These Are the 7 Things You Need to Look for Before Signing an Employment Contract in California
You just got a job offer. How exciting! Just one more step, and you will officially be hired. You just have to sign an employment contract. The pages are absolutely dripping with small font legalese that you can barely understand. You are tempted to skim the document and just sign your name on the dotted line. Not so fast! This is a binding legal document that outlines your job description and salary. It can determine who owns your creative work, whether you can be fired without cause, and how you are able to resolve disputes with your employer. You owe it to yourself to carefully review the contract and bring up any questions or concerns you have with your employer. Here are the seven things you need to look for before signing an employment contract in California.
Job Title and Role
You may assume that you know exactly what job title you will be receiving and what that role entails, but it does not hurt to double check what the employment contract says. This is especially true if you negotiated a title and/or job responsibilities that are different from the original role you interviewed for. It is possible that the changes did not make it into the contract.
The job description in your employment contract defines the scope of your responsibilities and how your success will be defined. Make sure the role is clearly written and gives you the freedom you expect. A generic job description can lead to trouble down the road if turns out that you and your boss had wildly different expectations for your role.
Most people do not need any encouragement to review the compensation page of their employment contract, but make sure you are looking for the right thing. First, confirm that the numbers add up. You worked hard to negotiate your salary, so do not let a missed email or miscommunication result in less pay.
Next, make sure you fully understand how you will be paid. Are you on salary or hourly? If you are hourly, how is overtime pay treated? If you are on a salary, what is the bonus structure? Are bonuses automatic? What are the criteria for receiving a bonus? How will that criteria be defined and who will determine if the criteria have been met?
Do not forget that benefits are also a big part of a compensation package. Double check that you get exactly what was promised. Specifically, make sure you are comfortable with the amount of vacation time, sick leave, and PTO offered, as well as insurance. If you negotiated any fringe benefits, double check that they were added to the contract.
Grounds for Termination
Like every state except for Montana, California is an “at-will” work state. That means that unless termination standards are clearly defined in your employment contract, your employer has the right to fire you at any time without cause as long as you are not fired for an illegal reason. (Take a look at my recent blog post all about wrongful termination in California.)
It is important to know whether you are working under an at-will system or a “just cause” system. Just cause means that your employer can only fire you for cause, and those causes should be clearly laid out in your contract.
We live in a big economy, and it is becoming more and more common for employees to make income outside of their day jobs. Some employers will include language in their contracts that prohibit moonlighting. For example, if you are a web designer working at a graphic design agency, they probably do not want you making websites for your own clients on the weekends.
In other cases, these moonlighting clauses can be restrictive. For example, maybe you are a project manager who happens to be a hobbyist photographer. Should you be restricted from getting paid to shoot a friend’s wedding? What about professionals who want to write a book or speak at conferences?
Many employers are open to negotiating exemptions to moonlighting clauses as long as what you do does not directly compete with your day job.
Copyrights, Inventions, Patents, and Creative Works
It is almost certain that your employment contract will include language that gives your employer ownership of any work you create as part of your employment, including inventions, copyrights, and patents. You will want to take a second look at this part of the contract to make sure that the language is not too over-reaching.
For example, what if you use a lab at work or company computer software to create an invention during your off hours? What if you create something outside of work using only your own equipment? Some contracts would even consider that property of the company.
If you are currently working on something big before you sign your contract, make sure you fully understand the implications of the contract. This is also another area where you may be able to negotiate for less restrictive language.
Many employers want to ensure that their employees do not share trade secrets that could make their way to competitors. This is a fair concern, but read over the confidentiality section of your employer contract so you clearly understand what you can and cannot publicly discuss. In some cases, confidentiality clauses can be particularly onerous. The attorneys who drafted your employment contract want to protect the company. They do not care if that makes your life a little less comfortable.
Non-Compete and Non-Solicitation Clauses
California is unique in that it does not uphold or protect most non-compete and non-solicitation clauses. This means that an employer cannot restrict you from getting employed by a competitor, setting up a similar business after leaving the company, or bringing members of your team with you after you leave. (Always double check with a labor attorney before making these types of decisions.)
Some out-of-state companies will give their employees boilerplate employment contracts that include non-compete and non-solicitation clauses. If you work in California, you can fight these clauses and most likely get them removed from the contract.
Binding arbitration clauses are becoming more and more common in employment contracts. These clauses force employees into arbitration rather than allowing them to use the courts if they want to file a complaint against the employer, such as sexual harassment or wrongful termination. In arbitration, a neutral third party hears evidence and makes a decision.
Oftentimes, arbitration gives an advantage to the employer over the employee. Arbitration can be expensive, the employee has no right to discovery, and decisions cannot be appealed.
Can You Challenge Your Employment Contract?
As I mentioned at the beginning of this article, your employment contract is a legally binding document. It is critically important that you read it thoroughly and understand it. If you have any concerns, I strongly encourage you to send the contract to an attorney who specializes in labor law for review. The attorney can flag any trouble areas and provide you with recommendations on how to negotiate better terms.
If you are being hired for a specialized position, you may be surprised at how amenable your employer is to revising an employment contract. Many contracts are filled with boilerplate language, and you can request specific clarifications or special allowances for your particular circumstances. If an employer is unwilling to budge on a specific issue, you may have leverage to negotiate better terms in a different part of the contract.
Finally, by reviewing your employment contract carefully, you will be able to make a fully informed decision about whether or not to accept the job instead of getting a nasty surprise during a dispute down the road.
If you ever need to find a labor law attorney in San Diego we are here to help. Contact Saba Law today.
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