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 liquidated damage clause in an employment contract is a provision that specifies a predetermined amount of money to be paid by an employee in the event of a breach of their contractual obligations. In South Carolina, there are different types of liquidated damage clauses that employers address when drafting employment contracts. One type of liquidated damage clause commonly seen in South Carolina employment contracts is the "Non-Compete" liquidated damage clause. This clause aims to protect employers by deterring employees from engaging in competing business activities during or after their employment period. The clause typically states that if an employee breaches the non-compete agreement, they will be liable to pay a predetermined amount of money as damages to the employer. This provision is enforceable as long as the liquidated damages reasonably reflect the employer's anticipated loss from the employee's breach of the non-compete agreement. Another type of liquidated damage clause is the "Confidentiality" liquidated damage clause. This clause serves to protect an employer's trade secrets, proprietary information, and other confidential materials. It specifies that if an employee breaches the confidentiality provisions of their employment contract, they will be required to pay a predetermined amount of money as damages. Similar to the non-compete liquidated damage clause, this provision is valid if the liquidated damages reasonably estimate the loss the employer will suffer due to the breach. South Carolina also recognizes the "Breach of Duty" liquidated damage clause. This clause is commonly used when an employee has specific duties and responsibilities towards their employer. If the employee fails to fulfill these duties, the employer may include a liquidated damage provision that states a pre-determined amount to be paid by the employee as compensation for the breach. The liquidated damages must be a reasonable estimate of the employer's anticipated loss from the employee's failure to uphold their duties. It is essential for both employers and employees in South Carolina to understand the specific terms and limitations of any liquidated damage clause included in an employment contract. While these clauses can provide a measure of protection for employers, they must be carefully drafted to ensure that the liquidated damages are reasonable and proportionate to the actual damages the employer may suffer in the event of a breach.
