“Joe is angry because he said that he was told that he’d be making $18.00 an hour. I told him that we don’t start anyone at $18.00 an hour and that we’ll pay him the starting rate we pay everyone, $17.00 an hour. Now Joe says he’s going to sue us. Help!”
“No problem,” I said. “Just send over a copy of his offer letter. That should clear this all up.”
Pause for painful silence on the other end of the phone.
“Are you still there?” I asked.
“Yes, I’m here. Um, well, there is no actual offer letter. But I know for sure what he was told.”
This is a conversation all too common in my business. The details and names change, but the story is the same: a disagreement about the terms and conditions of employment and nothing in writing.
Here’s the deal. With no offer letter, the burden of proof is on you.
Plain and simple. So, when there’s a disagreement and you end up with a claim, you can guarantee that most courts you’ll end up in will favor the employee first. Why? Because the system is designed to keep people employed. Not a bad system, unless you’re an employer who’s getting taken advantage of because they didn’t put their terms in writing.
There is one incredibly simple way to fix this. You guessed it: the tried-and-true offer letter. This fabulous document provides two primary benefits to help you sleep at night:
- Clear and concise understanding and future protection for the organization.
- Clear and concise understanding and future protection for the employee.
Now, don’t just run out and grab the first offer letter you see on the internet, although admittedly, there are some great ones out there. Be sure you have one that is compliant and meets your needs.
I realize that I keep saying offer letter when in reality, I mean offer letters. You need two: one for exempt (salaried) employees and a second for non-exempt (hourly) employees.
Here’s what needs to be in these magic documents. I’m going to warn you in advance, some of the items on the list may seem ridiculously obvious. They are. But each and every single one is on the list because they were missing on an actual offer letter that I’ve audited at some point in my career. I can’t make this stuff up.
So, here are Christine’s top 10 items that every offer letter should have:
- Name of employee — No joke! I’ve seen it. Or rather, not seen it, as the case may be.
- A date the offer letter is being written — This begins the timeline should you ever need to provide documentation of when you decided to make the offer.
- The effective date of hire — One of the most critical data points. This makes sure everyone knows the day that pay begins, which is often a point of dispute.
- The time they need to report to work on the first day — This might seem silly, but maybe you don’t want your new employee there at 8:00 a.m. on Monday if you haven’t had your first cup of coffee. Or, if you have varying work schedules, don’t assume they know which one they are starting on. Just make it crystal clear.
- The job they are being hired for — Yep, employees do actually say yes without really knowing the situation. Make their job title clear.
- Reporting structure — Often, a candidate is interviewed by many individuals, leading to confusion about their boss. Put it in writing.
- How much the employee will be paid:
- If non-exempt (hourly), compensation should be listed as an hourly rate.
- If exempt (salaried), salary should be listed as a weekly rate rather than an annual amount. A yearly rate can be problematic if the employee leaves before the end of the year.
- Employment requirements, such as letting them know that they will be completing an I-9, details on background or drug testing if applicable, the dress code if that’s an important detail, etc. — This eliminates surprises to make the first day more efficient and comfortable for both you and the employee.
- Benefits — This is optional but can be helpful.
- Date to return the offer letter — Don’t let an offer letter sit out there indefinitely. It must have an expiration date. Let’s play this one out: You send an offer letter with no specific deadline to return. You don’t hear back from the candidate for two weeks, despite trying to reach them. You assume they moved on and reach out to the second candidate and offer them the job. The second candidate accepts the job. Candidate number one comes back on week three with the signed offer letter. Now what? Time for 1-800-Call-A-Lawyer.
A few simple details in a well-worded offer letter will provide an enormous amount of support for both the organization and the employee. Implementing the practice of standardized offer letters for every employee is a great organizational safeguard, whether you have 10,000 employees or just one.