Legal news and tips for employees, by Law Office of Eugene Lee

Can My Employer Break My Employment Contract? Can I?

contract1.jpgWhenever it comes to contracts, the answer is always the same: it depends on what the contract says. A contract is a contract is a contract. Neither you nor your employer can breach a contract without facing the consequences. That is, unless the contract says it’s ok. This is why it is so important that employees keep copies of any contracts they have signed with their employers. If you don’t have a copy of your contract, your employer is required by law to give you one if you request it. To see how, go to this post.

These are important provisions to look for in your contract:

  • At will employment/Termination: In California, employment is presumed to be at will. This means your boss can fire you at any time for any reason (as long as it’s not discriminatory, retaliatory or interfering with your medical leave rights). Your boss could say, “You’re too tall, you’re fired” or “you’re too obnoxious, you’re fired” or “I don’t like you, you’re fired” or . . . well, you get the idea. The contract will usually spell out whether your employment is at will or not. Even if it does, don’t give up. The contract might include other contradictory provisions which say that your boss can’t fire you at will after all. When in doubt, talk to an attorney.
  • Arbitration: More and more employment contracts require you to resolve any disputes you might have with your employer before an arbitrator. This is basically the employer’s way of making sure you can’t sue him in court. What’s wrong with arbitration? Arbitrators can charge thousands of dollars, you might be on the hook for part or even all of it, arbitrators rarely give large awards to employees and, worst of all, arbitrators overwhelmingly tend to favor the employer who is more likely to be a source of repeat business over you, the individual whom the arbitrator will likely never see again. Here’s another thing, the clause is often written to require the arbitration to occur in another state.
  • Non-compete: Many agreements bar employees who leave the company from working in the same industry for a number of months or years. In California, these kinds of restrictions are not generally enforceable, particularly once the employee has left the company. As a result, most employers won’t try to enforce this clause. Still, it’s worth noting if your contract has this clause.
  • Liquidated damages: A few contracts might impose a monetary penalty on a party who breaches a contract. Note, if the penalty is too large, courts might strike the clause as being an unenforceable penalty.

Courts have also held that the terms contained in any employee manuals or employee policies which your employer has are also contractual. For example, if your employer’s policy manual says that you are entitled to bereavement leave and can’t be fired for it, then your employer is contractually bound to honor that commitment.

Finally, if your boss has orally made promises to you, like “you’ll have a job here for as long as you want one”, courts have held that those are oral contracts and are binding on the employer.

If your employer (i) breaks his contract with you, (ii) violates a term of the policy manual or (iii) goes back on his spoken word to you, you may have a legal claim for breach of contract. Legal claims for oral contracts have to be filed in court within 2 years. For written contracts, the time limit is 4 years. [Cal. Civ. Proc. C. sections 337 and 339]. If you think you have a claim, don’t wait – consult an attorney right away.

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44 Responses to Can My Employer Break My Employment Contract? Can I?

  1. I work in security at a aerospace for 22 years… of course I’m contracted through a security company and in the past 7 years have not received a increase in pay… the client was surprised because he said that there was more money paid in the contact for the officers for the increase… our branch manager is getting bonus’s on the backs of the officers who are doing more work and not being paid for is… my security is stealing our wages

  2. So I work as a nurse in a nursing home for almost 13 years, when our employer call out for a meeting that he already sold the company to a new owner. Are we entitled for a separation pay? Not only that, we are getting paid minimum wage $10 and the new employer told us that we are getting a raise upon work experience but never happened. We even found out that new hiries with no experience or less work experience get higher pay rate. Is this against employees rights, Equal pay for equal work, salary differences unequal starting salaries experience?

  3. So I work as a nurse in a nursing home for almost 13 years, when our employer call out for a meeting that he already sold the company to a new owner. Are we entitled for a separation pay? Not only that, we are getting paid minimum wage $10 and the new employer told us that we are getting a raise upon work experience but never happened. We even found out that new hiries with no experience or less work experience get higher pay rate. Is this against employees rights, Equal pay for equal work, salary differences unequal starting salaries experience?

  4. My company just told me they want me to sign a new employment contract. Im the DOS and have increased dept sales by 90 percent in 3 years. They said they value me , but have decided they are overpaying me. They want to cut my salary by $20k and distibute it to my subordinates. One employs has only been with our company 6 weeks!! Is this legal or discriminatory?

  5. I am General Manager of a Fast Food franchise restaurant. I have an employment agreement that says I am the one who is in control of the store. It also states I have 6 months to get the restaurant numbers at the level of the Corporate’s. It has only been 4 months and my boss is now trying to take power away from me by taking the scheduling away, food ordering and bringing back an employee who I do not approve of. I have already made significant changes to the stores numbers and have not done anything wrong. Do I have any legal right to file a complaint or lawsuit for breech of contract. There is a significant bonus amount outlined in my offer. By taking away my power he is taking away my bonus, If I am not going to have the control.

  6. I was working as a w2 employee on a project through an agency and did not sign a no compete. I have had major issues being paid appropriately – time gaps for no reason, simply not processing payroll due to a data entry error on the part of payroll, was told not set up in the system, keeps taking random state taxes out for which I do not reside, did not set up direct deposit, has messed up Federal with holding consistently the times I am paid. i was just advised by the recruiter who hired me that I could not go to work directly for the company that I was providing project services to. Something seems very fishy. Any advice is appreciated.

  7. I am working for an NGO. I recently left my old job and starrted with them. I signed my employment contract but now the NGO has no funding so I am now unemployed.

    Do I have a case to sue for loss of income?

  8. I am a teacher that requested a transfer last school year and got it denied, because “they needed me”. So the head of HR WROTE me a letter saying I would have priority over anybody else for any position. I just want to remain in the same location, but I just got transfered somewhere else. Do I have a case?

  9. So my contact is pretty simple. It states what position I hold and my salary. Today I was demoted to an hourly employee and lost my managerial position. Do I have a case?

  10. So i work at a fast food restaurant and we have like this policy that we are allowed to have 2 call offs in a month. Okay here’s the thing i haven’t called of for almost a month and then i called off on the 2nd week of feb (1 time) and i called off again the 4th week ( due to sickness ) then my manager makes our schedule right then when i saw it i don’t have any schedules and now she told me that she’s waiting for the hr decision. I had this co worker that she almost fired too and she still gave him a chance and i don’t get any? And then last night one of my co worker sent us the sched for next week and the next thing you know im out of that schedule my name isn’t there anymore. Can i sue them?

  11. No body allow to broke the contract. If the employe broke then he have to pay for it, if employer broke then they have to pay to the employee.

  12. I signed an employment contract as a full-time, salaried employee, which included the following provision:

    “After six months of service, you will be eligible to participate in the (Company) 401k plan. The plan includes an employer contribution of up to four percent of you annual total compensation, under the IRS Safe-Harbor rule of section 401 of the IRS code.”

    Sometime after that, I became away that the employer did not have a 401k plan. Over the next nine months, I inquired at least three times about my employer establishing the 401k plan. Her response was always “I’m working on it”.

    Eleven months after my hire date my employment ended. Since then, I have claimed of the employer that she owes me up to four percent of annual compensation during my employment period based on the 401k provision in my employment contract. She has responded, saying she does not owe me anything since she never established the 401k plan during my employment.

    Based on these facts, I have the following questions:

    Does she owe me the employer contributions as stated in my employment contract for the period I was employed?

    Does she owe me any other monies, such as the pre-tax benefits I should have received by making my own contributions to the 401k plan?

    Does she owe me any interest I could have received while investing my contributions during my employment?

    On a related issue:

    Did she engage in any fraudulent behavior by stating in my employment contract that the company had a 401k plan when the company did not?

    Did she breach my employment contract by including a 401k provision knowing the company did not have a 401k plan?

    Did she breach my employment contract by including a 401k provision, then promising to create one and then never doing so during my employment?

    If she did engage in fraudulent behavior, am I entitled to compensation beyond what she may/may not owe me in 401k contributions?

    If she did breach my employment agreement, am I entitled to compensation beyond what she may/may not owe me in 401k contributions?

  13. my job contract states that I am paid the week of Christmas through New Years day- well the Boss sent out an email that we are working Mon-Wed – what do I do – I brought the contract to the attention of the “new” HR Manager and he said he would talk to my Boss and never got back to me! So I have to work 3 days in which I was entitled by Contract to have off and paid!

  14. employer hires employees at a salary rate.
    A few months later the employee was notified by employer that the pay structure had to be changed. Is it legal for the employer to changed a pay structure with a signed contract of promised salary?

  15. My employment is govern by law of California

    I am full time employee of a company A (H1-B sponsor) and company is having C2C with another company B, and there is a direct client of B, which is C (Client).

    Now, I got full time employment offer from company B (Company is willing to transfer H1-B sponsorship on B) and work for same client C (Client).

    Concern points-

    1. A and B both are having contract which says, B will not work directly or indirectly with me – B has already offered me employment; and they say, we’ll handle (Should I worried about this?)

    2. I have signed Non-Compete Agreement with company A and blow are the important point where I need expert input-

    · NON-COMPETE COVENANT. For a period of 2 years upon completion of employment with A, “XYZ” will not directly or indirectly engage in any business that competes with “A”. This covenant shall apply to the geographical area that includes all of the State of California.

    · NON-SOLICITATION COVENANT. For a period of 2 years upon completion of employment with “A”, “XYZ” will not directly or indirectly solicit business from, or attempt to sell, license or provide the same or similar products or services as are now provided to, any customer or client of A. Further, for a period of 2 years upon completion of employment with A, “XYZ” will not directly or indirectly solicit, induce or attempt to induce any employee of A. to terminate his or her employment with A.

  16. As a condition of employment my former employer made me sign a contract to work for them for two years in exchange for specialized training. I left after six months and never received the training and they were supposed to deduct a certain amount from my last paycheck and did not. Now over 4 months later they sent me a bill for that amount, they broke the contract by not taking the money from my last check. Can they legally bill me now?

  17. I HAVE BEEN WORKING FOR A COMPANY FOR 23 YEARS. THEY HAVE PAID MY MEDICAL AND DENTAL INSURANCE SINCE DATE OF HIRE. THEY JUST NOTIFIED ME THAT IN 2 WEEKS I WILL HAVE TO PAY. CAN THEY DO THAT?

  18. I got my interview l sign my offer letter and after a week the company wants to reduce my pay more than 20% .They say that they were under the impression that I had the qualifications for the job; but now they realize that I don’t. However the position that they are referring to is not the one that I applied for .I will add that I quit my job of 8 years to go to this company.

  19. I BEEN WORKING WITH MY COMPANY FOR ALMOST A YEAR AND NOW THERE MAKING ALL OF US SIGN AN AT WILL CONTRACT. I DONT KNOW IF I SHOULD SIGN IT. DO I HAVE TO SIGN NOW?

  20. When I hired into a home care agency I had a verbal contract from the employer stating that I would not have to work any holidays. Today they shoved an agreement in my face asking me to sign it that states I agree to work holidays……I will not sign it as it negates our verbal contract. Can I collect unemployment if I am fired for not signing it? They told me I had 2 days to sign it but didn’t give me a copy to bring home to read through. Any suggestions? I will not work holidays.

  21. Over two years ago my employer stopped paying the employees and so I sent a letter asking when we would see the money we were working for. They fired me (I was on a contract) and they should not have been able to fire me for no reason. The whole thing really screwed up my life.. I would still be working there if this hadn’t happened. Is there anything I can do?

  22. My friend recently signed a contract with a family and here is what is says:
    Preliminary Contract of Employment
    $1000/mo with tax for 12 months
    Jane Doe agreed to start to work for us starting tomorrow as a housekeeper 24 hours 7 days a week.
    signed by my friend and the employer.
    Question: Can she get out of this contract anytime?

  23. I and 26 others signed an employment contract that stated the employer can terminate the contract for any reason at any time. Verbally the employer promised a 40 hour week whether we worked the full 40 hours or not. After working 1 day (10) hours and 6 days after the employer said starting retroactively the 40 hour has been reduced to only the hours you worked. Did they terminate the contract? Is it legal to terminate terms retroactively? Can I reject the new terms and consider myself terminated?

  24. Can my employer change their lunch break policy without going through proper steps? They state that they don’t have to mutually agree with you on giving you a lunch break if you work 6 hours.. is this true?

  25. My employer took a deduction from my pay check for $55.00 for an apron that is mandatory attire. Originally they were in restaurant for use each shift and laundered by establishment but some many disappeared they decided to charge each one of us for one. Is this legal? Also I’m wondering if the house can take a percentage of auto gratuity added to a check because they booked the party? And finally is there a set amount/ limit you can be told that you have to tip out of your money each night?

  26. I am under contract with a school as an English Tutor, but when I showed up to work they changed my job position to teach English Language Development to kids from Mexico. I have to do a 15 minute pull out class of my own every hour, but the rest of the time I spend in the class with those kids in my pull out class supporting them. I’m not apart of the union, and when I asked about the contract being redone to reflect the change it was ignored. I want to leave the job and teach some place else, but I am afraid they will try to pull my teaching credential as they have said they would do to a teacher who tried to leave at the beginning of the year. Can they really pull my credential? Is this a contract violation, or are the two jobs comparable enough for them to get away with this? (I also work an hour longer than my contract stipulated, but I am paid hourly, not salary.)

    • let me first disclaim that i’m not an expert on school employment law, however it sounds like this school is practicing some unfair and deceptive business practices since it seems to threaten its employees into doing things they don’t want to do.

      it seems that you have several issues, 1st your teaching license, 2nd employment contract and 3rd working extra hour .

      1. for your teaching license question i would advise you to look to your licensing organization to learn more about what violations would reflect negatively on your teaching license. that being said, it does not make any sense to me that someone would lose their professional license because she/he quit their job, even if there is a breach of contract situation. however, as i’ve said i don’t know anything about teaching licenses and you would have to either find an attorney who specializes in this or turn to the licensing body for help. also, i know you said that you’re not a union member, but if you contacted a teacher’s union, maybe they would answer some of your questions or put you in contact with someone who would give you advise.

      2. now about the contract, you should read the contract you signed with the school to see if the job description in the contract reflects the work you’re actually performing. although you were hired as a “tutor” the job you’re preforming now as an ESL teacher may not differ from what you “contracted” to perform, except maybe in title since the responsibilities may be same or similar enough where no “undue burden” is placed on you by making you teach the ESL classes. However, if there are vast differences between the job you accepted and the job you’re actually performing as an ESL teacher, then the school is probably in breach of its contract with you. I say probably because it depends on how different are the responsibilities you’re held to from those you agreed to in the contract, it is all about what you bargained for and the burden you bargained for.

      So, if there are major differences between the job you accepted and the one you’re expected to perform now, where you’re expected to do substantially more work or more responsibilities, the school would be in breach and you could leave and sue them for breach. However, another thing you need to consider is how long you’ve been working under these conditions, because the school may argue that agreed to this and the written contract was modified by your conduct…

      3. again i would recommend that you read your employment contract to see what it says about working after/past your normal work hours. generally, if the employer gives you a set schedule, ie M-F 9-5, the employer can’t force you to stay until 6 or to come in on Saturday or to penalize you for refusing to do it because that’s outside the schedule you agreed to with the employer. HOWEVER, the employment contract may state that as part of your job you would be required to stay late or come in on non-working days as necessary, so that would obligate you to stay the extra hour. But again, everything is proportional, so to speak, so if you’re forced to stay an extra hour every day and that interferes with your other obligations, that may be an unreasonable burden on you and you have the right to refuse to perform.

      Furthermore, the employer must pay you for the extra hours of work and those hours count toward your overtime.

      To sum up 🙂 read the job description and terms of the contract you signed, make a list of all your current responsibilities, and compare the two. You may want to, if you can, reach out to teacher’s union because they have expert knowledge in these matters and i’m just guessing their advise would be free. If you decide to see an attorney about this problem, the lawyer would want to see your contract and know the facts of your current job responsibilities, so that list would be a good thing to bring along.

      Since it seems like you would prefer leaving this job over renegotiating your contract it maybe a good idea to start looking for a lawyer

      good luck 🙂

  27. CALIFORNIA IS AN AT-WILL EMPLOYMENT STATE, meaning you can quit at any time, for any reason, with or without cause. State law supersedes any contract you signed with a business operating in California.

    I deal with contract and staffing on a daily basis… trust me, you can quit under contract and there is nothing an employer can do besides say your “Not eligible for re-hire”. By law they cannot say any thing negative about you besides the above statement.

    • that’s not true, in fact you’ve got it backwards. at-will employment is the default, if the employer didn’t clearly state whether or not you were hired for an “at will” position, the courts will presume that the employment was “at will”. however, when there is a contract between employee and the employer, it binds them to the terms stated in the contract. The contract overrides the presumption of “at will” employment and the terms of the contract will govern the parties rights and obligations under the contract.

      So even though no one can hold you against your will or force you to work somewhere you don’t want to work, if you have a contract with an employer, you can’t quit whenever you feel like it or for no good reason because the employer may sue you for breach of contract.

  28. Just curious to know if employer pust a codition in offer letter that employee can not leave the company for 1.5 years, if do so, he/she has to pay hafty amount($50000) to breach the contract. Is such a contract  leagl in California? 

  29. Hi:
    Thanks for all the information.
    We work in a music store.
    Our boss ask us to sigh as a contractor.
    We cannot work 60 miles away to teach music witch sould be wrong.
    And we cannot set our schedule , we cannot talk to our student about the schedule, we are even cannot see our schedule.
    And they paid us twice 2 month they paid how much they want to pay.
    Yesterday she is mad for we did not show up 1 hour early before work which we did not get pay to show up early.
    And she think we talk something to other teacher behind her back whitch is not true, she even call me to yell at me for no reason.
    And shw said going to cut our schdule for that.
    Can you tell me can we sue them??
    How and what we need to prepare??
    Thanks

  30. When a contract is validly entered into, parties must observe and respect the provisions thereof. any violation will result to breach hence actionable in courts of law.

    • can an employer tell you, you need to change your schedule after hiring you under a different schedule and leaving your previous job because of the schedule promised. Also, if you can’t do the schedule can they tell you it’s a voluntary resignation?

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