Offer letters are the opening to any employment relationship, and should start things off on a positive note. However, there are some important dos and don’ts to consider so that you do not leave the organization open to liability in the future. The company must be able to stand behind the contents of the letter, as it is a legally binding document. The terms must be clear and they must not promise anything the company cannot deliver on. Here’s how to keep your offer letters effective, while protecting the company.
Writing Offer Letters: The Dos
The basic information that should be covered in an offer letter includes:
- Job Title and work location
- Pay – in terms of rate, frequency and method of payment.
- Brief overview of the benefits coverage provided by the company (health, dental, vision, paid time off, etc.) and when they will begin. Be sure to note that benefits information will be discussed in detail during the orientation process.
- Date the signed letter must be returned, as well as the employee’s start date, start time, their probationary period, and number of hours to be worked per week.
- If the offer is contingent upon background checks, drug screens or other yet-to-be-completed information, state those contingencies in clear language.
- If your company requires new employees to sign documents like nondisclosures, non-competes, etc., attach them and name them in the contents of the letter.
- If employment is at-will, advise the new hire in writing of that fact and disclaim any attempt at using the offer letter as an actual or implied contract.
- If you are hiring an employee from a competitor, confirm that the individual is not subject to restrictive covenants like non-compete agreements that would prohibit employment.
Writing Offer Letters: The Don’ts
Remember that the company must deliver on promises made in an offer letter. Therefore, to avoid future liability:
- Don’t imply job security. Avoid statements like, “You will be able to grow your career here,” or “You will have a lengthy tenure us.”
- Don’t list out the specific job responsibilities. You can tell the new hire that they will meet with their manager during their first week to discuss specific responsibilities.
- Don’t use an annual salary figure. Courts have ruled annual salary mentions as a contract for one year of employment. Stick to hourly rate or the total per pay period.
- Don’t promise bonuses or raises. These are tied to performance and should not be promised in an offer letter.
Offer letters have been used in lawsuits in all 50 states. In order to protect your company, the template and language used in an offer letter should be reviewed by an attorney to guard against liability. You can also work with a recruiting firm that is well-versed in employment law to help you source candidates, make strong hiring decisions and craft proper offer letters.