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December 11, 2017

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Important Components of an Offer Letter

Are offer letters important? Hopefully, you answered "yes" to that question. Why are they important? Offer letters document wages and salaries as well as other information important to a good start for an employer and a new employee. Should offer letters be written for other than salaried positions? Yes. It is a good idea to document the offer with all employees. Items that should be documented in an offer letter include:

Job Title: What will be the employee’s title?

Start Date and Time: This information is important so there is no misunderstanding regarding the start time.

Dress Code: It is nice to inform a new employee of the expectations in this area. This is a good opportunity to document proper attire in a plant (i.e., no inappropriate t-shirts) or office setting.

Salary or Wage: How often will the new employee be paid? State the salary or wage on that basis. For example, if the pay is hourly, state an hourly rate. If the pay is weekly, state a weekly rate. By listing the salary or wage in the smallest increment, employers can avoid some potential problems that may arise. If an annual rate is stated, it may be interpreted as an implied contract.

Additional Compensation: Will the employee be eligible for a bonus? Will the employer provide additional compensation for reaching certain goals? Detail that information in the offer letter.

Vacation: Is the employer providing vacation time outside of the normal policy? Again, detail that in the offer letter. If the employer is not granting time outside of the normal policy, indicate that the vacation is within the guidelines set out in the handbook.

Benefits: If the employer has a benefits summary, attach that to the offer letter. If no summary has been given to the employee, detail the benefits such as health, dental, and life insurance. Indicate when the benefits will begin.

Additional Considerations: Detail relocation assistance, if it is offered. If the employer is providing a laptop computer, cell phone, or any other equipment, list it here.

Post-Offer Drug Screen: Indicate the offer is contingent upon the successful completion of the drug screen.

I-9 Documents: Provide notice to the new employee of what documents are acceptable and the time frame to produce them.

Additional Documents: Does the employer ask employees to sign other documents, such as a confidentiality agreement or a noncompete agreement? Include any other documents with the offer letter so the employee has time to review them prior to the first day.

Finally, do not forget to include an employment at-will statement so that the individual’s employment status is clear.

These are important components to a good offer letter. Consider using this as a guide when developing offer letters.

-Kathy Long
Reprinted with permission from the October 2002 issue of the Human Resource Digest.©2002 MRA-The Management Association, Inc.
MRA-The Management Association, Inc., is a not-for-profit employers’ association founded in 1901, and currently serves nearly 2400 member organizations throughout Wisconsin, Illinois, and Iowa. MRA’s mission is to improve employer-employee relations through information, training, and business solutions. For more information about MRA, visit www.mranet.org.