Your First Offer Letter: How Do You Respond?

October 16, 2019

Congratulations! You have received an offer letter. Usually, this is a document that formally extends employment to a job applicant and outlines the main terms and conditions (including salary and other benefits). The offer letter also frequently gives a candidate a more in-depth description of the position’s role within the organization and responsibilities. Although the offer letter may seem like it presents a take-it-or-leave-it proposition, most of the time there is some room for negotiation. Even if you think you have no ability to negotiate, it is still important to make sure you understand the terms you are agreeing to before signing the offer letter. Review the offer carefully and think outside of the box if there are issues you want to discuss.

What to Look for When Reviewing an Offer Letter

Although a trend in recent years has been to craft clever, creative offer letters to captivate potential employees, the purpose of an offer letter is to convey relevant details about the job in a straightforward manner. It usually states when the employee will begin working (and sometimes when the job will end, in the case of short-term or seasonal positions), schedule details, terms of compensation, benefits, and a description of the roles and responsibilities of the position. If an offer letter is missing essential information about critical terms like these, make sure you ask to have them included in the offer letter.

For example, if you were told during the hiring process that stock options were part of the compensation, but they are not mentioned in the offer letter, make sure you address this before signing and returning the letter. Ensure that the details of the offer correspond to your expectations and previous discussions.

If the job offer is contingent upon you completing certain documents or performing certain tasks, such as obtaining licensure or accreditation in a certain region or discipline, it should be noted in the letter. Other contingencies can include a background check, drug test, I-9 form completion, signed confidentiality/nondisclosure agreement, reference checks, proof of prior employment eligibility, noncompetition and nonsolicitation agreements, security clearance, and more. If these have been discussed during negotiations but are not in the letter, these also should be addressed before you sign.

Most employment in the U.S. is on an at-will basis. This means that a company may terminate the employee at any time, with or without notice, for any lawful reason, and that an employee may end his or her employment at any time without penalty. An offer letter should contain either a statement that the employment is “at will” and outline the notice requirements for each party or set forth the terms under which it proposes a contractual employment agreement.

Negotiating Terms in an Offer Letter

Although an offer letter usually sets out concrete, fixed terms for an employment offer, many companies allow (or even expect) a candidate to negotiate some aspects. Even if the salary amount may not be open for negotiation, other benefits may be. These include direct compensation aspects like 401(k) contributions, profit sharing, commissions, stock options, insurance benefits, signing bonus, relocation expense reimbursement, educational reimbursement, vacation and paid time off, or use of a company vehicle. Other often negotiable aspects of the offer can include lifestyle-related benefits like flexible scheduling, remote/work from home options, training or advancement options, crafting a different job title, or working at a different corporate location.

Even if you feel like you have little to no leverage, you may be able to demonstrate that some of these concessions will benefit the company as much as they benefit you. For example, you may propose that if you obtain a higher degree of certification in a particular skill or licensure that is beneficial for the company, then the organization will reimburse you a certain amount of those education expenses.

Legal Considerations

Most letters instruct you to sign your acceptance to the offer as written and return it to the employer by a set date when the offer expires. You may be concerned that proposing a counteroffer to an offer letter could ruin your chances to obtain the job as originally offered. However, an offer letter is not a binding contract; subject to very narrow exceptions, an employer can withdraw its offer at any time. Because of this, if you wish to negotiate the terms of the offer, it can be to your benefit to do so.

Offer letters often include an agreement by the employee to be bound by other agreements, plans and policies, so it is important to understand what you are agreeing to, and to ask for and copies of any such documents before you sign the offer letter. Some companies may also ask employees to sign additional agreements after they have started working, such as non-competition and non-solicitation agreements or dispute resolution agreements waiving the employee’s rights to file a claim in court or to join a class or collective action. It is therefore important to discuss these issues at the outset so that you are not surprised by additional obligations after you have already started.

Negotiating an offer letter can be done through meeting with the employer in person, by telephone, in a written response asking for specific changes, or in a markup of the document. The right approach will depend on your specific situation.

Having legal counsel review an offer letter can help ensure you understand each and every term of the proposed offer, spot any red flags that should be addressed, and negotiate in a productive way. A creative, experienced employment attorney can help you craft a strong counteroffer that presents the best chance for success.

(*Prior results do not guarantee a similar outcome.)