Dive Brief:
- While only 16% of people in the U.S. said they read contracts all the way through, 72% of people say they thoroughly examine employment agreements, according to recent research from Goldberg Law Group.
- Meanwhile, 4% of respondents reported that they skipped reading their employment contracts altogether, per the report. At the same time, 18% of people in the U.S. said that not fully reading those contracts has led to negative consequences.
- The report found that employment contracts are the type of contracts people in the U.S. engage with most seriously. However, “awareness of what those contracts actually contain remains low,” per Goldberg.
Dive Insight:
The research surveyed slightly more than 1,000 Americans regarding their contract reading habits, legal literacy and the fallout of not fully understanding a contract before signing.
It found that only 57% of respondents said they fully read their most recent employment contract before signing. Another 25% said they skimmed it, while 5% did not read the contract, and 13% did not sign one, per the report.
“The financial impact is significant,” Goldberg said in the report.
While most of those affected reported an impact of less than $500, 48% experienced losses greater than $500, and 13% said they lost more than $2,500.”
Apart from the financial strain, 17% of respondents said they “stayed in a job, service, or lease longer than they wanted because they didn’t understand the exit terms.” In addition, 17% reported losing money or intellectual property, or facing some other penalty due to an overlooked clause.
Nearly 1 in 3 workers said they were unaware of the specific provisions in their employment agreement. That included noncompetes, nonsolicitation clauses, IP assignment language and mandatory arbitration.
For workers who had agreements, 23% said they knew about their contract’s noncompete clause, while 13% each knew about either mandatory arbitration or nonsolicitation clauses. A paltry 10% of respondents said they were aware of an IP assignment provision.
“These kinds of overlooked terms are often at the center of contract breaches and corporate disputes,” the report said.
At the same time, 94% of respondents said they believed contracts should legally require a plain-language summary of key terms at the beginning of the document.
“That kind of near-unanimous agreement across a diverse sample of people is rare and shows a shared frustration that cuts across demographics,” Goldberg said.
The Federal Trade Commission has sought to ban noncompete agreements in contracts, but has thus far been unsuccessful.
Meanwhile, nearly half of employees reported being subjected to employer nondisclosure agreements, which can silence workers from reporting discrimination and other unethical behavior, according to a January 2025 report from advocacy group Lift Our Voices and Pennsylvania State University.