A guide for finding and avoiding dangerous provisions in employment agreements.
Employees oftentimes sign a number of documents before and during their employment such as employment agreements, non-compete agreements (or other restrictive covenants) and agreements linked to other incentive compensation such as equity, stock or bonus plans. Most employees do not read these agreements-at least not carefully. Employers know that and some are taking advantage of that fact by inserting releases or alterations of legal rights. Here are some of the more common hidden dangers to look for:
Changes to Statutes of Limitations
Illinois courts (including the Seventh Circuit Court of Appeals) have held that contractual alterations to statute of limitations periods are enforceable-even those that alter statute of limitations that are contained in federal or state statutes. The result? Regular employees who may not understand legalese or even those who do not review the entire agreement are shortening the time they have to file suit or bring claims without even knowing it.
these are extremely common and are oftentimes hiding in employment or non-compete agreements. Opponents refer to these as Forced Arbitration Clauses because employees rarely, if ever, have the power to negotiate them out of their agreements. By signing an agreement with an arbitration clause in it you are agreeing to give up your right to file your claim in court (and to have it heard by a jury) and, instead, are agreeing to have a private arbitrator decide it. Courts regularly enforce these agreements, although each year groups such as the National Employment Lawyers Association, of which we are members, try to challenge the enforceability of these provisions. See, https://www.nela.org/index.cfm?pg=mandarbitration
Waiver of your Right to a Jury Trial
Despite the fact that the 7th Amendment of the U.S. Constitution guarantees us the right to a trial by jury, employers sometimes will insert a waiver of this right into employment agreements and, once again, courts typically uphold these.
Choice of Law/Venue
You work in Chicago and would think that if you file a lawsuit against your employer it would be in Chicago or at least somewhere in Illinois right? Not necessarily. Employers who are headquartered elsewhere oftentimes slip in choice of law/venue provisions in agreements asking employees to agree that if they sue them they will do so on the company's home turf-i.e. usually the city/state in which they are headquartered rather than the employee's turf where s/he worked. With these choices of law/venue provisions employees could find themselves trying to litigate out of state which for obvious reasons can be more expensive and logistically difficult. These provisions also sometimes result in a different state's laws being applied to the case than the state in which you are litigating.
When an employee signs an employment agreement it is usually a happy occasion, i.e. a new job, a raise or other type of financial incentive. Because of that, employees tend to ignore the provisions in these agreements which do not seem right or, worse, are patently unfair. The problem is that the employment relationship may not always remain as happy as it is on the day of the signing and these hidden provisions can really come back to haunt an unassuming employee. The lesson that should be taken away is to read what you sign and if you do not understand any part of it talk to an employment lawyer who will.
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