- Rescinding a job offer is a very sensitive issue that carries potential liability.
- It is best practice to meet with the candidate in person to explain why the job offer is being rescinded and document the decision in a formal letter.
- Business owners should meet with legal counsel to review the decision and ensure they aren't opening themselves up to potential litigation.
- This article is for small business owners and hiring supervisors who are reconsidering an extended job offer to a job applicant.
For small business employers, there may come a time after offering a job to a candidate that you have to rescind it for a variety of reasons. Rescinding a job offer is never easy to communicate to the candidate, and knowing how to do it correctly is essential.
Even though employers may have done nothing wrong, a candidate may interpret a hiring decision as irreversible, which is why as a small business owner, you should consult an attorney if you find that you must revoke a job offer.
Common reasons why employers rescind job offers
Although each circumstance is different, there are several common reasons when this particular employment action is exercised, including the following:
- A candidate's criminal history is revealed, or a background check returns unsatisfactory results
- A failed drug test
- Negative employment references
- Falsification of the application materials
- The candidate is bound to an active noncompete agreement
- Company-related budget cuts
- Canceled or postponed projects or contracts with customers
- Installment of new executive leadership (or lack of support by leadership with the selected candidate)
- Unfavorable post-offer interactions with the candidate that are indicative of serious concerns with the comportment and skills of the candidate (e.g., lack of professionalism, etc.).
Key takeaway: There are several reasons that can lead to an employer rescinding an offer of employment. It's advised that business owners seek legal guidance to review the decision.
Knowing when you can rescind a job offer
There are two questions a small business owner should ask themselves when rescinding a job offer: First, do you have compelling, valid reason for withdrawing the job offer? Second, is the action ethical?
There are a host of legal and ethical issues that can intersect and arise when an employer has to withdraw a job offer. Imagine, for example, that you extend a job offer to a candidate for the sales manager position. This candidate submits her resignation to her current employer, sells her house, but you rescind the offer.
On the one hand, the sales manager candidate has the legal promise of a job; on the other hand, the employer has the legal option to exercise their at-will employment rights.
Promissory estoppel is a legal doctrine that supports a harmed party in enforcing employment promises made, even if a contract did not exist. This doctrine is an important reason why seeking legal counsel is advised when you're withdrawing a job offer.
In addition, during the job offer process, be clear with candidates that until the candidate receives a job offer in writing and confirmation that all of the pre-employment requirements have successfully been completed, the candidate should not submit their resignation to their current employer or take any premature steps (e.g., putting their home up for sale) that could be irreversible.
Many businesses are at-will employers or operate in an at-will rights state. As long as the reason is not statutorily prohibited or otherwise unlawful (e.g., discrimination based on the employee's affiliation in a protected class or reasons relating to previous whistleblowing activities, etc.) employers can terminate the employment relationship at any stage (including the job offer) for many reasons or no reason at all (although that is never a wise course of action to take).
Times employers cannot rescind job offers
Employers cannot rescind job offers when the motive for the decision not to employ the individual is based on the person's race, religion, gender, gender identity, pregnancy, age or national origin.
Key takeaway: There are a host of legal and ethical issues involved when an employer withdraws a job offer. With the doctrine of promissory estoppel a candidate may be able to legally enforce the promise of employment even though a contract was not signed and executed.
How to communicate a rescinded job offer to a candidate
Because of the potential legal issues involved with rescinding a job offer, communicating the decision to the candidate requires caution, clarity and empathy. Here are six tips for notifying a candidate that you are rescinding the job offer:
- Meet in person. If possible, meet with the candidate in person or via video conference.
- Share the "why." If you are have legal justification, share the reason or reasons as to why the offer is being rescinded. Your attorney can help you draft a statement that can be read to the candidate.
- Allow the candidate time to absorb the news. Chances are, the decision will come as a shock to the candidate. Allow them time to process the news. Listen to them.The candidate will very likely ask you several questions. It's best to stick to the statement or script you and your attorney created.
- Do not overshare or make promises. Do not make promises of follow-up or possible employment opportunities in the future.
- Share a rescinded-job letter: As a follow-up to your verbal conversation with the candidate, send a written letter as well. The letter should be dated and explain the reasons for the decision. It should also state, if relevant, that you are an at-will employer.
- Provide a resource or contact the candidate can follow up with. Consider providing the contact information for your HR department or a legal representative.
Key takeaway: Exercising professionalism as you communicate your decision to the candidate may disarm an otherwise heated exchange. Follow up your in-person discussion with a letter documenting your decision and the reasons behind the decision.
A sample rescinded job offer letter
Here is a sample letter you could send to a candidate that is brief, factual and to the point:
[City, State ZIP code]
Regarding: Rescinded Job Offer for [Company's name] [Job title]
Dear [Candidate name]:
On [date], you received a job offer for employment with [company name] as [job title]. As stated in your offer letter, employment with our company was contingent upon successfully completing a [e.g., background check], as well as [list additional pre-employment qualifying criteria].
During our hiring process, we [e.g., were unable to substantiate information you had provided regarding your previous employers.].
This letter, therefore, serves as formal written notification that your contingent offer of employment given on [Date] with [Company name] has been withdrawn.
We wish you the absolute best in your future employment endeavors.
[Name of company representative]
Key takeaway: Above is an example of a rescinded job offer letter a small business owner can use. Your attorney may have a template you can use as well.