Rescinding Job Offers: When Is It Legal? And What Does HR Need to Know?

9 Jul

Be careful with offering a job to a candidate.

The hiring process doesn't stop when a company asks a job seeker to be on the payroll. Sometimes, there are issues that pop up after an offer is extended and recruiting for the job needs to start once more. Even the most experienced HR professionals have had to null and void a job offer to a candidate. There are many reasons why job offers have to be rescinded – here are just a few:

  • The company's corporate health is poor and cannot take on another employee
  • The business must reorganize its employment structures
  • The department's budget is cut 
  • The candidate acts inappropriately after the company has already extended an offer of employment
  • The job seeker doesn't pass the background test 

According to CIO, rescinding job offers increased in commonality during the recession, but it can still come as a surprise to many job seekers. HR professionals must be careful with how they handle taking back an offer of employment.

Employee management is as important at the end of the talent acquisition process as when new hires officially become part of the organization. HR professionals need to ensure they are following the proper procedures – both the company's own policies and the state's – to act appropriately during these situations. 

What are the Legalities Involved? 
HR professionals know they have to walk a fine line when it comes to rescinding job offers, but taking back an offer of employment is considered acceptable in certain circumstances. An article in Media Bistro noted that offers are simply offers and are considered to be an offer of employment "at will" in most circumstances. Because of this, it is legal to rescind most job offers.

The Ohio State Bar Association defines "employment at will" to mean "that, unless you agree otherwise with your employer, either you or your employer may terminate the employment relationship at any time for any reason that does not contradict the law." The Center for Career and Professional Development at Rensselaer Polytechnic Institute, an institute of higher education in New York, noted each state has its own laws regarding the legality of rescinding job offers when they have been accepted, but most courts have accepted the concept of employment at will.

However, according to the Society for Human Resource Management, an offer of employment is often seen to be an official promise of a job, and this has been used in court by candidates with rescinded job offers to win their cases. Cases have been found in favor of job candidates under the legal doctrine of promissory estoppel, which "supports a harmed party in enforcing such promises made." A court can also side with the plaintiff if it finds there was a breach of contract because the employment contract was signed by the involved parties.

According to HR news site HC Online, discrimination and misrepresentation of the company and/or position can also be brought up in court by candidates. SHRM recommended HR professionals only rescind an offer of employment after legal counsel has looked over the matter.

When Is Rescinding Job Offers Acceptable?
It is sometimes acceptable for HR professionals and their employers to rescind job offers. Internal issues like company reorganization and budget cuts can factor into whether the offered job is even available anymore, but HC Online noted external elements, such as if the candidate lied on his or her application, can come into play as well. Even the candidate's behavior and etiquette can end up impacting whether her or she will still have an offer of employment.

For example, Inc. magazine reported that a journalist wrote on his blog that he received an offer of employment at a newspaper. Although his editor assured him the post was acceptable, he had used the business's logo without permission and quoted the offer letter, both of which the newspaper said was not allowed. An HR expert noted that the company may be partly at fault in this situation, because it may not have communicated that the newspaper wanted to announce the job offer or that the candidate would be on probation.

What Happens When the Worker Already Left His or Her Job?
Yet one of the biggest issues with rescinding job offers is the problem of whether the candidate offered his or her previous employer with a notice of intent to leave his or her job because the job seeker accepted the new job in good faith. There have been court cases regarding this. SHRM noted some have been won on the grounds of promissory estoppel, and HC Online noted a large banking organization was found liable for a worker quitting his or her former job to work at the company and then having to rescind the offer of employment.

HR professionals must consider the potential of having to take back the employment offer. U.S. News suggested candidates provide a written acceptance letter and don't give notice of intent to leave to their current employers until there is confirmation of employment. HR professionals may want to ask candidates for a written acceptance letter, communicate about acceptable behavior during the probation period and recommend they don't leave their jobs or make any sudden life changes until they have confirmation they are officially starting on the job.

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