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7 Red Flags to Look for on Employment Contracts

On Behalf of | May 19, 2023 | Employment Law

Employment contracts are legally binding agreements between employers and employees. They outline the terms and conditions of the employment relationship.

These agreements serve as crucial documents to protect the rights and interests of both parties. Employment contracts are also useful for preventing misunderstandings and disputes.

However, there are some red flags to look out for when you are considering an employment contract. If you notice a problem with your contract, make sure to consult with a skilled employment law attorney. 

Some of the most common red flags to watch for are:

1. Non-Compete Clauses

A non-compete clause can restrict a worker’s ability to be employed in a similar industry for a specific period of time after leaving the company. This type of clause may be overly restrictive. 

It is important to carefully review any non-compete clauses before signing an employment contract. Speak with an attorney if you have questions about the implications of an agreement.

2. Non-Disclosure Clauses

These stipulations can prevent an employee from discussing their work or company with other parties. 

In some situations, non-disclosure clauses are necessary and appropriate. However, they can also be overly broad. In these cases, they can be used to restrict an employee’s ability to engage in whistleblowing about important issues. 

You should not sign an employee agreement in which a non-disclosure clause might inhibit your free speech.

3. Arbitration Clauses

An arbitration clause requires disputes between employers and employees to be settled through the process of arbitration. This prevents disagreements from going to court.

While the arbitration process can be cheaper and quicker than a trial, it may also be disadvantageous to workers. Arbitration can be used as a tool to limit an employee’s ability to seek justice.

4. Termination Limitations

Some employment agreements contain clauses that limit an employer’s ability to terminate a worker. This type of clause may be useful for providing job security.

However, in some instances, they can make it more difficult to manage a workforce. This can lead to challenging work environments for employees.

5. Pay and Benefit Terms

It is critical to carefully review the benefits and pay sections in an employment contract. This will ensure that your compensation is fair and competitive. Look closely for any language that might cause your employer to lower your pay or decrease your benefits.

6. Intellectual Property

Some contracts include clauses that provide the company with ownership over any intellectual property created during the course of employment. This type of clause can be appropriate in some contexts.

However, this type of stipulation may also limit a worker’s ability to develop their own ideas, inventions, and creations. Common examples of intellectual property include:

  • Patents
  • Copyrights
  • Trademarks
  • Trade secrets

Do not allow an unscrupulous employer to claim credit for your ideas and creations. Speak with an attorney to ensure that the intellectual property clauses in your employment contract are in your best interests.

7. Wording and Language

Pay close attention to the specific wording and language used in your employment contract. Look out for any ambiguous or confusing terminology.

Vague terms and conditions may lead to disagreements or legal disputes. Unclear language may result in unfair or one-sided conditions for the employee. 

A skilled legal professional will carefully review the terms and conditions of your contract to make sure the language is clear. It is critical to fully understand the implications of any legal document you sign.

Contact a Seasoned Employment Law Attorney

To schedule a consultation with an accomplished employment law attorney, reach out to Foote, Mielke, Chavez & O’Neil in Geneva, IL. Our knowledgeable team will carefully review your circumstances to ensure that your employment contract works for you.