What does at-will employment mean? Learn this and other details like exempt vs. non-exempt status.
“CONGRATS, YOU’RE hired!” When you hear these exciting words, you’ll likely also encounter a job offer letter.
An offer letter is typically a good faith effort by an employer to provide clarity regarding the position for which you just spent months interviewing. Yet it is wise to remember that this is a legal document, often designed to protect the interests of the employer.
It is very tempting to just get it signed so you can move forward with a new opportunity. However, you have the most power before an offer is signed, so it is imperative that you review and understand this employment agreement.
Set aside time to print out and review all documents. Make note of all inconsistencies and questions before you request a conversation or send an email outlining your concerns. If there is anything delicate or significant, or if you have more than three items to discuss, a call is typically better than a long (or multiple) emails. Be sure to address everything at once and in a positive manner to avoid negotiation fatigue and frustration.
The extra time you spend upfront to ensure your offer is correct establishes your attention to detail and provides a clear outline for your success in your new role. Here are some key details of an offer letter to understand and review before you make the deal official.
A job offer letter may contain these details:
- Part-time vs. full-time status.
- Hourly vs. salaried status.
- Exempt vs. non-exempt status.
- At-will vs. contract status.
- A confidentiality clause.
- A non-solicitation clause.
- A mandatory arbitration clause.
- A non-compete clause.
Inspect what you expect.
The first thing to look for is your title, salary, job responsibilities, start date, benefits and other items that you negotiated for or agreed to before being offered the position. Many offer letters start as an offer letter template or offer letter sample, so if you negotiated a different title, salary or PTO benefit than is standard, there is a chance one or more of those items may have been overlooked when generating your offer. Make a note of anything inaccurate.
Understand your employment status.
Offer letters should make it clear whether you are a part-time worker or full-time employee as well as if you are an hourly employee, a salaried employee, eligible for overtime pay or not eligible for overtime pay.
Part-Time vs. Full-Time
Part-time employees work less than 40 hours per week. Often part-time roles are under the threshold to be eligible for benefits like vacation time or medical coverage. Full-time employees are expected to work 40 hours (or more) per week.
Hourly vs. Salaried
Hourly employees typically work eight or fewer hours per day and 40 or fewer hours per week.
Salaried employees are expected to work a full-time schedule of at least 40 hours a week and to complete all responsibilities as needed, regardless of what time they started that day or how many hours they already worked that week. In other words, you work until the work is done, instead of stopping based on a preset schedule.
Exempt vs. Non-Exempt
Exempt employees are ineligible for (or exempt from) overtime pay.
A non-exempt employee is eligible for overtime pay. This means if he works beyond a pre-defined, full-time schedule, he is usually eligible to receive 1.5 times his hourly rate.
The offer letter may describe how your state defines those boundaries and the overtime rate of pay. For example, in California, standard overtime is defined as more than eight hours in a day or more than 40 hours in a week, and double time time applies if a worker puts in more than 12 hours in a day.
What is at-will employment?
At-will employment means that an employee can be dismissed by the employer at any time and for any or no reason at all (barring cases of discrimination, retaliation and other special circumstances). At-will employment is very normal and no cause for alarm. It is the prevailing law of the land for most of the U.S. It also means that you, as an employee, are entitled to leave your employer at any time, regardless of reason.
Look out for scary clauses.
Most offers will include a “confidentiality” and a “non-solicitation” clause. Some may include mandatory arbitration or non-compete clauses. Be sure to read these clauses or sections carefully so that you understand and agree that you can uphold what is expected. Note that some of these clauses are limited by state rules, so be sure to check your local labor law protections.
In simple terms, a confidentiality clause requires that you keep information, tools and resources that belong to the company confidential and not share that information with others or take it with you to use in your next role.
A non-solicitation clause generally prohibits you from pursuing clients, contacts or employees that you encountered while working at the company after you leave.
A mandatory arbitration clause bans workers from taking disputes they have about wage theft, workplace discrimination and unjust dismissal to court. Instead, employees must settle grievances with their employers in private proceedings presided over by arbitrators.
A non-compete clause prohibits workers from joining a competitor after leaving the company. This kind of clause may have a time limit or geographic boundary.
Get it in writing.
If you discussed any special considerations, other benefits, perks or future actions, make sure those are in writing. Often these special considerations are agreed to in good faith between you and your new manager but can go unfulfilled if not in writing.
For example, you and your manager agree that if you accomplish certain performance objectives in the first two months, she will request a $5,000 base salary increase for you. Then, your manager leaves the company a month into your new role or is swept away with an internal promotion. You are now left trying to sell to a new manager that you have this handshake agreement.
If you are accepting the role because of an additional incentive, be sure to get it in writing. It will ensure clarity regarding the agreement and it keeps you safe in the event there are management changes.