This is it! You’ve arrived at the enviable offer-letter point of the job search. After receiving a verbal confirmation, you expressed your interest and asked for the actual offer in writing because you’re smart and know that’s what you’re supposed to do. Before you know it, you’re scrolling through pages upon pages of copy, and wearily, having barely read a whole paragraph, you are prepared to sign.
But wait! I promise you that hasty signing is not the way to handle this legal situation, and I spoke to two attorneys, fluent in the often mystifying language of contracts, to help me explain why.
Muse In-House Counsel Eric Kluger can’t stress the importance of this point enough. He says, “It’s easy to start reading and get distracted by dinner plans, but it’s an important document that outlines your agreement with the company,” and that’s why it deserves to get read—twice!
When you do a close reading, you’ll no doubt start to recognize several digestible things, including compensation (including bonuses), job responsibilities, benefits, the term, and non-compete and proprietary information clauses. While every contract will be different, here are a few basics you should know about each section:
Compensation
Compensation, notes Kluger, “is how you will be paid. It can be salary, equity, commission, or some combination of the three,” all of which can be negotiated.
In fact, according to the other attorney (whom I’ll call Jones due to a privacy clause at her place of employment) I spoke with, “everything is negotiable.” That includes office time and the opportunity to work remotely. It means negotiating a greater amount of equity if that’s important to you, but it also entails discussing continuing education opportunities if that’s something you care about. For Jones, who recently relocated to Denver from NYC, it meant getting reimbursed for the Colorado bar exam before accepting a position in her new city.
The takeaway here is that there’s often plenty worth negotiating beyond basic compensation, particularly if your salary offer isn’t where you hoped it would be.
Bonuses
This is a significant form of compensation in many companies, so if it’s a part of your contract, you’ll want to find out if they are discretionary or guaranteed. For example, Kluger offers the scenario of a sales role: “You may often be entitled to a bonus if you close a certain number of deals, and the bonus would generally be guaranteed if you meet that threshold.” A discretionary bonus, on the other hand, is as it sounds: left to the discretion of a manager or supervisor and may be dependent on a number of factors, including performance, output, mentorship, and a great deal more. Make sure you have a full and complete understanding of what a potential bonus means for you before you accept an offer.
The Job Description
Once you process how and what you want to negotiate, take a few minutes to review the job responsibilities section. Often, the bullet points under this heading are vague; along with listing the responsibilities you’ve come to expect based on your interviews and understanding of the role thus far, companies will sometimes include the following “and other associated responsibilities.” Is this cause for alarm? Could the company ask you to do things outside of your main duties? Perhaps, especially if you’re signing with a startup. But, says Jones, in most cases, it’s “not anything to be concerned with.” It’s a “catch-all phrase,” though she points out that if you’re worried, there’s nothing wrong with asking about it.
Kluger substantiates this point, noting that you shouldn’t “be afraid to ask your potential employer for clarification.” The company’s brought you this far and wants to hire you, so don’t be nervous about asking questions big or small. It’s your right to have complete knowledge of what you’re signing before you actually sign—and no company (you want to work for) will object to you following up.
The Benefits
As far as benefits and company policy go, if these are not clearly outlined in the offer letter (and they’re often not), you’ll want to seek out the information you need. Ask to review the company’s employee handbook for further information on things such as health benefits for you and your dependents, vacation, sick, and parental leave, and out-of-pocket expenses. It’s possible for many of these topics to be addressed in a second or third round interview, but if there’s something you forget to inquire about, now—before you sign and date—is the time to do it.
Along those same lines, if something you want to confirm in writing isn’t in the contract or the handbook, ask about it in an email. The response might not be “contract official,” but it’s better than having to refer back to a second-round interview a couple of months into the job when you’re following up on how unlimited vacation works.
The Term
Compensation (and the importance of negotiating), job responsibilities, and benefits aside, what do you need to know about “the term?” That’s a fancy way of saying how you are employed. Although most non-union employment agreements are “at-will” (meaning that you or your employer can terminate employment at any time and for any reason) some positions may outline employment for a pre-determined amount of time. It’s pretty standard, just be clear on what that term is before you sign.
Non-Compete
According to Kluger, this clause is “extremely important as it can affect where you work going forward.” He explains that agreeing to a non-compete clause means you promise not to work for certain competitors of the organization you’re signing with, generally for at least one to two years. He advices ensuring that the “restrictions are not too burdensome,” and notes that freelancers, in particular, should be wary of the non-complete clause as they are reliant on their ability to produce work for multiple companies in a given industry.
It’s possible, however, that you’ll never come across this type of clause. It’s a state-by-state situation and one that is not highly regarded, Jones told me, because it essentially limits your ability to earn a livelihood. This is one you should definitely try and negotiate.
Proprietary Information and Inventions
Depending on the industry and employer, your offer letter may have a section called “Proprietary Information and Inventions.” Kluger says that this agreement “is often required if you will be creating anything in connection with your employment.” That could be software, graphic designs, written material, or anything else you develop with and for the organization. “Essentially, it means that anything you create for the company, belongs to the company,” Kluger explains. It’s often industry-specific, so if you don’t encounter this section in your employment agreement, there’s no cause for concern. Often, this section will be accompanied by a sheet asking you to list prior inventions and original works of authorship; it’s a spot for you to fill out any previous works so that there’s no legal disagreement 10 years down the road.
Even if you’re so excited about the job offer that you spend three solid hours reading and rereading the contract, coming up with your points of negotiation, and drafting a list of questions, you don’t have to make a decision immediately—despite any pressure you may feel from the hiring manager. (He or she’s probably just excited to get you in there!) In fact, it’s perfectly OK to respond with an email outlining your time along the lines of,
“Hi [Name of Hiring Manager], Thanks so much for sending the documents. I'd like to take some time to read through everything and digest it. I'll plan to get back to you early next week.”
And, despite the fact you might be 100% sure you’re going to take the job, you should still take a couple of days to review and digest the agreement in front of you. Yes, you can begin firing away questions right away if you want to. And yes, you can start negotiating the afternoon of the morning you get the offer. But, no matter how eager you are to join the company, make sure you give yourself time to process it all before you change your LinkedIn profile.
Note: This article has been prepared for general information purposes only. The information presented is not legal advice and is not to be acted on as such. If you need legal advice, you should consult an attorney.