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Offer Letters: This Should be Simple, Right?

Stack of Paper

It should be simple to just write a letter offering someone a job. Unfortunately, that is not the case. While offer letters may not be required by law, employers often wish to set out terms and conditions of employment in an offer letter. Usually the employers’ reasons for doing so fall into one of two categories. First, they wish to entice the individual to accept the offer. Second, they want to state their expectations of the potential employee so that the record is clear on what the offered job entails.

Trouble may lurk in overly detailed offer letters, which may create unintended contractual arrangements. In the jurisdictions where at-will employment is presumed in the absence of a contract, an offer letter that suggests a particular term of employment or future guarantees, or fails to clearly state that the employment is “at-will,” may effectively remove the employee from the ranks of those employed at-will.

However, there are some details that are good to include in offer letters. If the employer intends for the employee to sign a separate noncompete agreement, it is a good idea to mention that fact in the offer letter. Indeed, some state laws now require as much. And if the new employee previously worked for a competitor, it is a good idea to have the employee represent that he has no agreements with a current or prior employer that would prevent him from working for you and to agree that he has been instructed by you not to bring any confidential information from those prior employers to his new employer.

These details beg the question: should you ask the new employee to sign his offer letter? Some would argue that a signed offer letter smacks of a contract, although ultimately whether an offer letter creates certain contractual rights will depend on the language of the letter itself. To the extent that the offer letter contains warranties from the new employee that he is under no restrictions from prior employers and is not bringing confidential information, a signature could be helpful.

The bottom line is that offer letters are complicated. A single form offer letter may not properly address all circumstances. Rather, some careful thinking needs to be done before the offer letter is sent, because offer letters are just not that simple.

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This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.