Employee Agreements |
September 26, 2021

Four Red Flags In Employment Contracts

Many employers solidify an employment offer by providing a written contract. While an employment contract can be a helpful way to identify each party’s rights and responsibilities, the employment contracts provided by an employer are generally intended to benefit the employer. They are not designed to protect your rights as an employee. Here are four red flags in employment contracts that you should watch out for: 

  1. Overly broad non-compete clauses. In most states, non-compete clauses are enforceable against an employee so long as they are reasonable. California has largely banned non-compete clauses altogether. There are, however, a few very limited exceptions.  The seller of a business, a former business partner, or a former member of an LLC can be prohibited from competing with the business after he or she leaves. California employers may also lawfully prohibit their employees from using trade secrets. 
  2. Complete ownership of your intellectual property. Employers are entitled to ownership of intellectual property that is created on company time and with company resources. But many workers have interests outside of work. You might have a hobby, or a second job, or other projects that are completely unrelated to the ideas you develop for your employer. It is rare that an employer would have a legal claim to any intellectual property you develop in these extracurricular activities. Carefully examine any intellectual property provisions that are contained in your employment contract. If an employer attempts to claim that any intellectual property you develop during your employment belongs to them – regardless of whether it was actually developed at work – this is a red flag.  
  3. Breach of contract provisions that only favor the employer. Either party can breach a contract and cause financial losses. When an employer writes the contract for you, they are more concerned with trying to punish you for a potential breach of contract than imposing consequences for their own breach of contract. It is important to carefully examine any breach of contract provisions. If the contract specifies a serious penalty for your breach, but no penalty if the employer breaches the contract, this is one-sided. Consult with an employment lawyer about an appropriate response. 
  4. Any unilateral provisions. Breach of contract is not the only issue in an employment contract that can be one-sided. Remember, an employer drafts a contract to protect its own interests – not the employee’s. Be wary of any contract provisions that impose extra rights on the employer or extra responsibilities on the employee. These can be red flags in an employment contract. You have the right to renegotiate any one-sided provisions to ensure that your contract is fair. 

Workplace Rights Attorneys For All California Employment Contracts

Employment contracts are often used as a tool to impose employers’ rights on an employee unilaterally. Employees have the right to negotiate their contracts to ensure fairness in all provisions. Minnis and Smallets is a California employment law firm that protects workers’ rights. Contact us today to schedule a consultation with an experienced California employment law attorney.