An employment contract is usually the first contract a person signs without anyone on their side of the table. The employer's version is drafted by the employer's lawyers and written to be signed quickly, often against an offer deadline. Reading it closely before signing is the one moment where the terms are still open.
This is an observational walk through the five groups of terms an offer or employment agreement puts in front of you: what to find in the document and why it matters. It does not tell you what to decide, and it is general information, not advice about your specific agreement. The legal judgment about what to do with what you find is yours.
1. The compensation terms
Base pay is the part everyone reads. The parts that change the real value of an offer usually sit around it.
- Bonus structure. Confirm whether a bonus is discretionary or formula-based, and whether it is forfeited if you leave (or are let go) before a payout date.
- Equity. If equity is offered, the economics live in documents the offer letter only references — the grant, the vesting schedule, the cliff, and what happens to unvested (and vested) shares on termination. Confirm the vesting schedule and the post-termination exercise window.
- Clawbacks and repayment. Some agreements require repayment of a signing bonus, relocation, or training cost if you leave within a set period. Confirm the trigger and the amount.
2. The termination and severance terms
How the relationship ends is defined at the start.
- At-will vs for-cause. Confirm whether the contract preserves at-will status or defines "cause," and how "cause" is worded — subjective, performance-based definitions give the employer wide latitude.
- Severance. Confirm whether any severance is promised, the amount, and the conditions (often signing a release). A severance promise that depends entirely on the employer's discretion is not a guarantee.
- Notice. Find any notice period each side must give.
3. The restrictive covenants
These follow you after the job ends, which is what makes them consequential.
- Non-compete. Confirm whether the contract restricts where you can work afterward, for how long, and in what geography or industry. Enforceability varies dramatically by state — some states bar most non-competes while others enforce reasonable ones — so whether yours is enforceable is a state-specific legal question worth confirming with an employment lawyer.
- Non-solicit. Find any restriction on soliciting the employer's customers or employees after you leave.
- Confidentiality. A confidentiality obligation is standard; confirm it is limited to the employer's actual confidential information and does not sweep in your general skills.
4. The intellectual-property terms
For anyone who creates, this group can reach beyond the job.
- Assignment of inventions. Confirm what the contract claims ownership of. Some IP-assignment clauses reach work created on your own time and equipment, and how far such assignments can go varies by jurisdiction — confirm the scope.
- Moonlighting / outside activity. Find any restriction on side projects or outside work.
5. The dispute terms
Nobody reads these until there is a dispute — which is when they decide the outcome.
- Mandatory arbitration. Confirm whether disputes must go to arbitration rather than court, and whether that includes a class-action waiver. This changes how, and how publicly, a future claim is resolved.
- Governing law and venue. Find which state's law governs and where disputes are heard.
- Attorney fees. Confirm whether fee-shifting is one-way or mutual.
How to use this
Read the offer and the employment agreement together, and mark every item above you cannot answer from the text. The unanswered items are the shortlist worth a question to the employer, a negotiation, or review by an employment lawyer. Many of these terms are commonly adjusted before signing — the document as sent is rarely the document that gets signed. What you do with that information is your call.
Related: employment contract analysis · non-competes explained.