Employment Contracts AI Review

Reviewing employment contracts traditionally requires significant time and legal expertise. For small and mid-sized businesses (SMBs), this review is often prohibitively expensive. Modern legal technology, specifically AI contract review software, helps businesses and law firms address these issues by automating the analysis of employment contracts.

What is an Employment Contract?

An Employment Contract is an agreement detailing the relationship between an employer and an employee, covering (but not limited to) compensation, covenants, and termination terms. Employment contracts are important for setting clear expectations and helping protect the business from future litigation or disputes.

The Traditional Employment Contract Review Process

Historically, reviewing contracts required legal professionals to interpret specialized language and assess risk.  This manual examination is time consuming and prone to human errors especially where the person reviewing the employment contract is not an employment lawyer. Indeed, humans make a lot of mistakes in drafting and reviewing employment contracts, which is how we get the common law of employment (seriously, employment laws are often made by courts finding issues in employment contracts).

For SMBs who may lack in house counsel or want in house counsel to focus on more pressing tasks, relying on external lawyers for high volume or routine employment contract review is prohibitively expensive. Enter goHeather.

The New Mechanism: How Legal AI Processes Contracts

AI contract review is the application of artificial intelligence (AI) to automate and streamline the analysis of legal documents. It uses advanced technologies to read, understand, and extract insights from legal text. This process transforms the contract from a static paper document into a set of organized data.

Legal AI systems employ Natural Language Processing (NLP) to interpret human language and Machine Learning (ML) to ensure algorithms learn and improve over time. Specialized legal AI is trained on high quality, domain-specific legal content, such as statutes, case law, and contracts.

A key technical element is Retrieval-Augmented Generation (RAG). RAG allows general Large Language Models (LLMs) to produce accurate answers by drawing directly from retrieved, verified legal text.

1. Retrieval: The system selects relevant legal documents from a large universe of authoritative content, searching by analyzing the meaning, intent, and content of legal concepts, not just keywords.

2. Generation: The retrieved documents are supplied to the LLM along with the original query, allowing the model to generate a response in an "open-book" setting.

This structured, data-driven approach enables the AI to extract critical information pertinent to local compliance and risk.

How goHeather AI Reviews Employment Contracts

goHeather is an AI powered contract review platform built by lawyers to bring rapid analysis to its core target audience: small and mid-sized businesses and small law firms. goHeather functions as a tool designed to provide an inexpensive first pass review of employment contracts anywhere in the world (it is jurisdiction aware), significantly speeding up the process of employment contract review and reducing cost.

goHeather is lawyer-trained AI underpinned by multiple of the latest AI models like GPT-5, among others from Anthropic, Google and Meta.

goHeather’s core value is providing the level of AI analysis once only reserved for large enterprises at a fraction of the cost.

goHeather's AI employment contract review process is efficient and tailored to the business user:

1. Upload: The user uploads the contract (PDF or Word file is supported) to the secure platform. The review can also be initiated directly in Microsoft Word with our Word Add In.

2. Analysis: The AI engine reviews the document against common law principles, industry standards, "good contracts" and, if you choose, company-specific rules known as Playbooks. The system is localized to the user's jurisdiction and designated side of the contract, providing tailored feedback.

3. Risk Flagging and Insights: The AI identifies legal issues and potential risks, ranking them by severity.

4. Redline: goHeather applies rredlines to your document for proposed changes suggedted by the AI.

goHeather also offers features valuable to both law firms and businesses, such as in-app chat to explain or draft new clauses, and self-serve customizable Playbooks to enforce company policies.

Insights for Employment Contracts

AI review is particularly effective for scrutinizing high-risk documents like Employment Contracts, where local compliance is essential:

• Risk Flagging: The AI identifies issues and potential risks, relative to your jurisdiction, ranking them categorically.

Example Flags

• Probationary Period: The AI may flag a high risk if a contract states that an employee’s probationary period termination is without notice. The insight explains that while the probationary period is legal under employment standards for a certain amount of months, under common law, the employee could still be entitled to common law notice of termination if employment standrards are not followed.

• Employer Discretion: The AI can flag terms that give the employer wide discretion to change an employee’s job title, position, or duties without the change constituting constructive dismissal. The resulting insight recommends limiting this discretion or providing for additional compensation if significant changes are necessary.

The goal of this targeted review is to provide the legal information needed by law firms for due diligence and drafting, and by businesses for risk management, allowing both to finalize agreements with more confidence.

The First Pass Reality: Verification and Oversight

AI powered contract review tools, including goHeather, are intended to be a first pass, collaborative assistant, not a replacement for a human lawyer. AI helps teams and legal professionals focus on strategic client work rather than repetitive, low-value tasks.

While specialized legal AI tools utilize sophisticated methods like RAG intended to reduce hallucination—the tendency of AI to generate false information—empirical analysis of leading legal research tools found that hallucinations persist. For a detailed discussion on the performance and limitations of specialized legal AI tools, see the scholarly article, "Hallucination Free? Assessing the Reliability of Leading AI Legal Research Tools" in the Journal of Empirical Legal Studies.

Verification is essential because complex legal judgment, strategy, ethical decision-making, and client empathy remain uniquely human elements of legal practice that AI cannot replicate.

Conclusion

Using goHeather for employment contract AI review enables businesses and small law firms to overcome the high cost and inefficiency of traditional enteprise only contract management. By automating the initial review work, goHeather provides a fast, affordable way to gain confidence in employment contract reviews.

The goal of goHeather is accelerated contract review through specialized workflows (not just chat like ChatGPT) and reduced costs, allowing humans to focus on strategic matters. Businesses and law firms should use goHeather as an inexpensive starting point for employment contract review, but should always consider retaining a lawyer for legal advice and final confirmation.