Employment Contract Review: Protect Your Career Before Signing

Compensation and Benefits

Beyond base salary, examine: vesting schedules for equity (4-year vesting with 1-year cliff is standard), bonus structure and whether it's discretionary vs. formulaic, commission structures with clear definitions of 'closed deal,' and whether benefits are guaranteed or 'currently offered.' The difference between a guaranteed benefit and one offered 'at the company's discretion' can cost you thousands.

Intellectual Property Assignment

Most employment contracts include IP assignment clauses that give the company ownership of anything you create during employment — and sometimes even outside of work hours. Key things to verify: does the assignment cover only work-related inventions or ALL inventions during employment? Are prior inventions excluded (you should list them in an exhibit)? Is there a carve-out for personal projects on personal time with personal equipment? Some states (CA, WA, IL, DE, MN) have laws protecting employee side projects — know your state's rules.

Non-Compete and Non-Solicitation

Non-compete clauses restrict where you can work after leaving. They vary wildly in enforceability by state (California bans them entirely; most other states enforce 'reasonable' ones). Check: geographic scope (nationwide is usually unenforceable), duration (6-12 months is common; 2+ years is aggressive), industry scope (how broadly is 'competitive business' defined?), and whether there's garden leave pay during the restricted period. Non-solicitation clauses (restricting you from contacting former clients or colleagues) are generally more enforceable and often more impactful than non-competes.

Termination Provisions

Understand exactly what happens when employment ends. Key provisions: definition of 'Cause' (the narrower, the better for you), severance package and whether it requires signing a release, notice period requirements for both sides, what happens to unvested equity, and any clawback provisions on bonuses or signing bonuses. If there's no written severance policy, negotiate it into the contract.

Red Flags to Watch For

• ⚠IP assignment covering inventions outside work hours with personal equipment
• ⚠Non-compete with nationwide geographic scope and 2+ year duration
• ⚠Broad definition of 'Cause' that includes subjective performance standards
• ⚠No severance provision or severance contingent on non-disparagement
• ⚠Non-solicitation that covers all company employees, not just your direct reports
• ⚠Clawback on signing bonus if terminated without cause
• ⚠Mandatory arbitration with employer choosing the arbitrator
• ⚠Unilateral right to modify compensation or role without consent