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.
A liquidated damage clause in an employment contract is an important provision that addresses the potential breach by an employer. In the context of New Mexico, there are specific considerations when including such a clause in an employment agreement. This detailed description will provide an overview of the New Mexico liquidated damage clause in employment contracts, addressing breach by the employer while incorporating relevant keywords. New Mexico recognizes the enforceability of liquidated damage clauses in employment contracts, which serve as predetermined amounts of compensation to be paid by the employer in case of a breach. When negotiating an employment agreement in New Mexico, it is essential to understand the various types of liquidated damage clauses that may be applicable. Here are some key types: 1. General Liquidated Damage Clause: A general liquidated damage clause sets a specified amount of money that an employer will be liable to pay in the event of a breach. The predetermined sum should be a reasonable estimate of the actual damages likely to be incurred due to the employer's breach, such as wrongful termination, non-payment of wages, or violation of non-compete agreements. 2. Non-Solicitation Liquidated Damage Clause: This type of clause specifically addresses breaches related to non-solicitation agreements. If an employer breaches a provision that restricts them from soliciting clients, customers, or employees from the company, a predetermined liquidated amount defines the compensation owed for the breach. 3. Non-Compete Liquidated Damage Clause: Non-compete agreements in New Mexico can also include liquidated damage clauses, providing a predetermined sum to be paid by the employer if they breach the agreement by participating in a competitive business or industry. These clauses ensure protection of the employer's trade secrets, confidential information, or customer base. 4. Unreasonable Liquidated Damage Clause: It's important to note that New Mexico courts may deem a liquidated damage clause unenforceable if the predetermined amount is deemed unreasonable and excessive, leading to a penalty rather than actual compensation. The clause must represent a good-faith effort to estimate the damages and cannot be punitive in nature. When including a liquidated damage clause addressing breach by an employer in a New Mexico employment contract, it is recommended to consult with an attorney knowledgeable in employment law to ensure its enforceability and compliance with the state's legal standards. By incorporating these types of clauses, employers and employees can protect their rights and establish clear expectations in case of a breach.
