Never Sign an Employment Contract Without Checking These 5 Things

Finally! You have found your next job. The salary is good, the location ideal, and the job fits your skills and experience to a tee.  Your new employer presents you with an agreement you’re required to sign before you start your new job.  Fewer than half of all new employees read the small print before signing on the dotted line to accept a job. Even 27% of lawyers don’t properly check their own employment contracts! Many people assume that it’ll all be fairly standard wording and if there were any issues with the company’s contracts then surely a past or current employee would have kicked up a fuss and we’d have all heard about it, right? 

Employment and independent contractor agreements are two of the most important documents you will have to sign for your occupation, yet most people will accept whatever employment contract terms given by the employer, no matter how unfair they are.   You may or may not be able to negotiate your employment depending on the relative bargaining powers of the parties.  But you can always ask questions so that you understand what it is that you’re being asked to sign and its impact on your future work life.   

We think these are the five most important things to check in your employment contract:

1. Non-Competition Clause

Non-compete clauses prohibit employees from working for an employer’s competitors for a certain length of time or in a certain geographical area after leaving their current jobs. Companies include these to inhibit competition or poaching of employees. They can end up hindering you from being able to move positions or leave a job you don’t like if you don’t read the specifications carefully. For example, if you work at a bank, a non-compete clause might prevent you from working at any other bank in your town for a period of time. That could really hurt your chances for career advancement. The company wants this clause to be as long and broad as possible, and the employee wants it to be as short and narrow as possible.

Tip: We recommend negotiating to tighten non-compete clauses in order to give yourself more potential for job mobility and prevent you from trying to sign a new contract, only to realize you’re barred from working in a related field for a year.

2. Non-Solicitation Provisions

A “non-solicitation” clause refers to terms that restrict your interactions with others. Like a non-compete, the non-solicitation period starts when your employment ends and typically continues for a certain period of time. But a non-solicitation clause doesn’t stop you from working for competitors. Some non-solicitation clauses may forbid you from asking former co-workers to join you at a new workplace. Other non-solicitation clauses may forbid you from doing business with your former employer’s customers, prospective customers, vendors, or contractors.  

Tip:  If you work in sales, be particularly mindful of a non-solicitation clause because your success in your new position might depend on the relationships you formed with customers at your prior place of employment.  You might be prohibited from soliciting sales from them.  Before you take a sales job that includes a non-compete, make a list of your existing customers, their contact information and email it to yourself.  You need some way of providing that you did not acquire that information from your new employer.  This will allow you to continue calling on those customers if you ever leave a position restricted by a non-solicitation provision.   

3. Confidentiality of Information

During your employment, you will have access to and gain knowledge of information that your employer considers confidential and proprietary information belonging to the company.  Some examples of information considered confidential include customer lists and contact information, pricing information for the company’s products and services, software and other computerized information, sales plans, production methods, and product designs.  In order for this information to be covered by this provision, it needs to be not generally known to the public.   

Workers can expose themselves to big problems by using their personal devices (phones, computers) for work purposes. If an employer thinks that you left with confidential information, they might ask to remove that information from your devices, which may cause damage to the devices, destroy your personal information and be a real invasion of your privacy.

Tip:  We recommend that you avoid using your personal devices for any work-related matter.  Ask your employer to provide you with devices for work or negotiate and understand upfront that if you’re required to use your personal device for work, that your employer does not and will not have access to that device under any circumstances.   

4. Invention Assignment

Invention assignment provisions require new hires to disclose any inventions they created before starting their employment at a new company. These clauses protect companies from losing patents by preventing employees from taking projects they worked on to a rival but can also allow them to claim ownership of your original work.

Tip:  If you, the employee, are somebody who thinks you’re going to come up with an improvement or invention, you should disclose (in writing) what you’ve already done beforehand so that there’s no confusion or disagreement of who owns what you’ve already done. 

5. Expense Reimbursements

Employees may have a misconception of their right to be reimbursed for work-related expenses.  This is especially true if you work from home and use your own devices and internet connection to do your job.  Pennsylvania law does not generally require expense reimbursements.  However, if you and your employer have an agreement (preferably in writing) such reimbursements are enforceable and must be paid to you within 10 to 60 days of your request.

Tip:  Make sure you ask about expense reimbursements and make sure you get it writing upfront either in your employment agreement, an email, or make sure it’s in your employer’s employee handbook.  

Don’t Go it Alone.

There are resources available to help you interpret employment or independent contractor agreements and their jargon before you sign to something. The employment lawyers at Fiffik Law Group are ready to assist you to understand that agreement before you sign and give you tips on how to negotiate a better deal. Contact us with any questions you have or to schedule a meeting to go over your own contracts or agreements.