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.
Iowa Liquidated Damage Clause in Employment Contract Addressing Breach by Employer: Explained In an employment contract, both the employer and the employee have certain rights and obligations. However, sometimes breaches of these agreements occur, leading to potential harm to the non-breaching party. To address such situations, Iowa recognizes the inclusion of a Liquidated Damage Clause, which helps protect employees in case of employer breaches. A Liquidated Damage Clause is a provision that specifies the predetermined amount of compensation an employee is entitled to receive if the employer breaches the terms of the employment contract. It serves as a means to estimate the losses suffered by an employee due to the breach, saving the need for lengthy legal battles and providing a clear remedy. There are different types of Liquidated Damage Clauses commonly seen in Iowa employment contracts. These include: 1. Breach of Non-Compete Agreement Clause: In cases where an employer fails to honor the non-compete agreement, preventing the employee from seeking alternative employment in a similar field, this clause safeguards the employee's interests. It allows the employee to claim a specific amount of compensation for the breach, compensating for potential loss of income and career opportunities. 2. Confidentiality Agreement Breach Clause: Should an employer disclose or misuse confidential information shared by the employee during the course of employment, this clause comes into play. It establishes a predetermined damage amount that the employer will be liable to pay as compensation for the breach, protecting the employee's rights to maintain the privacy and confidentiality of their sensitive information. 3. Wage and Payment Breach Clause: If an employer fails to provide accurate and timely payment of wages or other agreed-upon compensation, this clause ensures that the employee is fairly compensated for the breach. It specifies the liquidated damage amount to be paid, addressing any financial harm caused by the employer's breach of payment obligations. 4. Termination Clause: In situations where an employer terminates an employee unlawfully or without proper cause, this clause outlines the amount of compensation the employer must provide to the employee. It sets a predefined liquidated damage amount to cover any potential financial hardships faced by the employee due to sudden job loss. These types of Liquidated Damage Clauses provide essential protection to employees in Iowa, offering them an efficient way to seek compensation in case of employer breaches. When drafting an employment contract, it is crucial for both parties to carefully consider the specific circumstances and include the appropriate clause(s) to ensure fair and reasonable protection for all involved.
