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Employee Contract Review

Updated: October 19, 2023
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An employee contract review involves reviewing the employee's responsibilities, job description, compensation, benefits, and their policies and procedures. It aims to review your employee's contract and ensure it is up to date. It's important because it can help you ensure you're in compliance with current laws, but it also lets you know if any clauses in your contracts could be problematic.

For example, if you have an employee who has been injured on the job and wants to file a workers' compensation claim, they may be able to get more money if they have a clause in their contract stating that they are only required to work 40 hours per week. If they worked 60 hours per week and got injured while working those 20 hours, they could be entitled to more money through workers' compensation than if they had worked 40 hours and gotten hurt doing so.

The elements that employment lawyers will review in an employment contract review include:

  • Confidentiality
  • Non-compete clauses
  • Severance pay
  • Covenants not to compete
  • Background checks
  • Arbitration agreements
  • The term of the employment contract
  • The job title, description, and duties
  • The employee's compensation package
  • Employee benefits
  • Termination procedures, including notice periods and severance packages
  • Any restrictive covenants that limit former employees' ability to compete with their former employers

What Are the Types of Contract Reviews?

Contract review is a critical part of the business process. It's a meaningful way to ensure that your company is protected from potential pitfalls and helps you stay on top of any changes in the industry.

The types of contract review are:

  • Basic Contract Review

    A basic contract review provides a high-level overview of the document and is used to get an idea of what the document contains. It is also typically used to check for spelling, formatting, and other minor issues that don't require changes or corrections.

  • Contract Review with Edits

    A contract review with edits is a complete version of an essential contract review. You'll have someone look over the entire document to ensure that all of the terms are fair, accurate, and acceptable to both parties involved (your company and the employee). This review can help you avoid potential legal issues because it ensures that everything in the contract is up-to-date and accurate.

  • Contract Review with Negotiations

    Contract review with negotiation is a process in which the client, contractor, lawyers, and other experts negotiate the terms of their contract together. This is often a very informal process, where parties can sit together and discuss their concerns and desires, then work toward an agreement that suits both parties. This type of contract review serves as an objective analysis of the nature and purpose of the document.

  • Issue-Specific Contract Review

    An issue-specific contract review is when a team of lawyers and other experts reviews a particular aspect of a contract (such as its terms regarding intellectual property rights) to determine whether or not those terms are enforceable according to local law. This review generally only occurs after negotiations have concluded but before they have been finalized.

How Much Do Lawyers Charge for an Employee Contract Review?

Getting all the paperwork is essential when you're getting ready to hire employees. You're probably aware that you'll need an employment contract and an employee handbook, but what about other documents?

The good news is that your lawyer can help you with all of these things. The bad news is that it will cost you some revenue.

Lawyers charge between $175 - $1,200 for an employment contract review. This means that they'll look at the contract and ensure it's legally sound and up to date with current labor laws. They'll also ensure that there aren't any clauses in the agreement that could hurt your business or leave you open for legal action by an employee—and then they'll sign off on it as being ready for use.

The lawyer will also review any other documents related to hiring new employees: including handbooks and employment manuals (which should be distributed to all new hires), job descriptions, offer letters, notices of termination or resignation, etc.

Do lawyers charge a flat rate or by the hour?

The answer is: it depends. Lawyers have different ways of charging you and can be set in various ways. Some lawyers charge by the hour, while others lawyers have a flat rate. Let's take a look at the two types and how they work.

  • Flat Rate

    A flat rate is one fee that covers all the work done during your case. This fee can be charged hourly or as an annual retainer (a set amount paid upfront). For example, if your attorney charges $175 per hour, you'll pay $175 for every hour he works on your case.

  • Hourly Fees

    Hourly fees are charged by the hour and are billed at the end of each month based on how many hours were spent on your case during that month, plus any additional time needed to complete the project. For example, if an attorney charges $10 per hour but only needs 40 hours of service from you in a month, he'll charge $400 at the end.

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What Does a Lawyer Inspect in the Contract?

A lawyer inspects the contract to ensure that it meets specific requirements and to make sure that it is legally binding. Here are several things a lawyer looks for:

  • Overview of concerns

    The first thing that a lawyer will do is to listen to you and make sure you understand the legal situation. The lawyer will then give an overview of the concerns, how they may be resolved, and the next steps.

  • Quick scan review

    The next step is for your lawyer to review any documents with you, including contracts or agreements that need to be checked before signing. This process can be rapid or somewhat involved depending on the complexity of your situation.

  • Communications review

    After reviewing all relevant documents with you, your lawyer will begin communicating with other parties involved in your case - whether it's another party's lawyer or a judge or court officer - so that everyone's on the same page about what's happening.

  • Legal recommendations

    Your lawyer will explain the options for resolving your case based on its specific facts and circumstances so that you can decide which option(s) best serve your interests and goals.

  • Employee job security analysis

    If you're an employee whose job is at risk because of a legal matter involving them (e.g., a lawsuit), they may also guide how best to protect their employment status while the case is pending.

  • Position start and end dates

    A lawyer ensures that your contract includes the right start and end dates for your position, including any probationary period that might apply.

  • Termination clause review

    A lawyer can help you with the termination clause, which specifies how and when the employer can terminate your employment if they want to.

  • Compensation and benefits review

    A lawyer can assist you in ensuring that your contract reflects the compensation package you agreed to when hired, including salary, bonuses, vacation time, and other benefits.

  • Legality and fairness of job description

    A lawyer can help you ensure that your job description is legal according to federal, state, and local laws governing employment practices in your area of expertise or geographic location (e.g., wage and hour laws).

  • Exclusivity review

    A lawyer can clarify the terms of your contract and help you determine whether it includes an exclusivity clause, which would restrict you from freelancing or moonlighting for other clients during this period.

Key Terms in An Employee Contract

Here are the key terms that must be included in every employee contract:

  • Intellectual Property Rights
  • Assignment of Employment
  • Non-compete clause
  • Confidentiality clause
  • Assignment of inventions clause
  • Right to terminate clause
  • Termination for cause

Conclusion

Employee contracts are one of the most critical documents in a company. They define the relationship between an employee and a company and outline how they will be compensated and what they can expect from the company. If you're looking for a law firm that can help you with employee contracts, Contracts Counsel is ready to assist you.

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