Not Joining After Signed Offer Letter (The Legal CONSEQUENCES)

What happens if you sign an offer letter but end up not taking the job?  As an initial matter, if you have signed an offer letter but don’t want to go through with it, 99 times out of one hundred, you’ve signed a non-binding letter of intent or offer letter. And although your new potential employer may be annoyed that you’ve signed the offer letter but aren’t going through with it, it’s very unlikely anything is going to happen to you legally. But let’s break down the basics and go through it.

What is an Offer Letter?

An offer letter is simply a letter that details the main points of the employment relationship. Most offer letters will include compensation, so salary and bonus structure, a brief thing about the benefits, start date. If you’re in healthcare, maybe malpractice insurance responsibilities. So, the basic things like the highlights of the employment relationship.

Once you sign the offer letter, what normally would happen is they, being the employer, would incorporate what’s in the offer letter into an employment agreement. The employment agreement would then be sent to the professional. And that would have the nitty-gritty details of the employment relationship, so potentially how long the contract lasts, how to terminate the contract if there’s a non-compete, whether you must pay anything back if you leave early, the details of the compensation if it’s some productivity bonus, how’s it calculated, who pays for professional fees, that type of thing. That’s going to be the details in the employment agreement. And until you sign that employment agreement, the relationship is not complete, like you are not bound to anything until you sign the employment agreement.

Non-Binding Offer Letter

As I said before, 99 times out of one hundred, you’re going to have a non-binding offer letter. There could be a situation where the offer letter is binding, but it would have to have language that states this is a binding offer letter. It is, once again, extremely rare for there to be a binding offer letter. The only time that I’ve seen it is in academia. So, if you’re taking a position with an academic institution, many times, they don’t have employment agreements. They just have offer letters. And sometimes, those can be binding. But if you’re just a normal professional getting a new job with an employer, the offer letter will not bind you to anything.

However, once again, if there is language in the offer letter that states if you sign this offer letter and renegotiate the agreement in some way or decide not to go through with it, it’s possible there could be damages listed. So, for instance, if they used a recruiting service to find you, and then you sign the offer letter, and they’ve paid out, although that’s not how most recruiting services work, that’s the only scenario where you would have an issue.

Explain Why You Are Declining the Job

Now, when you do break the offer letter, the potential employer is, I guess, probably going to be ticked off that you’re not taking the job. So, you need to handle it delicately. Explain why you can’t move through with the job. Is there a family reason? Maybe an illness? Explaining that you’ve taken a job that pays more is not a good route. It’s not a good explanation as far as why you’re not going through with the job.

And even if that is the case, I would just keep that to myself. But you don’t want to completely burn a bridge. No matter what industry you’re in or where the job is, burning a bridge is a bad idea. And the easiest way possible is to explain why you don’t want to go through with the job. Hopefully, you can save some goodwill between your new potential employer and yourself. And who knows? Maybe in a year, the job you signed the offer letter for and then decided not to go through with it may become a great option. And if you handled this separation appropriately and amicably, you may have another opportunity that could shut down if you left under some bad blood. If they do come back at you after you’ve said, I’m not going through with the full employment relationship, and they’re mean, or they’re threatening you in some way, most of the time, the best way is just to grin and move on.

Don’t exchange a bunch of emails about, oh, this is so unprofessional, or how could you do this to us? It doesn’t serve any purpose. So, keep it amicable as best as you can and just move on. If you’re not going to go through with the job, there doesn’t need to be a nine-page explanation as to why you’re not doing it. It’s just, I’m not moving through at the job due to X, and I’m moving on.

What Happens After You Sign an Offer Letter?

There are two main distinctions. A professional could receive an offer letter, and that’s it. No employment contract follows. It’s just you agree to the terms of the offer letter, and then you start the job. And then, the second way would be the employer asking the potential employee to sign an offer letter, agreeing to basic terms. And then, they’ll incorporate those terms into an employment agreement and offer the employment agreement to the prospective employee. Then that person must decide if they want to sign the employment agreement and move forward with the relationship. 

Let’s first go with if you begin an offer letter with no employment agreement to follow. In that scenario, you’re most likely in an at-will employment relationship. This means that the agreement or the employment relationship may terminate at any time, for any reason. This is with no notice unless specifically stated in the offer letter. For the most part, there wouldn’t be any restrictive covenants that follow when the employment relationship ends. Restrictive covenants could include a non-solicitation agreement and a non-compete. 

Those are the two most common or the two that matter the most for most employees. They provide you with an offer letter that goes through basic things if you negotiate. Such as compensation, benefits, and start date, and that’s about it. I would say most licensed professionals usually would sign employment agreements. Attorneys don’t, for the most part, but almost anyone in healthcare, physicians, nurse practitioners, PAs, vets, chiropractors, and dentists, always sign employment agreements.

Not Required to Take on an Offer You Signed 

Let’s say you’re in another situation where they give you an offer letter, and you agree to the terms. Then they’ll follow up on the employment agreement. Many people ask, alright, what if I’ve signed the offer letter? But when they give me the employment agreement, it doesn’t look great. Do I have to go through with the job? The answer is no. Unless there’s strange language in the offer letter that states it’s binding, which would seldom happen if they follow up with an employment agreement. You can still negotiate terms. 

Let me give you an example. Let’s say the offer letter states there’s a non-compete, but it doesn’t have any details. So, you get the contract and then look in the non-compete, and it’s five years and covers an entire state. Like you will have to move out of the state if you want to continue in your profession. Well, that’s not a reasonable non-compete. But that could make a job that may have looked great at a hundred thousand a year be only worth 200,000 a year. That is if you accept that terrible non-compete. 

Provide Context for Disputing Job Offer

Even if you’ve accepted the terms of the offer letter, it doesn’t mean you have to go through and execute the employment agreement. The employer will probably talk about you agreeing to the terms, and now you’re returning to us. So, it is most effective if you provide some context as to why it looked good initially. Still, after reading the actual details of the employment agreement, it’s not so good.

I think most smart employers can understand that and appreciate that. If you just come back at them and say, no, now I want to double the salary, the bonus, or whatever. Without providing context, I assume the employer will not be pleased with that and may even pull the offer. So, what happens when you sign an offer letter? First, an employment agreement will likely follow, and then you’ll have to determine if you want to go through with that, or they’ll give you the offer letter. It’s an at-will relationship; you can leave at any time, and there likely aren’t any strings attached.