- Rescinding a job offer is a sensitive issue that carries potential liability.
- Meet with the candidate in person to explain why you’re rescinding the job offer and document the decision in a formal letter.
- Consult with legal counsel to review the decision and ensure you’re not opening up the business to potential litigation.
- This article is for small business owners and hiring supervisors reconsidering a job offer extended to an applicant.
At some point, small business owners and hiring managers may decide to rescind a job offer they extended to an applicant. Whether you’re rescinding a job offer because of a hiring mistake or various other reasons, it’s never easy to explain this decision to the candidate.
It’s crucial to rescind a job offer correctly and thoughtfully, weighing legal advice and the decision’s ramifications. We’ll explore what to do when rescinding a job offer and what you need to know to conduct this process legally and respectfully.
Can you legally rescind a job offer?
There are situations where you can and can’t legally rescind a job offer – and some gray areas. First, consider two questions:
- Do you have a compelling, valid reason for withdrawing the job offer?
- Is the action legal and ethical?
When you can rescind a job offer
It’s legal to rescind a job offer in an at-will employment situation or state. At-will employment means the employer can terminate an employee for any legal reason, and employees can quit without notice or explanation.
When you can’t rescind a job offer
Employers can’t rescind job offers for discriminatory reasons. For example, they can’t withdraw a job offer based on the person’s race, religion, gender, gender identity, pregnancy, age, whistleblowing activities or national origin.
If a job applicant feels they’ve been discriminated against, they can pursue legal action.
When you may face legal consequences
Even if you can rescind a job offer, you may still face legal consequences. “Promissory estoppel” (promises made) is a legal doctrine that supports a harmed party in enforcing employment promises, even in the absence of a formal employment contract. This doctrine is a critical reason to seek legal counsel before withdrawing a job offer.
Additionally, legal and ethical considerations can intersect when an employer withdraws a job offer. For example, say you extend a job offer to a candidate for a sales manager position. The candidate writes a job resignation letter to their current employer and sells their house. However, you rescind the offer.
The sales manager candidate has the legal promise of a job, but the employer has the legal option to exercise their at-will employment rights. In this situation, the candidate may use promissory estoppel in a legal action to enforce the promise of employment and show financial harm, even though a contract wasn’t signed and executed.
Tip: During the hiring process, emphasize that a candidate shouldn’t take any premature irreversible steps until they receive a job offer letter and confirmation that all pre-employment requirements have successfully been completed.
What to do before rescinding a job offer
Small business owners should approach rescinding a job offer with great care and preparation. Not preparing correctly can lead to serious legal consequences, even if the offer withdrawal is within your rights.
When considering rescinding a job offer, consider the following best practices.
1. Perform a full legal review before rescinding the job offer.
Consult an expert and perform a legal review of the candidate’s job offer before rescinding it. Remember, the candidate has the right to pursue legal action if they feel you breached an implicit contract. Sometimes, even seemingly innocent statements like “I look forward to working with you” can imply a job offer.
Key takeaway: Choose your words carefully during the hiring process to help avoid misunderstandings with severe consequences. And if you must withdraw an offer, do it before you’ve impacted the candidate’s life.
2. Have another candidate ready to fill the vacant role.
When a job candidate doesn’t work out, the position remains open. Leaving open positions for an extended period can slow productivity, particularly if hiring for a critical role. Keep a backup candidate in mind as you rescind an applicant’s offer to minimize operational and process interruptions.
To hire the best employee, you may review highly qualified candidates you initially passed on or conduct a new round of interviews. Budget your time and money thoughtfully as you rescind the job offer and select a new candidate.
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.
Inform the candidate as quickly as possible so they can resume their job search. Prompt notice may also mitigate ill will and potential legal actions.
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 to share your decision. You may make an initial informal phone call and follow up with an in-person meeting.
- Share the reason why. If you have legal justification, share the reason or reasons why you’re rescinding the offer. Your attorney can help you draft a statement to 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 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 meetings or possible employment opportunities in the future.
- Share a rescinded-job letter. Send a formal written letter as a follow-up to your verbal conversation with the candidate. The letter should be dated and explain the decision’s reasoning. If relevant, it should also state that you are an at-will employer.
- Provide a follow-up resource or contact. Consider providing the candidate with your HR manager or legal representative’s contact information.
Did you know?: If your business is sued by an applicant because of a rescinded job offer, get prompt, expert legal advice, don’t communicate with the person suing you, and stay focused on your business.
Common reasons why employers rescind job offers
Although each circumstance is different, there are several typical reasons employers rescind job offers, including the following:
- You discovered a candidate’s criminal history.
- A background check returned unsatisfactory results.
- The candidate failed a drug test.
- Reference-check questions revealed negative information.
- The candidate falsified application materials.
- The candidate is bound to an active noncompete agreement.
- Your company experienced unexpected budget cuts.
- Your company faced canceled or postponed projects or contracts with customers.
- New executive leadership was installed, or there was a lack of leadership support for the selected candidate.
- Unfavorable post-offer interactions with the candidate indicated severe concerns with their comportment and skills (e.g., lack of professionalism), making them seem like a bad hire.
Tip: Consider using one of the best background-check companies to narrow your search to the most well-qualified and viable job candidates.
Sample rescinded job offer letter
This rescinded job offer letter sample is brief, factual and to the point. This sample is intended to provide an idea of what to include. Before sending any official letter, check with your attorney to ensure it’s legally viable.
[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 [pre-employment qualifying criteria, e.g., a 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]
Rescinding job offers the right way
You might have to withdraw a job offer for several reasons. Some are out of your or the candidate’s control, while others result from conscious decisions on either party’s side. No matter the justification, rescinding an offer the right way is key to avoiding future legal and financial issues.
Patrick Proctor contributed to the reporting and writing in this article.