Professionals negotiating a new position with an employer or preparing for a promotion often have to sign contracts. Frequently, employees simply sign whatever documents employers provide without reviewing them or countering the proposed terms in any meaningful way.
They may then find themselves at a marked disadvantage later when they have a conflict with their employer or unexpectedly lose their jobs. The terms of an employment contract can restrict future economic activity and even prevent a worker from suing an employer. Sometimes, workers can prevent companies from enforcing contracts by asserting that they are unconscionable in court.
What makes a contract unconscionable and, therefore, unenforceable?
Imbalanced terms are a common issue
An unconscionable contract is unfair, unethical and possibly even oppressive. Typically, unconscionable contracts specifically benefit one party without providing much value to the other party.
An unconscionable employment contract might include restrictive covenants that prevent a worker from starting their own business or accepting similar jobs elsewhere for years after leaving their position. They might make unrealistic demands on workers, such as making them liable for liquidated damages in scenarios where they make a mistake on the job.
State statutes prohibit the courts from enforcing the terms of unconscionable contracts. To challenge a contract as unconscionable, professionals generally need to show that the terms are unfair.
Even if employees may not be able to invalidate a contract as an unconscionable agreement, there may be other ways to navigate a dispute with a current or former employer. Reviewing an employment contract with a skilled legal team can be the first step toward developing a viable legal strategy during an employment dispute.