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Employment AgreementSample review

7.1

/ 10 risk

Executive Employment Agreement

Employee ↔ Vertex Labs, Inc. · Governing law: United States

⚖️ Verdict: Proceed only with key changesLeans: Favors the employer (Vertex)

A senior-hire contract with a worldwide non-compete and an IP grab that reaches personal, off-hours projects. Several of these terms are unenforceable in key states, and all of them are worth negotiating before you sign.

8

Clauses analyzed

3

High risk

5

Need review

0

Accepted

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Where to focus

Your top negotiation priorities

The flagged clauses ranked by how much they matter. Tackle these first — tap any one to jump to the full breakdown and the suggested safer rewrite.

1

Worldwide 24-Month Non-Compete

Restrictive CovenantsHIGH RISK

An unbounded non-compete is the highest-risk term. Many courts will not 'blue-pencil' an overbroad clause; some void it entirely; the FTC and several states have moved against them. Narrow geography, time, and scope, or replace with a non-solicit/garden-leave construct.

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2

Overbroad IP Assignment (Prior + Post-Employment)

Intellectual PropertyHIGH RISK

The assignment reaches further than the law allows in many states and can sweep in personal projects and pre-existing IP. Add the statutory carve-out, delete the 12-month trailer (or narrow it to inventions derived from Company confidential information), and attach a prior-inventions schedule.

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3

Broad Clawback Regardless of Fault

CompensationHIGH RISK

A no-fault clawback tied to any restatement is broader than Dodd-Frank/SOX requires for most employees. Limit clawback to misconduct or a restatement caused by the Employee's misconduct, and protect already-vested equity.

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Overall risk

HIGH RISKScore: 7.1/108 clauses
High: 3Medium: 5Accepted: 0

Benchmark delta

+2.1

Industry benchmark

5/10

Compound risks

1

Heatmap high

3

Cluster of high-risk clauses

Risk heatmap

High
38%
Medium
63%
Accepted
0%

Worldwide 24-Month Non-Compete

Restrictive CovenantsScore 9/10Priority 10/10
HIGH RISK
SeverityOverall 9/10
Financial
8.0
Legal
9.0
Ops
6.0
LegalFinancial
  • The non-compete is worldwide, lasts 24 months post-employment, covers any competitor and any business the Company merely 'contemplated,' and applies regardless of role.
  • This is far broader than what most jurisdictions enforce — and California, Minnesota, and others largely void employee non-competes.
Risk insight: An unbounded non-compete is the highest-risk term. Many courts will not 'blue-pencil' an overbroad clause; some void it entirely; the FTC and several states have moved against them. Narrow geography, time, and scope, or replace with a non-solicit/garden-leave construct.
Safer rewrite: Limit the non-compete to 12 months, to the specific lines of business in which the Employee was materially involved, and to the geographic markets the Company actually operates in. Exclude jurisdictions that prohibit non-competes, and consider paid garden leave in lieu of a post-termination restriction.
Law ref: Cal. Bus. & Prof. Code §16600; FTC Non-Compete Rule; reasonableness/blue-pencil doctrine
Worst case: The Employee cannot accept any industry role anywhere for two years; alternatively, a court voids the whole clause, leaving the Company with no protection.

Overbroad IP Assignment (Prior + Post-Employment)

Intellectual PropertyScore 9/10Priority 10/10
HIGH RISK
SeverityOverall 9/10
Financial
7.0
Legal
9.0
Ops
6.0
LegalFinancial
  • The Employee assigns all inventions whether or not made on work time or with Company resources, plus inventions for 12 months after termination, and is deemed to have no prior inventions if no schedule is attached.
  • Several states (e.g., CA Labor Code §2870) limit assignment of off-hours, non-Company-resource inventions.
Risk insight: The assignment reaches further than the law allows in many states and can sweep in personal projects and pre-existing IP. Add the statutory carve-out, delete the 12-month trailer (or narrow it to inventions derived from Company confidential information), and attach a prior-inventions schedule.
Safer rewrite: Exclude inventions developed entirely on the Employee's own time without Company equipment or trade secrets that do not relate to the Company's business (per Cal. Labor Code §2870 and similar). Remove the post-employment assignment except for inventions that derive from the Company's Confidential Information. List prior inventions on an attached schedule.
Law ref: Cal. Labor Code §2870; similar statutes in WA, MN, IL, etc.
Worst case: A weekend side project unrelated to the job is claimed by the employer as assigned IP.

Broad Clawback Regardless of Fault

CompensationScore 8/10Priority 10/10
HIGH RISK
SeverityOverall 8/10
Financial
9.0
Legal
7.0
Ops
5.0
FinancialLegal
  • The Company can claw back 24 months of incentive compensation on a for-cause termination or any financial restatement, 'regardless of fault,' and can reduce or eliminate bonus/equity at will.
  • This sweeps far beyond the misconduct-based clawbacks typically required by law.
Risk insight: A no-fault clawback tied to any restatement is broader than Dodd-Frank/SOX requires for most employees. Limit clawback to misconduct or a restatement caused by the Employee's misconduct, and protect already-vested equity.
Safer rewrite: Clawback shall apply only to incentive compensation that was (i) based on financial results later restated due to the Employee's own misconduct, or (ii) where the termination for cause is based on the Employee's fraud or willful misconduct. Vested equity shall not be subject to clawback absent such misconduct.
Law ref: Dodd-Frank §954; SOX §304 (clawback frameworks)
Worst case: A company-wide restatement the Employee had nothing to do with triggers recovery of two years of bonuses.

Indefinite, Overbroad Confidentiality

ConfidentialityScore 6/10Priority 8/10
NEEDS REVIEW
SeverityOverall 6/10
Financial
4.0
Legal
7.0
Ops
6.0
LegalOperational
  • Confidential Information is defined as everything the Employee learns, whether or not marked or actually confidential, and the duty is indefinite.
  • Overbroad definitions can be struck down and may conflict with the employee's right to use general skills and knowledge.
Risk insight: Narrow the definition to genuinely confidential, non-public information, exclude general skills/knowledge and publicly available information, and (for non-trade-secret information) consider a defined term. Ensure a Defend Trade Secrets Act whistleblower-immunity notice is included.
Safer rewrite: Limit Confidential Information to non-public, proprietary information disclosed in connection with employment, excluding the Employee's general knowledge, skill, and experience and information that is or becomes public. Add the DTSA 18 U.S.C. §1833(b) immunity notice.
Law ref: Defend Trade Secrets Act, 18 U.S.C. §1833(b)

Customer/Employee Non-Solicit (No Contact Required)

Restrictive CovenantsScore 6/10Priority 8/10
NEEDS REVIEW
SeverityOverall 6/10
Financial
5.0
Legal
7.0
Ops
5.0
LegalOperational

The non-solicit covers all customers and prospective customers and all employees/contractors for 24 months, regardless of whether the Employee ever had contact with them — broader than needed to protect legitimate goodwill.

Risk insight: Limit customer non-solicit to customers the Employee actually worked with in the last 12–24 months, drop 'prospective' customers, and reduce the period; tie the employee non-solicit to actual solicitation.
Safer rewrite: For 12 months post-employment, the Employee shall not solicit customers with whom the Employee had material contact in the final 12 months of employment, nor solicit employees the Employee directly worked with. General advertising and serving inbound, unsolicited customers are excluded.

Minimal Severance, Heavily Conditioned

CompensationScore 5/10Priority 6/10
NEEDS REVIEW
SeverityOverall 5/10
Financial
6.0
Legal
5.0
Ops
4.0
Financial
  • Severance is only four weeks, payable only on a without-cause termination and conditioned on a full release, return of property, and continued compliance with the (overbroad) restrictive covenants.
  • There is no 'good reason' resignation or change-of-control protection.
Risk insight: For an executive role, negotiate a market severance (e.g., 3–6 months), add 'good reason' and change-of-control triggers, and decouple severance from covenants you've already narrowed.
Safer rewrite: Provide [3–6] months of base salary plus pro-rata bonus and benefits continuation on a termination without cause or resignation for good reason, and enhanced severance with equity acceleration upon a qualifying termination following a change of control.

Mandatory Arbitration, Class Waiver, Fee-Split

Dispute ResolutionScore 6/10Priority 8/10
NEEDS REVIEW
SeverityOverall 6/10
Financial
6.0
Legal
7.0
Ops
4.0
LegalFinancial
  • All employment disputes go to individual arbitration with a jury and class-action waiver, and the Employee must pay half the arbitrator's fees.
  • In many states, requiring employees to bear arbitration costs (and certain claim waivers) is unenforceable.
Risk insight: Employer-cost-bearing is generally required for enforceable employment arbitration. Shift arbitration fees to the Company, confirm statutory claims remain available, and check state limits on mandatory arbitration of harassment/discrimination claims.
Safer rewrite: The Company shall bear all arbitration fees unique to arbitration. Statutory claims may be brought as permitted by law, and nothing waives non-waivable rights (e.g., sexual-harassment claims under the EFAA). The arbitrator may award all remedies available in court.
Law ref: Ending Forced Arbitration Act (EFAA) 2022; Armendariz v. Foundation Health (CA)

At-Will Status vs. Equity Vesting

Employment TermsScore 5/10Priority 7/10
NEEDS REVIEW
SeverityOverall 5/10
Financial
6.0
Legal
5.0
Ops
4.0
LegalFinancial

Employment is at-will and the clause states nothing guarantees employment 'notwithstanding any other provision regarding compensation or equity vesting,' which can be read to subordinate equity-vesting protections to the at-will right to terminate.

Risk insight: Clarify that at-will status does not override negotiated equity acceleration or vesting protections, and align this Agreement with the equity documents and offer letter.
Safer rewrite: Nothing in this Section limits the Employee's rights under the equity plan or any negotiated acceleration upon a termination without cause or a change of control, which shall control over the general at-will language.

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