Employment Contract Red Flags
Key clauses to watch for in employment agreements and what they mean for your career.
Before You Sign That Offer
Getting a job offer is exciting, but don't let that excitement rush you into signing without understanding what you're agreeing to. Employment contracts can significantly impact your future career options.
Critical Clauses to Review
1. Non-Compete Agreements
These restrict where you can work after leaving the company.
Key Questions
- How long does it last? (6-12 months is typical)
- What geographic area? (State-wide vs. global)
- What industries/competitors are covered?
- Is it enforceable in your state?
Red Flag
Non-competes lasting 2+ years or covering entire industries
2. Intellectual Property Assignment
Who owns what you create?
- Work created during work hours → usually employer's
- Work created on personal time → check carefully
- Prior inventions → list them to protect them
Watch Out For
"All inventions" clauses that claim ownership of personal projects or side businesses
3. Non-Solicitation Clauses
These prevent you from recruiting colleagues or clients after you leave.
- Employee non-solicitation (can't recruit former coworkers)
- Client non-solicitation (can't take clients with you)
- Duration and scope matter
4. At-Will Employment
In most US states, either party can end employment at any time. Look for:
- Notice period requirements
- Severance provisions
- Conditions that override at-will status
5. Compensation Details
Should Be Clear
- Base salary and payment frequency
- Bonus structure and conditions
- Equity/stock options and vesting schedule
- Commission structure (if applicable)
6. Benefits
Verify what's actually in the contract vs. what was verbally promised:
- Health insurance (when does it start?)
- PTO/vacation policy
- 401(k) matching
- Remote work policies
7. Termination and Severance
- What happens to unvested equity?
- Is there severance if laid off?
- Do you get paid out for unused PTO?
- Are there clawback provisions for bonuses?
Major Red Flags
Don't Sign If You See
- Non-compete with no geographic limit
- IP assignment covering personal projects
- Mandatory arbitration with unfair terms
- Forfeiture clauses for earned compensation
- Vague job duties that could expand indefinitely
- Unilateral right to change compensation
Negotiation Tips
- Ask for time - A reputable employer will give you a few days to review
- Mark up the contract - Make notes and ask questions
- Negotiate restrictions - Non-competes can often be narrowed
- Get it in writing - Verbal promises mean nothing
- Know your worth - Research market rates
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