Do money problems release Oregon employers from employment contracts?

Are you an Oregon business owner experiencing financial trouble? Learn how to handle employment contracts to stay on the right side of the law.

Recently, your Oregon-based company took several financial hits. You want to honor all contracts you made with your employees, but your current situation may prevent you from doing so. To avoid agreement arguments with your workers, you wonder if you must follow through with contracts during times of monetary hardship. Learn your options and rights to get ahead of potentially harassing activity and lawsuits from disgruntled workers.

Defining the agreement

First, determine if you made at-will agreements or employment contracts with your workforce. Workers who signed at-will agreements may not have grounds to compel you to the desired action. Under an at-will agreement, you may terminate employees whenever you wish for nondiscriminatory reasons, and employees may quit their position whenever they want. For workers who signed employment contracts, the agreement may list a minimum employment period that you must honor and circumstances that justify terminating the contracted employee.

Filing for bankruptcy

Have you or do you plan on filing for Chapter 7 bankruptcy? If so, filing under this specific chapter of bankruptcy lets you sell your company assets and releases you from honoring employee agreement terms. With Chapter 11 bankruptcy, you reorganize your company while remaining in business, which may not absolve you from meeting terms in existing employment contracts.

Revising contracts

Say that you have an employment contract you must honor. Gauge the worker’s interest in renegotiating the contract to terms more agreeable to your current financial situation. It may take longer than you like to hammer out a new contract, but you may prefer the investment of time to the cost and time involved with navigating a lawsuit. If you fire contracted employees without attempting to revise your agreements, you open yourself to legal action for violating the contract’s terms.

Facing a lawsuit

What if you feel that you have no choice but to terminate a worker who signed an employment contract? Or, what if you already fired a contracted employee without knowing all the potential legal ramifications? In both situations, you may face legal action for wrongful termination. Even if the terminated contracted worker wins the legal case, she or he may only receive enough compensation to cover the salary terms of your original contract, nothing more.

Do you anticipate legal pushback from employees when you share the news of your company’s current financial health? Make it a priority to meet with a business law professional in Oregon to understand and protect your legal rights and create a viable plan of action.