Employment contracts in California are legally binding agreements that establish an employee-employer relationship. These contracts come in three forms: (a) written, (b) oral, or (c) implied. A breach of contract occurs when either the employer or employee fails to perform one or more terms specified in the agreement. Although California is an “at-will” employment state, meaning employers can generally hire or fire for any reason, this doctrine doesn’t apply when there’s a valid employment contract in place.
For an employment contract to be legally binding, it must include several key elements: offer and acceptance (one party, typically the employer, makes an offer that is accepted by the other party), consideration (an agreed exchange of value, such as work for payment), legality (the work defined must be legal), and capacity (both parties must be of legal age and mentally fit to enter the agreement, without duress or coercion).
Employment contracts can include a wide range of terms and conditions, such as job title, salary, benefits, vacation and sick leave, confidentiality clauses, dispute resolution procedures, termination clauses, and severance details. Some contracts may also include a length of service provision, specifying the duration of employment.
A common feature in many employment contracts is a “good cause” provision for termination. This allows an employee to be fired for reasons defined in the contract as “good cause.” However, the meaning of what constitutes “good cause” can often lead to disputes between employers and employees.
A “bad faith” breach of contract occurs when an employer makes an unreasonable interpretation of the contract terms, effectively violating the agreement. For example, firing an employee to take home a work-related memo under a provision meant to prevent theft of company property could be considered an act of bad faith.
If a breach of contract occurs, employees have the right to pursue damages. However, these damages are typically limited to what the employee would have earned had there been no breach. This includes lost wages and benefits, as well as the amount the employee will have earned in the future.
If you believe that your employer is acting in bad faith or breached your employment contract, immediately contact us.
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