While most employment is "at-will," some employees have contracts that limit when and how they can be terminated. If your employer violated an employment contract by firing you without cause or proper procedure, you may have a breach of contract claim.
Types of Employment Contracts
Employment contracts can be written, oral, or implied:
Written contracts: Formal agreements specifying employment terms, duration, termination procedures, and grounds for dismissal. Common for executives, professionals, and union employees.
Oral contracts: Verbal promises about job security or termination procedures. While harder to prove, oral contracts can be enforceable.
Implied contracts: Created through employer conduct, policies, or statements suggesting you won't be fired without cause. Employee handbooks, performance reviews, and company culture can create implied contracts.
Common Contract Terms
Employment contracts typically address:
Duration: Fixed-term contracts for specific periods, or indefinite employment until properly terminated.
Termination for cause: Specifying what conduct justifies termination—typically misconduct, poor performance, or violation of policies.
Termination procedures: Requirements like written warnings, performance improvement plans, or notice periods before termination.
Severance: Payments due upon termination, especially termination without cause.
Compensation: Salary, bonuses, commissions, equity, and benefits.
When Employers Breach Contracts
Common contract breaches include:
Termination without cause: Firing you when the contract requires "cause" and no valid cause existed.
Failure to follow procedures: Skipping required steps like warnings, reviews, or notice periods before termination.
Pretextual cause: Claiming "cause" exists when it doesn't—manufacturing justification to avoid obligations.
Failure to pay: Not providing agreed compensation, bonuses, or severance.
Early termination: Ending fixed-term contracts before they expire without justification.
Proving Breach of Contract
To prove breach, you must establish:
1. A valid contract existed (written, oral, or implied).
2. The specific terms that were violated.
3. You performed your obligations under the contract.
4. The employer breached specific contract terms.
5. You suffered damages as a result.
Implied Contracts from Handbooks
Employee handbooks can create implied contracts even without formal written agreements. If your handbook states employees will only be terminated for cause, describes progressive discipline procedures, or makes other promises about job security, these may be enforceable.
However, many handbooks include disclaimers stating they don't create contracts. Courts examine whether disclaimers are conspicuous and whether employer conduct contradicted the disclaimer.
The "Cause" Requirement
If your contract requires termination "for cause," your employer must prove valid cause existed. Typical cause includes misconduct or policy violations, poor job performance (usually documented), dishonesty or breach of trust, insubordination, and criminal conduct.
Mere personality conflicts, management changes, or business decisions don't constitute "cause" under most contracts.
Damages for Breach
Contract damages aim to put you in the position you'd be in had the contract been honored:
Lost wages: Salary you would have earned through the contract term or until you found comparable employment.
Lost benefits: Value of health insurance, retirement contributions, and other benefits.
Lost bonuses and incentives: Compensation you would have earned.
Severance: If your contract provides severance for termination without cause.
Duty to Mitigate
You have a duty to mitigate damages—meaning you must make reasonable efforts to find new employment. Damages are reduced by income from new employment or income you could have earned with reasonable job search efforts.
Document your job search efforts thoroughly. Unreasonable failure to seek work reduces your recovery.
Statute of Limitations
Contract claims have time limits—typically three to six years for written contracts, and shorter periods for oral contracts. Check your state's specific deadlines and file promptly.
Arbitration Clauses
Many employment contracts require arbitration rather than court litigation for disputes. If your contract has an arbitration clause, you may be required to pursue your claim through arbitration—a private process with different procedures and potentially different outcomes than court.
Getting Legal Help
Contract claims require careful analysis of your specific agreement. An employment attorney can evaluate whether you have a valid contract, identify breaches, calculate damages, and navigate any arbitration requirements. Many employment attorneys handle these cases on contingency.