When an individual receives an agreement, the first thing to determine is if it is an offer letter or a contract. Employees receiving an offer letter may have less negotiating room then employees receiving an employment contract. Why? Because the offer letter is usually pretty simple (1-2 pages) and is generally given just to set out some basic terms (i.e. start date, title, salary). Employees with an offer letter are also generally at-will employees (meaning they can be fired for any reason with or without notice, provided the reason for termination is not improper). This is not to say they cannot negotiate the terms of the offer letter or that the offer letter should be signed without being reviewed by an attorney. It is imperative that all the terms that have been promised to the employee be included in the offer letter before execution.
Employment contracts are generally provided to higher level employees / executives or employees who have negotiated terms that need to be documented. These may be terms that are not offered to all employees.
For employees who receive an employment contract, these are some of the items we would expect to see in an employment agreement. Some of them are straightforward and some leave room for negotiation. The below list should also be reviewed/ used by employees with offer letters or who are interviewing, because its a checklist to help the potential employee understand the terms of their new employment relation.
- title and responsibilities
- reporting chain – to whom do they report
- location of office to which the employee reports and whether the employee is remote or hybrid or will work from home
- at will or term contract (and if the latter is it truly the term stated at the beginning of the contract — for example 1 year — or can the person be terminated on 30 days’ notice, making the contract, in essence, a 30 day contract)
- salary/ compensation/ bonus/ stock/ equity
- sign on bonus – any requirements to stay for a period of time or pay back upon departure
- guaranteed bonus or bonus based on performance (and if the latter are there any metrics -to determine the basis for receipt of a bonus). Is the bonus to be paid now or as deferred compensation and will it be paid in cash or part in stock/equity and is there a vesting schedule
- notice requirements – any notice required for termination (with or without cause) or if the employee is to resign with or without good reason
- restrictions on future employment (non-compete, non-solicitation, non-disparagement) and do these continue if the employee is terminated without cause or only if the employee resigns
- any additional documents that will need to be signed by the employee (i.e. non-compete agreement, workplace inventions agreement, confidentiality agreement, etc.)
- severance – generally found in executive agreements and may apply if the employee is let go prior to the end of the term or if the employee resigns for good reason. Any severance may require the employee to sign a release of claims and the contract may state what the employee might be entitled to (i.e. salary, benefits, expenses, bonus, etc.)
- relocation benefits – what are offered, any requirements to stay for a period of time, or repayment. Possibility of re-relocation benefits at a later date.
Individuals who receive new employment agreements should have them reviewed so that all of the terms and promises discussed in the interviews are documented and there is no confusion at a later date.
Contact Sheree Donath at 516-804-0274 or Sheree@DonathLaw.com for assistance in having your employment contract or offer letter and the accompanying documents reviewed. We understand that time is of the essence and will accommodate you (speaking in the evening or weekends) to ensure that the documents are promptly reviewed and discussed with you.