Can You Rescind a Job Offer to a New Employee?

You’ve gone through the recruitment process and found a great candidate. The offer has been extendedand accepted. The hiring manager is excited, and your recruiter is relieved.  

But something happens to make you change your mind, and you wonder: Can I rescind the offer? 

The quick answer is yes, the company can do whatever it likes.

The better answer is, it depends. Why are you rescinding the offer, and are you prepared for any potential fallout? 

Many companies make a conditional offer of employment based on a host of variables. 

These could include: 

  • Passing a background check
  • Passing a drug test
  • Completion of test projects or assignments

Other organizations make offers of employment outright, with no stipulations. In either case, the offer is considered valid unless something occurs to break the deal. 

Rescinding a job offer is your right as an employer, but the reasons for the decision may muddy the waters as to whether you’re within those rights legally. 

The first question is why the offer is being rescinded. There may be several scenarios under which a company might rethink an offer of employment. Let’s explore some.

3 Good Reasons for Rescinding a Job Offer 

1. The Candidate Fails the Background Check  

The candidate you’ve selected looked great on paper, interviewed well, and wowed everyone along the hiring path. 

You anxiously made an offer before you had a chance to review their background and credentials. This is a common mistake. In a tight talent market, you’re eager to get a candidate off the market and on the payroll. 

But the devil’s in the details. According to SHRM, 92% of employers conduct some form of background check during the pre-employment screening process.[1] Depending on what you find, you may have to reconsider the candidate and rescind the offer, which you are within your rights to do.

2. The Candidate Lies on Their Résumé

How many candidates lie on their résumé? Some estimates go as high as 85%.[2] One of the most common résumé lies is experience. Applicants tend to fudge a bit on dates, exaggerate titles, and stretch experience to increase their odds. 

Some embellishments on the résumé are understandable—for example, if your posting asks for three years of experience, but an applicant has two-and-three-quarters years, they may round up to three years so they aren’t automatically screened out by HR. 

Titles can be deceiving as well. You’re looking for managerial experience, but an applicant’s previous history doesn’t include the word “manager” in their title. Someone who has the title of “senior coordinator” may state they are a “manager” on their résumé.  For these types of embellishments, it might be wise to question the candidate for more information depending on the nature and severity of the stretch.

The exact nature of the résumé fib can help you dictate how to proceed:

Experience

If the experience listed is nowhere near the reality of their background, you’d be wise to rescind the offer. 

A few years in a retail store doesn’t equate to regional management. You’re looking for talent that knows how to get the job done, not someone who thinks they can do their current manager’s job better. 

Qualifications 

Another typical stretch is qualifications—candidates claim to be proficient in the software you depend on, but at some point down the recruitment line, you find out they don’t have a clue. Or that supposedly bilingual candidate didn’t understand your basic greeting in the necessary second language. Pulling a job offer based on fictitious qualifications is legitimate—you’re looking for talent, not a trainee. 

Education

A study by CareerBuilder found one-third of applicants will lie about their academic degrees.[3] This shocking statistic reinforces the need for background checks. 

Lying about a degree should be a deal-breaker. The time and commitment it takes to acquire a degree are significant—and misrepresenting that information is a serious breach of trust. 

If an offer is rescinded because a candidate’s experience, qualifications, or education were falsified, employers shouldn’t see too much backlash. The job seeker knew they were taking a risk with the exaggerations.

3. An Internal Candidate Emerges

At the 11th hour, an internal candidate is demanding the job or promotion you’ve been interviewing for weeks or months to fill. While their insertion in the process earlier would have been preferred, you’ve decided they’re the right fit for the job. If promoting from within is the reason to rescind an offer, providing an opportunity for an internal candidate is a legitimate reason.

4 Reasons You May Not Be Able to Rescind a Job Offer 

It’s illegal to rescind a job offer for reasons that have to do with discriminationsuch as race, religion, gender, or age. But there are some issues that arise after an offer has been extended that aren’t as clear-cut. 

1. A Previous Criminal Record 

Depending on the state in which you conduct business, finding out an applicant has a criminal history may not be a reason to rescind a job offer. 

In more than 30 states, “Ban the Box” laws require employers to remove the question “Have you ever been convicted of a felony or misdemeanor?” on applications. 

Candidates who might have been excluded because of the “box” are now netting interviews. But criminal history may arise during subsequent discussions or in a background check. 

Can you rescind an offer simply based on the presence of a conviction? In most states, the answer is no. 

Employers are required to assess each candidate on an individual basis to determine whether or not the conviction is relevant to the work being performed, is recent, and/or poses a risk to the employer. In some states there’s a limit on the amount of time an employer can “look back” into the candidate’s background.

Rescinding a job offer based on a criminal conviction must be done carefully. 

If the candidate applying for a cash-handling position had a recent conviction for theft, the employer could be within their rights to exclude. If the same candidate was applying for a janitorial spot, they might not. 

States require employers to look at each situation on a case-by-case basis, generally with a bias toward helping the applicant acquire gainful employment. 

2. A Failed Drug Test

Drug testing is undergoing a radical change in the era of legalized cannabis for medical and recreational use. 

Some states are banning pre-employment testing for the substance, while others are limiting the rights of employers to test only when an employee is suspected of using on the job.[4] 

In many states, applicants have the right to challenge testing results. It’s important to understand the laws that apply to your business. 

For other substances, like pain management drugs, a positive result could be problematic as well. 

If the candidate is using the medicine under a doctor’s care, rescinding a job offer without the details (and a potential accommodation under the ADA) could pose a legal risk to employers. 

Positive drug test results should be considered on a case-by-case basis, with an eye toward applicable legislation, before an offer is pulled. 

3. Social Media Posts  

A quick scan of an applicant’s social media posts may reveal a host of issues you hadn’t considered. Their photos show them chain-smoking, climbing the face of skyscrapers, or participating in activism you want your business to avoid. Some candidates’ posts include virulent rants against their current or past employers. 

Should you disqualify them? 

Again, it may depend on the state in which you do business. 

Many people are surprised to learn that in 29 states, smokers have a right to privacy and non-discrimination.[5] In many of these states, the laws also protect workers from discrimination on the basis of any “legal activity” they engage in outside the workplace. 

An employer who is considering rescinding a job offer based on “activity” off the job may want to check their state regulations before making a decision.

For social media posts that bash a past (or current) employer or boss, the law, again, may be in an applicant’s favor. The National Labor Relations Board has determined some social media posts that include complaints about working conditions are “protected concerted activity” if the posts discuss work-related issues and are shared with one or more colleagues.[6] Even the most offensive rants may be considered protected speech. 

4. Business Finances 

An unexpected financial issue hits the company, and rescinding the offer may be the right move. But consider that recruitment and hiring is a costly venture for business, no matter the size of the organization. 

The amount of resources already in the process should be a significant consideration. Is it worthwhile to start the process over again? Will the situation right itself in the near future? 

Losing a good candidate because of short-term funding issues might be a poor return on investment. Consider asking the candidate if they could put off their start date. If they agree to a short hiatus your recruitment investment is saved. If not, biting the bullet in the short term may equate to a longer-term gain overall. 

What If ‘We Just Changed Our Mind’?

It happens. Sometimes the timing is off, or something occurred that rubbed you the wrong way. 

If there’s no concrete reason why you’re pulling back on the offer from your end, it may be unprofessional, but not illegal. 

If the job-seeker can point to anything in their background that should have been protected and may have factored into your flip-flop, you may not be. Be sure the real reason is no reason at all before you make the call. 

Is a Job Offer a Contract? 

Some wonder if an offer means the deal is set in stone. But in the majority of cases, an offer letter or verbal offer is not considered a contract. 

Unless there was an explicit contract of employment, signed by both parties, a written or verbal job offer doesn’t constitute a legal agreement. While it may be bad form to rescind an offer, in most cases the candidate has no legal remedy against the company. 

How to Rescind a Job Offer (With Sample Scripts)

You’ve made the decision to pull the offer and you’re well within your rights to do so. Now someone has to do the deed. Rather than playing a game of office hot potato, the bad news should probably come from HR. 

Your HR team is better-versed in rejecting candidates—they know how to do so professionally and within the law. 

A letter to the candidate, outlining the decision to rescind the offer is acceptable if the start date isn’t imminent. If the start date is imminent, you’ll need to make a phone call. The lawyers will tell you not to apologize—”sorry” equates to guilt. But you will want to express your regrets. You’ve spent time getting to know the candidate, and while you may not need them on your team today, who knows what the future will bring? 

“Unfortunately, we are now unable to hire you for the position as previously discussed” could be your opening. 

You may want to expand if you’re confident you’re within your rights as an employer to exclude, but it’s probably not necessary. You may want to cite (or the candidate may ask) the reason for the reversal—a discrepancy on your résumé or application is a sufficient answer if they’ve stretched the truth. 

If there’s an internal issue (finances, promotion, or no concrete reason), cite this generically: “An internal issue has made it impossible for us to bring you on at this time.”  

If you’d like to leave the door open for the future, say so. “With your permission, we’d like to hold on to your application if anything opens in the near-term.” 

From here, thank the candidate for their time and interest and wish them the best of luck with their career. Short and professional communications are the best protection for the employer—and they don’t give the candidate false hope. 

While it’s not the ideal situation, rescinding a job offer can be done professionally and legally. When rescinding a job offer, employers must consider what’s in their best interests. 

Ask yourself: 

  • Why is the offer is being pulled? 
  • Are the candidate’s rights being infringed upon? 

If the answers to those questions are fair, rescinding an offer might be uncomfortable, but it can be done, and done professionally. 

Article Sources:

  1. SHRM.org. “SHRM: Employers Slow to Pick Up Trend of Continuous Screening
  2. Inc.com. “85 Percent of Job Applicants Lie on Resumes. Here’s How to Spot a Dishonest Candidate
  3. CareerBuilder.com. “Press Room
  4. SafetyandHealthMagazine.com. “NYC Bans Preemployment Drug Testing for Marijuana, THC
  5. Lung.org. “State Legislated Actions on Tobacco Issues (SLATI)
  6. NLRB.gov. “The NLRB and Social Media

Riia O'Donnell

Riia O’Donnell is a human resource professional with over 15 years of hands-on experience in every discipline of the field. A subject matter expert, she answers your most-asked HR questions on the small business resource website Workest. Her first job, at age 15, was working the early morning shift at a local bakery on weekends.

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