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What is Employment Contract?

An employment contract is a formal agreement between an employer and employee that defines the terms and conditions of employment. It covers compensation (salary, bonuses, equity), job title and responsibilities, working hours and location, benefits, intellectual property assignment, confidentiality, non-compete and non-solicitation provisions, and termination conditions. Employment contracts range from simple offer letters to multi-page executive agreements with complex equity and severance terms.

What to Look for When Reviewing

  • Total compensation — base salary, bonus structure, equity (vesting schedule and cliff)
  • Job title, reporting structure, and core responsibilities
  • Non-compete clause — geographic scope, duration, and restricted activities
  • Non-solicitation provisions — covers employees, clients, or both?
  • IP assignment clause — what you create on your own time vs. company time
  • Termination provisions — notice period, severance, and at-will vs. for-cause
  • Dispute resolution — arbitration clause that waives your right to sue

Common Red Flags to Watch For

  • Overly broad IP assignment that claims inventions you create in your personal time, unrelated to company work
  • Non-compete that covers an entire industry with no geographic limitation
  • Mandatory arbitration clause buried in fine print that waives class action rights
  • No specific termination notice period, leaving severance entirely discretionary

How AI Changes the Review Process

Employment contracts protect employers by default. AI analysis puts the power back in the employee's hands by extracting every clause that affects compensation, freedom, and rights. Upload any offer letter or employment agreement and get a complete breakdown — including the non-compete scope, IP assignment details, and equity terms — in seconds, with citations back to the exact contract language.

Frequently Asked Questions

What should I negotiate in an employment contract?
Focus on total compensation (equity vesting cliff, bonus triggers), the non-compete scope (narrow it geographically and by industry), severance provisions, and the IP assignment carve-outs for personal projects.
Is a non-compete agreement enforceable?
Enforceability varies widely by state. California bans most non-competes. Other states enforce them if "reasonable" in scope and duration. The FTC has proposed rules to limit non-competes nationally. Always check your jurisdiction.
What is an IP assignment clause?
An IP assignment clause transfers ownership of inventions you create to your employer. Broad clauses try to capture everything you create, even on personal time. Most states allow carve-outs for inventions unrelated to company business made outside work hours.
What is a cliff in an equity vesting schedule?
A cliff is a waiting period before any equity vests. A typical 4-year vesting schedule with a 1-year cliff means you receive 0% equity if you leave before 12 months, then 25% vests immediately at month 12, with the rest vesting monthly thereafter.
Can AI analyze an executive compensation agreement?
Yes. AI is particularly effective at parsing complex compensation structures — base salary, target bonus, long-term incentive plans, change-of-control provisions, and severance multiples — and presenting them in a clear summary.

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