Employment Contract Red Flags: 6 Things to Check Before Accepting Any Job Offer

Getting a job offer is exciting. Before you say yes, slow down and read the offer letter and employment agreement carefully. Some of the most costly employment decisions happen at the moment of signing.

1. A Non-Compete Clause With Broad Geographic or Time Scope

A reasonable non-compete is narrow: direct competitors in your industry for six months to one year in a specific region. An unreasonable one might prevent you from working in your entire field for two years nationwide. Enforceability varies significantly by state.

2. At-Will Employment With No Severance Protection

If your contract is silent on severance, assume you will receive nothing beyond what is legally required in your state. If you are leaving a stable job with severance entitlements, negotiate severance terms before accepting.

3. Overly Broad Intellectual Property Assignment

Some IP assignment clauses are so broad they would technically give your employer ownership of a mobile app you built on weekends or a book you wrote at night. If you have active side projects, ask for a written carve-out before signing.

4. Mandatory Arbitration With Class Action Waivers

Bundled with arbitration clauses are often class action waivers, which prevent you from joining a group lawsuit with other employees. You must pursue each claim individually, which is often too expensive to be practical.

5. Vague or Incomplete Compensation Terms

Watch for phrases like "eligible for a discretionary bonus" without any criteria or range. If a bonus is part of your expected compensation, ask for it to be tied to specific performance metrics and a defined range.

6. Non-Solicitation Clauses That Restrict More Than Expected

Non-solicitation agreements prevent you from recruiting former colleagues or soliciting former clients. Read these carefully. Some versions are so broad they would prevent a former colleague from reaching out to you even if they initiate contact.