Signing an Employment Contract: Protections to Contemplate

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If you have accepted a job offer, it means that you legally consent to an exchange of your services for a salary or an hourly wage. Most employment relationships do not require the use of an employment contract but can be useful in certain situations. For example, an employer may want to add incentives to attract and retain highly specialized talent.

Even if it looks like common "boilerplate" language, you should always read and understand each contract before signing it. Take the time to review the contract yourself or with the help of a lawyer. Contracts work both ways and should protect your interests and those of the employer. Please note the following contractual provisions and read them carefully.

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What should be included in an employment contract?

The exact makeup of your contract will depend on the nature of the relationship, the needs of the employer, state laws and any negotiations. Some of the most common contract terms are:

  • Compensation. This includes salary or wages, commissions when paychecks are sent, paid time off, and benefits.
  • Good faith clause and severance pay. In good faith, the employee must work to the best of his ability. A severance package can be set for layoffs and other terminations made through no fault of the employee.
  • Arbitrary employment. This is a statement about whether the employer needs a reason to quit you (including a list of examples). It may also contain guidelines for termination, such as: B. the return of your security ID and your laptop.
  • Nondisclosure Agreement (NDA). An NDA is an agreement that you will not disclose certain information that is considered confidential. In this case, it is a clause in the employment contract that limits your ability to disclose certain types of information that your employer considers confidential.
  • Arbitration agreement. This is an agreement that all labor disputes will be handled through arbitration rather than litigation.

Even if you don't get a full employment contract, you may be presented with an arbitration agreement, NDA, or other narrowly defined but legally binding contract.

Will a non-compete clause limit my career choice after I leave?

A non-compete agreement prevents you from working for a direct competitor or from starting your own competing business for a period of time after you leave the company. It also protects intellectual property and other proprietary information such as customer lists, business processes, and certain methods. These clauses are not enforceable in every state and may have certain restrictions in states that allow them.

Non-compete obligations cannot be too broad or invalid in court. They must be limited by the following factors:

  • Duration. It can't be indefinitely. Some states have legal limits (e.g. 2 years for a Louisiana non-compete obligation).
  • Geography. It must be restricted to a specific geographic region, e.g. B. a neighborhood, city, or region of the state.
  • Scope. It cannot prevent you from working in any capacity for a competitor and must define a certain scope of work.

Non-compete obligations are intended to protect the employer. You may want to read an NDA or non-compete clause carefully to decide if you can live with the terms. If not, you can negotiate to remove the clause or be prepared to walk away. Employers in states that do not recognize non-compete agreements (such as California) can ask you to sign a non-solicitation clause. A non-advertising clause prevents you from soliciting your former employer's clients for a period of time.

Can an employment contract prevent me from being fired for no reason?

Without an employment contract, your employer can terminate your employment without a reason, as long as it does not violate your rights (e.g. the right not to be discriminated against on the basis of protected characteristics such as national origin or skin color). This is the legal concept of "arbitrary" employment. One benefit of a contract is that you can negotiate a clearer definition of the conduct, actions, or conditions under which termination would be appropriate.

Much of it depends on how the term "cause" is defined in the contract, which you want to define as narrowly as possible. Even if it sounds reasonable to your contract to say that you can only be fired "for an important reason," it can mean almost anything. If it is defined as a "company policy violation" or if it contains language that is left to the discretion of the employer, it may not offer you much protection.

Another protection to consider is to include a "termination and healing clause" in your contract. This clause gives you the opportunity to resolve a problem after you have been notified but before your employment relationship has ended. Think of that as a "fix-it ticket" for your job. As long as you appropriately correct the action in a reasonable time (provided the mistake was made in good faith) it will protect you from dismissal.

Are there any employment contracts for independent contractors or consultants?

State and federal employment protection may not apply to you if you agree to work for a company or individual on a contract basis rather than as a full or "permanent" employee. These safeguards include payment terms and procedures for termination of employment. However, you can still get protection in a written agreement with independent contractors. This can also be referred to as a "Statement of Work" (or SOW).

Because independent contractors provide certain services and manage their own labor affairs themselves, these types of contracts are usually much simpler than employment contracts. For example, you cannot be expected to limit your work with other customers unless there is a clear conflict of interest. Nor can you expect any benefits or job security from a particular customer.

However, you can include the requirement of a reasonable notice before termination of employment, which is usually two-way. In the meantime, your client can specify a language about the type, scope and quality of the work that is expected against payment.

Make sure your employment contract protects you

If you have been offered a position, you may be presented with a contract, whether it is comprehensive or limited to an NDA or arbitration clause. In either case, consider getting a contract drawn up by the employer's legal team. They will ensure that their interests are adequately covered. However, it is up to you to determine whether the terms are fair to you too. Make sure what you are signing is in your best interest and ask a lawyer if you have any questions before signing.

This article contains general legal information and not legal advice. Rocket Lawyer is not a law firm or a substitute for a lawyer or a law firm. The law is complex and changes frequently. For legal advice, please contact a lawyer.

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