Whenever you enter into an employment contract, you should be aware of your rights and responsibilities under the contract. You do not want to be surprised at a later date by a provision of your contract that you overlooked or did not understand. You must understand what is in your contract and what you are agreeing to at the start of the contract so you know what rights and obligations there are on both sides.As a result, it is important that you carefully scrutinize your employment contract and ensure that you are clear about its provisions before you sign it.
Understand that just because you are employed does not mean that you have an employment contract.
All states, except the state of Montana, permit employers to employ people on an “at will” basis. This means that an employer can fire or let an employee go for any reason or no reason at all, so long as it is not illegal to do so. For example, an employer cannot fire an employee on the basis of his race or sex, because federal law prohibits it.
If you are employed on an at will basis, you still are responsible for following your employer’s rules. Otherwise, you are at risk for termination.
Know that workers also may have rights based on their legal employment status.
It is important to know on what basis you are working for your employer. Some workers qualify as actual employees, whereas others are self-employed. Employees enjoy many legal rights that self-employed workers do not. Therefore, it is essential that you clearly define whether you are an employee or a self-employed worker.
If you are an employee, you may be entitled to certain legal rights, such as maternity, paternity and adoption leave under the Family & Medical Leave Act.
If you are self-employed, you work for yourself instead of an employer. You will not have an employment contract and will not have the rights of an employee. You simply provide a service or trade for a fee in your own right. You are more likely to have a contract to provide services for a particular individual or business.
All types of workers are entitled to certain rights, whether they are employees or self-employed workers. These rights include things like being paid minimum wage, being given minimum rest and lunch breaks, and being paid for all hours worked.
Realize that if you don’t have a written employment contract, you are an at will employee.
Ideally, you should always request and/or be given a written contract of employment if you are an employee. If you don’t have anything in writing, don’t be afraid to ask for it. Having a contract in writing makes disputes with employers less likely, as it is clear from the start what both parties intended and agreed upon.
Keep a copy of your employment contract.
If you did sign an employment contract, you should always keep a copy for your records. You need a copy of the contract to refer to in the future if you have questions or concerns about your rights and responsibilities, or those of your employer.
Know that an employment contract should be in writing.
Reducing a contract to writing ensures that its terms are clear. However, terms do not necessarily need to be in writing to be part of your contract. There are certain rights under state and federal laws, for instance, that apply to any individual’s employment, whether they are contained in an employment contract or not.
Understand that an employment contract should always contain certain information.
This information should outline in some detail the purpose of your employment and how it is to be carried out by both you and employer. While it can refer to an employee handbook for more detailed information, a written employment contract should include basic information, such as the following:
Your name and the employer’s name
Your job title and at least a general job description
Your start date
Your end date, if your position with this employer is not permanent
Your pay rate and schedule, as well as whether you are paid hourly or are a salaried employee
Your total hours of work and your daily schedule
Your entitlement to holiday, vacation, sick, and/or personal pay
The location of your position
The name of any persons to whom you will report
Any applicable notice periods for terminating or changing the contract
Information regarding disciplinary and grievance procedures
Your entitlement to pensions or retirement plans
Realize that all employment contracts have implied terms in addition to written terms.
For example, employment contracts have an implied term of mutual trust and confidence. This provision demands respect on both sides of the relationship and means that neither you nor your employer can act completely unreasonably.
Review or at least be aware of the terms and conditions of your employment contract, so that you are prepared for any eventuality.
This means that you should read your contract carefully, from beginning to end, and understand what provisions are and are not included. This process will allow you to be clear about your rights under the contract and understand what they mean.
Look for specific contract provisions that affect your rights.
You need to make sure that you are aware of your rights and responsibilities with respect to each provision in your employment contract. If these provisions are not included in your employment contract, then you may be lacking some rights that could adversely affect your employment in the future.
Determine whether your contract references an employee handbook.
If so, you need to also obtain a copy of the handbook and review it thoroughly before signing a contract. An employee handbook can contain valuable information about the terms of your employment that may not be specified in your employment contract.
Consult an attorney for advice.
If you have any questions or concerns about the provisions contained in your employment contract, you should talk with an attorney who is knowledgeable about employment law and employment contracts. If at all possible, you should contact an attorney to ensure that you understand your contract before you sign it.
Check to see if your contract requires exclusivity.
In many situations, employees work more than one job in the same field, or may perform freelance work while employed elsewhere. However, some employers do not want their employees to work for a competitor or another business. This is often referred to as an exclusivity clause. For instance, the provision should state whether the employee is permitted to have any other job, or if he or she is limited to a job in an unrelated field.
Determine whether your contract contains a non-compete clause.
Closely related to exclusivity provisions are non-compete provisions, which dictate whether you can work in the same field after your employment with the employer has ended. Some such provisions will prohibit you working in the same field for a specified period of time, and some limit the geographical area in which you can work in the same field.
In some cases, non-compete clauses also will place restrictions on your ability to contact or solicit customers of your former employer or use contacts made while you were employed there.
If the contract contains an exclusivity clause, it should specify the terms of the exclusivity. For
Look for a confidentiality clause in your employment contract.
Many employers will include a provision in your employment contract that is designed to protect their information, including trade secrets, client lists, and other confidential information. This clause also may be referred to as a nondisclosure agreement, and may be contained within a separate document from your contract altogether.
Confidentiality clauses may include provisions that any intellectual property that you create while working for the employer belongs to the employer. This means that you would not be able to use the property that you created while working for that employer after you have left your employment.
Make sure the contract clearly defines your pay.
In addition to stating whether you are salaried, paid on an hourly basis, or by the project, your contract should clarify other issues related to your pay. For instance, your contract should state whether you are entitled to overtime pay, how much you will be paid for overtime, and whether there are any limits on your ability to earn overtime pay.
Another contract provision related to pay might concern your ability to receive or earn raises in the future, the basis of any raises, such as performance or years of service, and the availability of periodic cost-of-living increases in pay.
At some companies, earning bonuses is also a possibility. If you are entitled to receive or earn a bonus, your employment contract should state the exact circumstances under which you may be able to do so.
If you are required to travel for your job, your contract should specify how travel expenses are paid by your employer or reimbursed to you. If you have to relocate to take this job, you should find out whether any of your relocation expenses are covered.
Explore your benefit package as outlined in your employment contract.
Employee benefits can differ widely from one company to the next, so you need to be sure that you are getting the benefits that you need and want. Potential benefits can include things like medical coverage, retirement plans, and vacation time.
Your contract should clearly define, or reference an employee handbook that clearly defines, the amount of annual leave you have from your job. There also should be a breakdown of these days or hours in terms of sick leave, personal leave, and vacation time, and how they accrue or roll over each year. Information about maternity or paternity leave, leave under the Family & Medical Leave Act, if applicable.
Another provision in your contract should specify the type of medical, dental, and vision insurance coverage offered, if any, as well as the costs of any premiums and basic coverage information for each program. You also will want to know if your employer offers a flexible medical expenses plan so that you can use pre-tax dollars to pay for uninsured medical expenses or childcare expenses.
Your employment contract also may provide information about any pensions, 401(k) plans, retirement programs, and stock option programs to which you may have access. This provision should include information about whether and to what extent your employer will match your 401(k) contributions and the vesting periods for any pensions and stock options.
Consider if your employment contract offers a severance package.
Whether you quit your job or are terminated, you have the right to know if you will be entitled to any sort of severance package and what benefits it includes. These benefits might include your wages or salary for a period of time, continued health insurance coverage for a certain amount of time, and information about any stock options you own.
Look for a contract provision about the resolution of any disputes.
For example, the contract should contain information about any sexual harassment policies and the reporting method that employees should follow. Additionally, the contract should specify what method of dispute resolution must be used in the case of a contract dispute, such as mediation or arbitration. Your company can require you to undergo certain alternative dispute resolution methods prior to filing a lawsuit, if stated in your contract.