Five Red Flags To Look For In an Employment Agreement

HomeBlogFive Red Flags To Look For In an Employment Agreement
June 22, 2022

1. Questionable Pay, Benefits, and Other Compensation

An employee’s overall compensation package can consist of base pay in addition to bonuses and commissions. It also consists of benefits that can be paid in whole or in part by your employer. Health insurance and retirement contributions are common benefits, but in the creative culture of Silicon Valley, employees can negotiate for a wide range of benefits. Your employment compensation might also include stock options and similar forms of compensation. 

All of these forms of compensation have value that affects your overall compensation package. If any of these terms do not sound fair or seem less than the industry standard in your field, let your own attorney review the proposed compensation package.

2. Overly Broad Non-Disclosure And Confidentiality Agreements

Many companies ask employees to sign non-disclosure agreements (NDAs) or other confidentiality agreements. These documents protect a company’s trade secrets, intellectual property, and confidential client data, and they are enforceable in court when they are narrowly tailored to these goals. But many companies try to stifle employee dissent with overly-broad NDAs. These NDAs can be used as a weapon to try to suppress employee’s free speech on normal bargaining rights. If your NDA seems burdensome, this could be a red flag. 

3. Overly Broad Non-Compete Agreements

Many employers also try to protect their intellectual property, trade secrets, and customer relationships with non-compete agreements (NCAs). These agreements prevent employees from working for competitors after they are no longer working for the employer who made them sign the NCA. Here, too, the agreement must be narrowly tailored to legitimate employer goals in order to be enforceable. Employees cannot be limited in their future employment if the limitations are too lengthy, too broad in geographical scope, or preclude them from any work they are qualified to perform. 

4. Intellectual Property Provisions

Here in Silicon Valley, intellectual property (IP) is the most valuable asset that many employees have. Bay Area employers pay top dollar to attract talented employees who can develop valuable intellectual property for them. When you develop intellectual property on the clock using an employer’s resources, the employer is entitled to ownership of that IP. This does not, however, mean that employees have no legal rights to their own ideas. It is important to have your own attorney review any IP agreements to ensure that your property rights are also protected. Remember: an IP agreement that is drafted by the company’s lawyers will be drafted in favor of the company. 

5. Pressure To Sign Quickly

Any time someone pressures you to quickly sign a legal document, you should be worried. Whether it is an employment agreement, a prenuptial agreement, or a timeshare contract, you need time to thoroughly review the document and understand your legal rights. Time pressure can prevent you from consulting with your own attorney. Without independent legal advice, you might be giving up important legal rights. Remember: the company’s lawyers are there to protect the company. They cannot advise you on your own legal rights, and they have specifically drafted the employment agreement to benefit the company. 

Experienced, Aggressive Employment Attorneys To Protect Employee Rights During Contract Negotiations

The Bay Area employment lawyers at Olivier & Schreiber LLP have years of experience negotiating fair employment contracts. Call (415) 484-0980 or visit our website to schedule your consultation today. 




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