Employment Contracts Should be Reviewed
Author: Daniel A. Lublin
It never ceases to amaze me how just a little bit of foresight can go a very long way.
Employees often bemoan the fact that they have little understanding of the employment contracts they are asked to sign. Such contracts are usually inundated with legal phraseology. But entice a soon-to-be employee with prospects of job security and many people will just sign their name unaware of the consequences that may arise down the road.
Employers are permitted to contract out of their severance obligations beyond the statutory minimums, as long as certain preconditions are met. In other words, by signing an employment contract without careful review, you could cost yourself a considerable amount of money and protection from unemployment should your job come to an end.
For instance, I recently consulted a client who was given what appeared to be a deficient offer of severance. Upon further review, however, I realized she had unwittingly signed an employment contract that limited the amount of money she was owed at the time of her dismissal. When she first started the job, the differential would not have been that great. However, 15 years later, her decision had cost her big time.
Not all employment contracts contain these limitations and in many cases, even if restrictive language does exist, a court is not prepared to uphold that bargain. But only hindsight is 20/20. Therefore, I offer these following five tips for any employee who is about to begin a new job:
Have an employment lawyer review the terms of your contract and point out any terms that may limit the rights you would otherwise have down the road. The cost of spending an hour with a lawyer should not be inhibitive considering the amount of money that may be at stake later on.
If you are a sophisticated party to the contract, I still encourage you to obtain legal counsel. Courts tend to hold sophisticated participants to a higher standard and are, therefore, less likely to have the impugned language struck down.
If you are uncomfortable with the terms of a contract you have been offered, you have every right to try to negotiate a better deal. I usually caution employees from aggressively pursing any additional terms but a proper and respectful approach likely won’t cause any harm. And, there are even times when a well-advanced approach for a better deal can raise your value in the eyes of your suitor.
If you are being pressured into signing a contract without the opportunity to properly review it, it may be a sign to take a step back and a closer look at the fine print. Employers should always give you sufficient time to review the contract.
Even if you have already signed the contract, don’t automatically accept that severance-limiting language will be enforced. Courts make employers jump through a myriad of legal hula hoops to justify this type of bargain.