When an employee signs an employment contract, failing to give proper notice before he terminates his employment is a breach of contract. Without giving proper notice, the employee may be liable for damages. In a recent Massachusetts case, Sigma Systems v. Rasamsetti, a computer consultant found himself liable for damages totaling $43,943.48, for failing to give the thirty days notice of termination as required by his employment contract.
The employer, however, is required to mitigate his damages. If the employer does not take reasonable steps to protect himself from loss, then the employee may not be responsible for all of the employer’s lost profits. In Sigma, the court found that the evidence did not show the employer was unable to substitute with another consultant for the job, or that an effort to substitute with another consultant would be futile. There was nothing in the record to suggest that the defendant was irreplaceable, and as such, the court found that Sigma had failed to mitigate all of its damage by hiring another consultant to finish the defendant’s work. Therefore, the court awarded the employer some but not all of its lost profit.
In addition, if the employment contract provides for them, the employee may also be responsible for the employer’s attorney’s fees when he sues for this breach of contract. However, these attorney’s fees must be based on a fair market rate for a reasonable amount of time. The employee should not be responsible for any excessive costs, but even reasonable fees can add up very quickly. In Sigma, the court reduced the attorney’s fees requested by the plaintiff, yet the defendant was still liable for $34,600 in attorney’s fees, and $2,466.22 in other costs, plus some lost profit.
Employees should pay careful attention to their employment contracts. Should they need to terminate their employment, an employee must be sure give his employer the required notice, or else he may find himself with a huge bill.
Addendum: Sigma Systems v. Rasamsetti was amended on Nov. 8, 2005. The court had incorrectly placed the burden of proof on Sigma Systems to prove that they could not have mitigated their damages. The burden is actually on the defendant to prove that their employer could have mitigated the damages, not on the employer to prove that they could not mitigate. Therefore, Sigma was able to recover lost profits from July through November 2001 and was awarded an additional $19,985.20.