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What Parts of an Employment Contract Should You Pay Attention to the Most?
26 Aug 2025
In California, signing an employment contract is more than what you do after accepting a work offer. It is a binding agreement that can impact your rights, your compensation, and even your ability to work in the same industry later on in your career. Whether you are joining a tech startup or a law firm, it is essential to understand the key components of your employment contract before signing it.
“Although an employment contract may appear simple on the surface, a second look can reveal more details that may require attention,” says Rusty Levin of Levin & Nalbandyan LLP. This article provides you with key details to review carefully before signing an employment contract in Pennsylvania.
At-Will Employment Clause and When You Can Be Let Go
In California, employers operate under an “at-will system,” which means they can terminate an employee's employment contract for any reason or no reason at all. The only caveat to this is that whatever reason is given by the employer for the termination must not be an illegal one. However, if you have a clause in your contract that sets a duration for your employment, that can serve as an estoppel preventing termination before the set date.
Employment Compensation and Bonus Structure
If you negotiate a signing bonus, performance incentive, or commission structure, ensure that the exact terms are clearly outlined in the contract. Ambiguity as to the existence of a clause is not a great place for you to be as an employee. Oral agreements are always difficult to enforce because people can deny that they made such a statement or even have no memory of it.
A safer approach is to ensure that any agreement reached at any point in the onboarding process is written down and signed by both parties. That way, there is evidence to rely upon when the content of the said agreement is a cause for dispute.
Details of Non-Compete Clauses Carefully
Generally, non-compete clauses are not enforceable against employees in California. However, many employers still insert it as a scare tactic to deter employees from working with their competitors. That non-compete clauses are generally unenforceable does not mean they cannot harm you. To safeguard yourself, ensure you seek clarity on the extent of these clauses in your employment and your ability to pursue future opportunities.
Mediation and Waiving Your Right to Court
Considering how lengthy and rigorous litigation processes can be, many businesses tend to avoid them completely when employment disputes arise. As an alternative, employers often include arbitration clauses in employment contracts to govern the resolution of disputes. It is important to pay attention to this clause because it can sometimes be harmful to you, resulting in you waiving your right to a trial in court.
For ADR clauses, ensure they are fair and that arbitrators are neutral third parties who are not answerable to the company.
Intellectual Property of Employee Creations
Generally, intellectual property inventions made by an employee during employment and within contracted hours belong to the employer. However, where you have an invention done during your off-work time and it is not related to services offered by your employer, the intellectual property rights reside with you.
To avoid any ambiguities with the intellectual property of inventions as an employee, you need to read and understand what your contract says about it.
Details About Termination and Severance Terms
Landing a good job often means not wanting it to end, so termination clauses tend to be overlooked. The twist is that understanding what the employment contract says about termination and severance is essential. That ensures clarity on entitlements if the contract comes to an end.
Conclusion
The excitement of getting a new job is a good place to be for many people. However, beyond the excitement, you must take the time to review any contract presented to you and understand every clause in it. If you need clarification on any aspect, it is recommended that you consult an employment attorney for guidance.
