Can an employer revoke a job offer?

A good hiring process would ideally weed out unsuitable applicants by the time a job offer is made – but what happens when red flags start to appear after that contract has been signed?

This scenario happens more often than you’d think – but under what conditions can employers revoke a job offer?

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Can an employer revoke a job offer?

Employers can withdraw, revoke, or rescind a job offer even when the applicant has already accepted it as long as it’s done within the timeframe indicated in the offer agreement and the reason for the revocation is not due to anything considered discriminatory, such withdrawal because of race, gender, religion, age, disability, or national origin.

The most common reason a company would rescind a job offer is a breach in conditions laid out in the employment agreement, which could happen due to various reasons.

Below are some of the conditions an employer can withdraw a job offer:

1. Failing a background check

This happens when candidates fail a standard background check, such as a criminal screening or a drug test.

2. Unacceptable behavior

This happens when an applicant behaves in a manner that goes against what the company’s values, and can occur between the applicant receiving the job offer and the applicant’s first day on the job.

3. Disabilities impacting job performance

Although an employer cannot revoke an offer based on discriminatory reasons, there are grounds for an employer to withdraw if the candidate has been found to be incapable of performing the job even if reasonable accommodations have been made.

4. Biases in the hiring process

Choosing an applicant because of an employer’s personal preferences or based on nepotism and not for the company’s best interest could lead to an unexpected job offer withdrawal. This could also happen when the employer hired an applicant despite not doing well during the interview process, or more suitable candidates were available.

5. Insufficient references

Failure to check references before offering the job can cause problems in the long run, especially if the applicant has been hiding information about themselves that could negatively impact your company.

6. Overspending and/or double-filling a position

This happens when an employer exceeds its hiring budget and or accidentally hires more than one candidate for a single role, forcing them to withdraw new job offers.

7. Downsizing

An unexpected event may impact an employer’s finances, compelling it to cut down on its workforce to stay afloat.

Regardless of the reason, an employer withdrawing a job offer should provide the candidate with an official withdrawal letter.

The letter should include all the details the applicant needs, such as the company’s name, job position, HR contact information for if the applicant has any questions regarding the move, and the reason for the job offer withdrawal. The letter should also note that the company is not required to offer any compensation, especially if the offer letter has not yet been signed and shared. 

Can applicants sue an employer for withdrawing a job offer?

Candidates who do not accept the decision normally cannot form a legal case against a company since most employment is at-will – meaning employers can let go of employees for no or any reason at all.

However, employers should still be aware that applicants can still sue if they are able to prove they suffered losses or damages due to the withdrawal, such as relocation expenses or lost income from resigning from their previous employer and position in favor of the new offer of employment.

Read more: Retracting a job offer – what’s legal?

How to avoid rescinding a job offer

Revoking a job offer should only be used as a last option by an employer because the recruitment process is both costly and time consuming.

The best thing HR professionals can do to avoid rescinding an accepted job offer is to be clear about the hiring process, as well as thoroughly vetting a candidate’s application. It also helps to have well-defined job descriptions and to ask the right questions during the interview process. Ensuring your hiring goals align with your organization’s financial projections can also help you avoid rescinding an offer for budgetary reasons.

However, if you ultimately find that rescinding an offer is the best option available, you can limit damage from legal action by offering a buy-out option of a couple of months of salary.