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. Here are some elements of what a successful offer letter to a potential employee should include:
1. Excitement
After your company has gone through the trouble of advertising a position, looking over resumes and interviewing potential candidates, you should be excited that you now feel confident enough to make an offer. It is important to convey your excitement to the chosen candidate in an offer letter, so that he too feels excited about working with you, and you can close the deal!
2. Basic Job Info
It is important to include basic job information in the offer letter. The title of the position should be included, 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. In addition, any bonus or commission plan should be described thoroughly. 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. In addition, be sure 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 with the position you are offering, 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 or not the position is exempt. If the position is nonexempt, you should include your overtime policy.
5. Conditions for the Offer
The offer letter should also describe any conditions of the offer. These may be 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. Non-compete agreements prohibit former employees from working for a competitor for a certain period of time, and are commonly used for service professionals and commercial salespeople, but are not limited to any particular types of work. In fact, Ohio courts have considered non-competes for a wide variety of occupations, including veterinarians, vegetable salesmen, and bail bondsmen.
Non-solicitation agreements preclude employees from soliciting your company’s clients and/or other employees to join them at their new business or that of a competitor. 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.
7. Confidentiality
If your company has a confidentiality policy (it should), offer letters should include confidentiality and/or non-disclosure clauses in order to protect the secrecy of important information that’s vital to the success of your business. The wording should acknowledge that by signing the offer letter, the employee must refrain from disclosure of certain information, 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. Typically an offer’s window of acceptance is open for 48 hours. The whole point of any hiring process is to fill a current hiring need, so you will want to move swiftly when you have chosen the ideal candidate. 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, an offer should explicitly call out the next steps for the candidate. Such steps may include signing the offer letter and returning it to a specific person at the company. You should 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.
Alex Gertsburg is a managing partner at Gertsburg Licata. He may be reached at (216) 573-6000 or at [email protected].
Gertsburg Licata is a full-service, strategic growth firm, specializing in business law, M&A advisory and executive talent solutions for entrepreneurs and executives of start-up and middle-market enterprises. Contact us today to discuss how we can help you secure your next competitive advantage. We are also home to CoverMySix®, our unique, anti-litigation audit service for middle-market companies.
This article is for informational purposes only. It is merely intended to provide a very general overview of a certain area of the law. Nothing in this article is intended to create an attorney-client relationship or provide legal advice. You should not rely on anything in this article without first consulting with an attorney licensed to practice in your jurisdiction. If you have specific questions about your matter, please contact an attorney licensed to practice in your jurisdiction.
