Employment Contract Legal Help:Reviewing, Negotiating, and Enforcing Employment Agreements

Most common form of employment documentation. May or may not constitute a formal contract depending on language. Often includes: position, compensation, start date, benefits eligibility, at-will language. May reference other policies and handbook. Disclaimer language preserving at-will status common.

Formal contract with full provisions. Common for executives, professionals, and key positions. Specifies term, termination conditions, severance, restrictive covenants, dispute resolution. May supersede offer letter.

Most comprehensive contract type. Specific terms, signing bonus, equity grants, severance, golden parachute, change-in-control provisions, restrictive covenants, indemnification.

Specified period of employment (1 year, 3 years, 5 years). Termination during term typically requires just cause or specific notice. Typically include severance for early termination without cause.

Defined start and end date. Renewable or not. Different from at-will employment because employer obligated for the term.

Specifies commission structure, calculation, payment timing. State laws often require written commission agreements (California Lab. Code § 2751).

Stock options, restricted stock units, profit interests. Specifies vesting schedule, treatment on termination (cliff vesting, graded vesting, accelerated vesting, forfeiture). Critical to evaluate termination treatment.

Different from employment contracts. Worker classified as independent contractor, not employee. Subject to misclassification challenges (see Wage and Hour page).

Variant of independent contractor or temporary employment. Specifies project scope, compensation, term.

Standalone agreement covering non-compete, non-solicit, non-disclosure. Sometimes embedded in employment agreement; sometimes separate. See Non-Compete Agreements page for detail.

Most employers expect negotiation. First offer is starting point. Take time to review and propose changes. Pressure to sign immediately is concerning sign about employer practices.

Compensation, equity, severance, restrictive covenant scope, arbitration. Cannot effectively negotiate on every point. Prioritize most important items.

Base salary often negotiable. Annual review increase mechanism (cost of living vs performance). Sign-on bonus. Equity grants. Severance protection. Specific bonus structure (formula vs discretionary).

Severance is often more negotiable than salary. Standard executive severance: 6-12 months base salary plus benefits, accelerated equity vesting, relaxation of restrictive covenants. Negotiate triggers (without-cause termination, constructive discharge, change in control).

Geographic limitation, time limitation, scope of activities. Most enforcement issues come from overbreath. Negotiate narrower scope or specific carve-outs (current customer relationships, future business not in employer's space).

Negotiate carve-outs for sexual harassment claims (now required under Ending Forced Arbitration Act), specific equitable remedies, attorney fee provisions. Negotiate employee-favorable arbitration provisions.

Cliff vesting protection. Accelerated vesting on termination without cause. Single-trigger vs double-trigger acceleration on change in control. Specific equity vesting calendars.

Can sometimes negotiate choice of law to your home state, particularly to access more employee-protective laws (California, New York, Massachusetts).

Verbal promises should be reduced to writing. Memorialize all material terms. Side letters for executives sometimes used.

Executive contracts, contracts with substantial equity, contracts with significant restrictive covenants warrant attorney review. Cost typically $1,500-$5,000 for thorough review and negotiation. Cost-effective compared to long-term implications.

Required arbitration of employment disputes. Replaces court litigation with arbitration. Common in modern employment contracts. Generally enforceable under Federal Arbitration Act (FAA) absent specific statute exception.

Federal law prohibiting pre-dispute arbitration of sexual assault and sexual harassment claims. Employee can elect to litigate in court regardless of arbitration agreement. Significant employee protection.

California has restricted arbitration in employment context. Some restrictions struck down by Supreme Court in Viking River v. Moriana (PAGA limits). Other restrictions remain. Specific analysis required.

Arbitration agreements often include class action waivers. Generally enforceable per Epic Systems v. Lewis (2018). Employees cannot collectively pursue claims even when arbitration permits individual claims.

Specific provider rules govern procedure. AAA Employment Arbitration Rules. JAMS Employment Arbitration Rules. Some have specific employee protections.

Filing fees, arbitrator fees. Some arbitration agreements require employer to pay all employer-imposed costs. Cost can substantially affect access to remedies.

Generally more limited than court discovery. Some arbitration agreements specify scope. Affects ability to develop case.

Arbitration awards typically have very limited appellate review. Affects strategic choice between arbitration and litigation.

If arbitration provision is unconscionable, courts may strike specific provisions or the entire arbitration agreement. Specific unconscionability analysis varies by state.

Some agreements give employee choice between arbitration and court for specific claim types. Negotiable provision.

Most negotiable. Standard executive provisions: 1-3 year term, 6-12 months severance, restrictive covenants, equity acceleration, change in control protection, golden parachute, golden handcuff. Specialized executive employment counsel often helpful.

Less negotiating leverage. Focus on critical provisions: compensation, restrictive covenants, arbitration. Even small negotiation can save substantial money over career.

Existing employer's restrictive covenants may apply. New employer may indemnify against prior employer claims. Existing equity may need consideration.

Startup compensation often heavily weighted toward equity. Vesting, exercise rights, repurchase rights, board seat triggers. ISO vs NSO tax implications. 83(b) election timing.

Specific provisions for acquisition: change-in-control acceleration, retention bonuses, golden parachutes. Continuation of compensation post-acquisition.

Multi-jurisdictional considerations. Tax treatment in multiple countries. Visa requirements. Specific governing law issues.

Classification choice affects taxes, benefits, restrictive covenant enforceability. Misclassification risk.

Different framework with civil service protections, unionized labor, specific procedural requirements. Often less negotiable but more job security.

Specific industry considerations: malpractice insurance, hospital privileges, on-call requirements, productivity bonuses, restrictive covenant geographic scope.

Commission structure detail. Commission earned timing (order placement vs payment received). Quota and accelerator structures. Forfeiture provisions on termination.