Should I sign a two year contract with my current employer?

[James_0011]

Hello,

I’m currently employed at a small software company as a “product analyst”, I’m making 65k, and this is my first job out of college.

My boss recently approached me (6 months into the job) with an offer to be promoted to a “senior product analyst” with a salary of 75k. The only catch is that he wants me to sign a two year contract.

I haven’t seen the contract yet, but my understanding is that the company would have to pay me the full two years salary if they want to fire me. On the other hand, I think that I can’t legally quit until the two years are up.

The only issue i see with this is that I’m essentially locked into the 75k salary for two years. What incentive do they have to give me a raise if they know I am locked in?

For some context: the company I’m at has around 50 employees, had over 100% YoY profit growth in 2017, and is in the process of acquiring 1-2 other software companies within the next two years.

I have no doubt that there will be opportunities with this company down the line.

What do you think? I’m worried that one year from now I will be getting contacted by LinkedIn recruiters with 90k offers and have to turn them down because of this contract. I already interviewed with one recruiter from linkedin who told me that the job would pay 80-90k when bonuses are factored in.

[suomalainen]

Sign the contract if it gives you what you want. Don't sign it if it doesn't. My employer requires that I provide this disclaimer: not legal advice. So my non-legal advice is to read the contract carefully and decide whether it's what you want. If not, negotiate! Want a raise in year 2? Put it in the contract. If it's not in there, don't expect a raise! Don't want a penalty if you quit before 2 years? Delete it from the contract! Don't like what will likely be a covenant to not work for a competitor (unless you're in CA, I believe they are unenforceable in CA)? Don't sign it! Etc. For the most part, contracts only mean what they say, so you don't need to be a lawyer to negotiate one.

FWIW, even though I'm not familiar with the industry, in general, I would think that if an employer is offering you an employment contract, rather than keeping you as an at-will employee, then you are in a (labor-)seller's market. If you're giving up flexibility to leave at any time, you should be getting something in return. But this forum seems crawling with tech types, so I suspect you'll get better advice in later comments.

[James_0011]

Thanks, you are correct that it’s a sellers market. I plan on taking the contract to a lawyer when I get it to make sure I understand it.

[BRUTE]

how much would James_0011 be able to make if he took another job now? if that's higher than 75k, brute would not lock in, but rather stay a bit and jump ship in a while.

[Did]

Sounds weird to me. Too long term. It's not like it's a 600k a year deal. Say no thanks unless it's 110.

[The Old Man]

You've received an offer. Now, it is your turn to make a counter offer or refuse. For me, if I planned to stay, I would research the market to identify an appropriate amount for a counter offer. If you think that is 90K then go for it.

[James_0011]

@Brute

I’m not sure if I could be making that much more than 75k if I took another job now. However, in a year I think I would have enough experience to find something around 90k.

Actually, if I moved to the Bay Area I think I could find a much higher paying job now. But, with housing costs I don’t think it would really be a raise. The average salary for my job in sf is 110k.

@did

Yeah it is weird. Like I said I haven’t seen the actual contract yet. But, I think I’m going to ask for a one year contract instead. If it is two years but allows me to get out of it anytime with 30 days notice or something that might be okay too.

@old

Yep, I plan on looking it over and definitely will take it to a lawyer before I sign anything. I kind of verbally agreed when I was talking to my boss but I was taken off guard and didn’t know what to do.

[James_0011]

Okay, so if anyone cares - I actually got the contract this week. I can resign at any time as long as I give 6 months notice before doing so. It also looks like they will review my salary Jan 2019 and possibly give me a raise (although, why would they do so if I'm already in a contract with them?).

I think I'm going to ask for a 1 year period or an 18 month period. Does anyone have any thoughts on what they will go for?

[suomalainen]

In my experience, most contract negotiations get resolved around "what's market". You typically have to take the market that you find yourself in, such that if you're in a seller's market, you can ask for more; if you're in a buyer's market, you generally have to take it or leave it. You said earlier you're in a seller's market, so my uninformed opinion is to ask for what you want and see what happens. The downside risk of asking seems fairly limited based on what you've said. That said, if you have actual knowledge of "the market", whether from folks on here or otherwise, and/or you have alternative offers, then you can be more confident in your requests.

One negotiating tactic that I always enjoy is to ask the other side to explain what their thinking is. "Why are you asking for a two-year lockup? Is there flexibility there?" If they say something stupid, then you know it's something that you can negotiate. If it's important to them, you'll know that you won't get far pushing on that point, so you can try to address other points so that on balance you improve the contract to your liking. If they're not willing to entertain any discussion, maybe you want to reconsider whether you want to be working with these people for two years.

If it's not clear, I have zero knowledge of your particular market, but these are my general reactions to contract negotiations.

[James_0011]

I’m not sure what would happen. I think that they wouldn’t do anything as it probably would cost them more to pay a legal team to take action than it would be worth to them.

The only real upside for me is that if they fire me before the contract is up they have to pay out the full two years of salary.

Yes I am in the US. However the company is European which may explain why this agreement seems so strange.

[suomalainen]

Depending on what the contract says the repercussions of contract breach could be anything it says. Even if silent on the point, you'd potentially be liable for damages, so whatever they could prove such as the cost of finding a replacement, etc. You can always make a decision to accept the risk, but there's no reason to buy yourself a lawsuit. I also think 6 months notice is terrible. Talk about awkward as shit for 6 months. Personally, I'd never sign anything where I wasn't comfortable with abiding by it. You never really know how people will act when the shit hits the fan, particularly if you work on some super big idea and they get all worried that you're gonna steal it or whatever. See, e.g., the lawsuits among the autonomous car companies over various employees (not that I've read any details about it).

[James_0011]

@augustus

How do you recommend I go about broaching that topic with my boss?

I mean, I can read what it says they will do if I leave in the contract, but I’m not sure if they will actually follow through with it.

@suom

I think I’m going to have to apply for other jobs now. Arrrgggh.

I don’t know what they would do if I just told them that I don’t want to sign any contract...

[suomalainen]

Agree with @aug. FWIW, my impression of employment contracts is that they are atypical. Most employers want at-will employees so they can fire willy-nilly. If they're offering you a contract, they probably see you as atypically valuable (or maybe it's just market dynamics). Hard to say from the cheap seats. Recommendation for approaching your boss: "Umm, boss, can I talk to you? Do you mind if we talk about this contract? I've never had one before, so I don't really know what to make of it. Can you talk me through why you want X, Y and Z and what happens if A, B and C?" and then you just ask a bunch of questions. Coming at it from a "help me understand" angle typically seems to defuse tension/defensiveness compared to saying "I don't like this". Unless your boss is a prick, it should be an adult conversation. If s/he's a prick, then start looking!

[James_0011]

I already have a lawyer helping me with it, and I’ve asked him to make several changes in the contract. I’m going to just send it back with the changes and see what they say

Yes, he told me that they want to put me under contract because I’m a valuable employee. This is a small software company that historically has trouble retaining talent.

No, my boss isn’t a prick but I think he thinks I’m more naive than I really am because of my age.

[suomalainen]

Good luck!