Employment Contract Review

Employment Contract Review

An employment contract hides most of its risk in standard-looking boilerplate, and the clauses that hurt are the ones that only activate on the way out: termination, non-compete, IP assignment. This skill walks every key clause, flags what deviates from market norms, and frames the negotiation - so the signer knows which three things to push on instead of either signing blind or fighting every line.

This is contract literacy and negotiation framing, not legal advice. Every material concern - and any restrictive covenant the person might realistically test - goes to a licensed employment attorney in the relevant jurisdiction before signing. Enforceability of non-competes and similar covenants varies sharply by jurisdiction, and no review table substitutes for counsel. State this boundary in the output itself.

Operating procedure

Read the contract as the party with less power. Every clause that is vague, broad, or one-sided favors the drafter - usually the employer. The job is to surface those and ask whether each is standard or aggressive.

Step 1: Gather inputs

1. The full agreement plus every referenced exhibit (equity plan, confidentiality agreement, prior-inventions schedule, arbitration agreement). A review of the offer letter alone is incomplete - say so if that is all that exists.
2. Jurisdiction (governing-law clause and where the person will actually work).
3. Role seniority and any verbal promises made during the offer process - these must end up in writing or they do not exist.
4. The person's specific exposure: side projects or prior inventions, likelihood of joining a competitor later, dependence on the bonus.

Where the market-standard position is uncertain for the jurisdiction or industry, label the benchmark a guess and route the question to counsel rather than asserting it.

Step 2: Review compensation and equity

• Base, bonus, variable: confirm the bonus is defined - target percentage, conditions to earn, payment timing - not "purely discretionary." A discretionary bonus with no definition is a red flag.
• Equity: grant size, vesting schedule (4-year with a 1-year cliff is the market standard), strike price, and treatment on termination and acquisition.
• Acceleration: double-trigger (acquisition plus termination) is market-standard; single-trigger is a generous outlier; no acceleration at all is worth an ask for senior roles.
• Exercise window: the 90-day post-termination default can force a punishing exercise-or-forfeit decision; extended windows are increasingly common and are a low-cost ask.

Step 3: Review restrictive covenants - the highest-risk area

• Non-compete: check all three dimensions - scope (which activities), duration, geography. A non-compete limited to direct competitors, 12 months or less, in a defined market can be within norms where enforceable at all; broad-activity, multi-year, or worldwide non-competes are red flags. Always flag any non-compete for legal review - enforceability is jurisdiction-specific and changing.
• Non-solicit: of customers and of employees, checked separately. 12 months is common; longer or covering "any person the employee ever interacted with" is overbroad.
• IP assignment: must cover work-related IP but NOT sweep in prior inventions or unrelated personal projects. Require a prior-inventions schedule and a carve-out for work done on personal time, without company resources, unrelated to the business. An assignment of "all inventions during employment" with no carve-out is one of the two or three most consequential red flags in the document.
• Confidentiality: reasonable scope and duration; perpetual obligations on ordinary business information are overbroad (trade secrets legitimately get longer protection).

Step 4: Review termination and severance

• Notice period both ways - asymmetric notice favoring the employer is worth flagging.
• Definition of "cause": a vague or expansive cause definition lets the employer terminate without severance; push for a tight, objective list (conviction, fraud, material uncured breach) with a notice-and-cure period.
• Severance amount and triggers, in writing.
• "Good reason" / constructive-dismissal protection: without it, a demotion or forced relocation carries no severance.

Step 5: Sweep the remaining clauses

• Clawbacks on bonus or equity - under what conditions, how far back.
• Change-of-control treatment beyond equity acceleration.
• Governing law and dispute resolution - mandatory arbitration waives the right to sue and often to class participation; always flag it.
• Assignment - can the employer transfer the contract to another entity without consent?

Step 6: Build the review table and negotiation frame

Prioritize: equity acceleration, exercise window, cause definition, and non-compete scope usually matter most. Pick at most three asks. Frame each as alignment, not adversarially: "standard double-trigger so we're aligned on outcomes." Get every verbal promise into the written contract - side conversations are unenforceable.

Worked artifact: review table rows

CLAUSE            WHAT IT SAYS                MARKET STANDARD           FLAG  RECOMMENDED ASK
IP assignment     All inventions during       Work-related IP only,     YES   Add prior-inventions
                  employment, no carve-out    carve-out + schedule            schedule and personal-
                                                                              project carve-out
Cause definition  "Failure to perform to      Objective list with       YES   Enumerated cause list
                  the Company's satisfaction" cure period                     + 15-day cure period
Acceleration      None stated                 Double-trigger for        YES   100% double-trigger
                                              this seniority                  acceleration
Non-solicit       12 months, customers the    12 months, direct         NO    None - accept
                  employee worked with        contacts
NOTE: Not legal advice. Non-compete and arbitration clauses flagged for
review by a licensed employment attorney in [jurisdiction] before signing.

Deliverable

Produce a clause-by-clause review table - clause, what it says, market-standard position, deviation flag, recommended ask - plus a top-three negotiation priority list with alignment framing for each ask, and a clearly marked list of items requiring a licensed employment attorney. The not-legal-advice boundary appears in the deliverable itself, not only in conversation.

Do NOT

• Do not pronounce a clause "unenforceable" - enforceability is a legal conclusion that depends on jurisdiction and facts; flag it for counsel instead.
• Do not review the offer letter and skip the referenced exhibits; the equity plan and confidentiality agreement often contain the worst terms.
• Do not fight every line - it signals inexperience and spends goodwill the person needs on the three asks that matter.
• Do not accept "we'd never actually enforce that" as a reason to sign a broad covenant; if it will not be enforced, it can be narrowed in writing.
• Do not let verbal promises about bonus, title, or severance stay verbal.

Quality bar

• Every clause category in Steps 2-5 appears in the table, even the acceptable ones (marked no-flag), so the person knows the whole document was read.
• Each flag states the market-standard position it deviates from, not just "this seems bad."
• The ask list is capped at three, each with alignment framing.
• The not-legal-advice statement and the attorney-review list are present in the output.
• Red-flag summary covers, at minimum: broad/long non-compete, IP assignment without a prior-inventions carve-out, vague cause, undefined discretionary bonus, and an inflexible 90-day exercise window.

Escalation

This skill is not legal advice and does not create an attorney-client relationship. Bring in a licensed employment attorney when: any restrictive covenant might realistically be tested, severance or equity value is material, the jurisdiction has specific statutory rules (non-compete bans, notice requirements), or the employer resists putting promises in writing. For negotiating the compensation package itself, route to salary-negotiation. For company-side consumer-facing documents, route to terms-of-service.