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Any discussion of breach of contract begins with an explanation of ‘at will’ employment. This terms describes the fact that an employer has the right to hire or fire someone for any reason with or without good cause subject to certain exceptions.

However, when an employer hires or fires someone based on certain protected categories and characteristics, it is a violation of anti-discrimination law. These laws protect all employees from discrimination on the job and apply to specific types of discrimination known as protected categories. Typically, protected categories include race, color, national origin, sex, religion, age, disability and sexual orientation.

Also, the ‘at will’ employment doctrine does not apply when there is a valid employment contract between an employer and employee.


  • Implied
  • Oral/Verbal
  • Written

When an employer breaks the contract it has created between employer and employer, doing so is known as breach of contract.

Exploring the Terms of a Written Contract

The provisions of a contract can be numerous. In fact, there is no limit to the number of terms or conditions a written employment contract may contain. Typically, an employment contract will contain a length of service provision which dictates the duration of employment. For example, if an employment contract contains a term of five years for employment, the employee is under contract for that time period and cannot legally quit or be fired, nor, in some instances, can he work for another company.

However, it is possible for any term or condition to be associated with certain exceptions listed also as terms of the contract. For instance, the common exception to a length of service provision is termination for “good cause.”

What is “Good Cause” for Termination

When an employment contract contains an “good cause” exception, an employee can be fired for any reason defined in the contract as such. The definition of “good cause” in a written employment contract is, then, extremely important, as it can determine whether or not there has been a breach of contract based on the terms of the agreement between an employer and employee.

The typical occurrence is that an employee under written contract will sue his employer because he’s been fired under the “good cause” exception to the length of service provision in the contract. The employee sues because he thinks there was no good cause for his termination. Court will examine the terms of the written contract to determine whether, according to the definition of “good cause” in the contract, there was a breach in violation of the terms.

Dealing with Bad Faith Breach of Contract

When an employer places unreasonable clauses within a contract, whether written or implied, he could be dealing in bad faith. Bad faith breach of contract occurs when an employer makes a clearly unreasonable interpretation of the contract, thus violating its terms.

For instance, an employment contract may contain a condition that terminates employment when or if an employee removes company property from the premises. Provisions like these are meant to prevent stealing, and typically apply when an employee takes a piece of equipment or confiscates company information.

If the employer fires a worker under this provision for taking home a memo or letter this could be considered an act of bad faith. Clearly, firing someone for taking home a memo is an unreasonable interpretation of the contract provision.

Breach of Contract Damages

The big question in breach of contract cases is what can employer recover in terms of damages. It is important to note that an employee can only recover the amount he or she would have earned had there been no breach of contract. These damages are called restitution damages since they are meant to make the employee “whole” by placing him back in the position he would have been in had there been no violation of the law.

This means there are only certain damages an employee may sue for under breach of contract claims. It is possible for an employee to sue for lost wages and benefits. Also, an employee can sue for the amount he or she would have earned in the future, minus the earnings of a new job, considering he gets a job in reasonable time. However, an employee cannot collect damages for emotional distress, though this is, at times, a big influence in breach of contract cases.