EMPLOYMENT CONTRACT REVIEW AND NEGOTIATION
California employment law attorneys helping executives and other employees understand and negotiate employment contracts.
Employees, particularly at the managerial and executive level, are often asked to sign written contracts at the start of their employment. These employment contracts establish rights and responsibilities of both the employer and the employee. Since signing an employment agreement can affect the employee’s rights, employees should make sure that they understand each term in any contract that governs their relationship with their employer. The employment lawyers at E&L, LLP review and negotiate employment contracts on behalf of executives, managers, salespersons, and other California employees.
WHAT TERMS ARE INCLUDED IN EMPLOYMENT CONTRACTS?
Employment contracts vary depending on the job the employee is expected to fill and other circumstances. A contract to employ a pharmaceutical salesperson will differ from a contract employing an executive at a technology company.
Despite differences in their details, particularly regarding the terms of compensation, many employment contracts address similar issues. Terms of employment contracts often include:
- Base compensation (whether salary or commission)
- Bonuses and other incentive compensation including stock options
- Job title and responsibilities
- Benefits, such as health, disability and life insurance
- Sick leave and vacation pay
- Starting and ending dates of the employment relationship
- Performance expectations
- Provisions regarding how the contract may be terminated
- Severance pay
- Whether employment can be terminated without cause, or at will
- Grounds for termination if cause is required
- Non-compete and non-solicitation provisions
- Obligations to keep trade secrets or other information confidential
- The place where disputes about employment will be decided
- Whether disputes will be subject to arbitration
- The law that will control dispute resolution
Certain contract terms, including non-compete and solicitation provisions, are often unenforceable in California. Other contract terms, such as mandatory arbitration, are enforceable, provided that they meet certain standards required by California law. A careful review of a proposed employment contract by a California employment lawyer is the key to understanding the rights and obligations imposed by the contract, as well as the likelihood that the contract provisions would be enforced in the event of a dispute.
ARE EMPLOYMENT CONTRACTS ALWAYS IN WRITING?
In most instances, employment contracts are in writing. That is because employers often want to define the terms of employment, including whether the employment is at will, what the employee’s obligations are with respect to handling the employer’s confidential or proprietary information, or the protocol for handling disputes between the employee and the employer. To avoid misunderstandings, employees should consider asking an employer to include verbal promises into the written employment contract. Otherwise, the oral promise may not be enforceable.
IS THERE A DIFFERENCE BETWEEN A SERVICE CONTRACT AND AN EMPLOYMENT CONTRACT?
A business enters into service agreements with independent contractors who provide services to the business. An independent contractor is not an employee, so a service contract is not an employment contract. An independent contractor or consulting agreement often contains terms that are less favorable to the contractor or the consultant than what would be legally required if the contractor or consultant was an employee.
In some cases, an employer will misclassify an employee as an independent contractor and will try to use a service contract to avoid paying overtime and contributing to payroll taxes. In those cases, the service contract might provide evidence of an employment relationship. Individuals who believe they have been misclassified as independent contractors should obtain legal advice.
IS IT POSSIBLE FOR AN EMPLOYEE TO NEGOTIATE A BETTER EMPLOYMENT CONTRACT?
Some employees have more bargaining power than others. If an employer really wants to hire a particular employee, the employee may be able to negotiate more favorable contractual terms. For example, an employee may be able to negotiate terms that provide additional job security, such as limitations on the employer’s right to terminate employment, or severance payments in the event of a termination.
WHAT TERMS MAY BE NEGOTIABLE IN AN EMPLOYMENT CONTRACT?
An employment contract, like other contracts, may be negotiable. For example, it is common for employees to negotiate terms for compensation and benefits. But there are other non-monetary terms that employees may want to negotiate. If the agreement requires termination for cause, then the employee may want to negotiate the definition of “cause.” If the employee is leaving secure employment to accept new employment based on specific promises made by the new employer, then the employee may want those promises expressed in writing in the employment agreement. Sometimes employees are able to negotiate for the right to receive severance in the event that the employer involuntarily the employment relationship without fault by the employee.
DO YOU NEED ASSISTANCE WITH AN EMPLOYMENT CONTRACT?
The California employment law attorneys at E&L, LLP help professionals, salespersons, and other employees who have been offered employment contracts. We make sure our clients understand the terms of the agreement. If certain terms are unfavorable, we may be able to suggest better terms or additional advantageous terms. We also represent clients in the negotiation or renegotiation of employment contracts. To learn more about our services, call us at 213-213-0000.