Drafting an Offer Letter Without Undoing At-Will Employment Rights
To preserve “at-will” employment status, employers will carefully avoid entering formal contracts and insert “at-will” disclaimer provisions in their Handbooks and Policies. But these efforts can be countered, thwarted, or complicated by poorly drafted offer letters that promise continued employment to a “hot” candidate. Often the problem comes from a manager recruiting and trying to attract a candidate, not Human Resources or senior management.
Such promises can create contract or reliance claims if the “hot” candidate turns out to be not so hot as an employee and has to go. An offer letter can constitute a contract as to termination or other terms and conditions of employment which can lead to damages for breach – particularly suspect are letters that have no clear at-will disclaimer language. A reliance claim arises when there is a promise of employment that is specific and relied upon and compensates an employee for losses incurred in taking a job that doesn’t work out. Reliance claims usually arise in the context of job offers that are withdrawn.
Courts have often rejected attempted contract or reliance claims on the strength of the at-will doctrine, but a specific-enough promise with clear detrimental reliance or an offer letter that makes promises of employment for a definite period of time can support a reliance or contract claim and make a termination an expensive mess.
Takeaway: Once you write an offer letter, review it backwards. If the employment is at-will, include language expressly stating that. Think about a termination meeting and ask yourself if you are making specific promises or saying things about the position that may compromise at-will employment rights. If you think you are, then consult legal counsel about rephrasing the letter to take out the potential contract or reliance language without entirely losing the intended tone and points meant to attract the candidate. Or, if such promises are really necessary to attract the candidate, have counsel draw up a reasonable contract that maximizes the employer’s rights while giving whatever binding assurances are necessary for the hire.