Review Your Contract Before Accepting That New Job
“Congratulations! You’ve been hired!”
After the job hunting, resume editing and interview process, landing a new career opportunity is exciting. Before you start to celebrate, however, you still need to complete the paperwork. Part of the onboarding process will involve signing your employment contract. At this stage of the process, it is important to pay careful attention.
No matter how much you want the job, it is important not to sign the job contract too hastily. Always review it and have an attorney review it, too. Your contract outlines the terms of your employment. Understanding what you’re signing is important in ensuring your security as you take the next step in your career.
Larry Weisberg, Esq. Attorney at McCarthy Weisberg Cummings, P.C., notes that confusion around employee agreements is common: “Most employees get an ‘offer letter,’ which defines them as an employee-at-will, rather than a formal employment contract. The offer letter is not necessarily binding, but if you do accept an offer, you are an employee-at-will, and your employment can change at any time.”
It’s always wise to review a job offer or contract or offer letter in detail and with a lawyer. This is especially the case if the employment involves a C-level position or is otherwise integral to your career. However, reviewing contracts can also be crucial in entry-level jobs.
A disadvantageous job contract at an entry-level job can make it hard for you to proceed in your chosen career or can make it challenging to leave for better offers. It is always the right choice for your career to review a job contract in detail before you sign or agree to anything.
Questions to Ask Before Signing a Job Contract
There are a few questions you should ask before signing the contract or accepting an offer letter:
- Can I look this over and get back to you? You may be expected to sign right away. In fact, your new employer may have a pen ready for you to sign on the spot. The trouble is that the contract contains multiple clauses and you need time to review them carefully. In fact, it’s best to take the contract home with you and get an attorney to review it. An attorney knows what to take note of when signing an employment contract and can explain any terms you do not understand.
- Am I an at-will or fixed-term employee? What kind of job security are you gaining in your new position? An at-will employee does not receive much protection from involuntary termination, so you will want to consider security. (PA is an at-will employment state) When looking at your security, take a look at how your employment is described and start dates as well as end dates. In some contracts, the job you believed was a firm three years may include a clause allowing your employer to terminate your contract at any time.
- What are the causes of termination? When can your employment be terminated? Make sure you understand the situations that can cause you to lose your job. In addition, seek out or negotiate contracts with just-cause termination, which protects your job from termination at whim. In addition, look to see whether the offer or contract includes any provision for severance payments if you are terminated for a reason other than for cause. Such a provision offers a cushion, even if the agreement allows for some other sort of termination provision.
- What are the benefits and compensation? Make sure your base pay is accurate in the contract. In addition, take a look at benefits and bonuses. Are they guaranteed or up to the employer? When, exactly, will you receive bonuses and benefits, and under what circumstances? What is the overtime? Make sure your benefits, compensation and overtime are very clearly outlined and reasonable. Compare the salary and benefits to other positions in the area for someone with similar experience. If there are big discrepancies, you may want to ask why that is.
You will also want to see salary increases clearly defined. Will you be eligible for increases to your wages at specific times? Will you need to undergo a review process to qualify for a better wage? If so, make sure you understand what the process is like.
If there is no mention of increases to salary, you could remain in your job with a static salary for an indefinite period, even as the cost of living increases with inflation. In fact, the contract may allow the company to reduce your salary in specific situations. You will want to keep an eye on any clause that affects how your salary may change.
- What are my job description and my responsibilities? Make sure your job description is clearly stated, as well as your duties. This ensures that even with management changes, you won’t be responsible for tasks and duties that are not yours. Clearly defining your employment terms ensures clarity and reduces the risk of confusion.
When looking at your job description, ensure the contract outlines how much of your time will be spent on various tasks. At the very least, have this written in some form. You don’t want to take on a job as a designer only to find that most of your time is spent on administrative tasks because your job contract lists those, too.
- Am I listed as a full-time employee? Make sure you are not listed as an independent contractor but rather are being listed as an employee, with full benefits and a salary. You will have fewer benefits and protections as an independent contractor and you will not be eligible for workers’ compensation, in most cases, if you are injured on the job.
If you are signing a job contract as an independent contractor, make sure your job description and the duties of your job are those of an independent contractor. You should have freedom as to where and how you work, and you should not be prohibited in any way from pursuing other opportunities. If you are misclassified as an independent contractor, you may not be getting the full benefits you should.
- What happens if ownership changes or the company is sold? In today’s economy, you never know when ownership may change hands. Make sure you understand whether your job contract will continue or will be invalid if the company is sold or if a new owner takes over.
- How happy am I with the way the job is described in the contract? This is a question you will have to ask yourself. Although you may be excited to get any job offer, think carefully about how the job is presented in black and white and compare it to how the job was described in the job ads and in interviews. There shouldn’t be significant differences.
Consider how the job description makes you feel. Do you feel it will be fulfilling and satisfying work? Look beyond the compensation and think about the longer-term consequences for your career and life. A full-time employee spends 2,000 hours annually at work, and you want that time to be a positive experience.
What to Look Out for When Signing an Employment Contract
Some clauses can cause problems for you down the road because they can affect your future career prospects and other opportunities you may have in your life. In some cases, the contract clauses in an employment contract can even affect any projects you are taking on in the privacy of your home. Noticing these clauses before you sign and renegotiating can help you avoid problems later.
There are a few considerations you will want to pay special attention to when accepting a job offer:
- A non-compete clause. This clause prevents you from working for a competitor for some time after you leave your employment. Be wary if the time period on this clause is especially long, as it can affect your career and life for years after you leave your job. If you work in a small industry, especially, you may not have many other options besides the competition if you ever decide to leave this position. Non-compete clauses can be hard to enforce, especially if they have unreasonable geographic and time limits, but it’s easier to weed them out before you sign rather than after you are on the job market.
- Strict intellectual property and work-for-hire rights. Some job contracts ask you to sign over all your work copyright to the employer. For example, if you are an in-house writer, all the work you produce at work may belong to your employer. What can be troubling, however, are the clauses that claim ownership to all patents, inventions, copyright and the like for projects you complete on your own time and away from your employer’s premises.
If you invent a new business product or artwork on your own time and without using your employer’s resources, you should ensure that intellectual property belongs to you. Any clause like this should be brought to the attention of your attorney. You can contact McCarthy Weisberg Cummings, P.C. to speak to an attorney about negotiating the clause, so your property remains your own.
- Exclusive employment provisions. These provisions are not enforceable in all states, but they are important to note. Exclusive employment provisions bar you from taking on freelance work, seasonal work, a second job or other types of employment during your job. This may mean you cannot start a side company while working for the employer.
These clauses limit what you can do on your own time. Currently, many workers choose to have second or even third jobs out of necessity. Being prevented from doing so can cause financial problems for you later. About 4.9 percent of Americans moonlight, and the total number of workers with a second job has been increasing since 2010. If your employer prevents you from taking a second job, you might find yourself in financial distress later with limited means for addressing the issue.
- Non-solicitation clause. This clause prevents you from working with the clients and employees of the company if you leave employment for a specific period of time. The clause helps prevent former employees from scooping clients and talent from the company. However, the clause can also hamper your ability to launch new business ventures after you leave the employment. If there is a clause like this in your contract and you cannot get it removed, at least ensure it is limited to a reasonable one or two years.
- Nondisclosure agreements. These clauses bar you from sharing confidential or proprietary information of the company with others. This may mean you cannot share information about clients, technology, products, business plans, financials and other data. While this doesn’t bar you from working for a competitor later, it means you cannot use the confidential information from your current employer in your job with your new employer.
Look at nondisclosure agreements carefully. Some are so strict they prevent you from essentially speaking about your employer or company with anyone in almost any capacity. In some industries, these clauses may also be written in such a way as to prevent whistleblowing activities. You need to understand what you can and cannot say about your employment to others if you sign a nondisclosure agreement.
- No-hire and no-poach clauses. These clauses prevent you from hiring employees from your current company or competitors. If you leave your job and want to hire the best talent by starting your own business, you could find your candidate pool severely limited by this clause.
- Invention assignment agreement. This clause requires you to reveal any inventions you have created before you start your job. The goal is to prevent workers from selling their inventions to the competitions. However, it can mean the employer tries to claim ownership of your invention. Also, if you have been working on something on your own time before you entered into a work agreement with your employer, you will certainly want to retain ownership of your ideas.
- Remedies and limits on arbitration or class action. Consider your contract limits, and how you can bring a claim against the employer. Are you waiving your right to bring a class action? Consider whether you are being asked to sign a contract to this effect outside of the offer letter or employment contract. If you are asked to waive your rights to class action or arbitration, look for an opt-out option or seek the help of an attorney.
If you see an invention assignment agreement on your job contract, contact McCarthy Weisberg Cummings, P.C. before you sign. It’s part of the contract an attorney should review and negotiate for you.
Speak to an Attorney to Review an Employment Contract or Offer Letter
If you have received a job offer and find yourself looking at an offer letter or employment contract, it is always a good idea to take the offer to an attorney. A full legal review of the employment contract or offer by a professional experienced with contracts and employment laws can ensure your contract is legal and protects you.
An attorney can help you understand your contract and can negotiate for a better contract for you. In most cases, employers are open to negotiation and an experienced attorney understands how to approach this delicate subject.
Even if you have already signed a contract or accepted an offer, it may be beneficial to speak to an attorney. If you are considering leaving your job, an attorney can review your options and rights with you. If you are working for an employer and feel your agreement or the terms of your job offer are not being honored, an attorney may be able to assist with this issue.
It can be daunting for a potential employee to ask questions about a job contract, but it is the only way to protect yourself. A responsible employer will understand your need to be clear when signing a legal contract. Even if you have already signed a job contract, it can be useful to speak to an attorney, especially if you have any concerns or are having problems with your employment. An attorney can help you understand whether any clauses are unenforceable and can explain any legal options you may have.
If you’d like a confidential consultation about your job contract as well as legal representation, contact McCarthy Weisberg Cummings, P.C. You can reach us online or by calling our office.