Insurance for Disputes Surrounding Employees

employment practices liability

Employer-employee relationships are often based upon complex employment contracts, which often provide certain protections for workers. When an employee claims that their employer has violated the terms of an employment contract, they can decide to take action against the employer based on a breach of contract.

While this doesn’t necessarily mean that the employer has actually done anything wrong, the issue could wind up in the hands of a courtroom. Companies need employment practices liability insurance to protect their interests against such claims, particularly if they feel the claim has no merit. Breach of contract cases can be complex, so it’s important to consult with an attorney when defending against a claim of this nature.

Breach of employment contracts

If an employer breaches the terms of an employment contract, he or she can be held liable and would be required to pay damages to the plaintiff. Examples of a common breach of contract claims include termination in breach of the contract, violation of a severance agreement, failure to pay an employee’s commission or bonus, or failure to pay other compensation.

If an employee breaches a contract, he or she can be held liable and required to pay damages resulting from either a breach of trade secrets, fraud, commission or wage over-payments or a breach of a non-compete clause.

For an employee to properly demonstrate that an employer has breached an employment contract, the employee usually must prove that a valid employment contract exists, or that the employee either performed his or her obligations under a contract or had a valid excuse for nonperformance. In addition, the employee may need to prove that the employer breached the contract and because of that breach, the employee suffered damages.

Damages resulting from a breach of contract

An employee may suffer from a wide variety of damages as a result of a breach of contract, including lost wages or profits, expenditures made on reliance of a contract, mental or physical suffering, as well as liquidated damages or a loss of interest payments.

If an employee properly proves breach of contract, he or she may be entitled to compensation. The employee may also be entitled to recover attorney’s fees. With this much at stake and the complexities of our legal system, issues of this type are best left in the hands of a capable attorney or legal representative. This is a clear example of the need for employment practices liability insurance.