Making a Job Offer

Making a job offer sounds like a simple process, but the stakes are high, and it is possible to make costly mistakes. This article tells you everything you need to know about preparing and making a job offer.

By David Bradshaw, Chief Executive Officer
17th March, 2023
David is a highly experienced consultant specializing in business strategy, lean operations/automation, and human resources. He holds a Master's degree from the University of Cambridge, UK, and an MBA from Quantic School of Business and Technology.

The search is over. You have perused reams of resumes, weeded through applicants, conducted countless interviews, and finally found the candidate with the right blend of skill and cultural fit that is perfect for your company. So, what's next?

The Job Offer

Making a job offer is a critical step in the hiring process. It can make or break the chances of securing the right candidate for the job. Once you have agreed internally to move forward, call the candidate to notify them of the offer. Begin by giving them the good news. Discuss the details of the job offer and ask for feedback.

Avoid overstating wages, benefits, or other terms and conditions of employment to attract the candidate. If the candidate is satisfied with the details, ask for verbal acceptance and assure them that a formal offer of employment will be sent shortly.

The Offer Letter

Although not required by law, providing a letter that outlines the job offer is considered best practice. Following up on a verbal offer with a written one not only sets expectations for the new employee, but also clarifies any matters discussed during the interview phase. In many states, employers must notify new hires of their rate of pay and regular payday in writing. By always providing an offer letter, you can ensure that this requirement is met.

A poorly written offer letter can lead to confusion and miscommunication between the employer and the employee, resulting in frustration and dissatisfaction on both sides. Therefore, it is crucial to get the job offer right the first time.

View the offer letter as a formal request inviting the candidate to join your company as an employee. Start the offer letter with welcoming language and congratulate them on their new position. This sets a positive tone for the rest of the letter and shows that the company is excited to have a new employee on board.

The offer letter should include:

  • job title and who the position reports to
  • the start date
  • pay rate and pay schedule
  • any non-discretionary bonuses, commissions, or other compensation
  • location and working hours
  • full-time/part-time status and exempt or non-exempt classification
  • any benefits offered
  • whether the offer is contingent upon background/drug screening results
  • compliance with immigration law to complete a Form I-9
  • any other terms and conditions of employment, and
  • a date by which the applicant must respond to the offer

The Fine Print

Employers must be mindful of how they describe the salary in an offer letter to avoid creating an implied length of employment. If the employer states the pay as an annual salary, it could suggest that the position is intended to be for at least one year. Instead of stating that an offer is for a base salary of $50,000 annually, break it down to “$2,083.33 paid on a semi-monthly pay schedule less applicable taxes and deductions.”

Avoid language that classifies the candidate as a “permanent” employee or guarantees length of employment (unless the job is a temporary or fixed-period project). Additionally, do not include verbiage that makes promises about future earnings or discretionary bonuses. Discretionary bonuses are given at the employer's discretion and are not guaranteed, meaning the employer can choose to give the bonus or not. Non-discretionary bonuses, on the other hand, are guaranteed and typically based on specific criteria such as meeting sales goals or other performance metrics. Similarly, do not guarantee any benefits that are subject to change.

To avoid an unintended contractual commitment with your offer letter, include a statement that the employment is at-will. Employment at-will means that the employment relationship may be terminated by the employer or the employee at any time and without reason. However, it is important to check your state and local laws, as there has been a trend toward implementing laws that provide greater protection for workers. For instance, New York City and Philadelphia have enacted laws that require employers in certain industries to provide a "just cause" for terminating their employees. This law applies to fast-food workers in New York City and parking employees in Philadelphia. Meanwhile, Montana is the only state that requires a just cause for termination. Although, Montana employers can still fire workers without just cause during a 12-month probationary period.

Employers must be aware of the potential legal implications of offer letters and ensure that the terms outlined in the letter are accurate and clear. Additionally, employers should be prepared to fulfill the obligations outlined in the offer letter if the candidate accepts the offer.

Closing the Deal

The letter should conclude with a line for signature and a date for the candidate to indicate their acceptance and understanding of the terms. However, some attorneys warn that signing an offer letter can create an offer-acceptance agreement, thus turning the offer letter into an enforceable contract. To avoid this, you can add a sentence stating that the offer letter is for informational purposes only and is not a binding contract.

After making the offer, it is essential to promptly follow up with the candidate and keep them informed of the next steps in the hiring process, including any pre-employment requirements, such as background checks or drug screenings. Delaying the process can cause the candidate to lose interest or accept another job offer.

By utilizing best practices when making a job offer, you can ensure that the process is efficient, free of legal liabilities, and that your new hire is on their way to making a positive contribution to your organization.