Benefits |
June 22, 2021

Employment Contract Checklist: What To Look For

When properly created and implemented, employees and employers will find employment contracts very beneficial. However, it’s best for employees asked to sign such agreements to seek competent advice first, especially if they don’t fully understand everything in the agreement. Meanwhile, here’s a checklist of crucial issues to consider when employees are considering executing an employment contract.

The Scope of Employment

  • What’s the employee’s job title?
  • What are the specific responsibilities of the employee?
  • Where’s the location of employment?
  • Is demotion a possibility? Or, can the employee’s job duties be significantly increased, decreased, or modified, and why?
  • Can the employee engage in other activities, such as getting involved in community activities or being a member of the board?

Compensation

  • What’s the base salary, does it increase, and when?
  • Is a signing bonus included in the compensation package, particularly if an employee would be letting go of other benefits or opportunities for switching jobs?
  • Are yearly or quarterly bonuses available? Also, are bonuses guaranteed or dependent on certain conditions (which conditions)?
  • If the base salary can be reduced, by how much and under what circumstances and?

Benefits

  • Is the employee required to participate in the company’s benefits plans, including the following, among others?
    • Medical and health, including dependent and spouse coverage
    • 401(k)
    • Disability
    • Life insurance
    • Pension
    • Cafeteria plan
    • Dental vision
    • Stock grant or option
    • Executive financial counseling
  • Will the company be shouldering the benefits payments?
  • How many vacation days each year is the employee afforded?
  • Can vacation days be accrued and carried over to next year, and so on?
  • Are some (and which) benefits will the employee be taxed on? Also, will the employee be reimbursed for the benefits-related taxes?
  • Are special forgiveness arrangements or loans available?

Confidentiality Restrictions

  • Take note that a lot of companies have separate forms for Confidentiality and Invention Assignment Agreements that they opt to incorporate in the employment contract by reference.
  • Employees should take extreme caution to not divulge or utilize confidential company-related information of a previous employer. A prospective employer will also usually require a covenant from the employee to prohibit such disclosure or use.
  • If there are confidentiality restrictions and restrictive covenants imposed on the employee, what are they and what’s considered confidential information?
  • How long do these restrictions and covenants last?

Employment Terms and Termination

  • What’s the duration of the employment term? Or is the employee employed “at-will”?
  • Under what grounds can the company terminate the employee?
  • If applicable, what are the compensation terms if the employee was terminated early?
  • What specific causes or circumstances can result in the employee’s “for cause” termination?
  • Is severance pay available if the termination is without cause?

Seek Legal Advice from a Reputed California Employment Attorney Today

Contract negotiations, particularly for high-level executives, are complicated, and there are many other issues that should be considered when negotiating with a prospective employee. But sound legal advice from one of our competent California employment attorneys here at Minnis & Smallets can help. Contact us online or call us to schedule your consultation today.