Most people treat the employment contract as a formality. The verbal offer sounded great, HR sent over the paperwork, and you want to seem cooperative — so you sign.
This is a mistake.
Employment contracts contain clauses that can:
You have the most negotiating power before you sign. After that, everything becomes much harder.
This guide covers the 9 most important things to check before signing any employment contract.
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This is the most fundamental clause in any employment contract.
At-will employment: Your employer can terminate you at any time, for any reason (or no reason), with no legal obligation beyond any notice period specified. In the US, most employment is at-will.
Just-cause employment: Your employer must have a specific, documented reason to terminate you. More common in unionized positions and some senior executive contracts.
What to check:
Red flag: "Employee may be terminated immediately for any reason." Combined with no severance provision, this is maximum employer flexibility at your expense.
The total compensation package, not just base salary.
What to verify:
Red flag: "Annual bonus at the discretion of management." This is not a bonus — it's a gift. If your compensation model depends on bonus income, push for a formula-based structure.
Red flag #2: Equity with a cliff vesting and a short exercise window (e.g., 30 days to exercise options after leaving). If the company isn't public, you may not be able to afford to exercise.
Whether and how long you're restricted from working in your field after leaving.
Enforceability varies significantly by state:
What "reasonable" means:
Red flag: A 2-year global non-compete for a mid-level role. Courts are increasingly skeptical of these, but fighting them is expensive.
Negotiate: If you're in a state where non-competes are enforceable, push for shorter duration, narrower scope, or compensation during the restricted period (called "garden leave" in some jurisdictions).
Who owns what you create during your employment.
Standard (and reasonable): Your employer owns work you create within the scope of your job, using company resources, during work hours.
Red flag: Assignment clauses that cover:
California law (Labor Code 2870) explicitly protects employees' rights to inventions made outside work hours without using employer equipment, even if the employer doesn't include an exception. But in most states, you have no such protection unless you negotiate it.
What to do: If the IP clause is broad, add a schedule of prior inventions — a list of your pre-existing IP that you want excluded from the assignment. Most employers will accept this.
Whether you can work with or recruit former colleagues after leaving.
Standard (and reasonable): You cannot actively recruit your former colleagues to join a competitor for 12 months after leaving. This is fairly standard and courts generally enforce it.
Red flag: "Employee shall not engage in any business activity with any person who was employed by Employer during the last 2 years." This is effectively a social relationship ban — you can't even work at a company that happens to employ a former colleague.
Whether you can work with former clients after leaving.
Red flag: Broad language that prohibits you from working with any client you had contact with — even if they approach you.
Negotiate: Client non-solicitation should prohibit you from soliciting former clients — not from accepting work from clients who come to you.
What you receive if the company terminates you without cause.
Most US employment contracts offer no severance unless you're at the director level or above. But you can negotiate:
Reasonable severance for key employees:
Double-trigger acceleration: A term worth knowing. It means equity vesting accelerates only if both (a) there's a change of control (acquisition) and (b) you're terminated without cause. This is standard and fair for executive equity.
How employment disputes will be handled.
Watch for: Mandatory arbitration clauses. Many employment contracts require you to resolve disputes through arbitration rather than courts. Arbitration is faster and cheaper, but:
Some states limit mandatory arbitration in employment contracts. Know your state's rules.
Which state's law governs the contract and where disputes are resolved.
If you're working in California but the company is based in Delaware, they may try to apply Delaware law. This matters because:
Negotiate: Ask for the governing law to be your work state, especially if your work state has stronger employee protections.
Before signing, verify:
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Yes. Many candidates don't negotiate because they're afraid of losing the offer. Reasonable negotiation almost never results in an offer being withdrawn. At minimum, push back on the non-compete scope and IP assignment if they're unreasonably broad.
For a senior role, equity-heavy position, or any contract with broad non-compete or IP clauses, yes. For a standard mid-level role, AI review is sufficient to identify the key issues. If AI flags serious concerns, then engage a lawyer to negotiate those specific terms.
Ask for at least 3–5 business days. Any reputable employer will accommodate this request. Pressure to sign immediately is itself a red flag.
Generally no, without mutual agreement. But watch for language like "Company may amend this agreement upon 30 days written notice." This effectively lets the employer change terms unilaterally.
Your employment contract defines the terms of your professional life for as long as you work there — and potentially years after. Spend 60 seconds to understand what you're agreeing to.
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