Job Offers: Why Rescinding One Can be Risky Business

Download Email
Expertise

Job Offers: Why Rescinding One Can be Risky Business

By Jay Starkman and Deby Skawinski

Although rescinding a job offer is not necessarily illegal, there are risks for an employer to consider.

Reported in the Business Journals

 

Steady progress in the job market means employers are extending more job offers and more candidates are accepting.

Sometimes, however, an employer must withdraw an offer. That's never a good thing for the candidate or the employer. Although rescinding a job offer is not necessarily illegal, there are risks for an employer to consider.

Most states have employment-at-will statutes which allow an employer to terminate an employee at any time without reason. These laws also generally apply to withdrawn job offers.

However, there are exceptions that can lead to candidates taking legal action against the employer.

Promises made

"Promissory estoppel" is a term used in contract law to support parties when they are harmed as a result of relying on a promise, regardless of whether an enforceable contract was in place. For example, a candidate may quit a job or relocate after accepting a new job offer. If the offer is then withdrawn, he or she can claim economic loss as a result and seek damages.

Contracts created

Whether an employer makes a verbal or written commitment of employment, a candidate may believe a contract has been created based on the language used during the hiring process. Even statements like: "Welcome to the company, we look forward to enjoying a long relationship," could cause a candidate to sue for breach of contract if the job offer is later withdrawn.

Prior knowledge

Candidates can also seek damages if they are able to show that a company had knowledge of the circumstances that eventually led to a rescinded offer (such as a change in company structure or budget cuts) prior to extending the offer.

Discrimination

The withdrawal of an offer may trigger a discrimination claim against an employer if the unsuccessful candidate is in a protected class. The risk increases if the employer then extends an offer to a candidate outside of a protected class for the same job.

Seeking damages

While it is unlikely that a candidate would be entitled to lost wages following the withdrawal of a job offer, if he or she quit a job in reliance on the offer, lost wages may be recoverable under one of the theories above. The employer also may be required to pay related expenses such as moving or relocation costs.

The takeaway for employers

Employers should do all they can to avoid rescinding a job offer. This begins with considering candidates carefully, and reviewing employment offers thoroughly with HR and legal professionals before extending them.

In the event an offer must be withdrawn, a legal review of the offer and the reasons for the withdrawal should be conducted prior to speaking with the candidate. This includes interviewing every employee who spoke with the candidate during the interview and offer process, to ensure no additional promises, either expressed or implied, were made. As with all employment actions, emotions can run high.

The manner in which the situation is handled and communicated by the employer often determines if the candidate will pursue legal action.

Whether making, accepting or rescinding a job offer, thoughtful consideration among all parties will go a long way.

 

Expertise

What Employers Should Know About the Latest Health Care Reform Actions

President Trump’s recent executive order on health care was aimed at increasing competition and lowering consumer costs in the health insurance markets. Specifically, the order directs three federal agencies to consider proposing new rules that would allow the sale of low-cost, short-term insurance; expand the use of health reimbursement accounts; and lift some of the restrictions on association health plans.

It’s unclear, as of this writing, how or when these proposed actions will change health care laws. The bottom line for employers and individuals, however, is that no laws have been changed yet. The order itself has no force of law, and issuing new regulations typically takes at least several months, plus what can be a lengthy and contentious period for public comment.

Expertise

What Employers Should Know About the Affordable Care Act:

While Congress continues to debate the future of the Affordable Care Act (ACA), questions loom for many Americans. Individuals and businesses alike are concerned and want to know what to do right now, and how to plan ahead.    

Learn More

Strategic Partners

Learn more about our many strategic partners ready to help elevate and engage your business.

See full list here

The Expect More Philosophy

We expect more, and so should you!

Learn more