How to create effective employment offer letters
Good news! During these times of challenging recruitment, a viable applicant seems interested in your business. What’s the next step to set the hook? A job offer letter serves many purposes. It should enhance the candidate’s interest in the opening and protect your company against claims that it misrepresented the employment opportunity. The letter also must be substantial enough to allow the applicant to resign from current employment. In other words, it must sell the job.
Tips for getting started
The offer letter should be organized as a story beginning with the more global considerations and then followed by the terms that naturally fall in place. Notably, it should be positive. Too often we see letters begin with a message similar to “you are employed at will and can be terminated at any time.” Some letters continue the buzzkill with multiple repetitions of the at-will-status warning.
Instead, the natural order is an introduction welcoming the applicant and expressing enthusiasm for the individual’s interest. Next follow the name of the position, the reporting date, and a reference to the supervisor to whom the new hire will report. A description of the expected work schedule is included completing the initial employment landscape.
What to say About compensation, benefits
Then comes compensation, expressed as either an hourly rate or a base salary calculated “at an annualized rate of $X.” Too often HR professionals unnecessarily note the position is “exempt” or “nonexempt.” The average person outside the HR world can find the terms confusing. Clarity is achieved by merely noting if overtime is paid. Finally, the compensation section should state the frequency of pay and whether the employer relies on direct deposit.
Next, explain the benefits. Bullet each benefit separately. There is no need to identify every term or condition of every benefit, so long as the following necessary language is included:
This letter provides a general summary of the terms and conditions of our benefit plans, which are further explained in our company policies or in material provided by our benefit providers.
The offer letter isn’t the place to attempt a detailed description of every retirement or health benefit term.
The bulleted benefits should include (1) holidays, (2) vacation, personal, or sick-day allotments, (3) life, disability, and health insurance, (4) retirement programs, and (5) any other significant perks. For health insurance, the offer letter should identify if there is shared payment, explain what coverage is available, and note coverage and carriers may change from time to time and that employee contribution costs may vary.
Other key things to include
Employment at will. Toward the end of the offer letter, it’s adequate to write that employment is “at will.” There is no legal need to add “the employer may terminate at any time.” The mere statement that employment is “at will” is enough to establish the right to discharge at any time.
Integration clause. Next, include an “integration clause” stating all the terms of the employment offer are included in the letter to the exclusion of any other oral or written representations. The clause is vital to avoid any retroactive claims that (1) matters represented in initial conversations were misleading or (2) any oral promises were made. It is especially important if recruiters may have been overzealous in describing the job.
Noncompetes, confidential info. The offer letter should include a representation by the applicant that the individual isn’t otherwise prohibited from accepting employment, most notably by any preexisting noncompete term, and that all information used in applying for the job was truthful, without known misrepresentation or deletion of material details.
In the letter, point out the applicant is expressly prohibited from using confidential information from any previous employer in furtherance of the employment. Also, let the individual know whether you’ll require the signing of a noncompete or confidentiality agreement.
Finishing touches
Finally, any contingencies, such as the requirements for a medical examination, substance abuse testing, or a favorable background check, must be spelled out. Most states now require the job offer to occur before those contingencies kick in. Conclude the letter with a section to be returned to you containing the new hire’s signature accepting the terms of employment and attesting that the representations and warranties are true and correct.
Steven E. Bers is an employment attorney with Whiteford, Taylor & Preston, L.L.P., in Baltimore, Maryland. Steven chairs the firm’s Labor & Employment section, leads the firm’s maritime law practice, and focuses his practice on management employment law. You can reach him at sbers@wtplaw.com.
