The most famous must be the Skype story right? Have a bunch of language in the employment contract, which gives the employer the right to take back all the vested shares you have been granted if you are "fired for cause"? Then fire everyone for cause right before liquidity event.
It was very obfuscated, and it was buried deep in thousands of words, but that's a big obvious red flag even if the legalese is impenetrable.
If you ever notice a paragraph like that, which begins with some words like "If, in connection with the termination of a Participant’s Employment..."
Don't sign it. Understand it, or find a lawyer who can.
The very scary part is "termination of employment", because that's something out of your control, so you must assume it could be used to take advantage of you.
This is an "IF .. THEN" statement where you have no control of the "IF" clause. So you'd best figure out the "THEN" part before agreeing to it.
God bless the UK's Unfair Contract Terms Act 1977, which doesn't permit this kind of "well it's in the contract" excuse. In 2000, the High Court confirmed that this Act applies to employment contracts.
There are also laws around termination of employment in general so I think that this would be easily rebutted in Court.
https://techcrunch.com/2011/06/26/skypes-worthless-employee-...