Hiring an employee is a terrifying experience for many business owners. As you go through this process you’ll probably feel:
- Scared about giving up control, will the person you hire do it right?
- Excited because you no longer need to do [task you hate] and can instead spend your time doing [task you love]?
- Terrified because you are now responsible to assure this person gets paid so they can feed themselves and their family
Hiring an employee is like many roller coasters you go through as a business owner. Thrilling moments and terrifying ones. In order to be a good boss, one of your first steps is to start your relationship off on the right foot. And part of this is establishing rules and boundaries for new employees.
Because as much as you wish they could, your employees can’t read your mind.
The key is outlining rules and expectations
So you should lie out for them on a piece of paper what these rules and expectations are. Of course, from a legal standpoint there are a couple of things to include or not include on this piece of paper.
Before we get into the legal nitty-gritty, let’s look at this from a 10,000-foot view. The primary goal of this piece of paper is to establish boundaries and to outline what you can expect from each other.
Where some business owners get into trouble is this piece of paper becomes a contract.
Where some business owners get into trouble is this piece of paper becomes a contract. One that guarantees to your employee that you will keep them for a specific period. And then when something changes and:
- You make a strategic decision to scale back and that position no longer exists
- Your sales drop and you can’t afford to keep the same number of staff
- The employee isn’t a good fit for the culture of your business and you need someone else to take her place
The employee can turn to the labor board and make you pay them for the remainder of their “contractual” period.
So how can we have a piece of paper that helps us establish boundaries, but doesn’t cross the line into a contract? We have to walk a legal tightrope.
What should you include?
I usually suggest preparing these as a letter to your future employee. This letter should outline:
- What their position will be along with their roles and responsibilities
- What they will be paid (if hourly on an hourly basis, if salary on a daily basis)
- When they will start
- What benefits they will receive if any
- If they will be required to sign any non-disclosure or proprietary rights agreements
- Any hoops they must still jump through (e.g. drug tests, reference check)
- The fact that their employment is at-will
The last one is the most important. What at-will employment means is that both of you can decide that this isn’t working and end your working relationship. And that you can end your relationship for any reason (or no reason). As long as you aren’t doing it for an illegal reason. (For example, because your employee got pregnant and you don’t want to have to comply with the Family Leave Act).
Note: The rules around at-will employment vary a little state-to-state. Here’s a good resource that outlines some of the differences.
What should you avoid including?
Not surprisingly, most of these all center on the idea that we don’t want to make promises that they’ll be working for you forever. So you don’t want to include:
- Calling the letter an “offer letter”
- Any promises about job security
- A probationary period
- A place for them to sign the letter
The probationary period is the biggest one that makes lawyers gets all squirmy. Because once your employee passes the probationary period, you eliminate the at-will nature of your relationship. Meaning that you can only fire them for a reason. And to do so, you’ll have to document the reasons for firing and give them the chance to improve. Honestly, doing this can be tricky and many small businesses fail to do it properly, which can lead to a wrongful termination lawsuit. Needless to say, that why this one makes us squirm in our seats.
The probationary period is the biggest one that makes lawyers gets all squirmy.
So while I urge you to use one of these letters, be cautious about walking the tightrope. Because I don’t want you to fall into the trap of having someone who is not the right fit being your employee for longer than you want her to be.
Have you hired employees? Did you use a letter like this? How did that influence your relationship? If not, is it something you’ll implement next time around?