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"Sign right here..."
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November 28, 2000: 8:18 a.m. ET
Check employee contracts for fine print before you sign on
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NEW YORK (CNNfn) - You're hired, welcome to the company—now sign right here.
In what some experts say is a growing phenomenon, more professionals are being asked to sign a contract when they sign on to a new company.
The reasons for the contract can vary, depending upon the company and the industry, but the basic employee pact typically covers "all the stuff that's close to people's hearts" as one legal expert put it, including job description, salary, benefits and, often, agreements covering intellectual property and working for competitors.
Experts say the explosion of Internet-based companies has sparked companies to insist upon employee contracts as a way of protecting trade secrets. That's fine for the company, but if you're not careful, you may find yourself in a bind if you leave a company before the contract expires.
John Challenger, chief executive officer of the outplacement firm Challenger, Gray and Christmas, said employee contracts are still rare, as they are usually reserved for top managerial talent. Still, he said, they are on the increase.
"You are seeing more of them today," he said, "because of the litigiousness and demand on the part of companies and the increased incidence of companies to let people go quickly when the results aren't there."
What's this mean?
When faced with an employee contract, Challenger said prospective workers have to iron out the language before putting pen to paper.
"You're trying to maximize what you get in terms of benefits and perks from the company," he said. "You're trying to minimize the limits on what you can do."
Richard C. Solomon, a professor of law at Southwestern University School of Law in Los Angeles, said employees should ask for time to study the agreement before they sign and then show the document to an employment lawyer. 
"If there's something they don't like," he said, "they might be able to negotiate. It all depends upon the market. Employers can take their pick of lots of qualified people, or, on the other hand, some industries are so desperate they're looking for anyone."
Often companies will include a clause requiring arbitration in the event of a dispute. Under arbitration, opposing sides in a dispute agree to take their case to one or more neutral decision makers who hear the case and render a decision.
Cases are usually settled quicker through arbitration, but, unlike court cases, the decisions are final and there are no appeals. If you're coming aboard new company, you may not like this arrangement. However, Solomon said companies tend to favor arbitration.
"The advantage is that it's cheaper," he said. "They avoid the risk of a runaway jury — juries tend to run away from companies. We've found a lot of executives make lousy witnesses. They don't think about persuading people, they're used to getting their way."
Healthy competition?
A non-compete clause can hamper an employee's ability to operate when he or she leaves the company. Challenger said a non-compete clause can be hard for companies to enforce.
"It depends on how well they're written," he said. "They need to be written very strictly. A company can't stop a person from going out and using his or her skills, but it can prevent someone from working with a competitor in a restricted geographical area."
Lawyer and author Barbara Kate Repa, an attorney for the Web site HROne.com, said workers are starting to rail up against against non-compete clauses, claiming they unfairly hamper them once they leave the company.
"We're starting to see a big crisis on this," she said. "The courts keep bringing it back to reasonable and common sense. They tend to not want people to be hampered in their ability to make a living."
Repa said three years was once the common legal standard for non-compete clauses, but courts are looking more to the nature of a business before making a determination. A recent California case involving an Internet company, Repa said, found one year was too long in the dot.community.
Contract lite
Repa, author of "Avoiding Employee Lawsuits" for Nolo, said confirmation letters can take on an increased significance in the case of a dispute.
"Employment letters are being enforced like contracts," she said. "Especially when things go wrong. The biggest problems occur when stock options aren't quite what was promised."
Company handbooks can also contain information — and potential legal ammunition — for an employment dispute case. Solomon said many management attorneys made a lot of money sanitizing company personnel materials of any potentially damaging material.
"Keep everything," he advised employees, "that includes letters, pamphlets, brochures, company handbooks. Read them right away. If there's a line that says something like 'we hope we have a long relationship,' photocopy it." 
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