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 Nevada liquidated damage clause in an employment contract addressing breach by an employee is a contractual provision that outlines a predetermined amount of compensation that an employee is required to pay to the employer in the event of a breach of contract. This clause serves as a form of financial protection for the employer if the employee fails to fulfill their contractual obligations. In Nevada, there are two types of liquidated damage clauses commonly used in employment contracts addressing breach by the employee: general liquidated damage clauses and non-compete liquidated damage clauses. 1. General Liquidated Damage Clause: A general liquidated damage clause in a Nevada employment contract addresses various breaches of contract, such as failure to complete assigned tasks, violation of company policies, or disclosure of confidential information. This type of clause specifies a specific monetary amount the employee must pay as compensation to the employer for each instance of breach. For example, if an employee fails to complete a project as agreed upon in the contract, the general liquidated damage clause may state that the employee must pay a predetermined sum, such as $5,000, as compensation to the employer for the damages incurred. 2. Non-Compete Liquidated Damage Clause: A non-compete liquidated damage clause in a Nevada employment contract addresses breaches involving the employee's engagement in competitive activities during or after their employment. This clause typically restricts the employee from engaging in similar business activities or working for a competitor for a specified period within a specified geographical area. If an employee breaches this clause by joining a competitor or starting a competing business, the non-compete liquidated damage clause outlines the amount the employee must pay as compensation to the employer. The predetermined amount usually reflects the potential harm caused to the employer's business by the employee's breach of the non-competition agreement. It is important to note that Nevada law requires liquidated damage clauses to be reasonably calculated based on anticipated damages at the time of contract formation and not intended to act as a penalty. The enforceability of such clauses can be subject to legal scrutiny to ensure they are not excessive or unfair. In conclusion, a Nevada liquidated damage clause in an employment contract addressing breach by an employee is a contractual provision that specifies a predetermined amount of compensation that an employee must pay to the employer in the event of a breach. This can include general liquidated damage clauses for various breaches and non-compete liquidated damage clauses limiting competitive activities.
