Most people spend more time negotiating salary than reading the contract they're being asked to sign. That's understandable — salary is visible and immediate. The clauses below are less visible, but they can cost you significantly more over the course of your career.

Here are five employment contract clauses that tend to catch people off guard later.

1. Intellectual Property Assignment (The "Everything You Make Is Ours" Clause)

Almost every employment contract has an IP assignment clause. The question is how broad it is.

Narrow (reasonable):

"Employee agrees that any inventions, discoveries, or work product created by Employee during the course of employment, using Company resources, and related to Company's business shall be the exclusive property of Company."

Broad (concerning):

"Employee agrees that any inventions, discoveries, improvements, or other work product created by Employee during the term of employment, whether or not related to Company's business, whether or not developed during business hours, and whether or not developed using Company resources, shall be the exclusive property of Company."

The second version means anything you create — a side project, an app, a novel — could belong to your employer. Many states (California, Delaware, Minnesota, and others) have laws that limit these clauses, but enforcement requires you to know about the limitation and assert it.

What to do: Ask whether the IP assignment can be limited to work done in the scope of employment and with company resources. Some companies will add a carve-out for pre-existing work if you list it explicitly in an attachment to the contract.

2. Non-Solicitation Clauses

Non-competes get more press, but non-solicitation clauses are often broader in practice:

"For a period of two years following the termination of employment for any reason, Employee shall not, directly or indirectly, solicit, recruit, or hire any current or former employee of Company, or solicit any client, customer, or prospective customer of Company."

This means:

You can't hire your former colleagues for two years
You can't reach out to any client you worked with — even clients who approach you first
"Prospective customer" can be extremely broad

Non-solicitation clauses are more consistently enforced than non-competes across most states. Violating one can result in injunctions and damages.

What to look for: The duration, the geographic scope (sometimes they're nationwide), and whether "prospective customer" is defined or left open-ended.

3. At-Will Employment Combined With Deferred Compensation

At-will employment means either party can end the relationship at any time, for any reason (with some exceptions). That's standard in most US states. The problem is when at-will employment is combined with compensation that vests or pays out over time:

Equity that vests over 4 years with a 1-year cliff
Annual bonuses paid in Q1 for the prior year's performance
Commission payouts delayed by 60–90 days

If you're let go the day before your cliff vests, you get nothing. If you're terminated in December before the annual bonus is paid in February, you likely get nothing. The contract will almost always say you must be "actively employed" at the time of payment to receive it.

What to look for: Whether there's any protection for deferred compensation in termination scenarios, and whether termination "without cause" has different terms than termination "for cause."

4. Mandatory Arbitration With Class Action Waiver

See the full guide on arbitration clauses, but in the employment context specifically:

"Any claim arising from or related to Employee's employment, including claims of discrimination, harassment, wrongful termination, or any other employment-related claims, shall be resolved exclusively through final and binding arbitration. Employee waives the right to participate in any class, collective, or representative action."

This clause prevents you from joining class action suits against your employer — including for wage theft, discrimination, or other systemic issues. Individual arbitration for employment claims has documented outcomes that favor employers.

What to look for: Whether there's any opt-out mechanism (rare in employment contracts), and whether the employer pays arbitration fees (they usually must for employment claims under AAA rules).

5. Termination and Severance Terms

Many employees assume they'll receive severance if let go. Most US employment contracts — especially for non-executive employees — have no severance obligation:

"Employment may be terminated by either party at any time, with or without cause, with or without notice. Employee shall not be entitled to severance or continuation of benefits upon termination."

Even where severance is offered, the contract often conditions it on signing a separation agreement that includes a broad release of claims — meaning you give up any legal claims you might have in exchange for the severance payment.

What to look for: Whether there's any severance commitment, what conditions are attached to receiving it, and what you're releasing in exchange.

Reading Your Offer Letter vs. Your Contract

Many employment offers come in two documents: an offer letter (summary of role, compensation, start date) and a formal employment agreement or offer letter with attached policies. The attached documents — IP assignment, arbitration, NDA, non-solicitation — often have more legal consequence than the letter itself.

Read both. If something in the employment agreement is unclear, it's reasonable to ask HR or legal to explain it before signing.

For a fast plain-English breakdown of your specific contract — including what's unusual or aggressive about it — you can analyze it with DocLearly. Free to try.

This article is for informational purposes only. Employment law varies significantly by state. Consult an employment attorney for guidance on your specific situation.

5 Employment Contract Clauses That Could Cost You Later