Being hired for a new job can be exciting and challenging all at the same time. It is common for people to be presented with employment contracts in their new position. Most of the items that you will find in an employment contract will be fairly standard. But there are also several things that you should look out for. Failing to properly consider all of the terms of your employment contract can lead to major headaches and issues down the road. Here are five things to look out for before you sign your new employment contract.
1. Non-Compete Clauses
Depending on the industry and type of work that you perform, there may be a non-compete clause within your employment contract. It is important to determine whether or not this clause is enforceable. In California, non-compete agreements are typically considered void. See, for example, Cal. Bus. and Prof. Code §§ 16600.
It is also a good idea to look for non-solicitation clauses that may be present within your contract. These could possibly prevent you from contacting clients or even your own colleagues in the future if you decide to leave your position. In order to protect your interest, make sure that these clauses are not overly broad in terms of geography, time, or scope.
2. At-Will Employment and Just Cause Termination
California is one of many “at-will” states in terms of employment. What this effectively means is that your employer can let you go at any time and for any reason. The major exception to this rule is that they cannot let you go for discriminatory reasons or as a result of retaliation.
However, some employment contracts will include a “just cause” provision. This is a type of protection that prevents your employer from letting you go on a whim. Be sure to read the contract carefully and ask questions in order to understand what would qualify as a “just cause” for your own termination.
Another major item to consider is whether your employment contract offers any severance terms. Severance is compensation that is paid to an employee at the end of an employment relationship. Understand in what situations you may be entitled to severance in the event you are let go from your position.
3. Compensation and Benefits Agreements
Perhaps one of the most important aspects of any employment agreement is the compensation and benefits arrangement. The terms of your compensation and benefits should be clearly defined. This is particularly important if you are going to receive stock options.
Some employers will add hidden clauses within compensation and benefits agreements that allow them to alter bonuses at their own discretion. You should understand if there are any clauses like this upfront and take this into consideration. Moreover, it is also worthwhile to check that all benefits, including retirement contributions and PTO, are in alignment with what you were initially promised.
4. Intellectual Property and Confidentiality Clauses
Depending on the nature of any work that you perform, there may be intellectual property clauses. It is common for these clauses to state that any work you create during the course of your employment belongs to your employer. This will typically be the case even if the work that you create was done on your own free time. For someone who is highly creative and wants a great deal of control over their own intellectual property, this could be a dealbreaker.
Another item to look out for in your employment contract is confidentiality agreements. Like intellectual property clauses, these can be relatively common. However, they should not be overly broad and unreasonably restrict your ability to work in a similar field at a later date. Failing to take these terms into consideration can create major challenges down the road if you wish to leave your employer.
5. Dispute Resolution and Arbitration Clauses
It is common for employers to include mandatory arbitration agreements in all of their employment contracts. These are typically included to prevent lawsuits. Take into consideration if the dispute resolution and arbitration agreements involve waving a right to a jury trial in the event of a class action lawsuit against your employer. While these parts of an employment contract may be common, they should be fair and not overly burdensome.
Getting Legal Help For Contract Disputes
There is no need to rush when it comes to signing your employment contract. Take the time to go through the contract line by line and be sure that you are comfortable with everything. When you run into an item that you do not understand, consider speaking with an employment lawyer. The last thing that you want is to be stuck abiding by the terms of a burdensome contract that you didn’t understand in the first place.
If you or someone that you care about is having issues with respect to your employment contract, you may have legal recourse through a civil claim. Our labor law attorneys at The Labor Champ are here to serve your needs. We can investigate the unique terms of your employment contract and let you know if you may be entitled to damages. There’s no cost in having us review your case. Whether you just have legal questions or are wondering how an attorney might be able to help with your particular situation, we are here for you. You can reach out to us anytime at 949-727-9300.
