Compensation & Offers · 4 min read
That offer letter is a contract in disguise — here's exactly which terms to read twice before you sign anything.
What employment terms should you review in a job offer letter?
Review the salary and pay structure, benefits and start date, equity or bonuses, work location and schedule, and any restrictive clauses like non-competes or IP assignment. Verify the job title, reporting line, and employment classification match what you discussed. Never sign on the spot — take 24 to 48 hours to read every line.
An offer letter feels like the finish line, but it's really a contract wearing a congratulations card. I once watched a friend accept a "$95K offer" that turned out to be $82K base plus a "target bonus" nobody hit — she'd never read past the headline number. Twenty minutes of careful review would have saved her a year of disappointment. For a structured walkthrough, see how to analyze a job offer letter before accepting.
Compensation: read past the headline number
Confirm the exact base salary, pay frequency, and whether it's salary or hourly. Then decode the variable pay: Is that bonus guaranteed or discretionary? What did the team actually pay out the last two years — "target" and "actual" are different numbers. Ask when bonuses pay out and whether you must be employed on the payout date (a classic gotcha).
Then compute the real total. Calculating total compensation — base plus bonus, equity, 401(k) match, and benefits value — often reveals that a lower base with great benefits beats a higher base with none. And salary vs total compensation explains why the headline number misleads so reliably.
Benefits, time off, and the fine print
Health insurance details matter enormously: premiums, deductibles, and when coverage starts (day one vs. after 90 days is a real cost difference). Check PTO — days, accrual, carryover, and payout on exit. Parental leave, 401(k) match and vesting schedule, remote-work stipends: these are worth thousands and they're all negotiable-adjacent.
Don't skip the boring paragraphs: employment classification (exempt vs. non-exempt affects overtime), at-will language (standard in the US, but know what it means), and the start date. Anything promised verbally — a signing bonus, a title bump after six months — must appear in writing. Verbal promises evaporate; written terms endure.
Equity and restrictive clauses deserve a lawyer's eye
If equity is involved, pin down the type (RSUs, options), vesting schedule, cliff period, and what happens to unvested shares if you leave. A four-year vest with a one-year cliff means leaving at month eleven gets you zero. Ask for the grant in writing with numbers, not percentages of a mystery pool.
Then read the restrictive covenants slowly: non-compete (how long, what geography, what industries?), non-solicitation, and IP assignment clauses. Some non-competes effectively bar you from your own industry for a year — in some states they're unenforceable, in others they're very real. When in doubt, a one-hour employment lawyer consult (often $200-400) is the best money you'll spend in the process.
Red flags that should make you pause
Vague language is the biggest one: "competitive salary" without a number, "unlimited PTO" with no minimum norms, bonus "at company discretion" with no history shared. Pressure to sign immediately is another — legitimate employers give you days, not hours. And if the letter contradicts what was discussed verbally, stop and get clarification in writing before proceeding.
Comparing multiple offers? This comparison checklist keeps the terms side by side so emotion doesn't decide. And if the numbers need work, negotiate without sounding demanding — most employers expect it.
Frequently asked questions
How long should I take to review an offer letter?
Ask for at least 48 hours; a week is reasonable for senior roles. Any employer that won't grant two days is telling you something about how they treat employees. Use the time to read every clause, run the total-comp math, and get questions answered in writing.
Can I negotiate after receiving the offer letter?
Yes — the offer letter is typically the start of negotiation, not the end. Respond with enthusiasm, then counter on the specific terms you want changed. Get the final agreed terms reissued in a revised letter before you sign; handshake amendments don't count.
What questions should I ask before signing?
Ask about bonus payout history, equity details in writing, the non-compete's scope, benefits start dates, and anything vague in the letter. These questions to ask before you sign cover the full list — bring them to the call.
Is an offer letter legally binding?
Usually it's not a full employment contract, but signed terms (especially arbitration, non-compete, and IP clauses) can bind you. At-will language means either side can end employment, but the specific clauses you sign still matter. When significant money or restrictions are involved, have an employment attorney review it.
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