Simply saying “you’re hired” just won’t cut it any more — making a job offer in writing is an essential step in the hiring process. Although not technically required by law, written offer letters are more important than ever. While such letters can be brief, they should be thoughtfully written in order to avoid misunderstandings and unintended legal consequences.
Clear Communication: Misunderstandings about a new employee’s terms and conditions of the job have long been a problem. If the employer and employee start off with different expectations about the position, there will be conflicts. Common areas of confusion include: the full extent of relevant duties; working evenings or weekends; extensive travel; and pay issues such as exempt status, commissions, bonuses, vacation accrual, etc. This can be avoided by a written offer that is clear on what the job entails.
Preservation of “At-Will”: Unfortunately, overly-detailed offer letters may create unintended contractual arrangements. In California, “at-will” employment is presumed in the absence of a contract; however, this doctrine can be overcome by oral and/or implied promises. An offer letter that suggests a particular term of employment or future guarantees may negate at-will status. Unless such a guarantee is intended (and carefully drafted), a clear record stating that the offered employment is at-will goes a long way toward preventing unintended obligations. Additional language that limits how at-will status can be modified (i.e., not by oral or implied promises) will help avoid surprise contract claims.
Conditional Offers: Laws and court rulings have resulted in a virtual requirement for certain terms and conditions to be put in writing. If an offer is contingent upon any condition, failing to state it in writing may preclude the employer from demanding it. Significant and common contingencies include:
Applicant’s Criminal History: California law prohibits seeking any information regarding an applicant’s criminal history, except as a post-offer condition. Any employer who wants to review such information may need to prove this was properly handled. As a practical matter, this means stating this in writing as a contingency of the job offer. (Note: There are additional legal requirements related to checking a person’s criminal history, credit or other background matters).
Medical Fitness: There are similar prohibitions and requirements for a pre-employment medical exam, including drug screens. Mandatory Arbitration: If your company requires employees to arbitrate all disputes, this is best presented in the written offer letter along with the entire arbitration package. Returning the signed arbitration agreement (after time to review it) should be a stated condition of the job offer.
Other Benefits to the Offer Letter: If the position includes any sort of commission, California law requires a written agreement regarding the terms of the commission plan, which should be in the written offer. Additionally, if the offeree previously worked for a competitor, it is a good idea to include a representation by the offeree that there are no agreements with another employer that would prevent employment with you. The letter should instruct the new employee not to bring any confidential information from those prior employers to your company.
Final Thoughts: Even if you want to contact someone to say they got the job, you should make clear that only the formal, written offer letter is the valid offer. Imagine if your new hire quit a current job based on a casual email from you, only to later find out your offer had challenging contingencies, or a problematic work schedule? The offeree should also have sufficient time to review the written offer and be required to accept the offer by signing and returning it by a specified date that is prior to the start of employment.
A carefully thought-out, written offer letter will help prevent both legal and practical problems. A form offer letter is a good starting point, but may not properly address all circumstances and would need to be modified to fit the specific position. A qualified employment lawyer can assist with developing a basic template for your company and with finalizing details for specific situations.
For further information, contact your LightGabler attorney or call our main line at 805.248.7208.