National, Inc. needed to hire a customer service representative.
It advertised for applicants, interviewed and evaluated the
applicants, and decided to offer the position to one of the
applicants. This was a three-month process. To complete the
process, National, Inc. drafted and sent the applicant an offer
The offer letter may be a contract. It may bind National, Inc.
to promises, or may not address oral promises upon which an
applicant relied when quitting his previous employer, and becoming
employed by National, Inc. With the wrong wording, the applicant
may claim that National, Inc. promised employment for a specific
period of time, made oral promises, did not protect its
confidential information and misclassified the applicant as
entitled to overtime pay. Therefore, National, Inc., as well as
every company, needs to review its offer letter to protect itself
Other than the new employee's job title, supervisor and
start date, every offer letter should have the following essential
At-Will Employment: At-will employment is the most
common form of employment. Both the company and employee may end
employment with or without cause, at any time, and with or without
notice. At-will employment gives the company the most freedom to
make decisions about its employees' status as an employee,
wages, benefits and working conditions.
Annual Salary/Hourly Rate: If a company incorrectly
states the annual salary, the offer letter may create an employment
agreement for a specified period of time.
Exempt/Non-Exempt Status: Every employee is either
entitled to earn overtime pay or receives a salary and no overtime
pay. Companies must examine each employee's duties and
categorize the employee as either exempt or non-exempt. Identifying
the category will avoid confusion and notify the employee of his
entitlement to overtime pay.
Intellectual Property: During the course of their
employment, almost all employees will learn the company's trade
secrets and confidential information. To protect the company from
the disclosure of its trade secrets and confidential information,
every company should require employees to sign a separate
confidentiality agreement as a condition of becoming employed. In
addition, companies may want to ensure that new employees do not
disclose the trade secrets and confidential information of a
previous employer. This will protect the company in case of a
lawsuit filed by the employee's previous employer.
Entire Agreement: After becoming employed, an employee
may contend that the company made oral promises. Therefore, an
offer letter should state that every agreement between the new
employee and company is listed in the offer letter.
Companies should not treat offer letters as a formality. Despite
its short length, it may create contractual promises. Its language
needs to protect the company from liability. Therefore, companies
need to carefully craft offer letters to avoid disputes and
establish important ground rules for the relationship created
between the employee and company.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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