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.

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.

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.

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