Writing an Offer Letter
By Laura Duggan
Putting everything in writing is not just paranoia, but good common sense, and the offer letter is no exception. Handshakes must be followed by documentation.
The process of hiring staff can be simplified if you prepare in advance by creating the various types of paperwork each employee will need. If you use an outsourced HR company, such as TriNet, they provide samples of everything you need, and you then can tailor the letters to match your own style.
Prior to, or following an interview, and prior to an offer letter, include the following important paperwork:
- Employment Application: legal statement of the person’s qualifications.
- Background check: protects you from possible unwelcome surprises
Welcome: The candidate has not yet accepted your offer, so the letter needs to convey the sincerity of your interest, as well as appropriate legal language.
Compensation: State the salary, annual or monthly, and any bonuses. If stock options are included, the Board of Directors must approve them at a Board meeting, and the minutes need to be filed accurately for future reference. The option terms must be spelled out, including any vesting provisions.
Terms of Employment: The employment is “at-will.” This is a legal term. Language could be something like this: “Your employment with the Company is at will, and therefore, may be terminated by you or the Company at any time and for any reason, with or without cause, and with or without notice. This “at will” employment relationship may not be modified by any oral or implied agreement.”
Indication of HR Process: If you use an outsourced HR Firm, then the employee appears to work for the HR firm, and their payroll comes via the HR firm. This relationship should be spelled out in the offer letter so that there is no confusion.
Expenses: If there is an expense reimbursement policy, it could be stated in the letter, or, a reference to appropriate documents might be made.
Confidentiality Agreement & Intellectual Property: These should be drawn up and included with the offer letter so that the employee knows in advance your expectations.
Expected Start Date
Expiration Date of the Offer, if not accepted by candidate.
Employee Acknowledgment: There needs to be a place on the letter for the employee to sign and state his/her agreement with the terms.
Include these forms with the offer letter:
I9: A form that verifies citizenship and is mandatory for all employees. The form is constantly being updated due to the current legal situation in the USA, so be sure you download and use the most up-to-date form.
W4: The IRS form that states the number of deductions that the employee wants to take off of his paycheck.