So you’ve found the perfect candidate – congrats! Now it’s time to seal the deal with a snazzy offer letter that gets the newest member of your dream team to sign on the dotted line. Here are some of the elements you should consider when crafting the ideal offer:
1. Job title
Include the title of the role and a brief description of what’s expected. Are there things that need to be part of their role? Be sure to write those down so that you can always point back to it if there are any questions in the future.
Outline their total compensation, which includes their salary, bonuses, any equity they’ll be offering, what the commission structure is like, and any other compensation structure that’s important for them to understand. For hourly employees, it’s a best practice to use the hourly rate in your offer letter, rather than an annualized version of it. For salaried employees it is best practice to show their annual salary and how much they’re paid each pay period (weekly, biweekly, or even monthly).
3. Pay schedule
Be sure to include how often they’ll get their paycheck, and any bonus cycles if bonuses are part of their compensation.
List out any benefits they’ll be able to take advantage of, like health insurance or a 401(k) plan. Do you offer smaller benefits, like paying for employee lunches or paying cell phone bills? Wrap those in as well.
5. Work logistics
Don’t forget the important details: Start date, office location, and work schedule. Also, include any logistics specific to your workplace.
6. Offer logistics
When does the offer expire? And who should they reach out to if they have any questions? Break it all down here.
7. Reporting details
This is an important one: Write down who their manager will be, the title of their manager, as well as anyone they will manage.
8. Contingencies (if any)
If your new hire has to sign a non-disclosure agreement or pass a drug test or background check (credit, criminal, driving record, employment or otherwise) in order for the offer to be valid, make sure that’s clearly stated. Also, include that hiring is contingent upon the new employee completing all of the new hire paperwork.
9. Signature page
To accept the offer, you’ll need to add a space where the employee can sign to agree to the terms outlined. You can do this by having them print and sign a copy or by sending them a secure version through an e-signature tool, like DocuSign or HelloSign.
Other important details
- At-will status: Do you want your offer letter to be seen as a binding contract? If not, make sure you include your employee’s at-will status. Unless you live in Montana, you probably live in an at-will state. (If you’re unsure, check with your local state employment agency.) This means that in these states, companies can end their employee relationships at any time without having a clear reason. If your employee is at-will, make sure you include this in the offer letter.
- Exempt or nonexempt status: Your employee will also either be stamped with exempt or nonexempt status, which you’ll want to add in their offer letter. Exempt folks are typically salaried and therefore don’t receive overtime pay and may not be eligible for minimum wage. On the flip side, nonexempt employees are eligible for these things and are often hourly.