Question: My company is hiring. What should I include in the offer letter?
Answer: First of all, congratulations on expanding your startup, whether it’s employee number two or employee number 200. When startups begin hiring, they are often moving so quickly that nobody formalizes the beginning of the employment relationship. Many states now require employers to notify new hires in writing of their rate of pay and regular pay day. For example, in Minnesota, employers with 10 or more employees must give employees a written and signed “agreement of hire,” which sets forth the date of the agreement, the date employment begins, the employee’s rate of pay or commissions, number of hours, and rate of pay for overtime hours. Other states have similar statutes. This information need not be included in an offer letter; however, doing so is a quick and easy way to satisfy those requirements.
So, even though it’s not required in every state, startups should document the beginning of an employment relationship with a simple offer letter. The offer letter should include some key terms and conditions of employment, such as:
- Employee title
- Start date
- Rate, manner and day of pay
- Hours of work
- Eligibility of benefits, if applicable (which should be detailed in a separate plan)
- Conditions of employment offer (for example, I-9 compliance, complete background check, non-confidentiality and non-compete agreements)
- Confirmation that employment is at-will
A job offer letter also gives you the opportunity to outline key job responsibilities and highlight relevant details about your startup and its culture. In the event a candidate requests to negotiate salary or other terms, the job offer letter serves as a critical anchor in those negotiations. Choose your terms carefully.