Offer letters in California: at-will, wage notices and final pay

At-will and what the letter should not promise

Labor Code section 2922 provides that employment with no specified term may be ended at the will of either party on notice to the other. An offer letter can confirm at-will status, but language promising a fixed term of employment, or termination only for cause, can undermine it. Keep the letter consistent with any handbook or policy that says the same thing.

If the offer includes stock options, say that the grant is subject to board approval and the terms of the equity plan, with the exercise price set at fair market value on the grant date. Do not quote a number of shares as a percentage without explaining it is based on a specified fully diluted count. Include confidentiality and invention assignment documents, and leave out non-compete clauses.

Required notices at hire

Labor Code section 2810.5 requires a written notice at the time of hire covering pay rates and the basis for them, the regular payday, the employer's name, address and phone number, and its workers' compensation carrier, among other items. The Labor Commissioner publishes a template. The notice is not required for employees exempt from overtime by statute or wage order, but many startups hire non-exempt employees too.

Other rules apply depending on size and timing. Employers with 15 or more employees must include the pay scale in job postings under Labor Code section 432.3. A newer law, the Workplace Know Your Rights Act, requires employers to give workers an annual notice of key rights by February 1 each year. Labor Code section 925 limits requiring California-based employees to accept out-of-state law or forum clauses.

Final pay timing

The Labor Commissioner explains that an employee who is discharged must be paid all final wages immediately at the time of termination. An employee who quits without notice must be paid within 72 hours, and an employee who gives at least 72 hours' notice must be paid at the time of quitting. A willful failure to pay on time can trigger a waiting time penalty of a day's wages for each day late, up to 30 calendar days.

Example: A startup decides to let a non-exempt employee go on a Friday afternoon. Final wages should be ready for that meeting. If payroll cannot produce a check that day, the company risks waiting time penalties. Plan the exit with payroll before the conversation, not after.

Your next steps

1. Confirm at-will status and avoid term or for-cause language in the offer.
2. Give the section 2810.5 notice to non-exempt hires and track the annual rights notice.
3. Prepare final pay before any termination meeting.