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If you are hired properly, you can increase your job security, compensation package, and other benefits. Many people accept work without clearly defining the terms of their employment. Others forget to ask for a written contract. They shake hands with their new employer and assume that everything will go smoothly. When misunderstandings develop, they are at a significant disadvantage.

Investigate potential employers. Find out all you can about a business's reputation, financial status, and credit rating, and how it treats its employees. For example, if you are being hired to replace someone, try to learn the name of that person and the reason he or she is no longer there. If possible, speak to the person. Investigate an employer's credit rating to discover if the business is having financial difficulties. Such information can often be obtained from a credit-reporting agency or bank. The following are significant items worth investigating:

• Does the employer conduct business as a corporation, Subchapter S corporation, partnership, or sole proprietorship?

• What are the names of the principal shareholders or partners?

• How many people does the business employ?

• What are the locations and kinds of real property and other assets owned by the employer?

• Does the employer have a history of litigation, and are there any outstanding encumbrances or liens?

• Was the business sold recently, and did the new owners assume its liabilities or just purchase the assets?

Investigate the status of the person hiring you. Employers sometimes argue in court that an employee was hired by someone who did not have the authority to offer employment, negotiate compensation, or live up to the agreed-upon terms. Only an officer (such as a vice president) or owner can bind the company. Make sure the person hiring you has such authority.

Recognize illegal employment inquiries. It is illegal to ask certain questions on employment applications or during hiring interviews. For example, inquiries pertaining to arrest records or drug use are illegal because employers are supposed to consider you as you now are and not as you have been in the past. Female applicants are often asked about marriage plans (Do you plan on getting married soon and raising a family?). Some employers avoid liability by asking applicants to sign documents called "waivers," which give the employer permission to acquire information about your credit rating, medical history, and arrest record. Inquiries about an applicant's race, color, age, gender, sexual preference, religion, and national origin are illegal.

The use of polygraph or lie detector exams by private employers has become the subject of increased scrutiny and criticism. The federal Polygraph Protection Act of 1988 was enacted to curb many abuses. The law now forbids the use of such tests for any job applicant.

Many states have also enacted strong laws protecting job applicants from stress tests, psychological evaluator tests, and other honesty tests. In some states the trend is to eliminate or strongly discourage the use of such tests. Therefore, before submitting to any such test, research the current status of the law in your state.

Finally, recognize that employers sometimes violate the law when testing the basic skills levels of job applicants (called "skills tests"). Since the failure to pass such tests could be viewed as the result of an attempt to exclude certain groups on the basis of race, age, sex, national origin, or religion, employers must be very careful. Under guidelines adopted by the Equal Employment Opportunity Commission (EEOC), all literacy tests for prospective employees must be job-related and adequately evaluate the applicant's ability to perform the duties and tasks of the job involved.

The laws about legal and illegal inquiries are complicated. For example, although it may be illegal to ask you to fill out a medical history form, an employer can ask you to submit to a preemployment physical, once you are accepted for the job provided the physical is the last part of the screening process and is essential for job performance (i.e., a fire fighter). However, it is illegal for doctors to ask discriminatory questions-for example, regarding the amount of time taken off for illness in the past two years or whether you have ever been compensated for an injury-during the examination.

Employers are allowed to conduct a credit check of an applicant if this serves a legitimate business purpose. However, the Fair Credit Reporting Act restricts employers from using consumer credit reports for employment decisions (such as granting promotions). If the employer orders a report, you must be told and given the name and address of the credit agency that is supplying it.

It is legal for an employer to ask your age and marital status after you start working in order to compute pension and other compensation benefits. But your answers cannot be used to make promotion, transfer, or firing decisions, and such questions must be asked of all employees in the organization.

Answering illegal inquiries. It is sometimes difficult to avoid answering an illegal question without appearing hostile or conveying the impression you have something to hide. You might disarm the interviewer by asking the significance of the question and then choosing not to answer it on the basis of irrelevance.

Know the law. To learn if you have been victimized by an illegal hiring practice, check the laws in your state. Many states have detailed guidelines on preemployment inquiries.

If you believe you were denied a job after answering an illegal question, contact a regional office of the Civil Liberties Union, Human Rights Commission, or Equal Employment Opportunity Commission. It is best to send a letter to document your claim (see Figure 1.1). After sending the letter, contact the agency to determine the course of action to take. It may also be appropriate to speak to a lawyer.

Recognize unusual legal conditions of employment.    In some states, employers can fingerprint and photograph applicants as a condition of employment. The federal government may require you to be fingerprinted if you apply for a civil service Job. However, you cannot be denied a job if you refuse to be fingerprinted and the law in your state prohibits this. You may also be required to live in the village or county where you work. So-called residence statutes have been declared constitutional by the U.S. Supreme Court. This is particularly true if you accept a civil service Job.

Avoid being victimized by job misrepresentation. There are many phony advertisements promising substantial income for part-time work or offering employment with unlimited earning potential. A typical ad looks like this:

If a job sounds too good to be true, it probably is. Unfortunately, most people learn the ads are misleading only after they have been exploited.

Making the purchase of goods a condition of employment may be illegal. To protect yourself against these and other schemes, take the following precautions:

• Be wary of guaranteed earnings claims. You have the right to know the facts. For example, if you are promised a certain sum because this is what other employees make, ask the employer to authenticate the claim. According to the Federal Trade Commission (FTC), it is an unfair and deceptive trade practice to promise you an amount that exceeds the average net earnings of other employees.

  George, interested in a sales career, was attracted by an ad stating that a company was looking for an aggressive individual to sell its product. Experience was not required because the company used national advertising and a dedicated staff to assist its employees. The ad promised substantial income immediately. George contacted the company and traveled at his own expense to meet the potential employer. There be discovered the catch: It was necessary to buy $5,000 worth of the product in order to sell it!

• Know what assistance you will receive. Some employers exaggerate the amount and quality of help to be rendered. Speak to the people who will supposedly assist you.

• Refuse job offers that make you buy before you work.

• Beware of work-at-home employment ads. Many such ads are illegal.

Protecting your rights. If you have been victimized by an employment scheme or work-at-home advertisement, do the following immediately:

1.  Call the regional office of the Federal Trade Commission. The FTC can investigate on your behalf and impose a cease-and-desist order on the company to discontinue illegal practices.

2.  Inform your employer you are taking action. Tell him or her you will file a complaint with the FTC if you are not reimbursed for your losses. Many employers are reluctant to tangle with the FTC and are inclined to settle matters amicably

3.  Contact your local Better Business Bureau (BBB). The BBB cannot impose sanctions the way the FTC can, but it can pressure a business to correct complaints. The BBB maintains a national list of individuals and companies that have been accused of engaging in misleading advertising and improper business practices. You can obtain this information by asking for it.

   A study by the Council of Better Business Bureaus examined one kind of work-at-home ad--envelope stuffing--to determine if it was misleading. The ads guaranteed earnings of up to $1,000 per week. The council concluded that people were spending more money to purchase introductory mailing lists than they could possibly earn back.

4.  Contact the Postal Service. The Postal Service can ask employers to voluntarily halt illegal practices. It can also issue federal court orders that prevent businesses from receiving mail.

5.  Speak to a lawyer. Some state laws protect victims of misleading trade practices and employment schemes. A statute such as the Uniform Deceptive Trade Practices Act may have been passed in your state. This allows a person to be represented by the state attorney general's office (which can sue for damages and equitable relief on your behalf).

Discuss key employment terms. No matter what type of job you accept, it is critical to discuss all the terms and conditions of employment before you agree to work. The following are important points to consider:

• On what date is your employment to begin?

• What is the length of employment: Are you employed for a definite term or are you employed at will? If employed for a definite term, is the contract renewable? Can one or both parties terminate employment prior to the expiration of the term? If so, how much notice (if any) must be given before the termination is effective?

• What is your title?

• What are your employment duties. Must you report to a superior?

• What are the number of required working hours, sick days, holidays, and vacation days?

• What is your employment status? Are you considered an employee or independent contractor? (As an independent contractor, you are required by law to pay social security, withholding taxes, and unemployment insurance.)

• What is your base salary? When is it payable? Specify all deductions from your paycheck.

• Is there a probationary period?

• Are you represented by a labor union? If so, what will your dues be?

• Are business expenses reimbursable? What, when, how, and to what extent?

• Are bonuses given? How are they calculated and when are they paid? Are prorated bonuses given if you are fired or resign prior to the natural expiration of your contract?

• Are commissions paid? If so, specify how they are earned. Is the commission based on a gross or net amount? If net, be sure you know what deductions are included.

• What are your fringe benefits? (These can include use of an automobile; free parking; car insurance; gasoline allowances; death benefits; prepaid legal services; medical, dental, and hospitalization costs; life insurance; company credit cards; keyman insurance; stock options; pension; and profitsharing plans.) Be sure you know all the ramifications of your benefit package (such as when your pension or profitsharing plan vests).

• Are periodic raises given? What is the procedure for merit raises and promotions?

• What happens if you become disabled? Define the meanings of temporary disability and permanent disability.

• Is a physical examination necessary?

• Will relocation be required? If so, specify who will pay for it and the manner of reimbursement.

  Can you have side ventures in a noncompeting business, or must you work exclusively on a full-time basis?

• Are you prohibited from working for a competitor after your employment ends? If so, for how long and where?

• Who owns inventions and processes created by you during employment?

Ask for a written contract. After agreeing on key employment terms, ask your employer to put these terms in writing. This will protect you in a number of ways.

• Potential misunderstandings will be reduced. Oral terms are often interpreted differently by employers and employees. Having them in writing may eliminate confusion and ambiguities for both parties.

• You decrease the chances of being fired unfairly. Working on a handshake is a risky proposition. In most states, the law says that if you are hired without a written contract, you are hired at will. This means that you can be fired at any time for any reason without advance notice.

• It is easier to prove the terms of your employment. A handshake confirms only that you accepted employment; it does not prove what was contracted for.

• Your rights may be increased. Clauses in written contracts can give you negotiating strength. For example, some employment contracts say that terms cannot be changed without the written consent of both parties. If such a clause was included in your contract and an employer attempted to reduce your salary or other benefits, this could not be done without your written approval.

• You are protected if you are fired in a manner prohibited by the contract.

No job lasts forever.   Some employers promise lifetime employment yet fire employees without notice. In virtually all states, promises of employment exceeding one year are not enforceable unless they are in writing. A "lifetime contract" is probably not as secure as it sounds.

Protect yourself if you cannot obtain a written contract.  Ask for a fixed employment term. According to the law, when you are hired for a definite term, you cannot be fired at the boss's whim. You can be fired only for cause, such as habitual lateness; prolonged absence from work; disrespect or unprofessional conduct; disobedience of company work rules, regulations, or policies; exceeding authority; negligence or neglect of duty; dishonesty or unfaithfulness; making secret profits; stealing; or misusing trade secrets, customer lists, or other confidential information.

Judith received a two-year written contract to work as a fashion designer. The contract would be automatically renewed for an additional year if notice of termination canceling the contract was not sent by September 1 of the second year. Judith was fired on December 5 of the second year, and she sued for damages. The court ruled that she was entitled to additional compensation because she was terminated improperly--the employer failed to cancel the contract by September 1 of the second year.

Another way to protect yourself is to send the company a confirming letter after you are hired. Such letters of agreement must accurately reflect the terms of your employment and include any oral promises made (see Figures 1.2A and 1.2B). You should send a letter of agreement whenever you cannot obtain a written contract.

If possible, avoid signing contracts containing restrictive covenants.   Restrictive covenants (also called "covenants not to compete") can prohibit you from doing many things, most commonly forming a competing venture or working for a competitor, soliciting former customers or employees, or using the knowledge acquired on the job in future endeavors,

For years, courts have struggled to balance the conflicting considerations of restrictive covenants. Some clauses are viewed as unfair because they limit a person's ability to earn a living. However, courts also recognize the legitimate interest of an employer to safeguard his or her business from deliberate commercial piracy.

Execute your contract properly.  Read your contract carefully and question all ambiguous or confusing language. Contracts prepared by employers usually contain clauses that work to your disadvantage. If you are satisfied with the terms of the agreement, be sure it is signed by a bona fide representative of the company who has the authority to bind the employer to important terms. Include the date and initial all changes. If the contract refers to a schedule or additional terms contained in another document, attach that document to the contract. Obtain a signed copy of the executed agreement for your files and keep it in a safe place with other important documents.