employment contract

Common Red Flags in Employment Contracts (aka Confidentiality Agreements)

Have you heard the caveat, Buyer Beware

It is a wise warning to anyone entering an agreement or inking a deal, including those about to sign an employment contract, to read the contract carefully to ensure you understand its terms. 

Newly hired employees are increasingly expected to relinquish valuable rights as a condition of employment. And, if you are not paying attention to the details of your employment contract, you might find yourself agreeing to terms that severely disadvantage you in the long run and give up your rights. 

Here, a Washington employment attorney shares six common red flags in employment contracts and advises you of the three things you should do before signing an employment agreement. 

6 Common Red Flags in Employment Contracts 

1. Missing or Ambiguous Salary and Compensation Language

Your employment contract should clearly define your salary and compensation structure. If language is missing, or if the terms are unclear, it could be a red flag that something is amiss with the company. 

2. Lower Salary or Benefits Package

By the time you receive an offer letter, you have likely already discussed salary and benefits. If the employment contract lists a lower salary, a different compensation plan, or a reduced benefits package than you expected, you need to clarify the reason for the difference. The reason could be as simple as a clerical error, but if you don’t speak up and correct the terms, it could cost you in the long run as the employer is not obligated to honor statements it made outside the agreement.

3. Non-disclosure Clauses

Non-disclosure clauses offer employers recourse against employees who share sensitive information about the company, such as financial and other confidential information and trade secrets. Even without such a clause, many states have trade secret laws protecting employers when former employees use or disclose trade secrets. Therefore, it is essential that employees understand what is considered protected information and the penalties for violating the agreement or applicable law. Penalties could include demotion, termination, or legal action. 

4. Ownership of Work Product

In many industries, particularly development and technology, employees’ work product is considered the company’s property and the employee has no rights to it.  This may include intellectual property, inventions, materials, and discoveries conceived or created while employed. Pay particular attention to any clause specifying ownership of property rights. 

3. Arbitration Clauses

Mandatory arbitration clauses require the parties to bring legal action in a private arbitration instead of court. A mandatory arbitration clause should detail the rights the employee is waiving and the burden placed on the employee by agreeing to arbitration versus other legal remedies. Be particularly aware of the designated arbitration service and filing deadlines that may compete with those allowable by law as well as any undue burden of costs placed on  the employee. 

4. Non-compete Clauses

Non-compete clauses prohibit former employees from working with competitors after separating from their employer. In Washington, non-compete clauses are invalid and will not be enforced against employees who make less than $100,000 per year. Non-compete clauses should be narrow in geographic location and time and should focus on the work the employee performs and the clients the employee serves rather than restrict the employee from doing anything that is competitive with the employer. 

3 Things to Do Before Signing an Employment Agreement 

1. Read the Contract Thoroughly

When presented with an employment contract, take time to read the agreement thoroughly and make sure you understand its terms. Every word counts. If any language is missing, confusing, or new language is added, request clarification. 

2. Request a Copy of the Contract

Ask the employer for a copy of the contract to take with you for more careful review before signing. If the employer refuses to provide you a copy of the employment contract at any time, be wary. 

3. Consult an Employment Attorney

Employment contracts are generally designed to protect the employer and are often mired in legalese. Consulting an employment attorney versed in employee rights may help you better understand the terms of your employment agreement.

Contact a Washington Employment Lawyer for Help

Before signing an employment agreement, make sure you are being treated fairly as some employment contracts contain lifelong obligations. Do not risk your rights or your future by signing the agreement without a complete understanding of the terms. Reach out to an experienced Washington employment attorney for more information regarding employee rights in Washington and what to look for in an employment contract. 

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