Michael Lodge, NCPM, CRTP: There are many times that as a business advisor or even in mediation, job offers come up in the discussion. How you handle job offers is a very serious business because when things go bad in am employer/employee relationship, it is important to note that everyone will go back and review the job offer. As a mediator I like to see the job offer and documents that supported the hiring and the subject of responsibilities. Workplace conflict is part of any business, it happens. The better both employee and employer know what the rules are, the better off the relationship will be. We are not giving legal advice here, just providing you with how to view the job offer, rescinding it, and the knowledge that it is a very important document.

Written by: Patrick Proctor - When a job offer is rescinded, it’s usually because the employer has stumbled on multiple areas of concern. The other reason typically has to do with a change of plans internally. Regardless, it is important to know that companies generally have the right to change their mind, even after an offer is made to the candidate. Knowing why you are rescinding and how to do it correctly are important to staying out of legal trouble.

What Does It Mean to Rescind an Offer of Employment?

Rescinding an offer of employment is just canceling a job offer that was made.

Picture this. You finish each round of interviews, choose a candidate, and notify them they got the job, only for circumstances to arise that force you to take back the offer. It’s not the same as rejecting a candidate who didn’t make the cut; you’re giving the job and then taking it back before they start.

According to a November 2020 report from the National Law Review, “…when an employer makes an offer of at-will employment, the employer is free to rescind that job offer, for any reason or no reason at all, at any time,” without suffering legal consequence.

This rule includes the timeframe of after the candidate has accepted the offer but before they begin work. Once the employee begins working, the likelihood you may face liability increases.

Our Call-Out to Seek Legal Counsel

We will state from the get-go that this is one of those HR-related topics that is always good to receive legal counsel on. All aspects of your hiring process are important to get right; however, the importance of managing these situations carefully cannot be overstated. Before an actual offer letter, there is limited risk to the organization, even if there was a verbal indication of a job offer. When you do prepare to rescind an offer of employment, it is important to clarify to the candidate what that means, what it looks like, and the many relating details.

Sample Letter for Rescinding a Job Offer

There are many good examples of letters designed with the purpose of rescinding an offer of employment, but we like this one as it is balanced, professional, and right to the point. If you’re rescinding the offer due to an issue with the candidate’s qualifications, i.e., if they fail a drug test, you’ll need to be more specific and ensure they understand their rights; you’ll also probably want to remove the open invitation for them to apply again later.

[Date]

[Candidate’s Address Line #1

Candidate’s Address Line #2]

Regarding: Rescinded Job Offer for [Company’s Name] [Title of Position]

Dear [Candidate Name],

We are writing to inform you that the job offer we extended to you on [Date] for the position of [Job Title], is now being rescinded. Unfortunately, [we’ve experienced some unforeseen circumstances and can no longer hire you as planned. We apologize for any inconvenience this causes you and will keep your information on file if another opportunity arises. You’re also welcome to apply for any other positions you believe to be a good fit] We wish you the best in your job search.

Sincerely,

[Name of Hiring Manager]

[Position title]

Why Employers Rescind Job Offers

Employers rescind job offers for many reasons. We have shared many of the most common reasons why employers rescind job offers from candidates.

External (Candidate) Related Factors

  • A failed background check

  • A failed pre-employment drug screen

  • Something not panning out with employment references

  • Concerns around the accuracy, or fabrication, of resume content, including work experience or education

  • Offensive social media behavior that was discovered after the job offer

  • Dishonesty about earned skills, licenses, or qualifications

There are other factors that employers encounter that have more to do with the organization itself and less to do with the candidate.

Internal (Company) Related Factors

  • Change in strategy: When company strategies or targeted objectives have changed or evolved regarding the hiring of the right individual for a position

  • Budgetary changes or related impact: Unintentionally exceeding the budget for the position

  • HR-related error: Offering a candidate the incorrect salary or total compensation package

  • Lack of management oversight: Double-filling a position (which should be exceptionally rare)

  • Change in business outlook: Hiring for a position that has been newly tagged for elimination

  • Illegal or improper conduct: Improper behaviors or conduct during the interview and selection process (this may include favoritism, illegal decision-making criteria nepotism, and other biases that interviewers may have allowed to weigh in).

  • Incomplete pre-employment process: Failure to check employment or character references before the job offer

  • Mistaken identity: A job offer shared with the wrong candidate. At times, John Smalley will receive the offer for employment when John Smith should have received the offer (believe it or not, this happens).

At-Will Employment

Many employers are aware of At-Will employment rights and how they work. As long as the reason for denying employment doesn’t break any federal hiring or employment laws, like discriminating against a protected class or isn’t for reasons relating to previous whistleblowing activities, etc., employers can terminate the employment relationship at any stage.

It is important to note the many variances in At-Will employment law are at the state level. The commonality here is that many of these legal differences between states have to do with the at-will exceptions.

Employers Cannot Rescind Job Offers When…

The reason for the withdrawal of employment must be legal. Reasons for the rescinding of a job offer cannot be for reasons that are protected by law such as discriminatory related reasons including, but not limited to race, religion, gender, gender identity, pregnancy, age or national origin, etc. If candidates were treated illegally, there might be legal action that they can take.

The second area of danger is trying to rescind a job offer after the candidate has officially become an employee (or after they have begun work). During these types of situations, you really should connect with your attorney before taking any employment action (regardless of how right you believe you are).

How to Communicate a Rescinded Offer of Employment

Rescinding a job offer is an important employment action that should not be dealt with lightly. Although any form of communication can be effective in communicating the message, the company’s work is not complete with a simple email or leaving a voicemail.

When exercising this right, you are impacting the lives of people and their professions, with career-sized consequences (as well as their ability to earn money for their families). Professionalism, dignity, and compassion reveal themselves when companies slow the process down, take time with the candidate, and explain what and why this is happening.

Tell the Candidate You Are Rescinding the Job Offer

Initial contact with the candidate is usually done over the phone. Delivering the news in person is most ideal (although uncomfortable, it can best express the compassion and professionalism that makes up everything your company does).

Much of the time when companies rescind job offers it is due to a failed pre-employment drug screen or background check. If this is the case, we suggest the following:

  1. Clearly state that the job offer has been rescinded or canceled.

  2. Reassure the candidate that this process is confidential.

  3. In clear terms, share your company’s concerns without displaying judgment or accusations of dishonesty. There may be a simple explanation, and if the candidate is still eligible for this or another position in your organization, you want to keep things on good terms.

  4. The last step during your conversation with the candidate should be an open invitation to follow up with the company with questions the candidate may come up with after-the-fact.

  5. Send a physical letter

Rescinding a job offer is not complete until you have delivered a hard copy letter to the candidate, explaining what has occurred and what was discussed over the phone. We recommend sending the letter via Certified Mail so that you can confirm receivership.

Bottom Line

Rescinding an offer of employment is an important employment action that employers can utilize, but when doing so, it should be very thoughtful. Legal guidance is the general rule here—getting a (legal) opinion before taking action is important.

Although it is true that the employer has the right to exercise business-related decisions that best serve the company, it is important to have your ducks in a row and to understand how to rescind a job offer the right way, plus what to expect after the news is shared.