What developers get wrong about their employment contracts (and the four clauses worth actually reading)

Findus — Wed, 29 Apr 2026 23:54:50 +0000

I built justtheterms.com because I kept signing employment contracts I didn't fully get.

Not the whole contract. Just one paragraph. The one that seemed important but I couldn't parse the legalese. So I'd Google it, find conflicting info, and eventually just sign anyway.

After building a tool that breaks down contract clauses into plain English, I've seen a lot of these paragraphs. Here's what comes up most often for developers.

1. The IP assignment clause

This is the one most developers miss. It's usually buried in the middle under a heading like "Inventions" or "Intellectual Property."

The standard version says the company owns any IP you create "in connection with your employment." That's fine. The aggressive version says they own anything you create "during the term of your employment," including stuff you build on your own time, on your own laptop.

California, Delaware, and a few other states have laws limiting how broad these can be. Everywhere else, you might actually be signing away rights to a side project you build on a Saturday.

What to look for: whether the clause has a carve-out for personal projects done on personal time and equipment. If it doesn't, ask about it before signing.

2. The non-compete clause

Non-competes have been changing fast. California banned most of them decades ago. Washington state just passed a near-total ban taking effect in 2027. Colorado, Maryland, and others raised income thresholds so high that most tech workers aren't covered anymore.

The problem is that none of that is obvious from reading your contract. The clause is still sitting there looking enforceable. You need to know your state's law to know if it actually applies to you.

What to look for: geographic scope, duration (anything over 12 months gets scrutinized heavily in most states), and how "competitor" is defined. A non-compete that covers "any company with overlapping business activities" is very different from one limited to a specific list of named competitors.

3. The arbitration clause with class action waiver

This one is almost always at the end of the contract, which is why people skip it. It says you agree to arbitrate any disputes instead of going to court, and that you waive your right to join a class action lawsuit against the company.

The class action waiver is the part that matters most. If you have a wage dispute affecting 10,000 employees, each person would need to file individually in arbitration instead of joining one class action. That makes it way harder for employees to push back collectively.

The Supreme Court upheld these in Epic Systems v. Lewis (2018). They're legal at federal level. Some state laws push back on them, but for general employment disputes, these clauses usually hold up.

You probably can't negotiate this one out. But you should know it's there.

4. The moonlighting / outside activities clause

Also called a "dual employment" clause. It restricts or requires approval for outside work, side businesses, and sometimes even open source contributions.

The restrictive version says you can't engage in "any outside employment or business activity that could interfere with your duties," which is vague enough to cover almost anything. A more reasonable version just requires you to disclose anything that's a direct conflict of interest and get approval.

If you have freelance clients or an active side project, this clause matters. Get it in writing before you start. Specifically what's ok and what isn't.

Why most people just sign

Employment contracts aren't written to be readable. Legal precision matters for enforceability, so they're written for lawyers, not for the person signing. Most developers just look at comp, title, and start date, then sign without reading the clauses that actually limit what they can do after they leave.

I built justtheterms.com for exactly this. Paste any clause, get a plain English breakdown of what you're agreeing to and what's unusual. No account needed to try it. It won't replace a lawyer for something complex, but it gets you from "I can't read this" to "I know what I'm signing."