Hiring process

What to Look for in an Employment Agreement

By Thomas McKinney

The employer-employee relationship is an important one and will play a significant role in the lives of the employer and, perhaps even more so, the employee. A strong and comprehensive employment agreement will set the tone for this relationship. It is thus important for the employee to be mindful of the contents of the employment agreement and be clear on the rights and obligations that are set out by this agreement. Here, we will take at several of the key provisions often included in an employment agreement that an employee should be particularly aware of and seek clarification on as needed.

What to Look for in an Employment Agreement

An employment agreement will vary in terms and scope depending on a variety of circumstances, including the type and nature of the employment relationship as well as the industry expectations, among other things. There are, however, certain points that should be included in an employment agreement and to which should be paid particular attention. This includes:

  • Compensation: Compensation terms should be stated clearly in an employment agreement. This not only includes the rate of pay or salary of the employee, but also provisions related to whether and under what circumstances a base salary will be subject to increase as well as if there were any circumstances which would justify a reduction in the rate of pay. Compensation terms may also include things such as quarterly or annual bonuses that may be available as well as whether the employee will be provided with a signing bonus due to making a job switch that may result in losing certain benefits.
  • Benefits: In addition to terms of compensation and bonuses, other employment benefits should also be clearly set forth in the employment agreement. Benefits may include health insurance, disability insurance, 401(k), retirement savings accounts, life insurance, and more. Any benefits that are optional to enroll in should also be clearly stated as well as whether the employer will be responsible for any payments incident to the benefits. Benefits should also detail any vacation time employees are granted each year and whether accrued vacation is transferrable year to year.
  • Scope of employment: The job responsibilities of the employee should be detailed and specific. The employees job title should be stated and the employment agreement should set forth whether, and under what circumstances, the job responsibilities of the employee can be changed.
  • Term of employment: The length and scope of the employment relationship should be specified in the employment agreement. This means that the term of employment and whether the employment is “at will” should be clearly expressed. Any grounds upon which the employer could terminate the employee should be specified as should any compensation the employer may be eligible to receive in the event of termination.
  • Non-compete clause: Sometimes, an employer may include a non-compete clause in an employment agreement and any potential employee should be aware of the existence and details of such a clause. What is the length of time of the clause? What is the geographical restriction of the clause?
  • Dispute resolution: Should a dispute arises between the employer and employee over the course of employment, how will such a dispute be resolved? Will there be an exclusive method of dispute resolution, such as confidential binding arbitration? What law will apply in such proceedings? 

Employment Law Attorneys

Before signing an employment agreement, talk to the knowledgeable team of employment law attorneys at Castronovo & McKinney. Contact us today.

About the Author
Tom McKinney is an experienced NJ Employment Lawyer in all major areas of labor and employment law, including discrimination, harassment, overtime violations, wage and hour claims, sexual harassment, wrongful discharge, Title VII, ADA, ADEA, FMLA, LAD, FLSA, and all other employment law claims. Tom is admitted to practice in the States of New Jersey and New York, United States District Court for the Eastern District of New York, Southern District of New York, District of New Jersey, and United States Court of Appeals for the Third Circuit. Prior to forming the firm, Tom practiced at Gibbons P.C. in Newark, NJ. If you have any questions regarding this article, contact Tom here today.