Employment Contracts

KEY POINTS IN EMPLOYMENT CONTRACTS

Employment contracts can be overwhelming as they often contain legalistic language and unfamiliar terms. You need to know what rights you might be signing away, or what benefits you might be agreeing to, when you sign an employment contract.  

What Should You Look for Before Signing an Employment Contract?           

In addition to confirming the salary and benefits you negotiated. you should look for non-compete agreements, arbitration agreements, bans on joining class actions, bans on speaking to other employees about salary/benefits, and confidentiality agreements.   If the contract is over two pages, consider getting legal advice.                                                                                                                 

What are Arbitration Agreements and why are they Significant?                               

Arbitration agreements (often called “mandatory arbitration contracts”) generally provide that all claims arising out of employment will be heard by an arbitrator or a panel of arbitrators instead of by a judge and jury. Women who sign these contracts are then barred from bringing claims to a trial by jury.                                                                                                                                   

Although mandatory arbitration contracts can reduce legal fees and lead to a quicker resolution, an employee often lacks power to negotiate the terms of the agreement. Cases are heard before arbitrators who are not usually experts in sex harassment, don’t have to issue written opinions explaining their decisions, and are subjected to extremely limited judicial review. Arbitrators are not bound to follow the law, unless the agreement or arbitration policy says they are.

What are bans on Joining Class Actions and why are they Significant?

Increasingly, employers include provisions that bar class actions either within arbitration or outside of it. Under wage and hour laws, a ban on aggregate/class actions can have significant effects. For example, an employer might have a policy that exacts several minutes per day of work from employees off the clock and without pay.  For you, this might total a couple hundred dollars of unpaid work.  If a whole class of employees was affected by the same policy, a class action lawsuit could go forward and would be worth much more than a couple hundred dollars.

Other things to look for in employment contracts:

       --Shortening the statute of limitations for all claims.  For example, an employer can include a time limit of 6 months, or even shorter, in which an employee may bring a claim of discrimination.            

            --Language noting an “at-will” employment relationship.   This means that either party can break the relationship for any reason or no reason at all (provided there was no express contract for a definite term governing the employment relationship and that the employer does not belong to a union).

The WAGE website provides an excellent legal memo if you want more information.

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