How to Review an Employment Agreement Before You Sign
Most of the long-term risk in an employment agreement is in the covenants and the termination terms — not the salary. Here is the order to read them in.
Last reviewed: May 26, 2026 by the BizLeaseCheck Editorial Team
General information, not legal advice.
Overview
An employment agreement or executive offer letter sets your pay, but its lasting consequences live in the restrictive covenants and the exit terms: what you can do after you leave, who owns what you create, and what you get if you are let go.
Review in this order: compensation and equity, then the restrictive covenants (non-compete, non-solicitation, confidentiality/NDA, and invention assignment), then termination and severance, then dispute resolution. The covenants and the definition of "cause" are where you have the most to gain by negotiating before you sign.
Topics to check
Confirm the base salary, the bonus structure, and — critically — whether the bonus is discretionary and forfeited if you are not employed on the payout date. For equity, find the grant size, the vesting schedule and cliff, whether there is acceleration on a change of control or termination, and the post-termination exercise window for options.
A headline number means little if a discretionary bonus can be zeroed out or unvested equity disappears the day you leave. Tie each number to the condition that controls it.
Read the non-compete, non-solicitation, confidentiality, and invention-assignment clauses together. Note each covenant’s scope, duration, and geography. Non-compete enforceability is highly state-specific — some states broadly void employee non-competes while others enforce reasonable ones — so treat any enforceability conclusion as a question for a licensed attorney in the governing-law state.
These clauses determine where you can work next and what you can take with you, so they deserve more scrutiny than the salary line.
Covenant not to compete (Cornell LII Wex)Check at-will status, how "cause" is defined, whether you have a "good reason" trigger, and what severance (if any) you receive and on what conditions. Then read the dispute-resolution clause: mandatory arbitration, a class/collective-action waiver, jury waiver, governing law, and venue.
Note that a federal law (the EFAA) lets a worker void pre-dispute arbitration of sexual-harassment or sexual-assault claims at their option, so a broad arbitration clause cannot reach those claims.
Employment-at-will doctrine (Cornell LII Wex)Key takeaways
- The biggest long-term risks are the covenants and the exit terms, not the salary.
- Tie every pay and equity number to the condition that can take it away.
- Read non-compete, non-solicit, NDA, and IP assignment together — scope, duration, geography.
- Non-compete enforceability is state-specific; treat it as a lawyer question.
- Check at-will status, the definition of "cause," severance conditions, and arbitration.
Official resources
Legal-review notes
Guide confidence marker: Medium confidence.
- Non-compete and other restrictive-covenant enforceability depends on your state and the exact terms; confirm with a licensed attorney.
- This guide is general issue-spotting, not jurisdiction-specific legal advice.
Frequently asked questions
What is the most important part of an employment agreement to review?
The restrictive covenants (non-compete, non-solicitation, confidentiality, and invention assignment) and the termination terms. They control where you can work next, what you own, and what you receive if you leave — often mattering more than the salary line.
Can I negotiate an employment agreement?
Often yes, especially the covenants, equity acceleration, the definition of "cause," and severance. Employers expect some negotiation on senior roles. The time to ask is before you sign, when you have the most leverage.
Is this legal advice?
No. This is general information. Employment terms — especially non-compete enforceability — vary by state and by the exact wording, so have a qualified employment attorney in your state review a high-stakes agreement before you sign.