HR Headaches: Rescinding a Job Offer

Here’s what employers need to know about the reasons, risks, potential legal consequences, and other considerations for revoking a job offer.

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HR Headaches: Rescinding a Job Offer

Here's what you need to know:

  • The best way to rescind a job offer is with honesty
  • If you rescind a job offer, you face the risk of legal consequences — so whatever the reason for revoking the job offer, you must be careful how you do it
  • HR teams should urge employers to wait until after getting results from the background check before extending a job offer
  • One way to reduce the risk before any possible rescinding happens is to craft a letter of employment to the candidate, including conditions for employment
  • If you must revoke a job offer, consult with HR, so your actions are legal and fair

Sometimes, an employee match seems too good to be true. However, when you realize that a person you’ve agreed to hire isn’t going to fit, what can you do? There are many reasons an employee won’t work within your organization.

Taking away a job offer can be a difficult decision, but it is 1 that you might have to make. There are reasons you might decide to rescind a job offer, and you need to consider them before making a decision.

Employers frequently have to rescind job offers. One primary reason is that employers don’t have enough information about the candidate to make an informed decision. Information may come to light that removes the candidate from consideration.

Another reason is that the employee may not meet the company’s expectations or standards.

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What are the reasons for rescinding a job offer?

There are a variety of reasons why you might rescind a job offer. For example, perhaps your company merged with another, and the new company has a different policy on hiring employees from outside the company. Maybe someone else got the job after your applicant had accepted the position.

Sometimes, you will rescind a job offer if you learn the applicant has lied about their qualifications or experience. For example, suppose a prospective employee fails a criminal background check, misrepresents their background, or fails a drug test. In that case, the candidate usually will have no legal leg to stand on if their offer gets rescinded.

The job offer process is a 2-way street. You need to find the best candidate for the job, and candidates need to find the best job for themselves.

If a job offer is rescinded, it’s usually because the employer has found a person with a better background or personality for the position. Maybe they have more experience or better skills.

Sometimes, candidates have to leave because their qualifications don’t match what you’re looking for. You may ultimately change your mind after meeting or speaking with the applicant and decide they may not fit.

You don’t want to burn bridges with the candidate you rejected. The best way to rescind a job offer is with honesty. Let the candidate know that someone else was better suited for the job and explain why. They will understand and appreciate your honesty.

What are the reasons not to rescind a job offer?

If you rescind a job offer after learning of something in the applicant’s background, the applicant may have a discrimination claim.

For example, if you discover an applicant was denied because of a disability, the applicant may have a claim for disability discrimination. Similarly, the applicant may have a discrimination claim if the employer rescinds the offer because of the applicant’s race, ethnicity, or national origin.

You can’t rescind an offer for discriminatory reasons such as race, religion, gender, age, or national origin. Furthermore, job applicants may be able to obtain legal protection if they feel they have experienced discrimination.

What are the legal consequences of rescinding a job offer?

If you rescind a job offer, you face the risk of legal consequences. If the rejected offer was based on discriminatory reasons, you could get sued by the applicant for discrimination.

Additionally, if the employer has already started to invest in the recruiting process — such as advertising the position or conducting interviews — they may be liable for damages to those affected by the rescinded offer.

Whatever the reason for revoking the job offer, you must be careful how you do it.

Other legal implications can include reimbursing the candidate’s expenses while waiting for the position. These could include lost wages or bonuses from former employers, moving expenses, and even damages by losing seniority if they are permitted to return to their former job.

So whatever the reason for revoking the job offer, you must be careful how you do it.

The risks of offering a job before the background check

When you extend a job offer to a potential employee, you take on a certain level of risk. This is especially true if the employer has not yet completed a thorough background check.

A few risks come with extending a job offer before the background check is complete. The most obvious risk is that you may have to rescind the job offer if you find something negative in the background check. This can be costly for you and the potential employee, damaging your reputation and creating animosity between the applicant and your business.

Another risk is that an unscrupulous applicant may use information from the background check to blackmail or harass the employer after hiring. This could lead to financial losses for the company and emotional distress for its employees. Furthermore, you could invite litigation by the candidate for discrimination.

HR teams should urge employers to wait until after getting results from the background check before extending a job offer. It’s also important to remember that some reviews are more thorough than others, so choose a reputable company to do the search.

How to mitigate those risks in a letter of employment

One way to reduce the risk before any possible rescinding happens is to craft a letter of employment to the candidate, including:

  • Making it clear that the offer is an at-will employment
  • Not using language implying an offer is a guarantee of employment
  • Listing the conditions like credit checks, references, and drug testing in the offer
  • Including a termination date for the offer so that the employee can’t drag their feet

What are the steps to take when you must rescind a job offer?

You can take these steps when rescinding a job offer:

  • Contact HR. They may also help you find a replacement for the position.
  • Notify the candidate. You should inform them that the job has been rescinded and explain why. Help them avoid wasting time applying for future roles that may not be available.
  • Let them respond. When you rescind a job offer, you should allow the candidate to respond. Let them explain their side of the story and provide information that could change your mind.
  • Give them a chance to correct errors. For example, maybe the candidate made a mistake on their application or during the interview process. Allow them to correct any errors so you can be sure you are making the best decision for your company.
  • Offer to assist them in finding a new job. If you rescind the position due to something out of your control, offer to help in the job hunt.
  • Review your hiring processes. Look for ways to improve and avoid situations like this in the future.

Need to rescind? Be sure hiring practices are legal and fair

You may rescind a job offer for many reasons. For example, external (candidate) factors, or internal (company) factors may force you to remove a candidate from consideration after the job offer.

You can end the employment relationship in most states as long as the reason for rescinding the job offer doesn’t break any federal hiring or employment laws and isn’t related to whistleblowing.

If you must revoke a job offer, consult with HR, so your actions are legal and fair. They’ll ensure you have good reasons for rescinding. In addition, they’ll guide you to follow the correct procedures and inform your strategy for re-recruiting.

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