What are the Risks when Withdrawing an Employment Offer

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May 17, 2019
Author: Ben Halverson
Organization: Lorman Education Service

It happens. You find a promising candidate, make them an offer, and then discover something about them that makes them a bad risk. Maybe they are not as qualified as you thought they were, something happens that makes it impossible for you to afford them or, in today's climate, they post something on social media that is utterly inappropriate.

Many job seekers do not realize that an offer can be rescinded, and many employers do not realize that rescinding an offer can leave them open to liability.

Is it Legal to Withdraw an Employment Offer?

In most cases, yes. Precise state laws can vary. In an at will state such as Ohio or Virginia, you can rescind an offer at any time, as the offer is always considered to be at will. However, the offer may be considered a contract and, as such, it's possible for the candidate to sue you.

In other cases, the withdrawal may be the result of a mutual decision, for example if salary negotiations fail.

How Should Companies Protect Themselves when Rescinding an Offer?

Ensuring that you do not face legal consequences if you do have to withdraw an offer is both challenging and simple. Here are some tips to avoid legal problems:

  1. Make it clear, in writing, that the offer is contingent on background checks. Background checks can take some time, so it is not always possible to complete them before making the offer. This might also include drug screening. If you do not say it is contingent and then withdraw the offer, you may find yourself on the hook for misrepresentation.
  2. If you advertise a job and then find that restructuring or other factors may cause you to have to change your mind, then consider not interviewing candidates until you know for sure you will have a position to fill. If the office is relocating, make sure that is stated in the advertisement so potential candidates can tell whether the new location will be suitable.
  3. Make sure that you do not withdraw an offer for any reason which might be considered discrimination. This often happens if you discover that a candidate has a significant health issue that constitutes a disability. In this case, you need to look towards accommodating the disability rather than withdrawing the offer. In order to avoid this, be very clear about any physical demands of the job, such as the ability to lift fifty pounds or drive.
  4. Do not mention salary of length of employment in the job offer. Make it clear that it is an at will offer, and that no contracts will be signed until and unless the employee starts work. Avoid using any language that might indicate a promise to the employee. Also, do not verbally say anything in interviews that might be construed as a promise of employment.
  5. Inform the candidate both verbally and in writing when the offer is rescinded. In some cases there are legal requirements that specify how you must inform them. Use at least two channels of communication, so as to make sure that you are clear and they receive the information.
  6. Think carefully before making the offer in the first place. Do as many checks as you can before sending the offer letter.
  7. Talk to the candidate about their behavior and recommend that they do not leave their current job. Candidates who leave their job to take yours and then have the offer withdrawn are much more likely to sue. The same goes for any other life changes, such as selling their home, buying a new home, planning a move, etc.
  8. Consult with legal counsel, always, before withdrawing an offer. Although you should send the letter rescinding the offer as quickly as possible, you should always run it past your lawyer so as to make sure you are not discriminating or treating a candidate unfairly.
  9. If the reason is not the candidate's fault and they are a good candidate, it may be worth pointing them towards other positions in the company.

It is never pleasant to have to withdraw an offer of employment, but it is sometimes necessary. Consider the steps above if you are in a position where you have to do so. For more information and advice on this and other HR issues, contact Lorman Education Services today.

Sources:

https://www.sage.com/en-us/blog/can-an-employer-rescind-a-job-offer/
https://www.shrm.org/resourcesandtools/hr-topics/talent-acquisition/pages/take-care-rescinding-job-offers.aspx
https://elliswhittam.com/blog/can-employers-withdraw-job-offers/

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