Enforceability of Employment Agreements
Prior to May 1998

A contract is a binding agreement between parties which the courts will enforce. All employment agreements between the foreign national and the U.S. employer are governed by general principals of contract law.

Unlike Immigration Law, which is strictly federal in nature, contracts, like employment agreements, are generally governed by both State laws and the general principles of common law which were introduced from the United Kingdom.

A contract is a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as duty. To breach a contract means the failure to perform it in the proper manner.

Generally, contracts including employment agreements need not be in writing to be enforceable. There are four basic requirements of a contract. The first is called mutual assent. This means that the parties to a contract must manifest by words or conduct that they have agreed to enter into a contract. This normally takes place as an offer and acceptance. The second requirement to a contract is consideration, which basically means there must an exchange of goods or services or monetary consideration. The third basic requirement is that the intention must not be of an illegal nature. The final requirement is contractual capacity. This refers to the fact that the parties must be of sound mind and body and of a specific age.

Generally employment contracts are in writing in order to make them easier to enforce. Employment contracts generally discuss the nature of work the employee will be fulfilling for the employer, the manner in which the employer will reimburse the employee, benefits, holidays, leave, legal restrictions which an employer can impose on an employee, etc. Just as the employee would have legal recourse if he/she is not reimbursed for their work, employers may also seek the assistance of the courts if a current employee or a former employee breaches the agreement in any manner.

The Law Office of Sheela Murthy regularly receives e-mails requesting information on the enforceability of provisions which require the employee to pay $10,000 or $20,000 if the employee leaves the employ of the employer within 1, 2 or 3 years, etc. This includes payment of airline tickets and relocation costs. Such clauses are generally enforceable if the payment is considered liquidated damages and not a penalty and such amounts bear a reasonable relationship with the expenses incurred by the employer for the employee.

These restrictions in a contract are also referred to as restrictive covenants. Generally, restrictive covenants are enforceable though they are interpreted narrowly by the courts which means that they are read literally and are not given a broad expansive interpretation. If there is any ambiguity in the language, the courts will generally not stretch the restrictive covenant beyond its literal or generally understood meaning. If a covenant is violated, the court may impose stiff penalties against the employee. In today's competitive business market, many employers have felt it necessary to protect themselves, their clients and/or their contractual relationships.

A standard to today's employment contract is the covenant not to compete. Generally, this would refer to a clause in one employment contract that the employee will not compete with the employer during employment and for a stated period of time thereafter. If the employee violates the agreement, the employer may seek relief through the courts. This may include the court issuing an injunction, which would forbid the employee from engaging in practices which would be considered competition. Of course, in order for the court to enforce covenants not to compete, they must be fair and practical.

Just as businesses have the right to protect their client lists, information, trade secrets, and so forth, employees also have certain rights under the law. Amongst these rights are the right to not be unfairly dismissed, the right to a safe work environment, notice of layoff or termination, the right not to be sexually harassed and compensation if injured on the job.

Unlike Immigration Law, which is purely federal in nature, Labor Law and Employment Law and Employee Protection Laws in the United States are subject to different rules and regulations in different States. There are several sources to obtain information regarding local employment laws in your area. The local chapter of the American Bar Association, the State s Department of Labor, local labor unions, etc.

It is important to remember not to sign an agreement which you as an employer or as an employee cannot agree in principle or fact. Under the doctrine of the sanctity of contracts, U.S. courts are very likely to enforce the agreement, especially if the terms are deemed reasonable in the business context.