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Employment Contracts and Compensation Agreements


Most employment contracts have common elements such as the employee's start date, salary, and benefits.  Other provisions that often appear in employment contracts are listed here, so that you can think about what kind of employment contract is agreeable to you before you sign your next employment agreement. An employment law attorney can advise you about the pros and cons of agreeing to the various provisions, and may also suggest other terms to include.

1. CONFIDENTIALITY AGREEMENT.  An employee confidentiality agreement is a contract (or part of a contract) in which the employee promises not to share any information about the details of the employer's business or the employer's secret processes, plans, formulas, data, or machinery.  Usually a confidentiality agreement lasts even after the employee no longer works for the employer.

2. NONCOMPETITION AGREEMENT.  In the noncompetition clause, the employee agrees that for a certain amount of time after he or she stops working for the employer, the employee will not become employed by a rival company or any company engaged in a similar type of business, and the employee will not set up a company that will compete with the employer's business (or solicit the employer's customers). Usually the noncompetition clause is limited to a particular geographic area.

3. OWNERSHIP OF INVENTIONS.  This provision applies to employees who invent things as part of their jobs.  In this part of the contract the employee agrees that anything he or she invents at work (or during a set period of time after termination) becomes the employer's invention, not the employee's own invention.  Additionally, employees usually agree to assign their inventions to the employer, cooperate with the employer in getting inventions patented, and keep information about the invention confidential like any other trade secret.  In return, sometimes the employer agrees to share with employee-inventors a percentage of the royalties paid for inventions.


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