Checklist · Labor and Employment

Negotiating or Reviewing an Employment Agreement: A Practical Checklist

26 U.S.C. § 83

Type
Checklist
Jurisdiction
National
Date
2025-11-26
Topic
Labor and Employment

This checklist walks through an employment agreement clause by clause, from the moment an offer arrives to the day the relationship ends. Part 1 covers what to request before responding to any term. Parts 2 through 7 review compensation, equity, cause and good reason, severance, restrictive covenants, and indemnification. Part 8 sets out what is realistically negotiable at each level. Part 9 covers the tax elections and deadlines that cannot be missed. Part 10 covers the employer's drafting review. Parts 11 and 12 cover the exit, the release, and the deadlines that follow it. The final part lists the mistakes that cost the most.

Negotiating or Reviewing an Employment Agreement: A Practical Checklist

Labor and Employment > Employment Agreements and Executive Pay | Published 26 November 2025 - Updated 15 July 2026 | UpLaw - uplaw.us

How to Use This Checklist

Candidates and employees work Parts 1 through 9 before signing anything. Employers work Part 10. Anyone leaving works Parts 11 and 12. Doctrine is in the comprehensive guide; the orientation piece is everything is negotiable until you sign; the forms and redline language are in the toolkit.

⚠️ Leverage exists only before you accept. After the first day, nearly nothing in this checklist is negotiable.

Part 1 — Before You Respond to Anything

☐ Request the complete package: offer letter, employment agreement, equity plan, form of grant notice and award agreement, restrictive covenant agreement, bonus or commission plan, and the employee handbook.

☐ Do not resign from your current job until you have the final documents.

☐ Check your current employer's agreement for restrictive covenants that affect the new role.

☐ Ask for the fully diluted share count if equity is offered, and the strike price and its valuation date.

☐ Ask whether the offer is contingent on a background check, reference check, or immigration status, and what happens if a contingency fails.

☐ Confirm the start date and whether it can move to preserve a vesting date or a bonus at your current employer.

☐ Have a lawyer review anything at director level or above. One to two hours is the correct investment.

☐ Respond once, in writing, with a consolidated list, and mark which items are requirements and which are preferences.

Part 2 — Compensation

☐ Base salary: amount, effective date, review mechanism, and whether reduction is permitted.

☐ Bonus: discretionary or formulaic; who sets metrics and by when; payment date.

☐ Employed-on-payment-date condition: ask to remove it for termination without cause and resignation for good reason.

☐ Pro-rated bonus on a qualifying termination: state it expressly.

☐ Commissions: when earned — booking, invoicing, or collection; post-termination commissions; chargebacks; quota and territory changes; and the employer's amendment rights.

☐ Signing bonus: repayment trigger, period, and whether repayment applies to a termination without cause. Ask to limit it to voluntary resignation.

☐ Relocation: amount, tax treatment, and repayment obligation.

☐ Benefits: effective date, waiting period, and any gap in coverage between jobs.

☐ Paid time off: accrual, carryover, and payout on separation, which is governed by state law.

Part 3 — Equity

☐ Type: incentive stock options, nonqualified options, restricted stock, or RSUs. Each is taxed differently.

☐ Number of shares and the fully diluted denominator. A percentage without a denominator is meaningless.

☐ Strike price and the valuation supporting it.

☐ Vesting schedule, cliff, and vesting commencement date.

☐ Post-termination exercise window. The default is 90 days. Ask for longer, in writing, before signing.

☐ Cost to exercise everything vested at each anniversary, plus the tax on the spread. Write down the number.

☐ Change of control: single or double trigger; percentage accelerated; treatment if the acquirer does not assume the awards.

☐ Treatment on death, disability, and retirement.

☐ Repurchase rights: whether the company may buy back vested shares on departure, at what price, and for how long.

☐ Transfer restrictions, rights of first refusal, drag-along, and market stand-off.

☐ For RSUs: whether a liquidity event is required to vest, and what happens if you leave first.

☐ For restricted stock: the 26 U.S.C. § 83 83(b) election deadline — 30 days from transfer, irrevocable, no extensions.

☐ For incentive options: the $100,000 annual limit and the alternative minimum tax exposure on exercise under 26 U.S.C. § 422.

☐ Read the plan, the grant notice, and the award agreement, not just the offer letter. They control.

Part 4 — Cause and Good Reason

☐ Read the cause definition twice. Is it objective or subjective?

☐ Require willfulness and materiality.

☐ Require written notice specifying the conduct and a cure period of at least 30 days where cure is possible.

☐ Require a board or senior determination with an opportunity to be heard, at executive level.

☐ Exclude good-faith conduct taken in the reasonable belief it was in the company's interest.

☐ Confirm a good reason provision exists. If it does not, ask for one.

☐ Cover: material diminution in duties, authority, title, or reporting line; material reduction in base or target bonus; relocation beyond a stated distance; and material breach by the company.

☐ Check the notice-and-cure structure — notice within a set period, a cure window, and resignation within a window after.

☐ Resist carve-outs that exclude changes resulting from a transaction or restructuring. That is the scenario the clause exists for.

Part 5 — Severance and Change of Control

☐ Write out what you receive in each scenario: without cause, good reason, for cause, voluntary resignation, non-renewal, death, disability, and each of those within a change-of-control window.

☐ Severance multiple: months of base, and whether bonus is included.

☐ Payment form: lump sum or salary continuation, and the tax consequences of each.

☐ Payment timing: confirm it is a fixed date, not "when the release becomes effective," for 26 U.S.C. § 409A reasons.

☐ Health coverage: duration and whether the company pays the premium or reimburses it.

☐ Equity treatment on each separation type, stated in the agreement and consistent with the plan.

☐ Mitigation and offset: whether severance is reduced by subsequent earnings. Ask to remove it.

☐ Conditions: release, covenant compliance, and cooperation. Ask that the form of release be attached at signing.

☐ Change of control definition: percentage thresholds, merger treatment, asset sales, and board turnover.

☐ Double trigger: protection period length, typically 12 to 24 months.

☐ 26 U.S.C. § 280G protection: a best-net cutback provision at minimum, and modeling before any transaction.

☐ Clawback exposure: look-back period, whether recovery is gross or net, and offset against unpaid severance. Note the mandatory policies under 15 U.S.C. § 78j-4 and 15 U.S.C. § 7243 at public companies.

Part 6 — Restrictive Covenants

☐ Identify every covenant: non-compete, customer non-solicit, employee non-solicit, no-hire, confidentiality, and non-disparagement.

☐ For the non-compete, answer concretely: what job could you not take, where, and for how long?

☐ Check your state's law on enforceability, compensation thresholds, notice requirements, and whether payment during the restricted period is required.

☐ Check the consideration. A covenant presented after you accepted the offer may be unenforceable in your state.

☐ Narrow the scope to the products, services, and territory you actually work on.

☐ Narrow the duration. Months, not years.

☐ Ask for a carve-out permitting employment with a competitor in a non-competitive role or business unit.

☐ Ask that the covenant lapse if you are terminated without cause or resign for good reason.

☐ Confidentiality carve-outs: publicly available information, prior knowledge, independent development, third-party receipt, and disclosures required or protected by law.

☐ Confirm the trade secret whistleblower immunity notice appears, per 18 U.S.C. § 1836.

☐ Confirm nothing purports to bar agency communications. Reports to the EEOC, the Commission under 15 U.S.C. § 78u-6, and other regulators cannot be waived.

☐ Inventions assignment: confirm the statutory limitation notice if your state requires one, and attach a prior inventions schedule. Do not leave it blank.

☐ Non-disparagement: ask for mutuality.

Part 7 — Indemnification, Insurance, and Dispute Resolution

☐ Indemnification to the fullest extent permitted by the state of incorporation.

☐ Advancement of expenses as incurred, subject to an undertaking to repay.

☐ A separate indemnification agreement, not reliance on bylaws that can be amended.

☐ Company as indemnitor of first resort.

☐ Directors-and-officers insurance: limits, Side A coverage, and tail coverage on departure and on a sale.

☐ Dispute resolution: arbitration or court; individual or class; administrator and rules; cost allocation; discovery scope; and whether injunctive relief is carved out for both parties or only the employer.

☐ Governing law and venue, compared to where you live and work.

☐ Fee shifting: mutual or one-sided.

☐ Integration clause: confirm that every promise you were made in the process appears in the document, because the integration clause erases the rest.

Part 8 — What Is Realistically Negotiable

☐ Individual contributor: base, signing bonus, start date, work arrangement, title, equity grant size, vesting commencement date, bonus forfeiture removal, inventions narrowing, covenant narrowing.

☐ Manager and director: all of the above plus a severance floor, change-of-control acceleration, and covenant scope limits.

☐ Vice president and above: all of the above plus a real cause definition with notice and cure, a good reason provision, defined severance, extended exercise window, indemnification and D&O, mutual non-disparagement, and legal fee reimbursement for reviewing the agreement.

☐ Chief executive and named officers: all of the above plus 280G protection, board-level cause determination, treatment in a transaction, and tail coverage.

☐ Usually unavailable: the equity pool size, plan-wide terms, the existence of arbitration at large employers, and fixed-term guarantees below the executive level.

Part 9 — Tax Elections and Deadlines

☐ 83(b) election: 30 days from transfer of restricted stock. Irrevocable. No extensions. File it and keep proof.

☐ Incentive option holding periods: two years from grant and one year from exercise for capital gain treatment under 26 U.S.C. § 422.

☐ Alternative minimum tax on the incentive option spread at exercise — model it before exercising.

☐ 90-day post-termination window for incentive options; longer windows convert them to nonqualified options.

☐ 26 U.S.C. § 409A payment timing on any deferred amount or severance.

☐ Six-month delay for specified employees of public companies on separation-triggered payments.

☐ Withholding and estimated taxes on option exercises and RSU settlements — the default withholding rate is frequently insufficient.

☐ Section 83(b) for early-exercised options if the plan permits early exercise, with the same 30-day rule.

Part 10 — The Employer's Review

☐ Standardize by level and document the business reason for any deviation.

☐ Draft a cause definition you can actually prove, with a procedure you will actually follow.

☐ Reconcile the employment agreement with the equity plan and award documents. Conflicts produce litigation.

☐ Fix 409A payment dates and use the short-term deferral or separation pay exemption deliberately.

☐ Attach the form of release at signing rather than negotiating it at the exit.

☐ Scope covenants to the state where the employee works, not the state in the choice-of-law clause.

☐ Include the trade secret whistleblower notice.

☐ Remove anything restricting agency communications.

☐ Confirm exempt classification rests on duties and salary, not on the title in the offer letter.

☐ Confirm pay transparency compliance for the posting and the offer, including remote roles.

☐ Confirm background check procedures comply with 15 U.S.C. § 1681b disclosure and authorization and 15 U.S.C. § 1681m adverse action steps.

☐ Confirm employment eligibility verification under 8 U.S.C. § 1324a without practices that violate 8 U.S.C. § 1324b.

☐ Model 26 U.S.C. § 280G before any transaction, not after.

☐ Maintain D&O and tail coverage for officers and directors.

☐ Complete the separation scenario matrix for every agreement before it is issued.

Part 11 — Leaving

☐ Read the agreement in full again before resigning.

☐ Calculate what vests before your last day, and whether a different date changes it.

☐ Confirm the exercise window and the cash required.

☐ Confirm whether a bonus already earned is forfeited by resignation.

☐ Check the covenants against the job you are considering, and get an opinion if there is doubt.

☐ Gather your own documents: agreement, plan, grant notices, reviews, and compensation history. Copies about you — not company data.

☐ Do not take company documents, data, or customer lists. This converts a covenant dispute into a trade secret case under 18 U.S.C. § 1836.

☐ Do not delete anything from company devices or accounts.

☐ Return all property and document the return.

☐ Ask for a written statement of vested equity and the exercise deadline.

Part 12 — The Separation Agreement

☐ Do not sign on the spot.

☐ Compare the offer to what the employment agreement already requires. You may be paying with a release for what you are already owed.

☐ Check the consideration periods: at least 21 days for an age claim release, 45 in a group program, plus 7 days to revoke.

☐ Confirm the group disclosure — decisional unit, eligibility factors, and the job titles and ages of those selected and not selected — if it is a group program.

☐ Confirm the release covers only accrued claims and carves out vested benefits, indemnification, and claims that cannot be waived.

☐ Confirm agency communication rights are preserved.

☐ Confirm the payment date is fixed and does not depend on when you sign.

☐ Ask for: mutual non-disparagement, agreed reference language, extension of the exercise window, continued vesting, characterization of the departure, and release from or narrowing of the non-compete.

☐ Confirm equity treatment in writing, including any acceleration and the exercise deadline.

☐ Confirm health coverage dates and who pays.

☐ Calendar every deadline in the final documents — exercise window, deferred payments, and the expiration of each restriction.

Part 13 — Mistakes That Cost the Most

☐ Missing the 30-day 83(b) election deadline. ☐ Accepting a 90-day exercise window and forfeiting vested options you could not fund. ☐ Not asking for a good reason provision, and being managed out without severance. ☐ Accepting an employed-on-payment-date bonus condition and being terminated in January. ☐ Signing a nationwide non-compete without checking state law. ☐ Leaving the prior inventions schedule blank. ☐ Relying on a recruiter's promise not written into the agreement. ☐ Reading the offer letter but not the equity plan. ☐ Exercising incentive options without modeling the alternative minimum tax. ☐ Signing a severance agreement on the day of termination. ☐ Taking company documents on the way out. ☐ Not securing D&O tail coverage before leaving an officer role. ☐ Letting the option exercise deadline pass while negotiating other terms.

Part 14 — Decision Trees

Is this equity worth anything?

  1. What type is it — incentive options under 26 U.S.C. § 422, nonqualified options under 26 U.S.C. § 83, restricted stock, or RSUs?
  2. What percentage of the fully diluted shares is it? A share count without a denominator tells you nothing.
  3. What is ahead of the common stock in the preference stack? In many outcomes, common receives nothing.
  4. What must happen for you to sell — an IPO, an acquisition, a tender offer, or a secondary market the company permits?
  5. For options: what does it cost to exercise everything vested, and what is the tax on the spread?
  6. For RSUs: is a liquidity event required to vest? If yes and you leave first, you get nothing.
  7. What is the exercise window after you leave?

Should I make an 83(b) election?

  1. Did you receive restricted stock (or early-exercise an option into restricted stock)? If it is an RSU, no election is available.
  2. Is the current value low relative to what you expect? If yes, the election is usually favorable.
  3. Can you pay the tax now, and can you afford to lose it if the stock is forfeited or becomes worthless?
  4. Are you within 30 days of transfer? If not, the election is unavailable — no extensions, no exceptions.
  5. File it, keep proof of mailing, and give a copy to the company.

Is this non-compete a problem?

  1. Does your state enforce non-competes for someone in your role and pay band?
  2. Was it presented before or after you accepted the offer, and does your state require advance notice or separate consideration?
  3. What does it actually prohibit — a specific competitor, a product line, or "any competitive business" anywhere?
  4. Does it lapse if you are terminated without cause? Ask for that.
  5. Is there a customer non-solicit that would protect the employer's real interest with far less restriction on you?
  6. If enforcement is uncertain, get a written opinion before you accept a competing offer. The former employer's ability to impose cost does not depend on ultimately winning.

Am I being offered severance, or being paid for a release?

  1. What does the employment agreement already require on this separation type?
  2. Is the offer more than that? If not, you are being asked to release claims for nothing.
  3. Does the release carve out vested benefits, indemnification, and non-waivable claims?
  4. Is the payment date fixed for 26 U.S.C. § 409A purposes?
  5. Is there an age claim, and does the document give you 21 days (or 45 in a group program) plus 7 to revoke?
  6. What non-monetary terms are available — reference language, covenant release, exercise window extension?

Part 15 — The Separation Scenario Worksheet

Fill this in from the agreement, the plan, and the award documents together, before you sign. Every blank cell is a question the parties will answer differently later.

Scenario Severance Pro-rated bonus Health Unvested equity Vested options window Covenants apply? Release required?
Terminated without cause
Resign for good reason
Terminated for cause
Resign without good reason
Non-renewal
Death
Disability
Retirement
Without cause within CoC window
Good reason within CoC window

☐ Fill every cell from the documents, citing the section for each.

☐ Flag conflicts among the employment agreement, the plan, the grant notice, and the award agreement. The plan usually controls.

☐ Flag blanks. A scenario the documents do not address will be resolved against whoever did not draft them.

☐ Note the two cells most often empty: non-renewal and retirement.

☐ Convert the worst realistic scenario into a number and decide whether the offer is acceptable on those terms, not on the base salary alone.

⭐ A closing discipline. Before you sign, write one paragraph in plain language answering: if this ends badly in eighteen months, what do I walk away with, what am I prevented from doing, and how long do I have to exercise? If you cannot answer all three from the documents in front of you, you are not ready to sign — and the questions you need answered are exactly the ones the employer can answer in an email today.

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