An employment contract may state the amount of liquidated damages to be paid if the contract is breached. Upon a party's breach, the other party will recover this amount of damages whether actual damages are more or less than the liquidated amount.
If the agreed-upon liquidated damage amount is unreasonable, the Court will hold the liquidated damage clause to be void as a penalty. If the Court declares the clause to be void, the employee would have to prove the actual damages.
Maryland Liquidated Damage Clause in Employment Contract Addressing Breach by Employer: Explained In Maryland, a liquidated damage clause in an employment contract serves as a mechanism to prescribe the amount of damages an employer would have to pay to an employee in the event of a breach of contract. It provides a pre-determined sum that both parties agreed upon at the time of contract formation, to serve as compensation for any potential violations. The purpose of including a liquidated damage clause is to reduce uncertainty and potential litigation costs, as parties can avoid lengthy legal battles to ascertain the actual damages incurred. Instead, the clause specifies the fixed amount that the employer must pay as a consequence of breaching their obligations. However, it is crucial to note that Maryland courts closely scrutinize and enforce these clauses to ensure they are reasonable and not punitive in nature. If found to be excessive or in violation of public policy, the court may modify or strike down the clause altogether. Different types of liquidated damage clauses in Maryland employment contracts addressing breaches by employers include: 1. Compensation-related liquidated damage clauses: This type of clause typically sets a specific sum as damages based on the employee's lost wages or benefits. For example, if an employee is wrongfully terminated, this clause could outline that the employer must pay a specific amount equal to the employee's salary for a certain number of months. 2. Non-competition agreement liquidated damage clauses: In Maryland, non-competition agreements are closely regulated. A liquidated damage clause in this context would specify the amount an employee would have to pay to the employer if they breach the agreement by engaging in competitive activities or joining a competitor within a specified timeframe. 3. Confidentiality agreement liquidated damage clauses: Confidentiality agreements often contain a liquidated damage clause. This clause would establish the amount an employer can seek in case the employee discloses confidential or proprietary information to unauthorized parties, breaching the agreement's terms. It is important for both employers and employees to carefully review and negotiate the terms of these liquidated damage clauses to ensure they are fair and reasonable for both parties. Seeking legal advice or consulting an employment attorney in Maryland can provide guidance on the enforceability and appropriateness of such clauses in specific circumstances.
Para su conveniencia, debajo del texto en español le brindamos la versión completa de este formulario en inglés. For your convenience, the complete English version of this form is attached below the Spanish version.
