Most high level employees and many salespeople work pursuant to employment agreements. Usually, the parties encounter no problems. But if a party fails to perform according to the employment agreement’s terms, the wronged party may pursue a breach of contract claim in court.
In Texas, most breach of employment contract lawsuits will be governed by a four year statute of limitations. That means that the wronged party must file a lawsuit within four years after the breach occurred. For installment contracts where performance occurs at set intervals (such as a commission agreement), the continuing contract doctrine likely applies. This doctrine holds that an employee or employer may recover damages for each instance of breach that occurred within the four year period immediately preceding the filing of the lawsuit, even if the initial breach occurred outside this time period. For example, an employee who received miscalculated monthly commission payments could seek damages for each payment that was paid within four years before she filed her lawsuit, even if the initial breach occurred five years ago.
For employment law advice regarding an employment agreement, please contact the employment law lawyers at Clouse Dunn Khoshbin LLP at [email protected].
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KEITH A. CLOUSE
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