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I thought of this today after a co-worker looked through the contract they had signed several years ago and was quite alarmed.

What should one look out for before signing a contract, as most employers will get you to sign one. Please post ideas separately so they can be voted individually.

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Most comments below assume you've got a dozen offers on your table. When you need work and you're asked for a non-compete and you don't have a few hundy sitting in your bank, the choice is quite easy. – Xepoch Oct 6 '10 at 4:10
@Xepoch, If you don't love whatever it is you are asked not to compete in, yes, it's easy. Only then. – Septagram Apr 14 '11 at 9:29
up vote 20 down vote accepted

Intellectual Property Clauses

Such clauses may state that the employer owns all intellectual property rights for any creative work produced during employment. If this is something that is important to you then make sure all vagueness around the definition of intellectual property and creative work is clarified and/or removed.

As programmers we write a lot of code and it is important to clarify before you start employment who owns the intellectual rights for a new algorithm or any patentable piece of code that you make come up with during your employment.

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And vagueness around "during". Is stuff done independently at home done "during employment"? – Greg Hewgill Oct 6 '10 at 3:21
Particularly what @Greg says. I think it's fairly reasonable to assume that any code you write at work and as part of your job belongs to your employer, but many contracts will also be written to imply that anything you write in your own time could be construed to be property of the company as well. – Dean Harding Oct 6 '10 at 3:46
When I was in college almost 35 years ago, my friend's dad worked for IBM and was covered by one of those. He had to get a waiver so he could sell clay figurines he made on the weekends at a flea market. I don't think that would hold up in court these days. – Bob Murphy Oct 6 '10 at 6:07
Oh, it's also common to have a page when you join the company where you list any software projects you work on in your spare time so they'll be exempted. And you can often get a written waiver if you come up with new ideas and the company isn't interested. – Bob Murphy Oct 6 '10 at 6:09
My employer threatened to fire me if I developed any software outside of work and distributed it since it would be direct competition. I work for a web design company :S So this is a very important clause to watch out for. – Brandon Wamboldt Oct 6 '10 at 9:37

Be very careful of contracts that state that you can't work for any competitor for x number of month after leaving the company. Companies use the word competitor generously, so for a web development company this could include any company providing web based services.

This puts you in a terrible position if you get a better job offer or if your job ends up being horrible, because finding a job for somebody who isn't a competitor with your current company will be very difficult.

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Depending on your legal framework, this limitation may or may not be legally enforceable. (Bearing in mind that IANAL) In South Africa, there's no way a court will uphold a clause that prevents you from getting a job. – Frank Shearar Oct 6 '10 at 7:04
+1 this is one of the two most important clause to look at. I always ask to reduce it to 1 year. – user2567 Oct 6 '10 at 7:40
FYI This is known as a "restrictive covenant" in legal terminology. – Dan Diplo Oct 6 '10 at 7:47
In the UK, for these clauses to be valid it needs to have a geographic limitation and a time limitation, and for there to plenty of suitable work available for you without breaching this clause. For less senior developers its very easy to change industry sectors when you change jobs, so a geographical limitation of the UK is quite reasonable. – Michael Shaw Nov 25 '11 at 22:58

Joel Spolsky blogged about this. His main points were to look out for:

  • A clause which forbids you to hire anybody who works for the company that is making you sign the NDA
  • Non-compete clauses in their employment contracts
  • Another dangerous clause says that you agree not to hire, or cause to be hired, anybody from the company if you leave for a period of x months (usually 12 to 24).

I've also seen contracts that forbid the hiring of working for customers of the company. If the company hiring you has a lot of customers, that could be a large amount of jobs you couldn't take after leaving.

All in all, I'd look out for clauses that restrict employment in general. For the most part, the goal of these clauses are to protect trade secrets, but they could also seriously hinder your job search.

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I remember hearing this regarding a MSFT exec who went to Google. Although suit was filed, I believe it was withdrawn due to the fact it couldn't be enforced. The state the asker resides in may play a factor into this – LamonteCristo Oct 6 '10 at 3:30
Where "state" may mean "not like Arizona, but like Spain"! – Frank Shearar Oct 6 '10 at 7:05

In all my contracts, I always change the 2 following clauses that are in most case, not fair:

  • not being able to work for a customer, competitor or similar industry for 2 to 3 years. I always ask to reduce it to 1 year.

  • having the same contract termination rights than your employer. Most of the time you can't terminte while they can. It's not acceptable, this period should always be equal. They request a 2 weeks notice? You should have that right too.

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