Common Employment Contract Red Flags

Common Employment Contract Red Flags

Certain positions in California could require employees to sign contracts with their employers. While a contract can often be seen as being a valuable form of security regarding future employment, people need to remember that employers present contracts that are largely going to operate in their favor.

This means that an employment contract is rarely, if ever, about protecting your rights as an employee. Many people need to carefully consider the contracts they are signing, especially if they involve any of the following red flags.

Common Kinds of Red Flags with Employment Contracts

Broad non-compete clauses — Non-compete clauses are generally enforceable against employees when they are reasonable in most states. California has attempted to ban non-compete clauses altogether, but there are certain exceptions. The Federal Trade Commission (FTC) proposed a rule to ban employers from imposing non-compete agreements on their workers, and the agency estimated that the new rule could increase wages by almost $300 billion per year and expand career opportunities for about 30 million Americans. Sellers of businesses, former business partners, or former members of limited liability companies (LLCs) can be prohibited from competing with a business after they leave. 

California employers can also prohibit their employees from using trade secrets. Certain jurisdictions will follow what is known as the janitor rule, that basically provides that a court will not enforce a non-compete agreement when it restricts the scope of a future employee’s future employment indiscriminately, unrelated to the legitimate business interests recognized in a jurisdiction. When a non-compete clause is drafted so broadly that it would literally prevent a former employee from working as a janitor for a competitor, the court will disregard the agreement entirely.

Complete ownership of intellectual property — Employers are entitled to ownership of all intellectual property created on company time and with company resources. Several workers may have interests outside of work involving intellectual property, and an employer should not have any legal claim to the intellectual property a person develops in their extracurricular activities. A person should examine the intellectual property provisions of an employment contract to know whether an employer will attempt to claim that any intellectual property a person develops during their employment belongs to them regardless of whether it was actually developed at work.

Breach of contract provisions that only favor employers — It is possible for either party to a contract to breach the contract and cause financial harm. Employers writing contracts will be more concerned with trying to punish people for their potential breaches of contract than imposing consequences for their own breach of a contract. Examine all breach of contract provisions. When a contract specifies a serious penalty for your own breach but indicates no penalty for an employer’s breach of the contract, you are looking at a one-sided agreement.

Unilateral provisions — Breach of contract is far from being the only issue in employment contracts that could be one-sided. People should be wary of any contract provisions that could impose extra rights on an employer or extra responsibilities on an employee. Unlike bilateral contracts, unilateral contracts do not provide for an express exchange of promises, and the asymmetric nature of a unilateral contract can cause many problems.

Contact Our Employment Contract Attorney in San Francisco

Did you need help negotiating an employment contract in the greater San Francisco area? The Law Office of Jeannette A. Vaccaro understands how to help people in these situations. 

Our firm will be sure to fight for an employment contract that protects all of your rights and gives you increased security in your profession. You can contact us online to set up a free consultation with our San Francisco employment contract attorney.