Unfair balance of power in your employment contract?

Many employer contracts keep too much power for employers in areas such as job termination and arbitration, among others.

In Michigan every day, employers offer contracts to prospective employees. Often, these finalists have gone through a competitive process that involved hundreds of applicants and several rounds of interviews. They have put a lot of effort into showing how they can help the employer. Thus, it can be disappointing, even stressful, to be faced with an employment contract that seems to leave little for the employee. Here are some ways in which contracts can be unfairly skewed toward the employer.

Mandatory arbitration

A contract may have a mandatory arbitration clause meaning that any disputes such as the employee alleging illegal discrimination must go through arbitration rather than through the courts. This type of provision can be disheartening because it strips employees of their legal rights. Furthermore, they might have a harder time finding legal representation. For instance, lawyers might be less inclined to take on a case when the potential for damages is limited.

In a major decision, the U.S. Supreme Court held in the May 2018 case of Epic Systems v. Lewis that these mandatory arbitration clauses are valid and enforceable in employment agreements despite other federal laws that may have suggested otherwise. For example, the court said that the National Labor Relations Act's guaranty of the rights of employees to collectively act together for mutual protection does not mean that they have the right to collectively sue an employer in a class action suit. An individual employee's mandatory arbitration clause trumps that right.

The strongly pro-employer nature of the Epic case makes it even more important that a potential employee consult a lawyer for help negotiating an employment contract, especially when the employer proposes an arbitration clause.

No notice of termination

An unfair contract may require a worker to give notice before leaving the job, say, two weeks' notice or a month's notice. At the same time, the contract could say that the employer is allowed to terminate the employee with no notice at all.

Fewer compensation options

The hefty salary may have attracted an employee to a job, but the contract might spell things out in a way different than expected. For instance, maybe the employee is required to pay out of pocket for work equipment or supplies with no reimbursement, or oral promises made earlier such as paying for gas or restricting travel are not reflected in the contract. Never believe an employer who says, "Oh, we will still honor what we said. This contract is just something you have to sign. Do not worry about it." No - get verbal promises in writing. Any reputable employer will be happy to do this.

Noncompete agreements

Some contracts include noncompete agreements. They basically mean that an employee cannot work for a competitor of the employer for a certain period of time, sometimes up to five years, and in a specific geographical area. Employees may also be prohibited from sharing items such as client lists and processes with the competitors of a business.

A number of noncompete agreements are fair. Others may not be, especially if you are working as a freelancer or contractor rather than as a true employee.

Many employees in Michigan can get their contracts negotiated satisfactorily with the help of a lawyer. It is also possible for a lawyer to help employees challenge a contract that may be illegal even if the contract has been signed and in place for several years.