EMPLOYMENT CONTRACTS The employee may also derive benefits from employment contracts. By knowing the boundaries of the incurred obligations to his employer, the employee may then recognize the area in which he may operate with- out conflict. The gray area between these two extreme boundaries of recognition and obligation, however, presents the difficult area where in- dividual judgment becomes involved in resolving potential conflict of interest problems. It is not difficult to understand the reason for using formal employ- ment contracts, especially since people entrusted with confidential in- formation may be found to be vulnerable. There is nothing special in the makeup of an individual that should cause him to make off with in- formation committed to his management, nor is there anything special in the constitution of an individual that causes him to act such that he yields under the pressure of temptation. Individuals who are not in- fluenced by monetary pressure may be influenced by flattery. Those impervious to flattery may be warped and biased by social inclinations. One way or another, every individual may become vulnerable. Re- sultantly, employment contracts are used to establish, at the outset, the rights and duties of an employee as well as those of the employer. There has been renewed interest on the part of many companies with regard to the particular form of employment contract which is used. The reason for this renewed interest in employment contracts is prob- ably due to the great competition which now exists between companies for skilled personnel. The more advanced corporations have now shortened their employment contracts by use of simple language in place of legalistic "whereas" clauses. The total effect of the change in form of the agreement has been from something that looks like a complex legal document to a clear, simple, and friendly letter which is executed in duplicate. Almost every individual, at one time or another, has been asked to sign an employment contract. Few individuals, however, actually read these contracts, and even fewer individuals actually understand their content. The difficulty with this state of affairs probably resides within the corporate personnel department, where the new employee is often merely asked to sign a series of papers without any great explanation as to what the papers involve. The real surprise and understanding of em- ployment contracts positively arises when the sensitively placed em- ployee decides to terminate his employment with one employer and thereupon advises the employer of his intention to work for a competitor

JOURNAL OF THE SOCIETY OF COSMETIC CHEMISTS within the same area of sensitivity. It is necessary then to consider the question: What are the component parts of an employment contract? All contracts, including employment contracts, necessarily require as a legal prerequisite that consideration be present as one of the significant requirements to establish the contract. In part, the consideration phrase of an employment contract typically reads as follows: In consideration of my employment with the XYZ Corporation and of the salary or wages paid for my services in the course of such employ- ment... The "employment" or the "hiring of the employee" is generally specified as such and these formal words are usually sufficient to establish consideration to sustain an employment contract between the employer and the employee. Many contracts for employment, however, go fur- ther and include with the "consideration" continuation of the employ- ment and payment of an unspecified compensation in the form of a wage or salary. Neatly set forth beneath the consideration clause there usually ap- pears the "I agree" clauses. Three basic clauses or covenants are found in almost all employment contracts, and these clauses usually present little or no problem between the employer and employee. The clauses obligate the employee to (a) keep, maintain, and make available com- plete and up-to-date records, (b) assign all new inventions and improve- ments of inventions, whether patentable or not, within the company's sphere of interest, and (c) cooperate and execute all necessary papers relating to the employee's inventions. The clauses which cause the greatest concern and difficulty in em- ployment contracts are those relating to (d) nondisclosure of trade secrets by the employee outside the company both during and after the period of employment, and (e) the covenant not to work in the same area for a competitor during a fixed number of years after termination of the employment. Use of these latter two clauses is considered justified by the courts so long as the clauses do not unreasonably restrain the em- ployee's right to earn a livelihood. Those clauses which unreasonably restrain or limit the employee's right to earn a livelihood will be struck down by the courts as contrary to public policy. It is quite certain in the law that any employment contract which goes beyond a reasonable degree to embrace anything and everything that an employee saw or learned during the period of his employment will