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.
In Idaho, a liquidated damage clause in an employment contract addressing breach by an employee is an essential provision that seeks to address potential damages suffered by an employer in the event of a breach by the employee. This clause specifies a predetermined amount of damages that the employee must pay to the employer if they violate the terms of the employment agreement. The primary purpose of a liquidated damage clause is to estimate the actual damages that would be difficult to determine precisely at the time of contract formation. By including this provision, both parties can foresee the consequences of a breach and avoid lengthy and costly legal disputes down the line. There are different types of Idaho liquidated damage clauses in employment contracts addressing breach by an employee: 1. Fixed Amount Clauses: This type of clause specifies a fixed dollar amount that the employee must pay in the event of a breach. For instance, the clause may state that the employee shall pay a sum of $10,000 if they violate a non-compete agreement. 2. Formula-Based Clauses: In some cases, liquidated damages are calculated based on a pre-agreed formula. For example, the clause may state that the employee must pay three times their monthly salary if they disclose proprietary information to a competitor. 3. Restitution Clauses: Instead of specifying a predetermined amount, this type of clause requires the breaching employee to reimburse the actual losses suffered by the employer. The clause may state that the employee shall pay the employer for any and all damages incurred as a result of the breach. It is important to note that Idaho courts may scrutinize liquidated damage clauses to ensure that they are reasonable and not excessive penalties. The courts consider factors such as the nature of the employment, the reasonableness of the amount set, and the potential harm caused by the breach. In conclusion, an Idaho liquidated damage clause in an employment contract addressing breach by an employee is a crucial provision that protects the employer's interests by clarifying the consequences of a breach. It can be structured as a fixed amount, formula-based, or restitution clause, depending on the specific circumstances of the employment agreement.
