Now here’s a HR function we hadn’t even considered as a legal minefield: Offer letters. But attorney Renee Inomata set us straight.
Inomata, partner in the law firm Burns & Levinson, warns that “that warm and fuzzy moment” in which you compose an offer letter to a prospective employee could bind your company to obligations you hadn’t anticipated — like creating an employment contract.
Here’s a summary of the tips she outlined in an item on Lexology.com:
- Don’t state the new employee’s compensation in yearly terms. Instead, describe it as $XX per week, which would amount to $XXX for a full year.
The danger: A promise of a yearly salary could mean you’d be legally obligated to pay the person for a full 12 months — even if you wanted to part ways with him/her in six months.
- Never use the words “guaranteed” or “entitled” — unless they’re preceded by the word “not.”
- Don’t get too specific about the job’s duties. It’s fine to describe the general responsibilities the job entails, Inomata says, and who the person will report to. But things change fast in companies today, and you don’t want an employee coming back to you saying, “Hey, you never said I was going to have to do (insert unwanted responsibility here).”
- Make contingencies clear. If the hire’s not official until the candidate has fulfilled some requirement — like signing a non-disclosure agreement or passing a drug test — make that crystal clear in the offer letter.
- Don’t ask the new hire to “accept the terms” of the offer letter — if they officially sign off on those terms, a court could consider the document a formal contract. As a matter of fact, it’s a good idea to include a sentence explaining that “this letter is for informational purposes only, and is not intended to be a binding contract.”