What to Know About Employment Contracts
Most employees in New Jersey are at-will employees. Here is what you should know about employment contracts and what they should include.
Most employees in New Jersey are at-will employees, which means they can be terminated at any time and for any lawful purpose. At the same time, at-will employees also can end their employment at any time and for any reason. While at-will employment is the norm, some employees work under written employment contracts. While there is no legal requirement that you have a written employment contract, negotiating one might help to protect your job and allow you to secure favorable job benefits that would not otherwise be available to you. Here is what you should know about employment contracts and what they should include.
What Should be Included in an Employment Contract?
A good employment contract should clearly outline your employer’s expectations of you and what you can expect from your employer. Some of the following types of provisions should be considered when you are negotiating an employment contract with your employer:
- Your employment term – A specific duration or indefinite employment
- Your responsibilities
- Employer-provided benefits, including life, health, disability, and retirement accounts
- Accrual of vacation and sick leave
- Reasons for termination
- Progressive discipline
- Dispute resolution method
- Trade secrets/confidential information clause
- Assignment clause to assign patents for your work while employed to the company
- Travel expenses
- Relocation expenses
- Automobile allowances
- Professional organization membership fees
- Professional insurance expense reimbursement
- Severance pay
Your employer might also want a non-compete clause in your employment contract.
When you are trying to decide whether to accept a position, the compensation you will receive is among the most important considerations. When you are negotiating with your prospective employer to secure an employment contract, you need to make certain that your total compensation package is included. Your total compensation package should include all of the following things:
- Salary or base pay with periodic raises
- Restrictive share and stock units
- Equity compensation
- Schedule of when you will receive bonuses
- Requirements for earning bonuses and additional compensation
Make certain that you ask to include specific details about the employee benefits you will receive in your compensation package. Your employee benefits are non-cash types of compensation. Make certain your employment contract includes health benefits for you and your family and what your’s and your employer’s responsibilities are, retirement accounts, including employer matching, life insurance, short- and long-term disability benefits, vacations, and holidays. When you discuss your benefits, make sure that everything is documented including the employer-paid portions of each. Include information about what will happen to your benefits if your employment ends.
Restrictive Covenants/Non-Compete Clauses
Many employers include restrictive covenants or non-compete clauses in their employment contracts. These provisions are for the employer’s benefit and not yours. If a prospective employment contract includes a restrictive covenant, it means that your prospective employer wants to prohibit you from working for a different company it views as its competitor. It might also prohibit you from soliciting former coworkers if you start a new business or from soliciting business from specific clients.
A non-compete clause might state that you can’t work for a competitor located within a specific geographic region and for a set time. A non-solicitation clause might state that you can’t try to talk the employer’s other employees or clients from following you to a new business or a new employer.
Restrictive covenants are only enforceable if they are reasonable in time and scope. If they are deemed to be legally reasonable, you will have to follow them unless you negotiate their terms. If you sign an employment agreement with unfavorable provisions, you will need to be prepared to live with the terms. You should work with an experienced employment lawyer at Swartz Swidler to negotiate all of the provisions of your employment contract, including any restrictive covenants that might be included. If you signed an employment contract with an unreasonable restrictive covenant clause, one of our attorneys can review it to determine whether it might be found unenforceable. For example, if your employer included a clause prohibiting you from working at a competitor within 200 miles of your home for five years, your lawyer might secure an order deeming it invalid and void.
It is a good idea for you to consider severance pay if your employment comes to an end. Being prepared for the end of your employment is a critical area that should be addressed in your employment contract. You should negotiate a severance package at the start of your employment that you will receive regardless of the reason for the end of your employment, including a voluntary resignation, termination for poor performance, job elimination, job loss through an acquisition or merger, or for cause termination. If you want to ensure that you will receive sufficient severance pay to allow you time to look for and find a new position at a different company, you should negotiate to include it in your employment contract.
Get Help From Swartz Swidler
Negotiating the clauses of an employment contract can help you secure better terms. However, getting the types of terms you want might necessitate the help of an experienced employment lawyer. The attorneys at Swartz Swidler focus on employment law and have substantial experience helping their clients negotiate favorable employment contracts. To learn more about how we might be able to help, call us today to request a consultation at 856-685-7420.