How to dissect an offer letter

Shutterstock

After a handful of interviews, a hard-skill competency test, and a cultural fit roundtable, you snagged the position. Go you! Now the offer letter is sitting pretty in your mailbox (or let’s be real: inbox, these days) — and you’re trying to read between the lines. While it isn’t an official contract of employment, an offer letter sets the tone and the ground for your next gig, and it’s not a document to be taken lightly. Rather, executive coaches highly recommend reading everything carefully before you accept it.

After all, the keyword of this paper is ‘offer’ — and it’s still within your power to negotiate. All too often, professionals aren’t familiar with legal-sounding industry jargon and skip forward to the salary section, which is usually top-of-mind. Plus, when we are excited about the opportunity, it’s easy enough to sign quickly so you can secure your spot. “Reading it carefully will ensure you understand the terms of your employment, as well as enable you to sufficiently protect your interests and rights,” reminds career expert for TopInterview Amanda Augustine. 

Here, how to dissect your offer letter by looking out for these sections:

Non-compete agreement

While this varies greatly dependent on industry, a non-compete can be incredibly limiting not only while you’re employed for a company, but once you decide to leave, too. In basic terms, Augustine explains a non-compete is an agreement between you and your employer, that dictates who you can work with while you’re on their payroll — and for a specified time afterwards. That last bit is what most savvy professionals barter, in an effort to give themselves flexibility in the future. If you sign it without reading it, you could be left in a difficult spot. “Under this clause, you’d also be prohibited from starting a business that is in direct — or sometimes even indirect — competition with your former employer,” Augustine continues. “Depending on where you live and work, these clauses can seriously limit your future employment options.”

You may not be able to fully get around a non-compete — and that’s okay. However, you can set strict guidelines on how long it holds you back post-employment. “If you’re unsure whether the time frame stated in your non-compete is reasonable, consider seeking counsel from an employment lawyer. And consider the region in which you will work — the extent to which a company can enforce such a clause varies from state to state,” Augustine adds.

Exempt vs. non-exempt status

No, it’s not sexy language — but determining what type of employee you are will help you understand your rights. As leadership development and career expert Elizabeth Whittaker-Walker explains, if you fall under the ‘exempt’ status, this means you have a salary tied to your role, and you do not have to be compensated for hours worked over your weekly agreement. In other words: you don’t quality for overtime. On the other hand, non-exempt usually means you’re paid by the hours you work, and probably, can bargain for more when you work past the standard 40. There are benefits to both avenues, but it’s worth exploring to see what works best for your financial goals and lifestyle.

Benefits

While an offer letter doesn’t usually get into the nitty-gritty of what benefits an employer offers, at the very least, it should explain what you’re eligible for and the basic details. Even if you have discussed these nuggets — healthcare, paid vacation, etc. — and so on during the interview process, Augustine stresses the importance of getting this information written in black-and-white before you sign anything. “If something was overlooked and omitted from your offer letter, politely remind your point of contact what was agreed upon, and ask to have this information added to your offer letter,” she continues. “If you don’t get these details in writing, then the company has no obligation to provide them — and you may be stuck with only standard benefits.”

Non-solicit clause

Very similar to a non-compete clause, you may also see a non-solicit section if you’re up for a gig in sales, account management or even senior management roles. What this is attempting to prevent is your ability to poach clients, customers or employees from the company, should you decide to leave and go out on your own, or elsewhere. Again, this is when Augustine says timeframe matters. While a few months is probably fine, if it’s a year or more, it’s worth chatting about. “Depending on the state in which you work, breaching this agreement can come with serious ramifications,” she warns.

Other perks

There are sections of your benefits package that are expected for most full-time employees, including health care coverage, paid time off, sick leave, 401K contributions and short-term disability. However, there are other perks that may be advertised when you’re going through the selection process, that somehow, don’t find their way to the offer letter. Whittaker-Walker stresses the importance of ensuring everything promised to you is part of this document, since it holds the company accountable for what they said. These include gym memberships or health perks, relocation packages, health savings plans, counseling services, child, elder or spousal support, continuing education grants and beyond. “ 

Work environment

Sure, you probably already discussed your salary and found a happy medium. You also understand what your overall package will include. But what about the environment you’ll work? And how many days you’ll report to the office? As more professionals seek a flexible schedule, ensure any and all details are part of your offer letter. “You don’t want to find yourself tied to a desk, if you know this doesn’t support your best work and or personal needs. This also includes travel expectations. If you don’t have a desire to travel every week, make sure this isn’t an expectation,” Whittaker-Walker recommends. “Before you say ‘yes’, make sure that everything you’ve negotiated in this arena is captured in your offer letter.”