What you’ll discover:
What should an Employment Contract include?
Would a noncompete provision hinder my future career options if I leave?
Does an Employment Contract protect me against being dismissed for no apparent reason?
Do independent contractors or consultants have employment contracts?
Be certain that your job contract protects you.
Once you accept a job offer, you are legally committing to trade your services for a salary or hourly rate. Most work arrangements do not need the use of an Employment Contract, although it may be appropriate in specific circumstances. An employer, for example, may choose to include incentives in order to recruit and retain highly specialized expertise.
Even if it seems to be standard “boilerplate” wording, you should always read and comprehend any contract before signing it. Take the time to examine the contract on your own or with the assistance of an attorney. Contracts operate both ways and should safeguard both your and the employer’s interests. Keep an eye out for and thoroughly study the following contract conditions.
Table of Contents
What should an Employment Contract include?
The specifics of your contract will be determined by the nature of the partnership, the requirements of the employer, state regulations, and any discussions that take place. Among the most typical contract clauses are:
Compensation. Salary or wage, commissions, when payments are issued, paid time off, and benefits are all included.
Severance and good faith clause. A good faith clause demands the employee to work to their full potential. A severance package may be defined for layoffs and other terminations that are not the employee’s fault.
Employment at will. This is a remark concerning whether your employer need a cause to fire you (including a list of examples). It may also contain termination procedures, such as the return of your security badge and laptop.
Non-disclosure contract (NDA). An NDA is an agreement that you will not divulge certain secret information. In this example, it’s a provision in your employment contract that limits your capacity to divulge certain sorts of information that your employer regards as secret.
Agreement on arbitration. This is an agreement that any employment problems will be resolved via arbitration rather than litigation.
Even if you are not given a formal Employment Contract, you may be given an arbitration agreement, an NDA, or another legally enforceable but narrowly specified document.
Would a noncompete provision hinder my future career options if I leave?
A Noncompete Agreement prevents you from working for a direct rival or establishing your own competitive firm for a certain period of time after you leave the company. It also safeguards intellectual property and other company-owned data such as client lists, corporate procedures, and particular methodologies. These provisions are not enforceable in every jurisdiction, and in areas where they are permitted, they may be subject to particular restrictions.
Noncompete agreements must not be unduly broad or they may be deemed unenforceable in court. They must be constrained by the following parameters:
Duration. It cannot be for an endless period of time; certain states have legal restrictions (2 years for a noncompete agreement in Louisiana, for instance).
Geography. It must be restricted to a certain geographic location, such as a neighborhood, city, or state region.
Scope. It must identify a specific area of work and cannot ban you from working for a rival in any way.
Noncompete agreements are intended to protect the employer. You should carefully examine any NDA or noncompete agreement to determine if you can live with the conditions. If not, you may want to explore negotiating to get the provision deleted, or you may want to be prepared to walk away. Employers in non-compete jurisdictions (such as California) may require you to sign a non-solicitation provision. A non-solicitation provision prohibits you from soliciting the clients of your previous company for a certain period of time.
Does an Employment Contract protect me against being dismissed for no apparent reason?
In the absence of an Employment Contract, your employer may terminate your job without reason if they do not breach your rights (such as the right to not be discriminated against on the basis of protected characteristics like national origin or skin color). This is a legal definition of “at-will” employment. One benefit of having a contract is that you may negotiate a more specific description of the sorts of behaviors, acts, or situations that would warrant termination.
Most of this is determined by how the word “cause” is defined in the contract, which should be as tightly defined as feasible. Even if your contract states that you may be dismissed solely “for cause,” it might imply almost anything. It may not give you with much protection if it is defined as “any infractions of company policy” or contains wording that leaves it up to the employer’s judgment.
Including a “notice and cure” clause in your contract for further protection. This provision allows you to rectify an issue after you have been given notice but before your employment is terminated. Consider it a “fix-it ticket” for your work. It protects you from being dismissed as long as you fully repair the conduct in a reasonable length of time (provided the mistake was done in good faith).
Do independent contractors or consultants have employment contracts?
If you choose to work for a corporation or person on a contract basis rather than as a full or “permanent” employee, state and federal employment rights may not apply to you. Payment conditions and procedures for terminating the employment contract are examples of these safeguards. Yet, you may still include safeguards in a formal Independent Contractor Agreement. This is also known as a “Statement of Work” (or SOW).
Since independent contractors supply specialized services and handle their own work affairs, these contracts are often considerably easier than employment contracts. You cannot, for example, be forced to limit your work with other customers unless there is an obvious conflict of interest. You should also not anticipate any advantages or job stability from a particular customer.
But, you might insert a demand for fair notice before terminating the job arrangement, which usually works both ways. Meanwhile, your customer may add wording indicating the kind, amount, and quality of work required in return for payment.
Be certain that your job contract protects you.
If you’ve been offered a position, you may be given a contract, which may be extensive or restricted to an NDA or arbitration provision. In either event, you’ll be looking at a contract produced by the employer’s legal team. They will ensure that their interests are appropriately protected, but it is up to you to assess if the conditions are also fair to you. Be certain that what you’re signing is in your best interests, and consult with a lawyer before signing.