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.
Title: Ohio Liquidated Damage Clause in Employment Contract Addressing Breach by Employee Introduction: In the state of Ohio, employers often include a liquidated damage clause in employment contracts to address potential breaches by employees. These clauses help protect employers against financial losses incurred as a result of an employee's breach of contract. This article aims to provide a detailed description of Ohio's liquidated damage clause, including its purpose, enforceability, and potential variations. 1. Definition and Purpose of Ohio Liquidated Damage Clause: The Ohio liquidated damage clause is a contractual provision designed to establish a pre-determined amount of damages an employee will be required to pay their employer in the event of a breach. It serves as a remedial measure to compensate the employer for losses that are otherwise difficult to quantify accurately. The primary purpose of this clause is to provide clarity and certainty regarding damages in case of breaches. 2. Enforceability of Ohio Liquidated Damage Clause: In Ohio, the enforceability of liquidated damage clauses is subject to certain legal considerations. The courts generally uphold these clauses as valid if they meet specific criteria. The amount stipulated as damages must be reasonable and proportionate to the actual harm anticipated to be caused by the breach. Additionally, the clause must serve a genuine compensatory purpose and not function as a penalty for the employee. 3. Types of Ohio Liquidated Damage Clauses in Employment Contracts: a) Flat-Rate Liquidated Damages: This type of clause specifies a fixed dollar amount as damages that the employee will be liable for in case of breach. It simplifies the calculation process and provides certainty to both parties involved. b) Percentage-Based Liquidated Damages: Instead of a fixed amount, this clause establishes damages as a percentage of the employee's salary or wages. The percentage may vary depending on various factors such as the employee's position, level of responsibility, or nature of the breach. c) Restitution-Based Liquidated Damages: Restitution-based clauses focus on compensating the employer for any financial losses incurred due to the employee's breach. It may include restoring funds or reimbursing monetary damages specific to the breach. d) Confidentiality and Non-Compete Liquidated Damages: These clauses address breaches related to confidentiality agreements and non-compete restrictions. They typically stipulate damages to prevent employees from disclosing proprietary information or engaging in competitive activities during and after their employment. Conclusion: Ohio's liquidated damage clause in employment contracts addressing breaches by employees provides employers with an effective means to safeguard against financial losses caused by contract violations. Thoughtful drafting and adherence to Ohio's legal requirements are essential to ensure the clause's enforceability. By including a well-crafted liquidated damage clause, employers can maintain contractual accountability and mitigate potential risks arising from employee breaches.
