Small businesses often hire employees informally without written employment contracts. However, Minnesota law requires employers to provide their employment arrangements with new employees in writing. This requirement can be satisfied with an offer letter or with a memorandum to a new hire before they start employment.
To ensure your offer letter or summary of terms of employment satisfies the written agreement requirement in Minnesota, the letter must be in writing and signed by both the employer and employee. It needs to have key terms of the employment, including:
- The date the agreement was entered into.
- The date employment begins.
- The rate of pay.
- The number of hours in a regular day’s work and whether additional hours are counted as overtime.
- A statement that specifies when the employer may deduct from employee’s wages for special projects undertaken by the employee and the terms that control those deductions.
In addition to the Minnesota statutory requirements, you should also include the following terms and conditions of employment in your offer letter:
- The title or position,
- The reporting relationship,
- The term of employment, if any, and if none, a statement clarifying that the employment will be for an indefinite term and may be terminated at the discretion or either party at any time,
- The manner of pay (such as salary, wage or commission),
- Eligibility for benefits (often spelled out in detail in a separate policy or plan),
- The conditions of employment, including:
- Form I-9 compliance;
- Completion of background and reference checks;
- Confirmation that the employee has not violated a non-compete or restrictive covenant with another employer; and
- A copy of any confidential information, trade secret, intellectual property. non-compete or non-solicitation agreement requirement for the position, and
- A statement the employment is at-will.
Keep in mind that these requirements apply to employees, not independent contractors. However, if you are engaging independent contractors, you also should get into the practice of memorializing the arrangement in a written agreement, and distinguish the relationship from an employer-employee relationship.