Pre hire contract states employee must pay a fee of $5,000 if the employee terminates the contract prior to maturation date, if the employer terminates the employee for any reason, or if the employee reduces hours worked each week less than 40. There is no initial monetary sign on bonus and no monetary bonus after the two year contract term. Contract states that new employees to the field will be given extensive training in the orientation period. However, new hires with zero experience and new hires with extensive experience are given the SAME training and orientation. Is that contract legal and would that fee have to be paid to the employer should the contract be terminated early?
The courts will typically allow parties to contract between each other freely, and will not void a contract unless it is patently unconscionable or illegal. If an employee is free to review the terms of the employment relationship, including monetary penalties for terminating a contract prior to its maturation, then the courts will most often hold that employee to the terms of the contract. The theory being that if the employee did not like the contract terms, he or she were free to decline employment in the first place, or negotiate the terms further. In the employment scenario, liquidated damages clauses (which is what you have here) are becoming more commonplace should an employee leave before the contract term, or give inadequate notice of voluntary termination. Employers argue that they incur a great deal of expense and loss of production because of employee turnover, which is what such liquidated damages clauses are designed to address. Your only argument would be that the $5,000.00 is excessive, either because it is being used as a penalty and not to compensate the employer for lost human resources, or because it is not commensurate with your salary and is unconscionable on those grounds. As a policy, however, a fee being paid to an employer for the early termination of a contract by an employee is not illegal.
As an employment attorney, that made my jaw hit the table. Is this a typo?
"Employee must pay a fee of $5,000...if the employer terminates the employee for any reason"
A contract which allows the employer to collect damages when they fire the employee, sounds like it is going to have a lot of problems. You should bring the contract to an employment specialist immediately.
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