What to look for in your employment agreement

Congratulations! You just received a job offer! The company probably emailed you one or more long, legal-looking documents. You may be ready to sign on the dotted line right away, but reading the fine print can save you and your future employer headaches down the line.

An employment agreement and related documents, like nondisclosure agreements, outline the company’s expectations for your employment. These documents create a binding agreement between the two of you about your title and benefits along with rules surrounding intellectual property, confidentiality, and more.

Disclaimer: The information provided in this post does not constitute legal advice. If you need legal advice, please consult a lawyer.

The Basics

When reviewing an employment agreement and associated documents, make sure to double-check key information about your prospective role. For a full list of what to look for, read this article.

• Title: What will be your title when you start? (Once I was offered a Senior Product Manager role, but the employment agreement accidentally said Senior Product Designer! I reached out to the company, and they fixed it immediately.)
• Compensation: How much will you be paid annually? Are you eligible for a bonus? What are the criteria for receiving a bonus? For some companies, bonuses are paid based on individual performance; for others, bonuses are tied to a company’s overall performance, like revenue goals.
• Pay schedule: How frequently will you be paid? Most companies pay every two weeks, but it’s always worth being sure!
• Equity: Equity deserves its own series of posts, but in short, how many shares of the company will you receive? How much are they worth? When can you purchase your shares (a process known as “vesting”)?
  Sometimes equity is offered in a separate document, and most likely you will need to sign a separate agreement regarding shares.
• Benefits: What benefits are included? Your offer most likely encompasses medical, dental, and vision as well as disability insurance. Some companies also include basic life insurance policies. Also, confirm when those benefits kick in! For some companies, the benefits begin immediately, and for others, they kick in the first full month of your employment. Let’s say you start a new job on November 20; your benefits may not go into effect until December 1.
• Paid time off: How much vacation do you get per year? Are there any policies about how far in advance you must request time off? Do you get sick days? Mental health days? How many?

The Tricky Stuff

Your employment agreement will also cover when and how the company can end your employment as well as what information you’re allowed to share outside of work. Employment agreements can cover a wide range of topics, from how you’re allowed to take legal action against the company to what kinds of side jobs you can have if any. Most employment agreements won’t include everything listed below, but most of them will have at least a few, so it’s good to keep an eye out for these phrases.

Very Common

• Termination: What is the process if the company wants to end your employment? Most jobs these days are “at-will” — both you and the company can end the relationship for almost any reason.
• Intellectual property: Companies want to make sure that the work you do for them is legally theirs, so the employment agreement might cover “intellectual property.” Some companies say that anything you create during your employment belongs to the company, even if you created it outside of work on your own laptop. Other companies, on the other hand, might say that whatever you create on the job and/or on company equipment belongs to the company; otherwise, anything else you make is all yours. In either case, if you work on side projects, make sure you aren’t working on them on company time or company equipment! This is a good practice in general, but if your employment offer includes these requirements and you don’t request a change to your agreement, your work may actually belong to your employer if you create something during work hours on your work laptop.
• Invention assignments: Related to intellectual property, you may be asked to list any patents, inventions, or original works so that the company is aware of anything you’ve created prior to joining the company. The agreement will then often require that any inventions you create during your employment belong to the employer.

Common

• Non-compete clauses: The agreement may include a section saying that you can’t work for a company in a similar industry for at least a certain amount of time after leaving the company. Let’s say you work for a social media startup; you may not be allowed to work at another social media company for at least a year after leaving.
• Non-poaching clauses: Maybe you loved all your coworkers and want them to come work at your awesome new job! Be careful; you might be violating a non-poaching clause, which usually says you can’t hire from your old company for at least a year.
  A non-poaching clause may also be called “non-solicitation.”
• Nondisclosure agreements: Nondisclosure agreements (NDAs) require that you do not share any confidential or proprietary information about the company during your employment or in the future.
  A nondisclosure agreement may also be known as a confidentiality agreement, proprietary information agreement, confidential disclosure agreement, etc.
• Moonlighting clauses: Your future employer wants to make sure that they’re your main job. A moonlighting clause will require that any work you do off-hours does not interfere in any way with your employment. Some moonlighting clauses can be much broader and require that you do not do any kind of work for any kind of company other than for your employer.

Less Common

• Arbitration requirements: In short, in an arbitration agreement, an employee gives up their right to sue their employer in court. If you and your employer have a disagreement that could lead to legal action, the employment agreement may say that you can’t sue the company and instead will have to settle the dispute through arbitration.
  Arbitration requirements may be referred to as “alternative dispute resolution.”
• Non-disparagement clauses: These clauses are often “mutual.” In short, during and after your employment, neither the company nor you are allowed to speak poorly of the other. For you as the employee, you’re agreeing not to say anything bad about the company, its services, its products, or its leaders. Non-disparagement clauses do include you not complaining about your job to friends and family, but in general, even if your company did find out you were venting to your best friend about your manager, the company wouldn’t go after you for violating the agreement. Your company would care very much, however, if you posted on Twitter or wrote a long blog post about how much you dislike your job.

What to know

Employment offers are usually geared to protect the company and may include clauses that aren’t entirely enforceable, especially depending on what state you’re in. For example, if you’ve been sexually harassed or discriminated against at work, you may want to contact an employment lawyer to see what your options are — the arbitration clause may not be enforceable.

With intellectual property, many employers don’t usually claim ownership of your side projects, especially if they have nothing to do with the company’s business. Let’s say you work for a healthcare tech company, but you have a side project building a gaming app. If this gaming app isn’t related to healthcare tech, your employers probably won’t want to claim it as their own intellectual property.

What to do

Your employment agreement might be 15+ pages long and full of legal-sounding language. How should you go about understanding what’s actually included and asking for changes?

• Read the agreement(s): As much as you can, read through all the documentation and keep an eye out for the terms or their synonyms listed above. Highlight or mark anything that you’d like clarification on or to request changes for.
• Always ask questions: Seriously! The company has extended you an offer. They want you to work there, so it’s both to their benefit and yours to clear up any confusion before you sign. Don’t be afraid to say you don’t understand something or ask them to change the overly broad language.
• For example, maybe a moonlighting clause states that you can’t do any kind of work for any other company but you regularly provide your expertise to a volunteer organization. You can ask that that that language be modified or removed so that doing your volunteer work isn’t a violation of your agreement.
• If your employment agreement says that anything you make during your employment, no matter when or on what device, you can ask your prospective employer to change the language so that your side projects — unrelated to the company and produced on your own time and equipment — remain your intellectual property.
• If a non-disparagement clause isn’t mutual — that is, it doesn’t go both ways — ask that it be made to cover both the company and you.
• If the company is unwilling to make changes — let’s say you want to limit the language around the intellectual property to ensure that your side projects aren’t company property — then this might be an indication that the job isn’t the right fit.
• Ask for help: If you want a second opinion, someone to bounce ideas off, or to get advice about accepting a new job offer, sign up for Merit to connect with mentors who can help you navigate this exciting and sometimes confusing part of getting a new job.