Offer Letter

A written document from an employer confirming a job offer, including title, salary, and start date.

An offer letter is a written document from an employer formally offering a candidate a position, and outlining the key terms of employment: job title, compensation (base salary, bonus target, equity), start date, reporting structure, and often a brief summary of benefits. It's the document that bridges the verbal offer and the formal employment relationship.

An offer letter is typically not a legally binding employment contract in the United States — it's an invitation to enter employment, usually on an at-will basis. Accepting an offer letter doesn't guarantee employment for any fixed period, and many letters include language explicitly stating this. This is different from an employment contract, which specifies terms including duration and conditions for termination.

The offer letter should be read carefully and in full before signing. Pay attention to: the exact base salary figure (annual vs. biweekly representation), the bonus structure and whether it's discretionary or targeted, equity details (number of shares, grant schedule, exercise price for options), start date and any conditions attached, clawback provisions for sign-on bonuses, and any non-compete or non-solicitation agreements that may be embedded or attached.

It's completely standard and expected to negotiate after receiving a written offer letter. The written offer is not the end of negotiation — it's confirmation of the starting point. Most offers have room to move, particularly on base salary, sign-on bonus, and equity, and receiving the offer letter gives you the documentation you need to make a specific, informed counter.

What Every Offer Letter Should Include

  • Job title and level/band — important for understanding your position in the company's hierarchy.
  • Start date — and whether it's negotiable.
  • Base salary stated as an annual figure — verify the pay schedule (bi-weekly, semi-monthly) and that the annual total matches.
  • Annual bonus target (if applicable) — expressed as a percentage of base, and whether it's discretionary or formula-based.
  • Equity — number of shares or units, vesting schedule, exercise price (for options), and grant type (RSU vs. options).
  • Sign-on bonus (if any) — the amount, payment date, and clawback terms.
  • Benefits overview — health, dental, vision, 401(k) match, and any notable perks.
  • At-will employment statement — confirm whether the offer is at-will or includes a specific term.
  • Conditions — background check, employment verification, drug test, or security clearance requirements.

Red Flags in an Offer Letter

  • Equity described only in dollars rather than number of shares — '%' of company or '$X in equity' without share count makes valuation impossible.
  • Bonus described as 'discretionary' with no target percentage — this means the bonus can be zero without breach.
  • A non-compete agreement embedded in the offer letter rather than presented as a separate document for review.
  • A sign-on bonus with an all-or-nothing clawback (no proration) over 24+ months.
  • Missing or vague start date contingencies — when does the offer expire if the background check takes longer than expected?
  • Compensation described as 'up to' rather than a specific number — this creates ambiguity about the guaranteed amount.

From Verbal Offer to Written Offer

Verbal offers are not offer letters. If a recruiter or hiring manager calls to tell you that you're getting an offer, you have not yet received an offer — you've received an intent. Don't give notice at your current job, turn down other interviews, or make major decisions based on a verbal offer alone. Politely but clearly confirm that you'll review and respond once you receive the written offer letter. Written documentation ensures there are no misunderstandings about compensation, title, or terms — and gives you something to counter in writing if negotiations follow.

Example

A candidate receives an offer letter listing her title as 'Marketing Associate' — one level below what was discussed throughout the interview process. She emails the recruiter immediately, notes the discrepancy, and asks for a corrected letter before signing. The recruiter confirms it was a data-entry error and sends a corrected version within 24 hours. Signing the original would have locked in the lower title and its corresponding pay band.