Hidden clauses to watch out for in employment contracts, Part 1

On Behalf of | Sep 19, 2016 | Employment Contracts |

Employment comes in two flavors: either at-will or contract. An at-will employee can freely quit and be fired; there is no job security. Conversely, a contracted employee is protected by the terms of the contract. Employers are unable to fire an employee except via the terms provided for in the contract. But not all contracts are good for employees, many of them contain hidden clauses that significantly impact the employee’s rights.

Confidentiality agreements are typical clauses included in many employment contracts (or employee handbooks which are “implied” contracts). The confidentiality agreement forbids the employee from sharing information about the employer’s business including trade secrets, plans, processes and other information. Confidentiality agreements extend past the employee’s employment.

It is critical that you understand precisely what you can and cannot discuss, especially if you are switching to a competitor. If you divulge confidential information, you could be subject to a lawsuit.

Non-compete clauses prevent employees from working for a rival company or any company that is engaged in a similar industry or type of business. Non-compete clauses can be limited to a specific geographic location and time-frame. If it is too expansive, the court will invalidate or modify it for being unreasonable. These clauses are permitted to shield companies from potentially damaging hirings by rival companies.

Another common clause involves the ownership of inventions. If the employee is regularly employed in the discovery or invention of devices, many companies will have the employee sign a clause that affirmatively states that all ideas and inventions are owned by the corporation/entity, not the individual. Many individuals are surprised by these clauses because it isn’t always immediately clear that your ideas can be possessed by another entity.

Employment contracts can be invalidated, but it is complicated. If you are seeking to invalidate your contract, you should speak to a lawyer as soon as possible. A lawyer will review the entire contract with you, the hiring process, and the circumstances of you signing and agreeing to the contract. During any of these stages, something might have occurred that could be grounds to invalidate the contract. You don’t need to stay “trapped” in an unfavorable contract, you can seek help.


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