Overview After you've decided to hire a candidate you have interviewed, an offer letter gives you the chance to clearly articulate the terms of employment for the position. The details you provide in the letter should be sufficient for the candidate to make a decision about whether to accept the position and its terms.
The offer letter should begin by providing, at a minimum:
- The title of the position
- Employment classification type, e.g., full-time, part-time, temporary, etc.
- Compensation, e.g., proposed salary, hourly rate, or commission arrangement
- Pay frequency, e.g., monthly, biweekly, etc.
- Types of benefits offered, if any
- Start date
- Work location
- Work schedule
- Exempt (ineligible for overtime, e.g., salaried) or non-exempt (eligible for overtime)
- Offer expiration date.
Conditions for the Offer
The letter should also describe the conditions for the offer. These are conditions that the employee must satisfy or complete before or after being hired. Example conditions include:
- Drug screening tests,
- Required pre-hire documentation (e.g., I-9 verification in the US),
- Background checks, etc.
You should also describe the kinds of agreements you'll need the candidate to sign. It's good practice to mention these in the offer letter so that the candidate can determine whether they can or cannot meet your terms before accepting the offer to avoid any complications during employment. The agreements should be separately provided.
Examples of these agreements include:
- Non-disclosure agreements, which protect sensitive company information
- Non-compete agreements, which limit the employee's ability to engage in business activities that directly compete with the company during and (where legal) after employment with your company
- Intellectual Property (IP) agreements, which define your rights as an employer over inventions or information produced while someone is employed by the company
- Invention disclosures, which declare the employee's previously developed IP so that it can be separated from IP developed during employment at your company.
Unless you intend to use the offer letter as a legally binding contract once the employee signs it, be careful to avoid including language that might be misconstrued as the terms of a contract.
Avoid statements that suggest guaranteed continued or indefinite periods of employment. Above all, make sure to have your offer letter reviewed by legal counsel.
The easiest way to prevent miscommunication is to clearly state that you are an at-will employer.
Individual states have differing laws governing at-will employment, so make sure to check the laws for the state in which the employee will be working, which may not be the company's state of incorporation.