Instead of relying on the old job offer letter you have a lawyer review in the 1990’s for your next new hire, it is recommended to review the offer letter to ensure it is up to date with current law. Here are the five terms employers should consider to include in job offer letters:
1. At-will designation
An offer letter should clearly set forth that the employee is being hired as an at-will employee, and that employment may be terminated by either party with or without notice at any time. Under California law, it is presumed that all employment is terminable at-will. California Labor Code section 2922 provides: “An employment, having no specified term, may be terminated at the will of either party on notice to the other.” The at-will doctrine means that the employment relationship can be terminated by either party at any time, with or without cause, and with or without advanced notice. Even though the law presumes all employment is at-will, it should be clearly set out in the offer letter as well.
2. Description of the job
It is a good practice to have job descriptions for all positions in a company. If the company does not have a job description, be as detailed as possible about the duties of the position the applicant is being hired for in the offer letter. This will help avoid potential disputes about whether certain duties are essential functions of the position for reasonable accommodation purposes, and could also be evidence in defending claims that the employee was misclassified as exempt. The job offer could also set forth whether the position is non-exempt or exempt, and have the duties reflect the designation.
3. Integration Clause
Place language into the offer letter that the terms set forth in the letter supersede any other offers or promises. This type of term is referred to as an integration clause. Including an integration clause into the offer letter will assist in countering any claim later on that other promises were made to the employee at the time of hire and the employer failed to comply with those promises.
4. Set forth commission terms if employee is eligible for commissions
Since January 1, 2013, all commission agreements must be in writing and must be signed by the employer and employee. Employers should review the offer letter to see if the offer letter meets these requirements. If it does not, or the commission structure is too complex to include in the offer letter, commission agreements still must be set out in a separate writing and signed by the employer and the employee. Employers should approach the issue of commissions carefully to ensure that the agreement defines key terms. In addition, in the case of non-exempt hourly employees, employers must be careful on how the commissions could affect the calculation of the regular rate of pay for overtime purposes.
5. Confidentiality provisions
Set forth if your company will require the employee to enter into a confidentiality agreement. If possible, attach the confidentiality agreement and have the applicant sign the agreement at the same time the job offer is accepted. The offer letter should also contain language to the effect that the applicant does not have any agreements with prior employers that would interfere with their duties and that the applicant will not use any confidential information learned at prior positions.