At the end of many employment agreements, you will usually find two surprising provisions. One will state that despite everything that you understood, the employment agreement is not an employment contract. What's that all about? Well, in many states you are deemed "terminable at will" (that means you can be fired at the discretion of your employer, provided such termination does not involve illegal or constitutionally protected circumstances). One notable exception to being deemed a "terminable at will" employee is that you are employed pursuant to an employment contract. So, many employers, particularly major BDs, take great pains to ensure that the employment agreement is not considered an employment contract.

Another curious provision buried at the back of the agreement is a boldface, all capitalized advisory that you have been given an opportunity to read the agreement and ask any questions your little heart desires. Further, you will be asked to consent to the statement that you were given an opportunity to consult with an independent attorney prior to signing.

Finally, you may be offered a period, often 30 days following your signing, to rescind the agreement. However, if you read that 30-day cancellation clause carefully, it usually requires you to exercise it by quitting. In essence, you have 30 days to test drive the agreement, but if you don't want to continue to be bound by it, then you must quit the job.

The combined purpose of what appears to be generous concessions is actually to put hand and leg irons on new employees. First, the employer will cite to the "independent attorney" and "cancellation" provisions as proof that you were not pressured into signing the agreement, that you were given every opportunity to have it professionally reviewed, and that any claims by you to the contrary are bad faith efforts to evade your legal obligations. Second, the employer will note its magnanimous gesture in giving you a full month to say "Sorry, but no thanks." Third, the employer will cite to the placement of the language in all-capitalized boldface immediately before the signature line, and will argue that it pointedly called the language to your attention and that the only logical explanation for your present confusion is bad faith, if not fraud.

In some cases, and I personally believe that the practice is unethical (if not fraudulent), your employer may require you to sign an employment agreement AFTER you have started employment. Worse, the agreement may contain restrictions that you either did not contemplate or specifically asked about and were assured would not be imposed.

When faced with this dilemma, once again, seek independent legal counsel. However, if for some reason you cannot retain an attorney, strike out those provisions you object to (place your initials next to each such deletion). If the company demands that you execute the agreement without the deletions, seek legal counsel. Note, however, that if you are "forced" to execute such a document, you may be able to raise those circumstances in contesting the validity of the agreement before a panel or court. Nonetheless, always read what you sign before you sign it, and assume that whatever you sign, regardless of the circumstances, will be enforced against you.

Employment agreements typically start off with the recitation that

That opening paragraph is a clear and concise statement as to why the BD believes you are indebted to it. The preamble informs the world that you were not merely hired but nurtured. In essence, the BD is warning you that it considers it has made a significant monetary investment in your career and that whatever your eventual success, you owe the firm a debt of something more than mere gratitude. Call it what you will . . . slavery, indentured servitude, fraud, whatever, but be aware that as a matter of law this relationship is often called legal, enforceable and the product of a contract freely bargained for.

Generally, the first enumerated paragraph after the preamble gets right to the point. Such paragraphs usually begin with the phrase "I agree that" or "I understand that". It's downhill from there.

The employment agreement usually starts off by stating that all records, whether original, duplicated, computerized, memorized, handwritten or in any other form, and all information contained therein, including names, addresses, phone numbers, and financial information of any account, customer, client, customer lead or prospect are confidential and the sole and exclusive property of the BD. So, when an RR asks me if the BD can claim that the customer accounts are its property, simply refer to such a provision and the "yes" answer seems obvious. Of course, what one can "claim" and what one is legally entitled to are often two different matters.

The employment agreement will then reiterate that the records or information noted above are not yours nor for your personal use but, in fact, the "confidential and sole and exclusive property" of the firm. Consequently, you will be required to agree not to use or remove such records or information EXCEPT for the sole purpose of conducting business on behalf of the BD. And if that's not clear enough, you are often asked to agree not to divulge or disclose the information to any third party, especially a competitor of the BD, either during your tenure or thereafter. Further, you will acknowledge that the records and information are "extremely valuable," all reasonable measures to maintain confidentiality and secrecy were undertaken, and such records and information re not generally known outside of the firm and even within the firm are available only on a "need to know" basis. Finally, the agreement will recount the expense of time, effort, and money necessary to develop and acquire the records and information and you will agree not to duplicate the records and information and will reaffirm that they are the BD's property and constitute trade secrets.

What's the point of all this mumbo jumbo? According to some laws and courts, if the records or data an RR is using is generally available, for example, listings in the yellow pages or a trade directory, then the BD may not be legally entitled to claim an exclusive property right. What this means is that records and information that are in the public domain or not handled with measures intended to ensure confidentiality, may be up for grabs. However, if a BD can show that but for its efforts the RR would not have been able to obtain the records or information, and that the BD warned the RR that such materials were considered its property and trade secrets, then the BD will gain an advantage in litigation.

The next installment: resignation and termination . . . what happens?