In track and field, how well the runner launches her body off the starting block determines her starting position in the race, and largely contributes to her overall success. Think of offer letters the same way. A solid offer letter can mark the beginning of a successful start to an employment relationship, and put a new employee in a good position to positively contribute to the growth and success of your company.
A successful offer letter should include these nine elements.
You’ve gone through the trouble of advertising a position, looking over resumes and interviewing potential candidates, so you should be excited that you can now make an offer. Convey your excitement to the candidate so that he or she feels excited about working with you, and you can close the deal!
2. Basic job info
Include the title of the position, as well as reporting structure. The offer letter should also include a description of responsibilities and expectations. In this section, you should also include a disclaimer that the employer has the right to change the position, and modify or assign additional responsibilities.
3. Compensation and benefits
The job’s salary, payment period, and the policy on raises should be included. Thoroughly describe any bonus or commission plan. Where applicable, information about fringe benefits such as health insurance, disability insurance, life insurance, 401(k) savings plans, profit sharing, and expense reimbursements should also be included. Don’t forget to include the company’s vacation and/or PTO policy, and reserve the right to amend or rescind compensation agreements and benefit plans and programs, including employee contribution levels.
4. “At will”/ exempt status
Most employment relationships are “at will”, meaning that either party can terminate the employment for any reason or no reason (so long as it does not violate discrimination or other laws or public policies). If this is the case, make sure it is clearly addressed in the offer letter by stating something like, “the employer is free to discharge individuals for any reason or no reason at all, without further obligation or liability.” Also, be sure to state whether the position is exempt. If the position is nonexempt, include your overtime policy.
5. Conditions for the offer
Describe any conditions that you want the employee to satisfy before or after being hired. Examples of such conditions include: reference checks, background checks, drug tests, and required pre-hire documentation.
6. Restrictive Covenants
While an offer letter will generally not include non-compete or non-solicitation clauses, it can condition employment upon the signing of these documents at commencement of employment. The best practice is to seek the help of a business lawyer when crafting non-compete or non-solicitation agreements. Moreover, you may want to include language in the offer letter stating that signing the document affirmatively acknowledges that the employee is not currently subject to any restrictive covenants from previous employers.
If your company has a confidentiality policy (it should), offer letters should include confidentiality and/or non-disclosure clauses in order to protect important information that’s vital to the success of your business, such as salary information or client lists.
8. Expiration Date
The offer should instruct the candidate to obtain independent legal advice before accepting and provide enough time for the person to do so. This will make the court more likely to uphold clauses in favor of your company if a problem should arise in the future. While it is still important to give the candidate time to properly review your offer, it’s also imperative to include a specific time in which your offer to that candidate expires. Making an expiration date around 48 hours after extending an offer also helps eliminate the chance of the candidate receiving competing offers, having time to compare offers, and then possibly presenting you with a counter-offer.
9. Spell Out the Next Steps
Finally, explicitly call out the next steps for the candidate. These may include signing the offer letter and returning it to a specific person at the company. Also include a start date and the timing of any contingencies such as reference checks. It’s important to include these steps so that the employment relationship begins on strong footing, launching your new employee and your business as a whole towards success and prosperity.
For more information on this topic, contact Alex Gertsburg at 440-571-7775 or firstname.lastname@example.org. Get more legal tips for your business on The Gertsburg Law Firm blog, with new articles every week.