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Top 10 Facts About Signing An Employment Contract

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In the United States, most individuals work on an at-will basis. The exception occurs if you are asked to sign an employment contract. Signing an employment contract can be beneficial as it likely ensures you some protections. However, there may also be some pitfalls to avoid or things to watch out for. Read on for the top 10 facts about signing an employment contract that you should be aware of.

  1. The contract legally must be reasonably fair. Employment contracts are often considered contracts of adhesion - which means that courts assume that you can't negotiate the contract very much and that you may feel pressure to sign on a take-it-or-leave-it basis. As a result, if the contract is extremely one sided or unfair, a court may not enforce its terms.
  2. You have a duty to read the contract under the law. While it is always a good idea to read anything before you sign it, you should also know that the law assumes that you have read any contract you sign and you are assumed to know what is in it. This duty is known as the "duty to read" under common law rules, and it means that you are assumed to know what is in a contract and to agree to its terms.
  3. You are giving up your rights to at-will employment by signing. When you are an at-will employee, you can quit or be fired any time for any reason or no reason at all. Most employment contracts remove this right, requiring you to give notice or perhaps work for a contracted length of time.
  4. You may be gaining rights to work. If the contract specifies causes for termination or disciplinary procedures, the company is bound to abide by them. If they don't, you could potentially sue for wrongful termination.
  5. You may contract away your rights to sue in court. Many contracts mandate that disputes be arbitrated. This means that if you do decide to sue your employer, you will be limited to doing so in an arbitration setting and the arbitrator, instead of a judge or jury, will decide your case.
  6. You cannot contract away civil rights or labor law protection. In other words, even if the contract says that you aren't entitled to make at least the minimum wage or that you can't bring workplace harassment claims, no court will enforce those contractual provisions. Such provisions are against public policy and as such are not acceptable or legally valid contract terms.
  7. You may limit your future employment opportunities. If you sign a non-compete clause, this essentially means that you are agreeing not to work with competitors for a given period of time. This can make it hard for you to find a new job if you have a limited skill set and all of your skills would require you to work in a job with the company's competitors.
  8. Non-competes must be reasonable and narrow. While a non-compete is valid, and can limit your job prospects, it cannot be so broad that you can't find work. For example, it might be OK for a software development company to include a clause stipulating that you can't work for another software development company within a 30 mile radius. It would not, however, be legally enforceable if the clause said you cannot work in the computer industry in any capacity anywhere in the world.
  9. If you're asked to sign a contract after the fact, your employer has to give something in return. In other words, if you are asked to sign a contract after you have begun working, the contract will only be valid if you receive some benefit from signing it from your employer. This is called "consideration" and mutual consideration is required.
  10. Your employer can bring legal action against you if you violate the terms of the contract. Contracts are legally binding promises. If you sign, be prepared to comply with the terms.

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