It is tough trying to find people who fit a certain job description, so when you do find one, it is best to send them a job offer letter immediately. But how do you write that letter? Read on to find out the answer.
Difference between exempt and non-exempt employees
People are often confused about the differences between exempt and non-exempt employees, so here is a simple breakdown of each type.
What is an exempt employee?
This type of employee is excluded from minimum wage, overtime regulations, and other rights and protections that employers offer to non-exempt employees. While these people do not have most of the protections that other employees have, they are given a set salary by their employers instead of being paid by the hour.
What is a non-exempt employee?
A non-exempt employee gets paid at least minimum wage for every hour that he works. He also earns overtime pay of not less than one-and-a-half times his hourly rate for any number of hours that he has worked beyond the standard 40 hours a week.
What information should be in a job offer letter?
One of the best ways to make sure that your company keeps growing and becoming more successful is by hiring the right people. So, when it comes to hiring, you have to make sure that the offer letter you hand out is easy to understand as well as enticing. Make sure that your job offer letter includes the following key terms:
State the position that you would like the lucky candidate to accept.
Name and position of the supervisor
Include the complete name and job title of the supervisor the candidate will be reporting to.
Full-time or part-time schedule
You have to state whether the position is either a full-time job or a part-time one. Specify the basic work schedule—when the employee should come in and when the employee can clock out of work.
Exempt or non-exempt classification
This is very important as the Fair Labor Standards Act (FLSA) requires that you classify employees as either exempt or non-exempt. You have to comply with the requirements in order to avoid any penalties as well as claims for any unpaid wages. If you do not know how you should classify the position that you are offering, then you can always ask for legal counsel to tell you how the law in your country or state would classify the job. Plus, it will teach you how to shape the job requirements if ever you wish to reclassify it in the future. So, whenever you hand over a job offer letter to an exempt employee, you should clearly state that they are not eligible for overtime pay, minimum wage, and other protections and regulations that non-exempt employees benefit from. Offer letters to non-exempt employees should state that they must record the hours they have worked and that they will be paid for any overtime work they do. The letter for non-exempt employees must also include the scheduled meal times and breaks.
Be sure to include the employee’s duties in the job description. You also have to state that whatever is in the job offer does not contain the exclusive and complete list of duties the position is required to fulfill. This way, these duties can still be subject to change and you can switch them according to what you need the employee to do.
Briefly describe the terms of any equity grants, but be sure to also state that the grant will be subject to the terms and conditions of your equity plan, as well as that of the employee’s grant agreement. If a performance-based vesting is used, then you have to describe and clarify the performance criteria.
Bonuses or commissions
This is something that the possible employee is going to look forward to, so clearly describe the terms of any bonuses and commissions (e.g. target amount, performance criteria, payment terms, etc.) he is eligible to earn. If you already have a formal bonus and commission plan that is set up in your business, then all you have to do is simply refer to this in the letter. The offer letter should make clear which forms of incentive compensation will be assessed and how it will be awarded by the company to the employee.
For a non-exempt employee, describe how he is going to be paid for every hour he works. For an exempt employee, state the amount based on his annualized salary rate. A lot of companies make sure that they state in the offer letter that compensation may be adjusted from time to time, at the company’s discretion.
Briefly describe all of the benefits that an employee will receive (e.g. medical insurance, vacation days, sick leave, holidays, etc.) or, alternatively, state that the employee will be eligible for all the standard benefits offered by your company. The offer letter should also inform the employee that benefit plan details are available for review.
Be sure that the employee knows this so that he or she will understand that the rules of the workplace have to be followed. You have to state that the employee will be subject to all of the company policies and procedures. You also have to state that these policies and procedures, even the ones that can be found in the employee’s handbook, will be subject to change at the company’s discretion.
If the employment is at-will (as typically recommended), then you should explain in the job offer letter that the company has the power to terminate the employee at any time, with or without cause or advance notice. You should avoid language that will imply how long the employee will work for your company or any other statements which imply that you look forward to working with the employee for a long time.
Confidentiality and invention assignment agreements
All employees should be expected to sign a confidentiality and invention assignment agreement as a condition of employment. Make sure that this is enclosed with the job offer letter.
Prior employer confidential information and restrictions
You have to state that you prohibit the employee from sharing any confidential information from previous employers or from any other third parties. You have to make sure that your company is fully protected by doing this. You will also need to disclose all of the employee’s restrictions. These would include non-competition or non-solicitation agreements of the candidate’s previous employer.
State in the offer letter that the candidate for employment will be subjected to a background check or reference check and will need to provide documents that show he is allowed to work in the country where your company is located. This is added protection to verify that he is who he says he is, and they prevent you from hiring someone who might cause problems for your company.
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