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What you need to know before you sign that employment contract

Finding a great job in this economy is hard work. Which is why you don’t want to put off a hiring manager by asking for too much. But you also don’t want to jeopardize your future by signing a legally binding document that puts you in a precarious position.

Understanding the terms and nuances of an employment contract could make the difference between job security and being out on the streets.

“Take some time before you sign,” Wendi Barish, a partner in the Employment Practices Liability Group at the Philadelphia law firm Weber Gallagher, tells eFinancialCareers. 
”While the job market is highly competitive in this economy, professionals need to carefully scrutinize proposed employment agreements.”

Here are some matters to consider before signing on that dotted line:

Does it make sense?

“If you don't
understand something, ask,” says Xan Raskin, an employment attorney and president of Artixan Consulting Group, an HR consulting
 company in New York City. “If the contract refers to the terms of policies that haven't been provided to you, ask for copies. If there are provisions
 such as tax consequences, equity compensation or other complicated terms of
 employment, spend the money to have an employment lawyer review it for you
 and give you some advice.”

The non-compete clause

“If the clause is too restrictive, the opportunity cost of accepting a future role may be too high,” says Tim Conti, an executive search consultant with On Search Partners, an executive search firm. “Before signing the non-compete in a new role, candidates should have a realistic grasp of what it will take to achieve their 10-year career plan, and then work with their recruiters to ensure that such clauses are reasonable.”

Grounds for Termination

Make sure you understand the potential grounds for termination of the agreement and that you are financially protected in the event that you can be terminated without cause,” says Barish. “If you are terminated without cause, you should negotiate to be paid severance.”


“Make certain that you can live with the confidentiality provision if the agreement is prematurely terminated and that you are comfortable with any limitations on the use of intellectual property,” adds Barish.

Donna Ballman, a Fort Lauderdale attorney and author of “Stand
Up For Yourself Without Getting Fired,” encourages prospective employees to pay attend to the following key points about employment contracts:


“Most contracts say you're an at-will employee, which means you can
 be fired for any reason or no reason at all,” she tells eFinancialCareers. “That might not sound too bad 
but if you also signed a non-compete agreement, then you could work a few
 months, give the company all your contacts and know-how, then be fired and
 have to stay out of the industry a year or two. If you can, try to negotiate 
a provision saying you can only be fired for cause. Make sure ‘cause’ is
 well-defined, and that it doesn't include something subjective like ‘not
 meeting company standards,’ or ‘poor performance’ unless there is some
 objective measure that can be utilized.”


“Make sure you understand how you're going to be paid. That may sound 
silly, but I can't tell you how many commissioned employees don't understand
their commission structure, and how many people expecting bonuses as a big
chunk of pay don't understand how the bonus will be calculated. If you don't
understand your pay structure, the time to ask is before you sign the
agreement,” said Ballman.

Intellectual property

“If you paint, design video games, write novels, or do
 anything creative outside of work, beware the contract that says if you thought of it or created it while you're employed, it belongs to the 

Know your rights as an Independent contractor

“Most companies get this wrong. If you're signing an
 agreement that you're a contractor, that means you are going to have to pay 
the employer's share of employment taxes. If the company controls the time, place and manner of your employment, you're an employee.”

AUTHORLekan Oguntoyinbo Insider Comment

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