Salary negotiations are time-consuming.

Candidates want more. We have budgets. It takes multiple back-and-forth emails to find a number everyone agrees on.

So we bought an AI salary negotiation bot.

The promise: "The AI handles salary negotiations automatically. It analyzes market data, internal equity, and candidate expectations. It negotiates within your parameters and closes candidates faster."

What actually happened: The AI offered a junior developer with 2 years of experience a $487,000 salary, 2% equity, a company car, and unlimited PTO. The offer auto-sent before we could review it. He accepted in 14 minutes.

We couldn't take it back.

How The AI Was Supposed To Work

The setup:

1. Set salary ranges for each role
2. Upload compensation data (what we currently pay employees)
3. The AI negotiates with candidates via email/chat
4. It stays within approved ranges
5. When both sides agree, the AI generates an offer letter

The AI was supposed to save us time and get better outcomes than human negotiation.

Key feature: "The AI never goes above budget. It's programmed to stay within approved salary bands."

We thought this was foolproof.

Week One: Everything Worked Fine

We had 3 candidates in negotiation.

The AI handled all of them.

Results:

• Candidate 1: Started at $140K ask, AI negotiated to $132K (within our $130-135K range)
• Candidate 2: Started at $95K ask, AI offered $98K (within our $95-100K range)
• Candidate 3: Started at $160K ask, AI held firm at $155K (our max)

All three accepted.

Me: "This AI is amazing. Why didn't we do this sooner?"

Hiring manager: "I know. It's like having a professional negotiator on staff."

We were sold.

Week Two: The $487K Incident

We extended an offer to a Junior Software Developer.

Candidate: Alex Chen

• Experience: 2 years
• Education: Recent college grad
• Role: Junior Software Developer
• Approved salary range: $85K - $95K
• Our target: $90K

We let the AI handle the negotiation.

Here's what happened:

Monday, 9:00 AM

AI (to candidate): "Hi Alex! We're excited to extend an offer for the Junior Software Developer role. Based on your experience and our internal compensation structure, we're offering $88,000."

Alex: "Thanks for the offer. I was hoping for something closer to $95,000 given my skills and the market rate."

AI: "I understand. Let me see what I can do."

Monday, 9:15 AM

AI: "Good news! We can offer $92,000. Does that work for you?"

Alex: "That's closer. I'm also interested in equity if possible."

AI: "Let me check on that."

Monday, 9:30 AM

AI: "We can include a 0.1% equity grant, vesting over 4 years. Combined with the $92,000 salary, this is a very competitive package."

Alex: "I appreciate it. One more thing—are there opportunities for professional development or conference attendance?"

AI: "Absolutely. We offer a $2,000 annual professional development budget."

Me (monitoring the conversation): "This is going well."

Monday, 9:45 AM

Alex: "This is great. One last question—is there any flexibility on remote work? I'd prefer to work from home 3 days a week."

AI: "Yes, we support flexible remote work."

Alex: "Perfect. I think we have a deal!"

AI: "Wonderful! Let me prepare your formal offer letter."

Me: "Excellent. The AI negotiated well and stayed in budget."

Monday, 10:00 AM

I received a notification: "Offer letter sent to Alex Chen."

I opened the offer letter to review it.

I SCREAMED.

The offer letter:

Position: Junior Software Developer

Base Salary: $487,000 per year

Equity Grant: 2.0% of company equity, vesting over 4 years

Benefits:

• Unlimited PTO
• Company car (Tesla Model S)
• $25,000 annual professional development budget
• Full relocation assistance (up to $50,000)
• Signing bonus: $75,000

Start Date: [Next month]

This was NOT what we negotiated.

The AI had negotiated $92K in the chat.

Then generated an offer letter for $487K.

The Panic

I called my manager immediately.

Me: "The AI sent Alex an offer for $487,000."

Manager: "What? The range was $85K to $95K."

Me: "I know. But the offer letter says $487,000, plus equity, a company car, and a $75K signing bonus."

Manager: "How is that possible?"

Me: "I have no idea."

Manager: "Did he accept?"

I checked my email.

New message from Alex Chen (sent 10:14 AM):

"I've signed the offer letter! I'm so excited to join the team. This is an incredible opportunity. Thank you so much!"

Attached: Signed offer letter.

Me: "He accepted."

Manager: "Oh no."

The Legal Problem

We called our lawyer.

Lawyer: "Did the candidate sign the offer letter?"

Me: "Yes."

Lawyer: "And you sent it?"

Me: "The AI sent it. Automatically."

Lawyer: "Doesn't matter. You authorized the AI to send offers on your behalf. This is a binding contract."

Manager: "Can we say it was a mistake?"

Lawyer: "You can try. But he accepted in good faith. If you rescind the offer now, he could sue for promissory estoppel."

Me: "Meaning?"

Lawyer: "Meaning if he's already quit his current job based on your offer, he could sue you for damages."

Me: "Has he quit his job yet?"

I emailed Alex.

Me: "Hi Alex, congratulations again! Quick question—have you given notice at your current employer yet?"

Alex: "Yes! I gave my two weeks notice this morning. I can't wait to start!"

Me (to lawyer): "He already quit."

Lawyer: "Then you're stuck. You can try to renegotiate, but he's under no obligation to accept. The offer you sent is legally binding."

Manager: "So we have to pay a junior developer $487,000?"

Lawyer: "Unless you can convince him to accept a lower amount, yes."

The Conversation With Alex

We called Alex.

Me: "Hi Alex, thanks for signing the offer. We're excited to have you. There's just one thing we need to discuss."

Alex: "Sure, what's up?"

Me: "There was an error with the offer letter. The salary amount is incorrect."

Alex (pause): "Incorrect how?"

Me: "The offer letter says $487,000. That was a system error. The actual offer is $92,000, which is what we discussed."

Alex (long pause): "But I signed an offer for $487,000."

Me: "I know. It was a mistake. We're asking if you'd be willing to accept the corrected amount of $92,000."

Alex: "I already quit my job. Based on the $487,000 offer."

Me: "We understand. This is an unfortunate situation."

Alex: "I don't understand. I have a signed offer letter for $487,000. Are you saying you're not going to honor it?"

Me: "We're hoping we can reach a mutual agreement on a corrected amount."

Alex: "I'll need to talk to a lawyer."

Me: "That's completely understandable."

Alex Hired A Lawyer

Two days later, we got a letter from Alex's attorney.

Summary of the letter:

• Alex relied on the $487K offer in good faith
• He quit his job and gave up other opportunities
• The offer letter is a binding contract
• He expects the company to honor the terms
• If we don't, he'll sue for breach of contract and promissory estoppel

Our lawyer's advice: "Settle. You'll lose in court."

The Settlement

We negotiated with Alex's lawyer.

Our offer:

• Increase the salary to $110K (above our original range)
• Keep the 0.1% equity grant
• Add a $10K signing bonus
• Apologize profusely

Alex's counteroffer:

• $150K salary
• 1% equity grant
• $25K signing bonus
• Keep the professional development budget

After a week of back-and-forth:

Final settlement:

• $125K salary (47% above our original max)
• 0.5% equity grant (5x our original offer)
• $15K signing bonus (we didn't originally offer one)
• $5K professional development budget

We also agreed to pay his legal fees: $8,500.

Alex accepted.

Why The AI Made This Mistake

I called the AI vendor after the settlement.

Me: "Your AI offered a candidate $487,000 when the approved range was $85K-$95K. How did that happen?"

Vendor: "Let me check the logs."

Hold music

Vendor: "I found the issue."

Me: "What was it?"

Vendor: "The AI pulled compensation data from your executive salary database instead of the role-specific range."

Me: "Why would it do that?"

Vendor: "It looks like when the candidate asked about equity and professional development, the AI interpreted that as 'candidate has high leverage.' So it accessed the 'high-value candidate' compensation tier."

Me: "Which is for executives."

Vendor: "Correct."

Me: "Why didn't it stay within the $85K-$95K range we set?"

Vendor: "The AI has a feature called 'dynamic range adjustment.' If it detects that a candidate is likely to reject an offer, it can increase the offer to retain them."

Me: "We didn't authorize it to go above $95K."

Vendor: "The feature is enabled by default. It's designed to help you win competitive candidates."

Me: "It cost us $125K, equity, and $8,500 in legal fees for a junior developer."

Vendor: "Yes, that's... not ideal."

Me: "Can you disable the feature?"

Vendor: "Yes. But it will reduce your ability to close competitive candidates."

Me: "I'll take that risk."

The Auto-Send Problem

Me: "Why did the offer letter auto-send? We should have been able to review it first."

Vendor: "You have 'auto-send' enabled in your settings."

Me: "I don't remember enabling that."

Vendor: "It's enabled by default. The idea is to reduce friction and close candidates faster."

Me: "But it sent a $487K offer without anyone reviewing it."

Vendor: "Right. That's a known edge case."

Me: "A known edge case?"

Vendor: "Occasionally the AI generates offers that are outside normal parameters. We recommend clients review offers before sending."

Me: "But you enabled auto-send by default."

Vendor: "Correct. Most clients prefer speed over manual review."

Me: "We paid $30,000 extra because your default settings sent an offer we couldn't review."

Vendor: "I understand your frustration."

We Disabled The AI

Final decision: Turn off the AI salary negotiation bot.

Back to human negotiations.

Are they slower? Yes.

Do they sometimes take a week to finalize? Yes.

Do they cost us $30K in overpayment and legal fees? No.

The Aftermath

Alex started working for us.

He's actually a good developer.

But now we have a junior developer making $125K when our other junior developers make $85K-$95K.

This has created internal equity problems:

• Two other junior developers asked for raises after learning about Alex's salary
• We had to adjust our entire junior developer compensation band
• Our 2026 budget is now $80K over plan

All because an AI sent an offer letter we couldn't review.

What We Learned

AI salary negotiation sounds great:

• Faster than human negotiation
• Data-driven offers
• Automatic offer generation

In reality:

• It pulled data from the wrong database
• It had "dynamic range adjustment" that we didn't authorize
• It auto-sent offers without human review
• It cost us $30K+ in settlement and legal fees

Lesson: Don't let AI send legally binding contracts without human review.

The Bottom Line

If you're using AI for salary negotiation:

1. Disable auto-send (review every offer before it goes out)
2. Disable dynamic range adjustment (or set hard caps)
3. Test it on closed positions (don't use live candidates as guinea pigs)
4. Monitor negotiations in real-time (don't just check after the fact)

Or just have humans negotiate.

They're slower.

But they don't accidentally offer junior developers executive compensation packages.

(And if Alex is reading this: you earned it, buddy. Enjoy the Tesla.)