Employment Contract Checklist: 50-Point Review
Most people don't review their employment contract carefully. They skim it, see "salary: $100k," and sign. Two years later: "Wait, I lost all my equity because I quit? I can't work for anyone in tech for 2 years?" This 50-point checklist forces you to review everything before you sign.
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Reviewed by Sarah Martinez
Employment Attorney, CA Bar Licensed
Employment Contract Review Team
Employment Law Expert
Reviewed by licensed employment attorneys
Compensation Section (10 items)
1. Annual salary stated clearly (number, not "competitive"). 2. Payment frequency (weekly, bi-weekly, monthly). 3. Sign-on bonus amount and timing. 4. Sign-on bonus clawback terms (if any). 5. Annual bonus formula and % of salary. 6. Bonus performance metrics defined. 7. Equity grant: quantity and type (options, RSUs, restricted stock). 8. Vesting schedule: length in years (4 years standard). 9. Vesting cliff: length in months (1 year standard). 10. Strike price (for options) and company valuation provided.
Benefits Section (10 items)
11. Health insurance plan type (HMO, PPO, HDHP). 12. Company premium contribution percentage. 13. When health insurance starts (day 1 or after 90 days). 14. Dental insurance coverage. 15. Vision insurance coverage. 16. 401k match percentage and cap. 17. 401k vesting schedule. 18. PTO days per year. 19. Separate sick leave or included in PTO. 20. PTO rollover policy (carryover allowed or use-it-or-lose-it).
Leave & Time Off (6 items)
21. Parental leave: length and paid/unpaid status. 22. Parental leave: applies to all family types equally. 23. Sick leave: paid, how much. 24. Bereavement leave: paid, how much. 25. Religious holiday observance allowed. 26. Sabbatical: available, how often.
Employment Terms (8 items)
27. Employment status: at-will or term-based. 28. If term-based: length of employment. 29. Probation period: length and terms. 30. Severance: amount if fired without cause. 31. Severance calculation: weeks/months of salary. 32. Benefits continuation during severance. 33. Notice period required (how much notice to quit). 34. Notice requirement is mutual (company also gives you notice).
Restrictive Clauses (12 items)
35. Non-compete: duration (months/years). 36. Non-compete: geography (miles, region, nationwide). 37. Non-compete: scope ("direct competitors" vs. "entire industry"). 38. Non-compete: applies if fired or only if you resign. 39. Non-solicitation: do you understand it. 40. NDA: duration and scope. 41. Confidentiality: what's considered confidential. 42. IP assignment: does company own all work or just company work. 43. IP assignment: does company claim side projects/personal work. 44. Clawback clause: exists or not. 45. Clawback: duration if it exists. 46. Clawback: pro-rata or cliff structure.
Dispute & Legal (5 items)
47. Binding arbitration: mandatory or optional. 48. Arbitration: can you opt out. 49. Non-disparagement: can you speak negatively about company. 50. Non-disparagement: is it mutual (applies to company too). (Bonus) Entire agreement: does contract say this supersedes verbal promises.
Key Takeaways
1. Knowledge is power: understanding your contract before signing gives you negotiating leverage 2. Most employment contracts favor the employer—know which terms are negotiable 3. Red flags aren't always deal-breakers, but they deserve attention and negotiation 4. Taking time upfront to review prevents costly mistakes later
Common Mistakes to Avoid
• Skimming without reading carefully: Read every word. Employment contracts hide important terms in dense legal language. What you don't read will hurt you. • Not asking questions: If you don't understand a term, ask HR to explain it in plain English. Don't pretend to understand; it comes back to bite you. • Assuming it matches the offer letter: The offer letter says $150K salary. The contract says "subject to performance review." Which is true? Read carefully for conflicts. • Not checking state laws: Some terms are unenforceable in your state. Research your state's employment laws before accepting. • Forgetting to get a signed copy: Keep a fully signed copy of every contract you sign. Don't rely on email chains. You need proof later if disputes arise.
Before You Sign
Step 1: Create a checklist of key items to review (use our 20-point checklist). Step 2: For each red flag you find, research whether it's enforceable in your state. Step 3: Read the contract sentence-by-sentence—don't skim. Step 4: Identify 2-3 items you'd like to improve or clarify. Step 5: Email HR with your questions/proposed changes. Step 6: Don't sign until you have written responses to your concerns. Step 7: Keep a signed copy for your records.
Real-World Example: The Hidden Clawback
Sam received a job offer and reviewed it quickly using a standard checklist. The offer looked good until Sam read a clause buried on page 4: "Signing bonus of $30,000, subject to full repayment if employee is terminated for cause within 24 months." Sam didn't think much about "terminated for cause" and signed. Two years later, there was a disagreement with his manager. Sam was terminated for "performance issues" (though he felt it was unfair). The company demanded repayment of the signing bonus. Sam couldn't afford $30,000 and had to negotiate a settlement. If Sam had used a detailed clause-by-clause review, he would have caught this and negotiated: (1) Limit clawback to first 12 months, (2) Carve-out for "bad faith" terminations, (3) Or remove it entirely. Take-away: buried clauses are common. Read the ENTIRE contract, every page, every clause.
📚 Related Guides to Help You Further
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- stock options
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- RSUs vs stock options
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People Also Ask
What should I do if I find issues in my employment contract checklist: 50-point review?
If you identify concerning clauses, document them and request changes before signing. Consider consulting with an employment attorney for complex terms.
Can I negotiate the terms mentioned in this employment contract checklist: 50-point review before you sign?
Yes, most employment contract terms are negotiable. Many employers expect negotiation, especially for equity, non-compete clauses, and severance terms.
How long does it typically take to review and negotiate these clauses?
Basic review takes 1-2 hours. Negotiation can take 1-3 weeks depending on employer responsiveness. Use our AI analyzer for quick initial analysis.
What are the most important clauses to focus on?
Prioritize: compensation/equity, non-compete restrictions, severance terms, and termination conditions. These have the biggest long-term impact.
Frequently Asked Questions
What if my contract doesn't have some of these items?
Missing items = gaps you should fill. Example: No severance clause = you get $0 if fired. No non-compete clause = you're free to work anywhere. Ask HR to clarify missing items.
How many red flags disqualify an offer?
Depends on the job. One major red flag (e.g., 5-year non-compete) might be disqualifying. Multiple minor red flags (clawback + binding arbitration + vesting cliff >1 year) together might be disqualifying. You decide your threshold.
Can I skip this checklist for a good company?
No. "Good companies" still have non-competes, clawbacks, and unfavorable vesting. Review everything regardless of company reputation.
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