Starting Up – Set Up Part 3

September 11, 2017

Authored by: Bryan Cave At Work

Part One of this series focused on several of the federal and local filings and registrations that new employers will need to make in preparation for their first hires. In Part Two, we dove into drafting job descriptions and their use in determining whether a position should be classified as exempt or non-exempt under federal and local wage and hour laws. In Part Three, the final post in this three-part series, we’re examining the specifics involved in extending an employment offer. Whether it’s your first time or your twenty-first time, making a job offer is exciting−you’ve finally found your ideal candidate and are looking forward to a bright future together!  But the start of the employment relationship also starts the clock on a number of employer obligations and opportunities.

For example, certain states require employers to provide their employees with written notice of certain job-specific information at the time of hire.  This information can include notice of the employee’s rate of compensation (both regular and overtime, where appropriate), notice of the employer’s proper legal name, notice of the appropriate pay days, and notice of any commission plans in which the employee may participate.  Most of these notice obligations are typically codified in the appropriate state Wage Theft Prevention Act.

Additionally, in most states the signing of a covenant not to compete at the inception of the employment relationship will provide sufficient consideration to support such an agreement.  In contrast, in many states, continued employment (i.e. signing such a covenant after the start of the employment relationship) will not be sufficient consideration.  As such, to the extent an employer wishes for its employees to execute restrictive covenant agreements, it is a best practice for employers to condition their offers of employment on the execution of such agreements.

Finally, the offer letter is perhaps an employer’s greatest opportunity to memorialize the terms and conditions of the parties’ employment relationship.  Nearly every jurisdiction within the United States recognizes a default employment relationship status known as “at-will.”  Under the at-will doctrine, both the individual employee and the employer are permitted to terminate the parties’ employment relationship with or without notice and with or without cause, provided the reason for the termination is not discriminatory.  Unless extending an employment offer for a defined period of time, all of an employer’s employment-related documents, including offer letters, should reaffirm the at-will nature of the employees’ employment.

In addition, employers are wise to include the following information in an offer letter: the relevant title/position, full time/part-time status, start date, rate/frequency of pay, manner of pay, and any other conditions of employment, such as compliance with federal immigration law obligations (completion of Form I-9), successful completion of background and reference checks (if used), and the execution of a restrictive covenant agreement (if appropriate).  The letter should request that the employee execute and return the letter to the employer if s/he agrees to the terms identified therein.

With executed offer letters in hand, your startup will be well on its way to becoming a booming business!

Bryan Cave LLP has a team of knowledgeable lawyers and other professionals prepared to help employers assess their obligations when starting a business and hiring employees. If you or your organization would like more information on best practices for hiring employees or any other employment issue, please contact an attorney in the Labor and Employment practice group.

Many thanks to our former colleague, Lily Kurland, for contributing this article to our blog.