What To Include In An Offer Letter To Protect Against Future Wage Claims In California

In this article, you can discover…

• The wage information you must legally include in an employment offer letter.
• How a well-drafted offer letter can help you avoid legal complications in the future.
• Whether you should update offer letter templates to reflect changing California laws.

What Wage Information Must Be Included In A California Offer Letter To Stay Compliant?

In California, Labor Code Provision Section 2810.5 requires you to provide certain wage information to every new employee to whom you give a job offer.

In an offer letter, you must clarify the employee’s exempt versus non-exempt employment status and must put in writing the hourly wage or salary that they will be paid if they accept your offer of employment. You must mention the fact that employee handbook policies will govern their employment. You must also mention that, upon being hired, they must provide proof of eligibility to work in the United States.

You should also fill out and attach the Labor Code Section 2810.5 Form and set forth the pay offer on this form, as well. This form will also detail whether the wages are hourly, salaried, piece rate, or some other format, and what the pay rate will be (for example, $25 / hour).

On Form 2810.5, you must also clarify how you are going to comply with the California Paid Sick Leave Law. As of 2015, California employers must provide up to 40 hours of paid sick leave for every 12-month period. This can be done in one of two ways.

One, you can fulfil this requirement through accrual, for example, one hour of paid sick leave for every 30 hours of work. Alternatively, you can front-load that paid sick time, and simply offer an up-front 40 hours of sick time that’s available for the new hire to use when they need it.

Other forms will need to be included that detail PTO policies, how much PTO will be offered, and how much paid vacation time will be offered, both of which are distinct from paid sick leave in California.

Workers’ comp information must be provided, including your carrier and broker information. Finally, whenever wage information changes, you must either give notice of that change or reflect it on your employees’ next pay stubs.

Can I Include Arbitration Language Or Policy References In An Offer Letter?

While you can do this, I do not recommend it. Instead, a standalone agreement is preferable. This standalone contract, once signed, means the employee agrees to arbitrate employment claims before a private arbitrator, instead of suing you in court before a judge and jury.

If you need such a standalone agreement, my law firm can provide one. It contains a class-action and PAGA waiver, and is roughly three pages in length.

Can A Well-Drafted Offer Letter Help Prevent Future Employee Misclassification Claims?

Not really. Offer letters are handed out to employees, not to independent contractors. For independent contractor relationships, a specific contract must be drawn up, detailing that the contractor has the right to work for other parties, must supply their own tools and equipment, can hire their own employees, and can market themselves to the public for the nature of the work that they are performing for you.

A typical independent contractor agreement will be about six to eight pages long, will be quite detailed, and will help clarify that this person you are bringing on is, indeed, an independent contractor and not an employee.

If you have an independent contractor agreement but the day-to-day reality is that you provide the tools, direct their work, and require them to come into the office each day, they are an employee, not an independent contractor.

It is very important to be sure the worker is not misclassified, as no agreement can protect you from a misclassification lawsuit if the terms used do not reflect the nature of their employment.

How Often Should I Update My Offer Letter Templates To Reflect New Laws?

An offer letter is typically fairly brief, about one to two pages. The basic contents of an employment letter won’t change very frequently. Form 2810.5 will also be attached and must be completed. Overall, this form can serve as a reference for drafting the body of the offer letter, helping ensure that all required information is included.

If you need help drafting a clear, compliant offer letter for a new hire, please come and see me. I’ve been drafting such letters for over 30 years, and can provide you with a compliant, securely-drafted letter to offer your employees.

Still Have Questions? Ready To Get Started?

For more information on California offer letter requirements, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (855) 534-1490 today.