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How to handle mistakes in employment agreements

On Behalf of | Mar 16, 2022 | General Counsel |

Employment agreements are a crucial part of employment law. When employment agreements have mistakes, it is often unclear what will actually happen. It might seem obvious that mistakes don’t really count when the intention is clear, but that current precedent calls this into question.

Employment agreements

An employment agreement defines key aspects of a worker’s employment, such as the terms of work, a job description, or the pieces of a severance package. In most cases, these are simple and easy contracts and both parties do not take long to agree on the terms, put them to paper, and sign them. However, in some cases, there are mistakes or errors that make their way into the contract and both parties sign without realizing that they are there. In one case, a severance contract had an extra zero in the monthly salary, resulting in the executive leaving the company getting ten times more money than the company intended.

The two parties went to court and the company moved to dismiss on summary judgment. The first court allowed this, but the appeals court overturned the decision. Even when a piece of a contract appears to be an obvious mistake, courts are extremely hesitant to make any changes to them, preferring to let the terms stand as written. This poses a major risk to both employees and employers. If they do not examine every employment agreement carefully, they may wind up with a flawed contract and no court recourse.

The example cited here favored the employee, but it is just as likely that a flawed employment agreement could hurt the employee if they are not careful.

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