US EMPLOYMENT CONTRACTS

There are times when it's critical to get your employment contract in writing, especially if you have a unique job or if you're going out on a limb by accepting a job — for instance, if a competing company is recruiting you.

An employment contract sets forth the terms and obligations of the employer's relationship with the employee. Most employment contracts are negotiable. After signing the employment contract, the employee and employer are both bound under the terms of the contract.

The employment contract often gives the employer some control over when they can terminate an employee. Similarly, an employment contract can provide the employee with a sense of job security if it is for a set term.

STANDARD AREAS COVERED

• Job title, responsibilities and duties
• Salary or compensation
• Standards for evaluation
• Health/Medical benefits
• Other benefits (stock options, etc.)
• Length of employment
• Grounds for termination

COMMON CLAUSES

Arbitration Clause: This clause provides that if the employer and employee have a dispute, they must go through arbitration rather than the courts. Arbitration is much like a trial, except that there is not a real judge and the process is confidential. In many cases, arbitration is binding on the parties, and neither party can seek judicial review of the arbitrator's decision.

Attorney's Fees: An attorney's fees clause can be a double-edged sword. Employers tend to be afraid of them because if an employee sues and wins, the employer has to pay for the lawyers on both sides. But, by the same token, an employee could also end up on the hook for all the attorneys' fees if he/she loses.

Choice of Law Clause:This may indicate what state law courts will use to interpret the contract terms and settle contract disputes.

Confidentiality: This will specify what business information the employee cannot use or discuss after leaving the job. In some circumstances, the employee's work or products created while employed may also be defined as a confidential work product.

Covenant of Good Faith:Even if not explicitly stated, both parties are required to treat the other party fairly.

Equity Ownership: If you’re being offered stock options or other ownership interests, you’ll want to tack down the terms, including the vesting period, purchase price & opportunities for additional grants.

Expense Allowance: An expense allowance can be better than paying expenses out of pocket and then getting reimbursed, because expense allowances may be tax exempt.

Indemnification: If a competitor hires you, your new employer may want you to sign an agreement that protects them from any non-competition or proprietary rights agreements you had with your old employer.

Non-Compete Clause: The employee is restricted from working for the employer's competitors for a period of time after leaving the employer. This clause may also place restrictions on types of industries or geographic locations where the employee may seek future employment.

Relocation Expenses: Nail down specifics on how your new employer will reimburse you and whether you're required to stay at the job for a certain period to keep your relocation reimbursement.

Severance: This states what the employee will receive if the employment relationship must come to an end. This clause may also specify the difference in benefits the employee will receive if she is fired, resigns, or is laid off.

Signing Bonus: Your contract should set out how and when any signing bonus will be paid, as well as whether you're required to remain in the job for a certain period to keep the bonus.

Term: Most employers prefer "at will" employment, in which either the employee or the employer can end the employment relationship at any time. But some written employment contracts guarantee employment for a certain length of time. This assures the employee the job's around for at least that long, and the employer can end the relationship after that by simply declining to renegotiate the contract.

Termination Clause: Often this clause will describe the procedure for termination. It may provide whether and when employment is renewable. It may also provide that the employee or employer must give advance notice before ending employment.