By Doug Bend
When a small business or startup considers offering an employment position to a candidate, it’s common practice to create an employment agreement, or offer letter, which stipulates the general terms of the relationship. Before presenting such an agreement to a candidate, make sure you consider a couple of key provisions:
- The position and title, including whether the offer is for full time employment, and the expected days and hours the candidate should fulfill
- Whether or not the position is considered exempt or non-exempt, as defined by the Fair Labor Standards Act
- The rate of pay and if the offer includes any equity compensation
- The term of employment; the law presumes the relationship is “at will” (See Cal. Labor Code 2922) unless specifically changed within the agreement
- The statement of benefits being offered, if any.
To help highlight the “at-will” nature of the relationship, many employers will bold or place the at-will provision in all caps. Speaking generally, if the employer provides a clear at-will provision within an employment agreement or offer letter, it hinders the ability of the employee to later claim there was an inferred agreement that the employee could only be terminated for cause (See Guz v. Bechtel Nat. Inc., 24 Cal.4th 317 (2000)).
Under CA law, certain information must be given to employees at the time of hiring. For non-exempt employees, the employer must give specific information about pay rates and paid sick leaves (See Cal. Labor Code Section 2810.5). Any changes to this information must be provided in writing to employees within seven (7) days of implementing the changes. For employees whose compensation includes commission, the employer must provide a written commission agreement stating the method for computing and paying the commission (See Cal. Labor Code Section 2751).
Finally, it should be noted that for a CA employer, non-compete agreements are generally unlawful. However, a prudent employer can create some indirect non-compete provisions, such as including proper non-disclosure and confidentiality clauses within the employment agreement or offer letter. Furthermore, employers can also include non-solicitation language that would prohibit an employee from recruiting co-workers after the employee leaves.
The information provided above is far from an exhaustive list. Employers should work with an attorney to ensure they are properly following state and federal rules to avoid costly mistakes down the line. If you’re interested in speaking to an attorney at Bend Law Group, please reach out at info@bendlawoffice.com, or give us a ring at (415) 633-6841.
Disclaimer: This article discusses general legal issues and developments. Such materials are for informational purposes only and may not reflect the most current law in your jurisdiction. These informational materials are not intended, and should not be taken, as legal advice on any particular set of facts or circumstances. No reader should act or refrain from acting on the basis of any information presented herein without seeking the advice of counsel in the relevant jurisdiction. Bend Law Group, PC expressly disclaims all liability in respect of any actions taken or not taken based on any contents of this article.