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.
A Minnesota Liquidated Damage Clause in an Employment Contract is a provision that specifies a predetermined amount of damages that an employee will be liable to pay if they breach the terms of their employment agreement. This clause protects employers by providing them with a measure of compensation for the losses they may incur due to an employee's breach of contract. There are different types of Minnesota Liquidated Damage Clauses that can be included in an Employment Contract to address breach by the employee. These include: 1. General Liquidated Damage Clause: This clause specifies a fixed monetary amount that the employee will be obligated to pay in the event of a breach. It serves as a predefined measure of damages and eliminates the need for the employer to prove the actual losses suffered. 2. Liquidated Damages Based on a Formula: In some cases, employers may opt to include a formula-based liquidated damage clause. This clause calculates the amount of damages based on specific factors such as the employee's salary, length of employment, or the nature of the breach. Using a formula provides a more tailored approach to determining the damages. 3. Restrictive Covenant Liquidated Damage Clause: This type of clause is specific to cases where an employee breaches a restrictive covenant, such as a non-compete agreement or a non-disclosure agreement. It outlines the predetermined amount of damages the employee will owe if they violate the terms of these agreements. The primary purpose of including a liquidated damage clause in an employment contract is to provide certainty and avoid costly litigation in the event of a breach. However, it is important to note that these clauses must comply with Minnesota state laws. Courts in Minnesota will closely review liquidated damage clauses to ensure they are a reasonable estimate of the employer's potential losses and not an unenforceable penalty. In conclusion, a Minnesota Liquidated Damage Clause in an Employment Contract is a provision that establishes a predetermined amount of damages an employee must pay if they breach their contract. Different types of clauses can be included, such as general liquidated damage clauses, formula-based clauses, and restrictive covenant clauses specifically addressing breach in non-compete or non-disclosure agreements. It is crucial for such clauses to comply with Minnesota state laws to be enforceable.
