Key Takeaways

  • Rescinding a job offer is legally permissible in many cases but carries risks, particularly if done after the candidate has accepted.
  • Employers should clearly define job offer terms and use conditional language to reduce legal exposure.
  • Rescinding an offer based on protected characteristics (e.g., religion, disability, pregnancy) is unlawful.
  • Employers should follow a documented and lawful process when rescinding offers, especially if the candidate has already accepted.
  • Clear communication, documentation, and professional courtesy can help minimize reputational and legal damage.
  • Candidates may have legal recourse if they’ve suffered damages due to a rescinded offer, including under promissory estoppel or discrimination claims.
  • Consult legal counsel to ensure compliance with state and federal regulations when considering rescinding a job offer.

Rescind Offer: Everything You Need to Know

Rescind offer is an action taken by an employer who chooses not to hire a person who has already been offered employment. There are many reasons an employer may rescind a job offer. Having made a verbal offer does not legally obligate an employer to hire an employee, especially if there are extenuating circumstances or conditions. A few possible reasons to rescind a job offer include:

  • Your company requires a background check that an applicant was unable to pass.
  • A candidate does not follow up or stops communicating after your offer was made.
  • You discover that the candidate has signed a non-compete agreement with a previous employer that would bar him from completing his work.

For whatever reason, you may be forced to rescind your offer because he or she has missed, without explanation, their first day on the job. The most common reason an employer would rescind a job offer is due to a potential employee falsifying their credentials. Many of these scenarios may not arise until after an offer has been made and accepted.

It's also possible that you may have to rescind an offer of employment, not because of something you discovered, but due to something that has happened since the offer was made. If a candidate runs into issues outside of the sphere of employment that interfere with their ability to do their work, you may have to rescind the offer — for instance, if the applicant is still attending college and does not graduate as expected or otherwise gets into trouble. If their actions after accepting the position give you reservation, such as inappropriate social media postings, you may consider rescinding. While there are plenty of reasons that you can legally rescind an offer of employment, there are also some areas that will get you into trouble.

You may not rescind an offer of employment due to religious discrimination. If, for instance, your future employee informs you that she is Muslim and must wear a hijab to work, you may not deny or rescind an offer. In fact, if you do, you may be sued for discrimination.

You may also be sued if you rescind an offer because you have discovered the person you are hiring has a disability. Disabled persons are protected under the Americans with Disabilities Act (ADA) and may not be discriminated against. Equally, if you discover your future employee is pregnant, you may not rescind your offer as they are protected under the Pregnancy Discrimination Act. When rescinding an offer, it is always best to discuss the reasons with your human resources department, if possible, or get another professional opinion.

Best Practices Before Rescinding an Offer

To mitigate legal and reputational risks, employers should follow these best practices before rescinding an offer:

  • Use Conditional Offer Language: Clearly state that the offer is contingent upon factors like background checks, reference verifications, or credential validation.
  • Document All Requirements: Specify any conditions that must be met prior to employment, such as drug testing or proof of licensure.
  • Verify All Information Before Offering: Whenever possible, complete all employment checks before extending a formal offer.
  • Avoid Discriminatory Motives: Ensure that reasons for rescission are lawful and not based on race, religion, gender, age, or disability.
  • Notify in Writing: If rescinding, communicate the decision clearly and respectfully in writing. Avoid vague language that could be misinterpreted as discriminatory.

Taking these precautions can help maintain professionalism and reduce the likelihood of legal claims or reputational damage​​.

Legal Meaning and Timing of a Rescinded Offer

To define "rescind offer" in legal terms, it means the withdrawal of a previously extended offer of employment. This withdrawal may occur before or after a candidate accepts. However, the legal implications can differ significantly depending on the timing.

A formal offer, once accepted, may legally constitute the start of an employment relationship in some jurisdictions—even if the employee has not yet begun work. For instance, under California law following the Michaels v. State Personnel Board decision, employment is considered to begin upon acceptance of a formal offer, not the actual start date. Therefore, rescinding after acceptance may trigger procedural requirements, including potential investigations into whether the appointment is unlawful.

Employers must understand that rescinding a formal offer after acceptance could obligate them to follow specific regulatory processes to avoid wrongful termination or breach of contract claims.

How to Craft a Job Offer

Ideally, a job offer would be made once all pre-employment verifications have been made. In a perfect world, references would be checked and education would be verified. Making a conditional offer, however, can help you to avoid any legal complications that may arise. Making a job offer in writing can help clarify those stipulations and make sure that there are no misunderstandings. Even a verbal offer should be followed up with a written one in order to avoid confusion.

Sometimes, during the hiring process, it is necessary to rescind an offer once it has been made. As an example, it may take time for a criminal background check to be completed. It is reasonable to provide for the safety in your workplace to rescind an offer should a potential employee fail a criminal background check.

There is a process that needs to be followed for rescinding an offer even if you have a legitimate right to do so. Assuming that you are not running afoul of discrimination or other laws, you can state the conditions of onboarding an employee with an offer letter. Make sure a potential employee understands that employment is conditional on a background check, possibly a credit check, and on the condition that they sign a non-compete agreement. These are just a few examples and other conditions may apply in your particular situation. Information that should also be in writing may include work duties, benefits, and pay. Though you should be careful to avoid wording that indicates a specific time frame such as annual pay.

It's important to avoid flowery language that may infer benefits or a promise to the employee. Phrases such as "for many years" or "flexible scheduling" should be omitted from an offer. This vague type of wording can create gray areas where legally defined work may be misunderstood.

Avoiding verbiage and language that implies a guarantee of employment is key. Including even vague notions of a time frame, for instance, could be construed as a contract despite your intention. An offer should also include a date of termination for the offer. This is to ensure that the offer is not indefinite and will ensure that you receive a timely response.

Make sure that you are clear with a potential employee and that all information is communicated accurately. A well-worded and well-defined letter can protect you and your business. Keep any applicable managers or supervisors up to date on the status of any potential employee.

When and How to Rescind an Offer Professionally

If you must rescind an offer, approach the situation with empathy and professionalism. Here's a guide for employers:

  • Act Promptly: Once the decision is made, communicate it as soon as possible to avoid further inconvenience to the candidate.
  • Use Written Communication: Send a formal letter stating that the offer is being withdrawn and include a brief, lawful reason.
  • Offer an Explanation (When Appropriate): If the offer is being rescinded due to internal business changes or budget constraints, explain the rationale clearly and professionally.
  • Express Regret: Convey appreciation for the candidate's interest and the time they invested.
  • Consider Alternative Roles: If appropriate, offer to consider the candidate for future roles.
  • Consult HR or Legal Counsel: Especially if the candidate has already accepted, legal review is essential to avoid potential claims.

Handling the situation with transparency and dignity can preserve goodwill and reduce legal risk​​.

Risks of Rescinding a Job Offer

There is an inherent risk in rescinding any job offer. Even if your actions were not discriminatory, a potential employee may still be able to take action against your company. If a potential employee has suffered damages as a result of your offer, they may have some recourse against you.

Having resigned from another employer, for instance, a potential employee may suffer from a loss of income for which you may be culpable. In some states, a potential employee may be able to receive unemployment benefits as a result of your actions. In this example, those benefits would come from a state fund and not a company's coffers, but the implication is clear. Your company could be accused by a potential employee of fraudulent misrepresentation though he or she would need to establish that the offer you made was intentionally false.

However, if you knew that the job would not exist due to changes in your business or because of market conditions and still made the offer, an employee may be able to prove fraud and receive damages. Fraudulent misrepresentation can be difficult to prove, but if it can be proven, a potential candidate could be awarded damages for past and future income.

Alternatives to Rescinding a Job Offer

Rather than immediately rescinding an offer, consider alternatives that might resolve the situation while maintaining the employment relationship:

  • Postponing the Start Date: If the issue is temporary (e.g., pending documentation), delay onboarding instead of canceling the offer.
  • Role Adjustment: If the original position is no longer available but a similar role is open, offer a reassignment.
  • Clarifying Expectations: Misunderstandings about responsibilities or qualifications can sometimes be resolved with clearer communication.

These alternatives demonstrate goodwill and can reduce potential fallout or legal exposure.

Legal and Financial Consequences of Rescinding an Offer

Rescinding an offer—especially after it has been accepted—can result in significant consequences:

  • Promissory Estoppel Claims: If a candidate relies on the offer (e.g., quits another job or relocates), they may claim damages.
  • Unlawful Appointment Procedures: In jurisdictions like California, accepted offers may be considered appointments. Rescinding could trigger state-level regulatory investigations.
  • Discrimination Lawsuits: If a candidate believes the rescission is due to a protected class (e.g., age, disability), they can file a complaint with the EEOC or a state agency.
  • Reputational Damage: Job seekers may share their experience online, damaging your company’s image and employer brand.

Employers should assess the timing, reasons, and potential ramifications before taking action. When in doubt, seek advice from an employment attorney. UpCounsel can connect you with top-rated legal professionals to navigate these complex situations.

Frequently Asked Questions

1. What does it mean to “define rescind offer” in employment law? To define “rescind offer” means to formally revoke a job offer, either before or after a candidate has accepted it. The legality and implications vary depending on timing and reason.

2. Is a verbal job offer legally binding? Verbal offers can be legally binding, especially if the candidate has accepted and taken action based on the offer. However, written terms are easier to enforce or contest legally.

3. Can a candidate sue if a job offer is rescinded? Yes, if the rescission is discriminatory or causes financial harm (e.g., the candidate quit another job), the employer may face legal action for promissory estoppel or discrimination.

4. What if a candidate has already accepted the offer? Once a formal offer is accepted, rescinding it becomes riskier. In some states, the employment relationship is considered to have begun, triggering regulatory protocols.

5. How can I protect my business when making job offers? Use clearly written, conditional offer letters. Verify background information before extending an offer and consult legal counsel before rescinding an accepted offer.

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