In some states, managers making statements such as “Keep your nose clean and you’ve got a job for life” have unwittingly bound their employers to a contractual relationship that means the employee can only be fired for cause. Offer letters that promise long-term employment or a year’s worth of employment have also resulted in legal claims against employers. How can you ensure that your offer letters don’t promise more than you want them to?
The offer letter is a crucial document reflecting the employer’s intent to enter into an employment relationship. It is particularly important if the company is courting an applicant who would have to leave other employment or relocate to accept the offer. The offer letter must be written in a clear and concise way and include the details needed to make a decision. Use these tips to draft ironclad offer letters for your organization.
Set the tone of employment. The letter should not be overly legalistic and cold, nor should it be too personal. This letter begins the relationship with the new employee and should reflect a polished and professional organization. It is important to cover all your legal bases, but a contractual letter without warmth may result in the applicant questioning whether he or she wants to work with you.
Ensure final authorization to hire. All authorizations to hire should be obtained prior to sending an offer letter. Salary should be nailed down, as well as other terms and benefits of employment, such as commissions, stock options, title, and other details.
Get an authoritative signature. The offer letter is an official document and should be signed by someone who has the authority to extend a job offer. Therefore, a supervisor’s signature is probably not appropriate, while a chief operating officer or HR director would be appropriate.
Do not extend an offer until preemployment reference checks have been completed. You can certainly make the offer contingent upon passing certain criteria such as drug screening, I-9 requirements, or other postoffer tests, but references should occur prior to the offer letter.
Do not extend an offer until the final decision has been made and no other offers have been extended. An offer is an offer, and it is difficult to rescind an offer once it has been extended. So be cautious that the job offered is one that is open.
Summarize the terms of employment. Include location, times of work, start date, title, and other such details.
Indicate salary. Summarize the terms and conditions of employment, including monthly base salary if it is an exempt position, and hourly equivalent if it is a nonexempt position. If a salary figure is quoted, it should be stated in terms of monthly or biweekly compensation, rather than as an annual salary, because some courts have interpreted the quotation of an annual salary as an intention to employ the candidate for one year.
Indicate benefits information. Include general health care/benefits information, such as when coverage will begin.
Provide the employee’s title and supervisor. This might have been conveyed in the interview process, but it solidifies the relationship between supervisor and employee.
Include an at-will provision. Clearly state that the employment is at-will and that the letter supersedes any prior oral representations. If you are not an at-will employer, this information should be omitted. It is helpful to include the statement in the application form, the offer letter, the employee handbook, and at any other appropriate point in the employment relationship.
Include contingencies. List any preconditions to employment (for example, candidates may need to sign nondisclosure of confidential/proprietary information agreements or provide employment eligibility information).
Indicate an expiration date for the offer. If you don’t do this, the applicant might feel that the position is open indefinitely.
Get a signature. Include a signature line for the employee (by which the employee certifies that he or she is accepting the position under the terms offered).
Send two copies of the letter. Have the applicant sign and return one and keep one for his/her own records.
This article appears in Council’s September 2004 Personnel/HR Assistant newsletter. This newsletter offers proven HR leadership strategies to help you work smarter, manage tasks more efficiently, and build your HR career. Click here to subscribe or order a free trial.
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