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 employer would have to prove the actual damages.
In Louisiana, a liquidated damage clause is a common component found in employment contracts to address potential breaches by employees. This clause provides employers with recourse in the event that an employee breaches the terms and conditions outlined in their employment agreement. It establishes predetermined damages that the employee must pay to the employer as compensation for the breach. By including this clause, employers seek to protect their business interests and ensure that they receive fair compensation should an employee violate contractual obligations. One type of Louisiana liquidated damage clause in an employment contract addressing breach by an employee is for non-competition agreements. Such agreements prevent employees from engaging in competitive activities or working for a competitor during or after their employment with the company. If an employee breaches this type of clause, they may be required to pay a predetermined amount as liquidated damages, serving as compensation for the harm caused by their breach. Another type of liquidated damage clause in Louisiana employment contracts addresses confidentiality agreements. These agreements prohibit employees from disclosing sensitive or proprietary information to third parties without proper authorization. If an employee breaches this clause, they may be liable to pay a predetermined sum as liquidated damages, reflecting the potential harm caused by the unauthorized disclosure of confidential company information. Additionally, an employment contract may contain a liquidated damage clause to address breaches related to non-solicitation agreements. Non-solicitation agreements prohibit employees from soliciting clients or customers of their current employer. If an employee violates this clause, they may be subject to paying liquidated damages according to the predetermined amount specified in the contract. It is important to note that liquidated damages serve as a measure of compensation in anticipation of actual damages and must be reasonable under Louisiana law. The validity and enforceability of a liquidated damage clause in an employment contract may be subject to judicial review if it is deemed excessive, punitive, or unfair. In summary, a Louisiana liquidated damage clause in an employment contract addressing breach by an employee provides employers with a predetermined amount of compensation in the event of employee breaches related to non-competition, confidentiality, or non-solicitation agreements. These clauses play a crucial role in protecting employers' interests and ensuring accountability for employee violations.
