business owner needs to have in place – one of these is the offer letter. Offer letters identify the
terms of the candidate’s employment with you. Without them, it is hard to substantiate what you and the employee agreed to in terms of pay, work hours, and benefits. When an employee comes to you and says, “I thought we agreed that I would be paid $X and I’m only getting $Y”, you just need to refer to the offer letter and any confusion is quickly eliminated. However, a word of caution — while offer letters can help to prevent problems; they can also create problems if not carefully written.
To help ensure your offer letters prevent problems:
1) create a standard offer letter template that can be used anytime you make an employment offer to someone
2) include the key terms of the position
3) have the template reviewed by an employment attorney.
Some of the offer letter terms to include are:
■ Position Overview
• position title
• position status (e.g., full, part-time)
• Fair Labor Standards Act exemption status
• to whom position reports
• summary of position responsibilities
• employment start date
■ Any employment offer contingencies and conditions
■ Compensation and pay information
• salary and wages
• pay periods and dates
• overtime and payroll deduction provisions
Key point: It is critical to state employee compensation in an hourly, weekly, or pay period salary amount to avoid the expectation that the employee will receive the full annual salary if they terminate before the end of their first year of employment.
■ Benefits and paid leave overview, eligibility, and change provisions
■ At will statement
Key point: To help ensure that an offer letter can not be construed as an employment contract or agreement, include a statement that employment is at will. Check your State’s employment at will doctrine for language to include in this statement. In addition, be sure you don’t promise employment for any specific period of time or make promises about anything related to future bonuses and job security.
■ Arbitration preferences
■ Offer lapse date
■ Employee signature (and date) indicating agreement with the offer letter terms
Be sure to express in the letter your excitement about the candidate joining your team and don’t forget to put the signed job description in the personnel folder!
The offer letter is the “go-to” document about the agreed upon terms of the employment offer…so be sure they are written in a manner in which they clearly establish the employment terms and reduce liability issues.
YOUR TURN: What do you include in an offer letter and how has it helped you and your business? Please leave your reply below.