When a Company Can Withdraw a Job Offer

Company telling applicant they have withdrawn a job offer


sankai / Getty Images  

Many job applicants wonder if their job offer is set in stone once it has been extended. Unfortunately, the answer is no. For the most part, employers can rescind a job offer for any reason or no reason at all, even after you’ve accepted their offer.

So, what happens if you have already accepted a new job and the employer decides they don't want to hire you?

Reasons Employer Can Withdraw a Job Offer

Organizations can withdraw a job offer for virtually any reason, except a discriminatory one. However, there can be legal consequences in some situations.

Why are employers so free to revoke a job offer? Because of employment at will.

Most states, except Montana, have employment-at-will statutes, which allow employers to fire an employee under most circumstances. These laws are generally applied to rescinded job offers as well.

When prospective employees fail criminal background checks, misrepresent their background or fail a drug test, there is often no legal recourse if an offer was rescinded based on those discoveries.

Per the Equal Employment Opportunity Commission, an employer may even rescind an offer to a disabled candidate – but “only if it can show that [the candidate is] unable to perform the essential functions of the job (with or without reasonable accommodation),” or that the candidate poses “a significant risk of causing substantial harm” to themselves or others.

Reasons a Job Offer Should Not Be Withdrawn

However, employers can't withdraw an offer for discriminatory reasons such as race, religion, gender, age or national origin, and job applicants may be able to obtain legal protection if they feel they have been discriminated against.

As a precaution, candidates should wait until they have met all contingencies listed in a formal job offer before submitting a resignation at their current job, selling their home, signing a lease, or incurring other moving expenses.

How to Handle a Withdrawn Job Offer

In some states, candidates may have grounds for a lawsuit claiming damages if they suffer consequences as a result of a withdrawn job offer. In these cases, the plaintiff needs to show damages, such as moving costs incurred or lost income from a job they quit after receiving the job offer.

If you think you might have a case, you should consult a lawyer in your state and make sure that the attorney has won similar cases and is willing to be compensated on a contingency basis.

Minimizing the Chance Your Offer Will Be Withdrawn

It’s possible to do everything right and still wind up losing a job offer after it’s been extended, but there are things you can do to minimize the risk.

Be Honest and Forthright

As Mark Twain once said, “If you tell the truth, you don’t have to remember anything.” Beyond that, if you’re honest, you also don’t have to worry about your employer finding out anything later on. Never lie on your resume, and be prepared to answer any questions about your background that might give an employer pause. (For example, a criminal history or bad credit.)

Know Your Rights

For the most part, employers can conduct background checks, including credit and criminal history. However, the Fair Credit Reporting Act restricts how they can ask for and use the information.

Also, some states and cities have further restrictions about what employers can and can’t ask during employment pre-screening. As of July 2019, 35 states and 150 cities and counties prohibit employers from asking about criminal history. This “ban-the-box” legislation is intended to protect job applicants from discrimination.

Consider Getting It in Writing

In an interview with The Balance Careers, Mimi Moore, Partner in the Chicago office of Bryan Cave LLP, suggests asking if the job offer letter can specify what will happen if the offer is rescinded. If so, it’s important to be specific about any signing bonuses, advances, and moving allowances.

Make Sure You’re Comfortable With the Offer and the Company

Moore says that this is most important. If the company has a bad reputation or the offer seems iffy, think twice before signing on the dotted line. Legally, companies can rescind most offers; practically speaking, good employers won’t get in the habit of doing so, lest they scare off talented workers.

Have a Backup Plan

Taking a new job is always a risk, and it’s a good idea to have a plan in case things don’t work out. Would you ask for your old job back, pursue another lead, target another employer with your networking efforts? Busy as you are preparing for your new job, it pays to take a moment to think out what you’d do in the worst-case scenario. You never know when you might need a Plan B.

Key Takeaways

Employers Can Rescind Job Offers for Almost Any Reason – or None at All: Unless that reason is discriminatory, e.g. based on disability, gender, race, etc.

However, There Can Be Legal Consequences for Employers for Revoking an Offer: In some cases, employees may be able to sue for damages if they can prove they’ve suffered losses as a result.

You Can Take Steps to Avoid Losing an Offer: Be honest in your application and consider getting your offer terms in writing, including what happens if the offer is rescinded.

Always Have a Backup Plan: Bottom line, no job is forever, and no offer is guaranteed.

The information contained in this article is not legal advice and is not a substitute for such advice. State and federal laws change frequently, and the information in this article may not reflect your own state’s laws or the most recent changes to the law.