Employment Contract Review & Risk Analysis
Understand what your employment contract really says before you sign.
See What You're Missing in Your Employment ContractAn employment contract defines the relationship between you and your employer -- your role, compensation, benefits, and the rules that govern what happens when the relationship ends. While getting a job offer is exciting, the contract you sign can shape your career for years after you leave that position.
Many employment contracts contain clauses that restrict your future options: non-competes that limit where you can work next, IP assignments that give the company ownership of your side projects, and arbitration clauses that waive your right to sue. Understanding these terms before you sign gives you the chance to negotiate or at least make an informed decision. This is informational, not legal advice.
Common Red Flags in Employment Contracts
Broad Non-Compete Clauses
A non-compete that restricts you from working in your entire industry for two years after leaving can effectively freeze your career. Check the geographic scope, duration, and how broadly competitors are defined.
Intellectual Property Assignment
Many employment contracts include IP assignment clauses that give the employer ownership of anything you create during employment, sometimes including side projects or work done on your own time. Look for language that limits the assignment to work related to the company's business.
At-Will Employment with Restrictive Covenants
If your contract says the employer can terminate you at will, but you are still bound by non-compete and non-solicitation clauses after termination, the deal is lopsided. You can be let go for any reason but still face career restrictions.
Mandatory Arbitration
Arbitration clauses require you to resolve disputes through private arbitration rather than the court system. This can limit your legal options and typically favors the employer, especially if they choose the arbitration provider.
Vague Termination Provisions
If the contract does not clearly define what constitutes cause for termination, or if severance terms are absent, you may have less protection than you think. Clear termination and severance language is worth negotiating upfront.
Garden Leave Without Compensation Guarantee
A garden leave clause requires you to stay away from work during your notice period while technically still employed. If the clause does not guarantee full pay and benefits continuation during garden leave, you could be sidelined without adequate compensation.
What KlausClause Checks For
When you upload your employment contract, KlausClause automatically analyzes:
- ✓Non-compete scope, geographic range, and duration relative to your role
- ✓IP assignment breadth and whether personal projects on your own time are excluded
- ✓At-will termination provisions combined with post-employment restrictions
- ✓Mandatory arbitration clauses and whether they limit your legal options
- ✓Severance and termination provisions including what constitutes cause
- ✓Garden leave provisions and compensation during the notice period
Employment Contract Review Checklist
Before signing any employment contract, verify each of these items:
- Verify your job title, reporting structure, and core responsibilities
- Confirm compensation, bonus structure, and equity vesting schedule
- Check the non-compete clause for geographic scope and duration
- Review the IP assignment clause for scope limitations and personal project carve-outs
- Look for mandatory arbitration and understand what it replaces
- Verify termination provisions including notice period and severance
- Check for garden leave provisions and compensation terms
- Review benefits and confirm start dates for health insurance and retirement
- Confirm the probationary period terms and what changes after it ends
- Check non-solicitation restrictions on recruiting former colleagues
Related Contract Clauses
Learn more about specific clauses commonly found in employment contracts:
Frequently Asked Questions
What is an employment contract?
An employment contract is a legal agreement between an employer and an employee that outlines the terms of employment, including job responsibilities, compensation, benefits, termination conditions, and any restrictive covenants like non-compete or confidentiality agreements.
What should I look for in an employment contract?
Focus on compensation and benefits, the job description and reporting structure, termination provisions (including what counts as cause), any restrictive covenants (non-compete, non-solicitation, confidentiality), IP assignment clauses, and dispute resolution mechanisms like mandatory arbitration.
Can I negotiate an employment contract?
Yes, employment contracts are negotiable. Common negotiation points include salary, benefits, start date, remote work flexibility, non-compete scope and duration, IP assignment carve-outs for personal projects, and severance terms. The best time to negotiate is after receiving the offer but before signing.
Related Contract Types
Further Reading
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