Texas does not require employers to provide a prospective employee with a formal offer letter. Many employers choose to do so to avoid misunderstandings and clarify some of the important aspects of the proposed employment. For employers that use offer letters, here are a few items that an employer should consider including in every offer letter.
- Identify the job title, work location and start date for the proposed employment.
- Add an at-will disclaimer. If the employment is intended to be at-will, advise employees in writing of that fact and specifically disclaim any intent to create any actual or implied contract.
- Set forth the manner in which the employee will be compensated. For example, if the arrangement is an hourly arrangement it may be sufficient to say that the employee will be paid $20.00 per hour. If the compensation arrangement is a salary; state the salary in a weekly or monthly amount rather than on an annualized basis. If the employee will be paid commissions consistent with a commission plan, make sure that you say so. Tell the employee that he or she will be paid consistent with the terms and conditions of the employer’s commission plan and state when that plan will be provided to the employee. There is a significant amount of litigation over commission payments when there is no written commission arrangement or the commission plan is vague, ambiguous, or otherwise poorly drafted.
- If the employee is being hired from a competitor, confirm that the employee is not subject to any restrictive covenants or noncompetition agreements that would prohibit the anticipated employment. If the prospective employee has no such agreements, have the employee represent, in writing in the offer letter, that he or she is not bound by any covenants not to compete or restrictive covenants.
- Expressly advise the employee not to bring any information from his or her former employer. Tell the employee that your company doesn’t need that information and doesn’t want such information. Furthermore, specifically instruct the employee that he or she is not to use or disclose any confidential, proprietary or trade secret information from the old employer in furtherance of the new employment.
- Have the employee sign, date and return the offer letter. Under Texas law, a signed acceptance is not necessary to show acceptance (only knowledge of the terms and then the beginning of employment). However, a signed acceptance is very persuasive evidence that the employee knew and accepted the terms.
These drafting tips may help employers and prospective employees avoid disputes over offer letters and the resulting employment.