Understanding Offer Letters
Understanding Offer Letters
Let’s envision a scenario which you may have already encountered or will soon encounter as a student looking for co-ops and full-time jobs- you’ve created a solid resume and portfolio, applied to a bunch of positions, interviewed with a handful of companies, and just got an official offer letter! That’s awesome, but as you start reading the letter, you quickly realize it goes on for 20+ pages and contains loads of legal jargon. Parsing offer letters can often be a chore, especially if you’re not sure what to look for first. This won’t always be the case, but most medium to large companies have templated offer letters that spell out everything you’re agreeing to in exhausting detail. Now of course you should read your offer letters in their entirety, but knowing it can be difficult initially, I want to provide you with a quick list of important things that you can look for and check off when you start sifting through them. Some of the sections are only applicable to full-time job offers, but for items that also apply to co-op offers, I’ll include info about what to expect for both.
Job Description & Title
Your job description and title are two of the very first things you should see! It’s important to check them along with any other job responsibilities listed (if there are any) even though it may seem unnecessary. You want to be sure you know exactly what you’re signing up for and make sure it’s what you were expecting initially. You should always know your designated role, even for a co-op position.
Base Salary / Hourly Wage
This is the big number most people look for right away. Your base salary (perhaps obviously) equates to how much you can expect to earn on a yearly basis. If your offer lists your compensation in the form of an hourly wage, you can multiply the number by hours you expect to work in a week (this should also be listed somewhere in the offer letter) and calculate a rough yearly (or monthly) estimate. This is your guaranteed pay- what you should use when figuring out your expenses and budget while working at this new job. It’s also important to lookup the tax rates in the area of your job (even for co-ops) as you will likely be taxed at those rates as opposed to the rates of your home location. You should always expect to see a base salary or hourly wage in an offer letter, regardless of what the position is.
There are two main categories of bonuses: one-time payouts and recurring payouts. On a co-op you may be lucky enough to get a one-time relocation bonus to help you move, but most bonuses are only given to full-time employees. One-time payouts can take the form of a signing-bonus, relocation stipend, or anything else really, but the important thing to note is that you will only receive one payment. Recurring payouts obviously will continue to earn you money throughout your time working at the company. Often times, they take the form of a yearly stipend dependent on how well you worked during the year. Depending on the bonus, recurring payouts may or may not count as guaranteed income, and it’s important to know if you can safely add an amount onto your base salary when figuring out your budget. As you read through your offer letter, take note of the bonus(es) you’re provided with and determine if you can count on them as guaranteed income.
There are lots of different types of benefits- too many to list in a single blog post. That being said all benefits can be sorted by ones that the company provides for free, and ones that you have to opt in and pay for. For example, if the company provides free food for its employees it may be entirely free, or you may have to pay some amount from your paycheck every month to participate. It’s not always necessary to read through all of your benefits immediately, but definitely consider how the costs may affect your budget and whether or not each benefit is worth it to you if it’s not provided for free.
One of the most important things you should look for when first scanning your offer letter is your start date. Usually offer letters will include an exact date in the near future when you will be expected to start working. The date may be what you expected, especially if you talked about preferred start dates with your employer in an interview or email, but it may also be something far sooner or far later than you expected, so make sure to check. It’s important to factor in how much time you think it’s going to take you to move out to your new work location and be ready to work. Ensure that the start date gives you enough time to comfortably make the transition. Moving for a co-op is arguably easier than moving for a full-time position, but both require time and research. If you find that your start date isn’t ideal, you can always feel free to contact the company and see if you can negotiate a different start date. If you give a valid reason (like that you need time to make the move), companies are usually willing to give you a little wiggle room. If your position is a co-op, it’s also important to note the end-date so you can make sure you’re getting enough weeks in / not missing the start of the next semester of school.
The job’s location shouldn’t be a complete surprise to you if you’re familiar with the company or read the job description, but it’s very important to now consider what it’s going to be like for you to move out and live in that area. If you’re only going to be living there for a couple of months, this is less important, but still worth thinking about. Compare how much you’re expecting to be paid to what you think it’s going to cost you to live in a location. Predictable expenses include housing, food, transportation, utilities, and services that you normally pay for. It helps to make a comprehensive list of all the things you think you’ll need to consider paying for, do some research on average costs, and make sure you’ll be able to support yourself with your projected income.
Confidentiality & Non-Compete Agreements
It’s extremely important to check if your offer letter contains anything relating to confidentiality or non-competition. Confidentiality agreements usually ask employees to not release company secrets to the public, and while this may be obvious in many circumstances, it’s extremely important to pay attention to what you can and can’t say so that you can avoid any accidental leaks. Non-competition clauses address a slightly different issue, but they’re just as important. A non-competition clause will specify what you are allowed and not allowed to do while working at the company or sometimes even for a short while after leaving the company. Consider any side-projects that you have / plan to work on and understand that working on them on company-time can lead to some consequences that you’d most likely want to avoid.
Negotiating Offer Letter Details
This topic comes up a lot because if you’ve never negotiated with a company about an offer letter before, it can be rather daunting. I won’t go into too much detail, but here are a few quick pointers. It’s easy and totally acceptable to politely negotiate your dates of employment (within reason) and possibly specific vacations that you’ve already planned. It’s also perfectly okay to ask an employer to correct any mistakes (like an incorrect job title) before you sign- they’ll either fix it for you and send you a new letter or tell you it wasn’t a mistake, and then you can re-evaluate the offer as is. Salaries and hourly wages are harder to negotiate. Before asking for a higher number, do some research to find out what someone of your skill level in your profession can reasonably expect to make in your new location (yes, location matters because of taxes and living costs). If you do ask for a higher number, always do it in a polite way and understand that they may not be willing to raise the amount.
Those are all the major points! I didn’t cover everything and of course every offer letter is going to be unique, but I hope I’ve given you a good place to start! Happy job hunting!