Navigating the complexities of rescinding a job offer

Rescinding a job offer is one of the trickier parts of hiring. You have to be the bearer of bad news instead of welcoming a candidate on board. You also need to make sure you don’t expose your company to a lawsuit.

In this article, we explain how to rescind a job offer properly so you can avoid legal or ethical problems for your company.

What does rescinding a job offer mean?

Rescinding a job offer is revoking a job proposal that you offered to a candidate. It occurs after the offer is made — sometimes even after the candidate accepts it — but before the actual start date.

Legal and ethical considerations of rescinding a job offer

While an employer or company can rescind a job offer after acceptance, this action requires tactful handling to avoid issues.

Legal implications

Rescinding a job offer is generally legal. However, things can get complicated legally if the candidate can prove they’ve experienced economic damage or emotional harm because you took back your offer.

Here’s a list of legal implications that employers can face after rescinding a job offer:

• Promissory estoppel: In cases where the candidate has made a significant life change based on the job offer. This includes resigning from their current place of employment or moving. The candidate could claim what’s called promissory estoppel to receive compensation for their reliance on the offer.

• Discrimination claims: Rescinding an offer can lead to a discrimination lawsuit if the candidate believes the withdrawal is based on a discriminatory reason, such as race, gender, or age.

• Impact on future hiring: Legal actions due to rescinded offers can affect future hiring, requiring revisions in offer letters and contracts.

• Reputation damage and legal costs: The legal costs and damage to a company’s reputation can be substantial, even if a lawsuit isn’t successful.

• Violation of labor laws: Depending on local and federal laws, rescinding an offer might violate specific statutes, especially if the reason isn’t compliant with employment laws.

• Bad-faith claims: If an offer is rescinded in bad faith — for example, after a salary negotiation — legal repercussions could result.

• Damages for misrepresentation: If the employer misrepresented the company, job responsibilities, or benefits, the candidate might claim damages.

• Settlement costs: Legal action could lead to settlement costs to avoid prolonged litigation.

Ethical aspects

The candidate may have declined other opportunities or made life-changing decisions based on the prospect of working for your company. It's ethical to consider the impact of rescinding the offer on this person.

Be transparent and fair throughout the rescission process. This includes providing a clear and honest explanation for the rescission and, whenever possible, offering assistance or other forms of support to the affected candidate.

Common reasons for rescinding a job offer

Even if you find someone who appears to be a good match for your company, you may still need to rescind the offer.

Here are some common reasons why a company might need to withdraw a job offer:

• Failed background check: Unfavorable results from a background check, such as a criminal record or a history of misconduct.

• Falsified application information: Discovering that a candidate has lied about their qualifications, experience, or skills is a huge red flag to an employer.

• Failed drug tests: Many companies have strict drug-free workplace policies. Failing a drug test is a common reason for rescinding an offer.

• Budget cuts or financial constraints: Economic factors or budgetary revisions can suddenly make it infeasible to onboard a new employee.

• Organizational restructuring: Changes in company structure can lead to shifts in hiring needs. You might need to withdraw job offers during organizational restructures.

• Poor references: Negative feedback from a reference or previous employer can cause an employer to reconsider their offer.

• Job position cancellation or modification: Sometimes, the specific job role for which a candidate was hired is modified or cut.

• Misconduct during the hiring process: Improper conduct or an ethical breach during the interview or hiring process can result in an offer rescission.

• Discovery of conflict of interest: Uncovering a potential conflict of interest that wasn’t previously disclosed can be a deal-breaker.

• Changes in management or company direction: New leadership or strategic pivots can alter the company’s hiring priorities.

It's good to be familiar with these common reasons for rescinding job offers. It helps you be proactive in avoiding job offer withdrawals.

How should employers handle the process of rescinding an offer?

Rescinding a job offer is a delicate process that requires careful navigation. Employers should rescind a job offer with professionalism and compassion. 

Here are some best practices to follow.

1. Prepare in advance

Check if there is internal consensus within your organization before rescinding an offer. This involves discussions with key stakeholders to understand the implications. Make sure all parties agree on the decision to rescind a job offer.

2. Conduct a legal review

Consult with legal counsel to ensure the rescission complies with employment laws and contractual obligations. 

3. Communicate clearly

Communicate the decision to the candidate promptly and directly. Avoid delays, as they can lead to further complications.

4. Remain honest and respectful

Explain the reason for rescinding the offer clearly and respectfully. Be concise, avoid using jargon, and express regret. It’s also important to be empathetic toward the person.

5. Offer support

If possible, provide assistance to the candidate. This could include offering to help with their job search or giving them a reference.

6. Maintain professionalism

Keep all interactions professional and courteous. This helps maintain the company’s image and can help ease the candidate’s disappointment.

7. Ensure confidentiality

Respect the candidate’s privacy by keeping the details of the situation confidential. Discuss the matter only with those who need to know about it.

8. Fill out the proper documentation

Document all communications and decisions related to the rescission. This is essential for future reference and can be important if any legal issues arise.

9. Learn from the experience

Use this experience to refine your hiring processes. Analyze the reason for the rescission and implement changes to prevent the same thing from happening in the future.

By following these guidelines, employers can navigate the complexities of rescinding a job offer while minimizing the negative impact on both the company and the candidate.

Sample letter to rescind a job offer

Rescinding a job offer should be done with the utmost professionalism and sensitivity. Below is a template for a formal letter that you can adapt to inform a candidate about their job offer rescindment. [Your company name]

[Your company address]

[City, State, Zip Code]

[Date]

[Applicant name]

[Applicant address]

[City, State, Zip Code]

Subject: Rescindment of job offer at [company]

Dear [applicant],

After careful consideration and due to [specific reason for rescinding the offer, e.g., unforeseen budget constraints, restructuring, or a failed background check], we regret to inform you that we must rescind the offer of employment for the position of [job title] at [company] that was extended to you on [date of offer].

Please understand that this decision was not made lightly. It is the result of [briefly explain the reason, ensuring it’s non-discriminatory and professional — e.g., “recent changes in our company’s financial outlook that necessitate a revision of our staffing plans”]. We recognize the inconvenience and disappointment this news may bring, and we wish to extend our sincerest apologies.

[Optional: If possible, provide support or alternative solutions. For instance, “We are committed to supporting you during this transition and would be happy to provide references or assist in your continued job search.”]

We appreciate the time and effort you have invested in the application and interview process and were genuinely impressed with your qualifications and experiences. This decision in no way reflects on your abilities or our belief in your potential.

Please feel free to reach out to me or our HR department at [contact information] if you have any questions or need further clarification regarding this matter.

Thank you for your understanding, and we wish you all the best in your future endeavors.

Sincerely,

[Your name]

[Your position]

[Company name]

[Contact information]

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