What should I look out for in my Offer Letter?

Miniseries: What should you look out for in your contract
Offer Letter | CIIAA | Residential Lease | Equity Agreement | Contractor Agreement

This week kicks off our mini-series on what you should look out for in your contracts, starting with Offer Letters. While these 2~3 page letters are easier to read on the legalese spectrum, they cover a wide range of topics.

1. Dates, dates, dates

   Exploding offers are ubiquitous. The first step to dismantling the bomb is identifying the Offer Expiration Date and Offer Start Date, and negotiate yourself enough time to process the employment package fully.

   
   

2. Identify all the other contracts you’ll need to sign

   We could write an entire blog post just on this topic (oh wait, we did!: What are all the documents an employer asks you to sign) but the next step is to identify all the other documents the offer letter references, and make sure you don’t lock in the employment before reviewing the entire package. Documents that can cause surprises down the road: Benefits, Non-Competition Agreement, Equity Incentive Plans, and more.

   
   

3. Compensation clawbacks

   Your compensation can be provided in many forms: signing bonus, annual bonus, remote work setup stipend, relocation stipend, etc. Most of these benefits can have strings attached if you don’t meet certain criteria such as duration of employment and/or performance targets. Failure to meet the criteria can mean needing to return the cash, pro-rated or in its entirety.

   
   

4. Compensation review cycle

   A competitive package today likely won’t be in a few years, especially with current inflation rates. Make sure your offer letter lays out what it takes and how regularly you get raises.

   
   

5. Clauses that affect future employment opportunities

   Depending on your state, your offer letter may have some combination of non-solicitation and non-competition agreements during and after your employment. These clauses range from standard (no blatant competing and stealing of clients during your employment) to catastrophic (inability to work in the same industry for X years after departure).

   
   

6. Clauses that recently became illegal

   The law is always changing, often faster than employers can keep up with, but that shouldn’t delay your protection under the law. For example, President Biden signed the Speak Out Act (S.B. 4524) on December 7, 2022, making Non-Disparagement clauses that ban negative comments about your employer illegal if they don’t make an exception for sexual harassment claims.

   
   

7. Clauses that aren’t there, but should be

   Given how short they are, offer letters can sometimes be vague on topics that are very important to you. For example, they might say ‘Paid-Time-Off is included’ but not how they’re accrued, or ‘401(k) Program’ without the details of employer % matching. Make sure everything important to you is spelled out in writing.

   
   

8. How legal issues are resolved

   After all, you’re signing a contract, which means you’ll want to know how disputes regarding the contract can be resolved. You may be required to file claims to a specific court, or give up your rights to the court system entirely and go through arbitration only via JAMS.

I thought my Offer Letter was pretty short, but Ask Ginkgo flagged referenced documents and shined a light on clauses that needed clarification or weren’t included, which improved my evaluation of the package.

- Software Engineer, Climate Tech

For advocacy and beyond!
The Ask Ginkgo Team