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Employment Contract Law

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Negotiating an Employment Contract

The employment contract sets forth the terms and obligations of the employer's relationship with the employee. Most employment contracts are negotiable. After signing the employment contract, the employee and employer are both bound under the terms of the contract. The employment contract often gives the employer some control over when they can terminate an employee. Similarly, an employment contract can provide the employee with a sense of job security if it is for a set term.

Items Usually Addressed in an Employment Contract

  • Job title, responsibilities and duties
  • Salary or compensation
  • Standards for evaluation
  • Health/Medical benefits
  • Other benefits (stocks, options, etc.)
  • Length of employment
  • Grounds for termination

Common Clauses in Employment Contracts

  • Arbitration Clause - This clause provides that if the employer and employee have a dispute, they must go through arbitration rather than the court system. Arbitration is much like a trial, except that there is not a real judge and the process is confidential. In many cases, arbitration is binding on the parties, and neither party can seek judicial review of the arbitrator's decision.
  • Non-Compete Clause - The employee is restricted from working for the employer's competitors for a period of time after leaving the employer. This clause may also place restrictions on types of industries or geographic locations where the employee may seek future employment.
  • Confidentiality - This will specify what business information the employee cannot use or discuss once they leave the job. In some circumstances, the employee's work or products created while employed may also be defined as a confidential work product.
  • Choice of Law Clause - This may indicate what state law courts will use to interpret the contract terms and settle contract disputes.
  • Severance - This states what the employee will receive if the employment relationship must come to an end. This clause may also specify the difference in benefits the employee will receive if she is fired, resigns, or is laid off.
  • Termination Clause - Often this clause will describe the procedure for termination. It may provide whether and when employment is renewable. It may also provide that the employee or employer must give advance notice before ending employment.
  • Covenant of good faith and fair dealing - Even if not explicitly stated, both parties are required to treat the other party fairly.

Do I Need an Attorney for My Employment Contract Issue?

Consulting an attorney before signing or drafting an employment contract is helpful to ensure that you know what will be expected under the contract. An employment lawyer can also help negotiate terms that will benefit you and to re-negotiate the contract if either party wishes to change the employment relationship.

Photo of page author Peter Clarke

, LegalMatch Content Manager

Last Modified: 03-05-2018 09:24 PM PST

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