Legal Remedies When an Employment Contract is Violated

Compensatory Damages (a/k/a Money $$$)

employement contractAn employment contract is at its essence a contract and the law offers extensive remedies and consequences to those who break the contract, violate the contract, and/or ignore the contract. A breach of an employment contract most often gives rise to traditional contract damages. Emotion, distress, tort remedies, and punitive damages are not available. “When a wrongful discharge of employment occurs, the measure of damages is usually the employee’s salary for the remainder of the employment period.” Where the employment was for an indefinite term, or for life, future wages may be awarded for a reasonable period. Thus, in Preston v. Claridge Hotel & Casino, the Appellate Division rejected the employer’s claim that an award of future wages was improperly based upon speculation and conjecture, finding instead that the jury could reasonably find that it would be two years before plaintiff would obtain a salary equivalent to that which she received prior to termination.

In a wrongful discharge case, the employee’s lost wages will be reduced by the amount of wages the employee earned from another employer or could have secured by the use of reasonable efforts. This obligation by the employee to seek a replacement position is called mitigation of damages. Mitigation of damages is proven by demonstrating that (1) the employee made no effort or no reasonable effort to secure employment after the discharge; and (2) other employment opportunities were available that were comparable to the position that the employee lost.

Punitive Damages in a Breach of Contract Case

Where the essence of the case is limited to a breach of such a contract, punitive damages are not appropriate regardless of the nature of the conduct constituting the breach.

One NJ Appellate Court has suggested that punitive damages may be available for a breach of contract in exceptional circumstances. The language used by the court reads as follows:

“there may arise a case involving such an aggravated set of facts that punitive damages might be appropriate regardless of the contract form of the action and even though it may be beyond the scope of the recognized exceptions in the adjudicated cases.

While the availability of punitive damages is unlikely, please feel free to discuss punitive damages should you consult with an employment law attorney at our office. You never know, your case may make new law. That issue remains unresolved, however, and the circumstances—if any—that might warrant imposition of punitive damages for breach of contract remain unknown.

Emotional Distress Damages

Damages for emotional distress are also ordinarily not recoverable in an action for breach of contract. Such damages may be allowed, however, where (1) the breach was willful and wanton, meaning a conscious and intentional disregard and indifference to the rights and safety of others which the defendant knows or should have known is reasonably likely to result in injury, damages, and harm; and (2) the harm was foreseeable when the contract was made. An employer would not generally be responsible for a loss he or she had no reason to foresee as a probable result of a breach when the contract was made: “to impose liability the employer must have had reason to foresee the injury at the time the contract was made, not at the time of the breach. This is a critical distinction which may significantly impact the possibility of recovering anything more than traditional economic damages.

Have questions or believe you have an employment law case that has merit and want to discuss its potential economic value? Then please contact Fredrick P. Niemann toll-free at (855) 376-5291 or e-mail him at Please ask us about our video conferencing or telephone consultations if you are unable to come to our office.

Fredrick P. Niemann Esq.