Wise words from both The Godfather and recruiters everywhere: Give them an offer they can’t refuse. One of the most exhilarating parts of the hiring process is telling your new hire you want them to join your journey. To make that part happen, you should send them something called an offer letter. An offer letter is a written document employers send to candidates that contain the offer, or what they’ll get, if they decide to accept the role. In this section, we’ll tell you what to cover in your letter, and then we’ll give you a template so you can just fill in the blanks and send that letter on its merry little way.
First, it’s important to note that technically, offer letters aren’t required when you bring new people on board. Despite that, most employers send them anyway because it’s a good way to reinforce what was discussed in the verbal offer. And yes, it is recommended that you make a verbal offer first. No one should find out they got a job by finding a letter or email in their mailbox. It also helps to serve as a paper trail in case employees want to negotiate the details inside the offer, like compensation.
What to cover in the offer letter
You should be sure to include any of the details that help define the role. For example, consider including the following things:
- Job title: The title of the role and a brief description of what’s expected.
- Compensation: How much they’ll be making on an annual (for salaried employees) or on an hourly basis (if employees are hourly), any equity being offered, bonuses, what the commission structure is like, etc. Use this space to really explain what their pay will look like. It’s no good if employees feel like they were unclear about what they were being offered. For hourly employees, it’s a best practice to use the hourly rate in your handbook (rather than an annualized version of it). Courts view an offer letter as a contract, and employees have been known to sue if their actual gross wage doesn’t add up to what was stated in the offer letter.
Side note: Take the 10 percent rule to heart. According to recruiter Jorg Stegemann, most candidates expect a 10 percent pay bump whenever they switch jobs.
- Pay schedule: Weekly, biweekly, bimonthly? Explain how often they’ll get paid. It’s often helpful to include an employe’s annual salary along with the exact amount they’ll be paid during each pay period. So if someone is earning $75,000 a year, you would write that they’d earn $2,884.62 every biweekly pay period.
- Benefits: Talk about any benefits they’ll be able to take advantage of, like health insurance or a 401(k) plan.
- Work logistics: Start date, office location, and weekly schedule.
- Offer logistics: When does the offer expire? And who should they reach out to if they have any questions? Break it down here.
- Reporting details: Who their manager will be and the people (if any) they will manage.
- Contingencies, if any: If your new hire has to sign a non-disclosure agreement or pass a drug test or background check in order for the offer to be valid, make sure that’s clearly stated.
- 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 DocuSign or HelloSign.
Sure, you want to make sure all the basics are inside your letter. But it’s also important to celebrate the moment that you’re really talking about. Don’t be afraid to be excited and cheerful in your tone — this is a happy occasion after all, and you want to convey that to your candidate. Reiterate your vision and how that person’s role plays a part in bringing that dream to reality.
You want to make the person you’re writing this for feel wanted. Don’t just cross off the basics — include specifics on how important they will be to your team.
And finally, make sure you cross your t’s and dot your i’s. Include the legal information necessary to keep things clear and protect either one of you from any misunderstandings.
- 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 typically hourly. You can read more about the difference between the two here.
Remember what you loved about the candidate you interviewed, break out your laptop, and start hashing out your offer letter. With these tips up your sleeve, you’ll be ready to write a note that down to the letter, your employees will be elated to receive.