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What to Include in Your Offer Letters & How to Avoid Compliance Risks
Thursday, Jul 05, 2018

The recruiting process is complex and dynamic, especially when it comes to the critical offer process. Lack of efficiency this late in the recruiting process can result in compliance risks, lack of professionalism and increased time to hire.

A poor offer experience can even lead to candidates withdrawing from the application process, or accepting an offer from a competitor. Losing candidates in the offer stage means it takes longer to fill roles, and unfilled positions ultimately hinder an organization’s ability to hit business goals. In fact, more than two-thirds (67 percent) of employed American adults agree that the application, interview or offer process would make or break their decision on whether to take a job, according to a recent survey by iCIMS.

Large, multi-division, multi-national and global organizations often have complex nuances to manage for the offer process making it even more important to evaluate their process and identify pain points and risks.

Here are just a few examples of what could cause complexity in an offer process:

  • High-volume hiring
  • Exempt vs. non-exempt employees
  • Hiring out-of-state
  • Complex approval process
  • Clause management
  • Salary vs. hourly employees

What Should Be Included in an Offer Letter

Formal offer letters provide an opportunity to solidify expectations and explain key details of the positions, salary and benefits offered. Key terms of employment to include in an offer letter include:

Job Details, Compensation and Benefits

  1. Position/Title
  2. Name/Position of Supervisor
  3. Full-Time/Part-Time Schedule
  4. Exempt/Non-Exempt Classification
  5. Duties
  6. Compensation
    1. Base Salary (Exempt Employees)
    2. Hourly/Overtime Rates (Non-Exempt Employees)
    3. Bonuses/Commissions
  7. Benefits
  8. Compliance with Employer Policies/Handbook

A Statement of At-Will Employment

At-will employment means that the company or the employee can terminate the relationship at any time. Not only should you state this in your offer letters, but you should avoid any language that implies a fixed time period of employment.

  • Avoid Language That Implies a Fixed Term of Employment
  • Avoid Language That Implies the Offer Letter is an Employment Contract
  • Include Language Expressly Stating the Relationship is At Will

A List of Any Applicable Contingencies

To provide clarity and align employee-employer expectations, it’s important to include if employment is contingent upon certain conditions such as:

  • Criminal Background/Credit Check
  • Passing a Drug Test
  • Government Contract Award
  • Having/Obtaining/Maintaining a Security Clearance
  • Signing a Non-Compete or Non-Disclosure Agreement

Additionally, it’s important to do your research on any applicable employment laws for your state and industry as this might affect the language you include in your offer letter. For example, California and New York require an additional wage notice to non-exempt employees.

A Manual or Disjointed Offer Process Leads to Mistakes & Compliance Risks

Many companies today handle their offer letter process by using multiple systems and tools or managing everything manually, which is often time-consuming and difficult for recruiters.

A manual or disjointed process can also easily lead to errors like using a previous template but not updating the key details like the candidate’s name and salary.

In addition to the time it takes to go through a manual offer process, system administrators are often left with the burden of creating complex processes that need to be documented, maintained and rolled out across the organization via training and change management programs.

Beyond the inefficiencies lies compliance risks. This is an even bigger concern for large organizations that hire nationally or globally, as they often have hundreds of different offer letter templates and clauses for new hires. Without a streamlined process, they risk sending the wrong template or clause going to the wrong candidate.

Additionally, without a centralized process, it‘s difficult to lock down who can see varying levels of information. This typically involves the use of 3-5 tools between recruitment software, email, Microsoft Word, and sometimes Excel. Without the right system in place it’s difficult to manage the user permissions for individuals within the company, leaving your candidate’s data vulnerable.

The Offer Process is an Extension of the Overall Candidate Experience

After a job offer is made verbally, if it takes a long time to get the formal offer letter to the candidate this leads to a poor candidate experience and possibly losing out on best-fit talent.

Evaluate your company’s own offer letter process and the pain points you are experiencing. If your company’s current offer letter process is complex, time-consuming and unprofessional, consider the following checklist to create a more scalable, consistent and compliant process around this critical stage of the recruiting lifecycle.

  • Reduce the risk of human error and send out professional-looking letters
  • Create a great candidate experience and get offer letters out to candidates faster so you don’t lose them to competition
  • Reduce compliance risks with better automation, template management and clause management
  • Establish better management of permissions and access for user groups and individuals

With unemployment numbers coming in at the lowest rate since December of 2000, employers are now scrambling to fill positions as they begin to grasp the impact a candidate’s interviewing and hiring experience can have on other aspects of their business. Today, it’s more imperative than ever to make the entire hiring process as positive and easy experience as possible.