Let's say you recently offered a position to a candidate but then discovered several discrepancies in their resume, including falsified dates in their employment history. Could you legally rescind their job offer with this new information?
At first glance, the answer seems to be a resounding yes. But because rescinding an employment offer after you have gone through the interview process carries potential legal risks, it's important to do your due diligence beforehand.
In most cases, if employment is "at-will," you can revoke an offer for any lawful, non-discriminatory reason. However, rescinding an offer comes with legal considerations that may impact your company's reputation, such as detrimental reliance (where the candidate experiences harm due to reliance on the job offer, i.e. resigning from a previous job, relocating, or rejecting other opportunities) or discrimination.
Although you may be confident in your choice to rescind a job offer, there are several things you should do to avoid unnecessary legal problems.
Establish and document the reason for revoking a job offer, which must be valid, lawful, and non-discriminatory. The most common reasons for rescission include:
However, in some situations, an offer may be rescinded due to unexpected changes with budget cuts, restructuring, or hiring freezes. Identifying the reason for withdrawal will help mitigate risks while ensuring compliance with legal and ethical standards.
A job offer cannot be revoked for any unlawful or discriminatory reason. This may include:
Federal laws prohibit discrimination for job seekers based on certain characteristics, such as:
You cannot rescind an offer because a candidate requests an accommodation for a disability, pregnancy, or religious observance.
Per the National Labor Relations Act (NLRA), you cannot withdraw an offer because a candidate supports a union, discusses wages, or engages in other legally protected workplace activities.
Ensuring that a job offer is rescinded for lawful reasons helps you mitigate legal risks and maintain compliance with federal employment laws.
Anytime you are considering rescinding a job offer, you must ensure that no federal, state, or local laws prohibit the withdrawal. For example:
Many jurisdictions have enacted laws restricting when and how you can inquire about a candidate’s criminal history. Some laws prohibit asking about criminal records early in the hiring process, while others limit how you can use that information when making hiring decisions.
Some states and localities prevent you from discriminating against candidates based on lawful activities off-the-clock, such as political expression or the legal use of substances like marijuana.
To safeguard against potential legal disputes, you should thoroughly document the legitimate, non-discriminatory reason for rescinding a job offer. Proper documentation not only helps demonstrate compliance with legal requirements and reinforces the fairness of your rescission process, but can also spare you with the headache of “he-said, she-said" legal recourse.
Before proceeding with a job offer rescission, review all relevant documentation to ensure they support your decision and to verify there are no contractual restrictions that could prevent the withdrawal. For example:
By ensuring that company policies support the decision, you strengthen your rationale and reduce the risk of disputes.
Before withdrawing an offer, consider these alternative solutions:
Postpone the Start Date. If rescission is due to temporary budget issues, a delay might be feasible.
Offer an Alternative Position. If the original role is unavailable, consider another role that fits the candidate’s qualifications.
Seek Additional References. A negative reference check may warrant further investigation before making a final decision.
Request Candidate Clarification. If discrepancies exist in the resume, an honest mistake could be resolved without rescission.
Inform candidates of the rescinded job offer as soon as possible. Candidates often make significant preparations, such as resigning from their current job or relocating. Early notification helps minimize disruption and may allow the candidate to stay with their current employer.
You should deliver the news respectfully, preferably by phone or in person. A professional and empathetic tone is essential, especially if the rescission is not the candidate’s fault.
To avoid legal issues, you should explain the reason for rescission clearly, citing the specific policy or condition the candidate failed to meet. Ensure the reason is lawful and non-discriminatory.
Document the conversation with the candidate, including the reasons for rescission and the candidate’s response. This record can help protect the employer in the event of legal claims.
After the conversation, send written confirmation to reiterate the rescission. The letter should include:
If you are denying the candidate the position due to a failed background check, you must provide them with applicable pre-adverse action notices.
After rescinding a job offer, you not only need to choose another candidate, but you also need to determine if your processes and wording found in a job search or offer letter need to be adjusted for better clarification.
Review and update offer letters or employment agreements to streamline future rescissions. If you do not currently have an “at-will” employment clause and fall within a jurisdiction where this is legal, add it. You may also want to add a clear statement outlining conditions candidates must meet before starting the job (e.g., passing drug tests or background checks).
Consider your internal procedures to ensure clear communication when a rescission is necessary. If financial or organizational changes impact hiring, find an efficient way to inform stakeholders, such as hiring managers and HR personnel, to pause or delay hiring.
Rescinding a job offer to a new employee should be a last resort, handled with caution to avoid legal and reputational risks. Prior to doing so, ensure you have a lawful, well-documented reason, then communicate the decision professionally if there are no alternative solutions. By maintaining consistent and fair hiring practices, you can mitigate risks and uphold your company's credibility.
For more information about creating rescinded offers, please contact your certified HR expert or an employment attorney. Not a current Stratus HR client? Book a free consultation and our team will contact you shortly.