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Posted
Jun 10, 2000; updated Sep 24, 2007
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A contract is a binding
agreement between parties that the courts will enforce. All employment
agreements between a foreign national and a U.S. employer are governed by
general principles of contract law.
Unlike immigration law, which is strictly federal
in nature, employment contracts and agreements are generally governed by both
state laws and the general principles of common law that were adopted
from the United Kingdom.
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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 a duty. To breach a contract means to fail to
perform in the proper manner.
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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 its acceptance. The second requirement to a contract is consideration, which,
in the employment context,
basically means there must be an exchange of goods or services for 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
certain minimum age.
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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 performing for the employer, the
manner in which the employer will compensate the employee, benefits,
holidays, leave, legal restrictions that an employer can impose on an
employee, etc. Just as the employee would have legal recourse if s/he is not
paid for her/his work, employers may also seek the assistance of the courts
if a current or former employee
breaches the agreement in any manner.
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The Murthy Law Firm regularly
receives eMails requesting information on the enforceability of provisions
that require the employee to pay a certain sum if s/he leaves
the the employer within a specified timeframe. Such clauses
generally
are enforceable only if the payment is considered liquidated
damages and not a penalty, and such amounts bear a reasonable relationship to
the expenses actually incurred by the employer for the employee. An employer
is not permitted to demand remuneration when an employee in the U.S. is "at
will," meaning that either party may terminate the employer / employee
relationship, unless different provisions have been made by contract.
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These restrictions in a contract are also
referred to as "restrictive covenants." Most restrictive covenants
are enforceable, although they are interpreted narrowly by the courts. This
means that they are read literally and are not given a broad, expansive
interpretation. If there is any ambiguity in the language, the courts
generally
will 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, provided the covenant is found
to be legally enforceable. In today's competitive business market, many
employers feel it necessary to protect themselves, their clients, and/or
their contractual relationships by inserting restrictive covenants in their
employment contracts.
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A standard clause in today's employment contract
is the covenant not to compete. Generally, such a clause in an employment
contract would prohibit the employee from competing 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.
Relief may include the court issuing an injunction, which would forbid the
employee from engaging in practices that would be considered competition. Of
course, in order for the court to enforce covenants not to compete, they
must be fair and practical.
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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. Among 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
the right to compensation if injured on the job.
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Unlike federal law, which includes immigration law,
labor and employment 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, including the local chapter of the American
Bar Association, the State Department of Labor, local labor unions, the U.S.
Department of Labor, the U.S. Equal Employment Opportunity Commission, etc.
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It is important to remember not to sign an
agreement to which you, as an employer or as an employee, cannot agree in
principle or in 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.
Copyright © 2006, MURTHY LAW
FIRM. All Rights Reserved
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