damages and another 2000 per month of the contract not worked. This would apply if I left the project before completion of the 2 year contract. Is this contract enforceable in TX?

Asked on May 27, 2019 under Employment Labor Law, Texas


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

The amount of damages ($10,000 + $2,000/month) is *likely* excessive and not enforceable. Like most states, TX will enforce "liquidated damages" clauses--or provisions setting forth in advance the damages the breaching party will pay--if "actual damages," or the real loss caused by a breach, is difficult to know in advance, and also is the liquidated damages being sought are a reasonable estimate of what such damages might be. You have not indicated what your role or pay is, but even if it is difficult to determine the impact of you breaching in advance, it seems likely that a damages provision which would, for example, have you pay $34,000 in damages if you left employment, for example, one year early is excessive to the impact of you leaving early: it would have to be the case to support that award that if you left (in this example) one year early that it was reasonable to think that they'd suffer $34k of additional costs or lost profit, etc., and that does not seem likely--after all, it would seem that they could simply hire a new contract worker to replace you, and might suffer at most a few weeks of slow down in work.
But again, that is a comment made without knowing the project you're one, how it is staffed, how critical you are, what you do, or what you are paid. If you have very specialized or in-demand skills critical to an important, time sensitive project, and so you leaving would in fact be very disruptive and you'd be difficult to replace, it is possible that these damages are reasonable. All we can say is that *most* workers would not be held to damages like the ones you describe, but to know whether you would be, you need to consult in person with an employment law attorney who can evaluate what is reasonable in your case.
Note that even if the amount of the damages are too high and unenforceable, if you breach the contract, they can get whatever actual losses or costs they can prove you caused them (e.g. if to replace you in a reasonable, they had to hire through some agency that cost them an extra $10k of fees or wages, they could get that).

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