How to review an employment agreement in Word

Employment agreements mix money, career plans and state law. A non-compete that works in one state may be unenforceable in the next, and a broad IP assignment can reach further than either side expects. This guide covers a practical review in Microsoft Word, whether you act for the employer or the employee, and how LexDraft fits in.

Before you start: whose side, which state

For an employer, the goal is a clear, enforceable agreement that protects the business and is consistent across hires. For an employee, the goal is to understand the deal, fix unclear pay terms and limit restrictions after leaving. In both cases the state where the employee works matters most. LexDraft works under US law, covering federal law, all 50 states and D.C. It knows state-specific non-compete, notice and venue rules, and it flags clauses that may be unenforceable in the state you select.

Step by step: review an employment agreement in Word with LexDraft

1. Open the document in Word. LexDraft is a Word add-in from Microsoft AppSource. It opens as a side panel in Word 365 (Windows and Mac), Word 2021 and Word on the web, so there is nothing to upload and no other app to learn.
2. Set the job. Select the state, then run the review. LexDraft reviews the agreement for risky clauses, missing standard terms and state-specific red flags. Its four built-in playbooks cover NDA, SaaS MSA, DPA and Services, so here the review works from the document and the state you choose.
3. Read the findings by severity. Each finding is graded Critical, High, Medium or Low. Start with Critical and High, then decide how much time the rest deserve.
4. Run the quick checks. The defined-term and cross-reference checks are rule-based and run without AI. They catch terms that are used but never defined, terms defined but never used, and references such as "Section 5.3" or "Exhibit B" that point nowhere. Each finding has a jump link to the exact spot.
5. Accept or reject each redline. Proposed changes are word-level edits, so only the words that need to change are touched. When you accept one, it lands as a native Word tracked change, ready for the other side.
6. Ask about anything unclear. Use the LexDraft chat in the Word sidebar to get a plain-English explanation of a clause, then ask follow-up questions in the same chat.
7. Do your own final read. AI review can miss issues or be wrong. Qualified counsel must check every output before it goes out.

What to check in an employment agreement

• Role and duties. Title, reporting line, location and whether remote work is allowed. Vague duties make "cause" harder to judge later.
• Pay. Base salary, pay schedule, and how bonuses are decided. "Discretionary" and "target" mean very different things.
• Equity. Check vesting, what happens on termination and on a sale, and whether the plan documents control.
• At-will or fixed term. Make sure the agreement does not say both in different places.
• Termination and severance. Read the definitions of "cause" and "good reason" closely, plus notice periods, severance amounts and any release requirement.
• Non-compete. Check scope, length and geography against the law of the state. Some states ban or sharply limit non-competes.
• Non-solicitation. Check whether it covers customers, employees or both, and for how long.
• Confidentiality. It should protect real business information without stopping the employee from using general skills.
• IP assignment. Some states limit assignment of inventions made on the employee's own time without company resources. Check for a carve-out and a prior inventions list.
• Disputes. Review arbitration terms, class waivers, governing law and venue.
• Benefits and leave. Confirm that references to plans and policies are accurate and current.

Common employment agreement review mistakes

• Using one template for hires in different states without checking restrictive covenants for each.
• Defining "Company" to include affiliates in one section and not in another. The defined-term check flags inconsistent use.
• Pointing to an equity plan or handbook section that does not exist. The cross-reference check finds references with no target.

Drafting one instead?

LexDraft also drafts employment agreements. Describe the role in plain English, answer a few questions about the parties, the state and key terms, and LexDraft writes a first draft into your Word document. You can refine it in chat, for example "make the non-compete 6 months instead of 12". Try the free employment agreement builder or the non-compete checker too.

This guide is general information, not legal advice. LexDraft does not give legal advice; qualified counsel must review every draft. Spotted something out of date? Email support@lexdraft.ai and we will fix it.