Published on March 7th, 2007 by Alan L Sklover
“Education is what you get if you read the fine print. Experience is what you get if you don’t.”
– Pete Seeger
ACTUAL CASE HISTORY: Walter, 47, a senior executive with a money management firm in New York, felt in a bind. He’d been with a prestigious firm for twelve years and was generally happy. He’d slowly climbed the firm’s ladder of success, and enjoyed his job. Unfortunately, the firm had recently lost three of its largest clients, and a state of unease pervaded the halls. Cost-cutting had begun and a hiring freeze had been imposed. Prospects for year-end bonuses weren’t bright.
Recently Walter had been aggressively recruited by a money management subsidiary of a large midwestern bank. Twice he’d been invited to join their newly formed team, with an attractive salary and guaranteed bonus for two years. Of great interest to Walter, the subsidiary’s chief executive told Walter that the bank planned to institute a profit-sharing plan that could make Walter wealthy in just a few years.
Because his prospective employers were eager to build their team, Walter was told they needed an answer from him in three days. The subsidiary’s CEO was coming to New York over the weekend, and wanted Walter to sign their “simple offer letter” by Sunday night. Walter called us as soon as he received the offer letter. I assured Walter we could review it quickly, but I couldn’t guarantee that any problems found could be resolved by the Sunday night deadline. I told Walter that, if his prospective employer was willing to meet over the weekend, if necessary, any possible problems could be ironed out by Sunday night, the CEO’s deadline.
But Human Resources at the “parent” bank seemed hesitant to talk. They complained I was making a “big deal” out of nothing, and that all other executives simply signed these offer letters exactly as written. We also heard: “What could be wrong with the offer letter? It’s only two pages long, and it’s written in simple English. Why are you making such a big fuss about this? Maybe you don’t really know what you’re doing . . . Maybe Walter isn’t our kind of guy, after all.” These were comments I’d heard many times before. I assured them our due diligence was just that: not a sign of distrust, but a reflection of prudence.
When I reviewed the offer letter, I identified serious problems. They weren’t unusual; in fact, they were the kind of problems I commonly find in offer letters. I explained to Walter the degree of risk each represented; after all, it was his decision to make. With Walter’s approval and his wife’s agreement, I sent a simple memo to the bank’s HR representative explaining my concerns and offering simple, reasonable solutions. The response was swift: Walter’s appointment with the subsidiary’s CEO was cancelled and their offer was withdrawn. Walter was not at all happy; his wife was near distraught.
Six months later, Walter called to give me an update. A colleague of his had taken the position he’d been offered. Now, six months later, the colleague was unemployed. It seems the midwestern bank’s money management team never got off the ground because of a disagreement between the subsidiary’s CEO and the parent bank. Most of the team was simply let go, without notice or severance. The so-called “guaranteed” bonuses were not being paid; it seems the subsidiary was a limited liability company, or LLC, and it now had no assets to pay anything to anyone. The hoped-for profit-sharing plan had never been formalized. Worst of all, two weeks after he arrived on his new job, Walter’s colleague was required to sign a two-year non-competition agreement, and now the parent bank was threatening to send nasty letters to any money manager that hired him until the two year period was over. Walter’s colleague was now unemployed, without severance and unemployable. Though sad for his friend, Walter and his wife were happy they did the right thing: they’d looked before they’d leaped. What had seemed like a golden opportunity had been, in fact, a perilous path to a problem.
LESSON TO LEARN: Though short and informal, job “offer letters” are binding contracts. Even if an employer says, “We don’t use employment contracts,” that’s exactly what an “offer letter” is. Unfortunately, when presented for initial review, job offer letters are usually one-sided, in the employer’s interests. When reviewing an offer letter presented to you, you must ask yourself, “Why is my prospective employer asking me to sign this? Is this for their benefit, or my own?”
For this reason, you must insist on being given the time and opportunity to carefully review and analyze a job offer letter, even at the risk of losing out on the prospective job. Because offer letters are legal documents that may have long-lasting and tumultuous consequences to a person’s finances, career and family, those who sign job offer letters without careful review do themselves no favor. Always bear in mind: your prospective employer would not want you to sign a contract binding the company without legal review, analysis and discussion, so why would they ask you to do just that when your own finances, family and future are at stake?
Unfortunately, frequently offer letters are deceptively written, and deceptively dangerous. Nearly always they appear to “guarantee” you what you want, but almost always they don’t really guarantee anything. In almost all cases, job offer letters appear simple; but in reality are far more complicated than they seem. They appear “welcoming,” but often have hidden trap doors. Offer letters usually are written in a casual style, with a friendly, encouraging tone. But if you’re not careful before signing one, you may later regret it – very much.
If you take the time, there’s an awful lot you can do to help yourself get a more rewarding, less problematic offer letter. The pressure and temptation to sign an offer letter can be hard to resist. SkloverWorkingWisdom™ can give you the tools to help you analyze what to look for – and what to look out for — in new job offer letters.
WHAT YOU CAN DO: We analyze and negotiate scores of job offer letters each year. In doing so, we bear in mind the Third Step of our SkloverWorkingWisdom™ Method of Workplace Negotiating: in every employment agreement, seek (a) Rewards, (b) Risk Limiters, and (c) Responsibilities and Resources. We look to make sure these are covered with certainty in every job offer agreement. The seven most common problems we find in offer letters, and how we address each, is discussed below:
1. Clarity: Is All Language “Window-Clear?” – Look out for “cloudiness.” Everything in a Job Offer Letter should be expressed in clear, simple and understandable language. Our standard is this: are the terms understandable to a 12-year-old. That standard is something we strive for no matter how “sophisticated” and “important” the people are. Jargon, legalese and fancy language must be avoided. There are several reasons for this, but they can all be summarized by five simple words: “Avoidance of disputes and lawyers.” The very purpose of a job offer letter is to set down for future reference what’s been agreed to today. If it’s not clear now, while everyone’s on “friendly” terms, it won’t be any clearer later, if distrust or discord has arisen. The words and phrases need to be “un-arguably” clear for the very simple reason that, if a dispute later arises, the employer’s lawyers will look for “potential arguments.” That’s their job, and you can presume they will do it well. Demanding clarity now is the best way to avoid lawyers later. Consider asking your spouse or friend to review your offer letter to see if they can easily understand what it says. [Ensuring Clarity is a matter of SkloverWorkingWisdom™ Risk Limitation.]
To obtain a Model Memo Confirming the Basic Terms of Your Job Offer, to adapt to your own facts and circumstances, just [click here.] “What to Say, and How to Say It.”™ Delivered by Email – Instantly
2. Conditions: Be Cautious About Pre-Conditions. – Look for when you become “officially employed.” Very often Job Offer Letters state that they’re not binding or effective until all “pre-conditions” have been “successfully” met. These include such things as background reports, drug tests, security clearances, and reference checks. Don’t be surprised if these take months to complete. Avoid moving from your present position, or curtailing other job interviews, until these are all “successfully” completed. One client found out that her personal background report was unacceptable . . . three weeks after she started the job. She was asked to leave immediately. Ask that the offer letter be rewritten to state that you’ll start two weeks after you’ve received written notice that all “pre-conditions” have been satisfied. [Removing Conditions is a matter of SkloverWorkingWisdom™ Risk Limitation.]
3. Commitment: Do You Have Any Job Security? – Look for a firm “term.” The employment relation is either committed – like marriage – or it is not – like dating. Most employment is uncommitted, what lawyers call “at will,” and can be ended without any notice, and without any reason. That’s not good because it constitutes job insecurity. By agreeing to take the new job, you’re making a big commitment; so should your employer, in return. It’s important to request that the employer commit to a firm “term” of the relation, that is, that the employer will employ you for a minimum term, of perhaps one or two years. After all, it will take at least six to twelve months, or more, to mutually assess each other. (Of course, the offer letter can say that if you commit theft, harassment or other “cause” for firing, you can be fired.) [Providing for employer Commitment is a matter of SkloverWorkingWisdom™ Rewards.]
4. True Guarantees: Will Monies Promised In All Events Be Paid? – Look for absolute certainty of payment. Whether or not you’re guaranteed your continued employment for a set period of time, you should be truly guaranteed monies you’ve been promised. Watch out for these two traps: (a) you must be employed on the date that payments are made to receive one; and (b) you will be paid in accordance with some plan or program, the details of which are not provided (these frequently will provide that you get nothing if not employed at the time payments are made). For example, if you’ve worked the entire calendar year, and bonuses are given out in February, what happens if you’re laid off in January? Very often bonuses, equity and commissions are promised but denied on these bases, even after being described as “guaranteed.” [Making sure you’re actually paid what you’ve been assured you’ll be paid, and what you’ve earned, are both matters of SkloverWorkingWisdom™ Rewards.]
We offer a Model Letter entitled “Model Response to Interviewer after Being Asked for Your Salary Expectation.” If you would like to obtain a copy for your use, simply [click here.] Delivered by Email – Instantly
5. Completeness: Is Everything That Was Agreed to, Included in Your Offer Letter? – Look for what you’ve been “assured” of. Common sense and the law agree: “If it isn’t in the offer letter, it may later be denied you.” Early on, before looking at your offer letter, make a list of what important things related to the job you’ve been assured of. Are they in the offer letter? As examples, will you have an entertainment budget, a research associate, and an administrative assistant? Vacation of five weeks, or two weeks? A right to audit commissions? If it’s important to you, and not in the offer letter, ask that it be included. This is of the essence of an Offer Letter review and negotiation. [Assessing Completeness is a matter of SkloverWorkingWisdom™ Rewards.]
6. Present or Later Non-Compete’s: Is Your Future Employability Restricted? – Increasingly, we find that new employment is offered with a dangerous catch: “if you work for us, later you won’t work for our competitors.” You must presume that non-compete’s and non-solicit’s will later be enforced. We view all “non-compete” agreements to be dangerous and unfair – yet surprisingly negotiable. Your first task is to find the non-compete agreement, because they are often hidden. They may be in so-called “confidentiality agreements,” in stock option plans, or even in codes of conduct. If you don’t find one, ask that your offer letter state that you won’t be asked to sign one later. If you do have a non-compete, your second task is to resist it when you can (that is, ask for its removal), limit it to a short list of companies and a short period of time, and to insist on continued salary and bonus while you’re restricted. [Eliminating or Reducing future restrictions on your employment is a matter of SkloverWorkingWisdom™ Risk Limitation.]
To find out now, before it is too late, if you will be required to sign a non-compete agreement or other future restriction – perhaps as a surprise on your second day of work – we have prepared and offer a Model Letter to HR to Clarify Benefits and Burdens,” just [click here.] Delivered by Email – Instantly.
7. Duties, Reporting, Locale: What Exactly is Your Job? – In our experience, these three – duties, reporting and locale – are often the sources of the most political, and hence intractable, future problems. Will your job include responsibilities that you hate, reporting to someone you thought would report to you? Might you be transferred to Afghanistan? We find that those who fulfill critical responsibilities are those who continually develop leverage to acquire more rewards and greater risk limitation in the future. Focusing on these three aspects of your employment will either prevent future problems, or indicate for you that the job you thought you were going to have really wasn’t that job at all. [Focusing on Responsibilities and Resources is the essence of SkloverWorkingWisdom™ Responsibilities Acquisition.]
One of most popular Model Letters is our “Model Response to Offer Letter,” which provides a good framework for your overall response. You can easily adapt it to your own needs. To obtain a copy, just [click here.] Delivered by Email – Instantly “What to Say, and How to Say It.”™
SkloverWorkingWisdom™ emphasizes smart negotiating for yourself at work. To do that, you need to know what you want, and what you don’t want. When given a job offer letter, both subjects need to be addressed, openly, frankly . . . and smartly. Always be proactive. Always be creative. Always be persistent. And always do what you can do to protect yourself and your family. Take all available steps to increase and secure employment “reward” and eliminate or reduce employment “risk.” That’s what our SkloverWorkingWisdom™ is all about.
You can obtain our entire list of 10 New Job letters, memos, and checklists for one reasonable price, which is a 42 % savings. It is called our Ultimate New Job Package. To obtain yours, [click here.] Delivered by Email – Instantly.
While you should always consider using an experienced attorney who is both knowledgeable in this area of law, and licensed to practice law in your locale to guide you and assist you, there is a lot you can do to help yourself, too. It might be best to come to your attorney with ideas and a draft in mind, and seek his or her help in final revisions. Regardless of how you choose to proceed, remember that “forewarned is forearmed.”
P.S.: BACKGROUND CHECK COMING UP? Do you have an “Indiscretion” or “Very Personal Issue” that might come up? We offer a Model Letter to SHARE A “VERY PERSONAL ISSUE” to explain it, and seek its acceptance, in pre-emptive fashion. No one is perfect, and no one’s life history is perfect, either. Explain it the right way. What to Say, and How to Say It.™ To obtain your copy, [click here.] Delivered by Email – Instantly!
Help Yourself With These and Other
|New Job 3:||Confirming Basic Terms of New Job Offer|
|New Job 5:||Model Response to Receiving a New Job Offer|
|New Job 7:||Checklist of New Job Items to Consider Requesting/Negotiating|
|New Job 13:||Six Important Elements to Request Be In Your Expected Job Offer|
|New Job 15:||Model Request for Sign-On Bonus|
|New Job 16:||Two Model Memos to Protect Your Book Of Business ("B.O.B.")|
|Job Issues 5:||Model Response to Request That You Sign a Non-Compete|