Is it legal to withdraw a job offer?

When a company makes a job offer to a candidate, a binding employment contract is usually formed once the candidate accepts the offer. However, in some cases, it may be legal for an employer to rescind a job offer under certain circumstances.

Can an employer withdraw a job offer?

In general, once a job candidate accepts a formal offer of employment, a legal contract has been formed between the employer and candidate. This means the employer cannot simply withdraw the offer on a whim. However, there are some exceptions where an employer may have the right to revoke a job offer, including:

  • The offer letter or contract stated the offer was contingent on something – like completing a background check or drug screening. If the contingency is not met, the employer can withdraw the offer.
  • The employer made a mistake in making the offer, such as offering the wrong job title, compensation, or responsibilities. There must be clear evidence it was an unintentional error.
  • There was a misunderstanding about a major element of the job which substantially changes the role. For example, extensive travel requirements were not disclosed.
  • The employer’s financial circumstances changed significantly and unexpectedly. There must be evidence that continuing with the hire as-is would cause substantial damage.

If none of these narrow exceptions apply, it is usually illegal for an employer to rescind a job offer once the candidate accepts it.

What if the employee has not started work yet?

Some people mistakenly believe that if the employee has not started working yet, the employer can withdraw the job offer without consequences. This is not true – once an employment contract is formed, it is legally binding even if the employee’s start date is still weeks or months away.

The exceptions above allowing an employer to revoke an offer apply regardless of whether the employee has begun working. Starting work is not a prerequisite for having a binding employment agreement.

When does a contract form after a job offer?

In most cases, a job offer and acceptance will form a binding employment agreement. The key elements needed are:

  • The employer made a clear, formal job offer for a specific position.
  • The offer included all key employment terms – job responsibilities, compensation, benefits, work schedule, etc.
  • The candidate accepted the offer definitively, either verbally or in writing.

This creates an employment contract enforced by law, even if no written document has been signed. However, the agreement is strengthened if the main terms are put in writing, such as in a formal offer letter. And in some cases, a written job offer may state that a binding agreement is only formed when the written document is signed.

What if the offer letter says “at-will” employment?

“At-will” means the employment relationship can be ended by either party at any time for any lawful reason. However, this refers to terminating employment after work has begun – not withdrawing a job offer. Stating a job is at-will does not give the employer a broad right to revoke offers.

When can a contingent job offer be withdrawn?

If an offer letter states the job offer is “contingent upon” something, that contingency must be met for a binding contract to form. Common contingencies include:

  • Background check – Employers may make offers contingent on the candidate passing a criminal history, credit check, employment verification, education confirmation, motor vehicle records search, etc.
  • Reference check – The candidate must meet certain standards in their professional and personal reference checks.
  • Drug screening – A negative pre-employment drug test may be required.
  • Other pre-employment testing – This may include skills testing, personality assessments, etc.

If the contingency is not met, the employer can legally withdraw the conditional job offer. However, there must be evidence the contingency legitimately was not fulfilled – an employer cannot simply use it as an excuse.

Withdrawing an Offer Based on Salary Negotiation

Some employers make job offers contingent on the candidate accepting the salary and benefits package offered. In this case, if the candidate tries to negotiate or counter the offer, the employer may legally withdraw the original offer.

However, it is unethical to include a “no negotiations” contingency solely to trap candidates and prevent them from attempting to negotiate salary or benefits. If there is no stated contingency about negotiations, an employer generally cannot rescind an offer simply because the candidate tried to negotiate for better terms.

Can you change your mind after accepting a job offer?

Just as employers cannot usually back out of a job offer after the candidate accepts, the candidate also cannot accept an offer and then simply change their mind and withdraw their acceptance later on. Once an employment contract is formed, both parties are legally obligated.

However, if the employer made important changes to the terms of employment that were not agreed upon, that may allow the candidate to withdraw from the contract.

Some state laws give employees a brief window of time – such as 72 hours – to rescind their acceptance even without the employer changing terms. But absent such a cooling-off law, employees are typically bound once they accept an offer.

What damages can an employer face if they unlawfully withdraw an offer?

If an employee can show the employer breached a binding employment contract, the damages caused by the withdrawn offer may include:

  • Lost wages – The pay and benefits they would have earned if they had started work as expected.
  • Relocation costs – If the applicant already incurred costs like travel and moving based on the offer.
  • Future lost wages – Their earning potential may be damaged by the sudden withdrawal of the position.

If the withdrawal was discriminatory or retaliatory, additional damages may be available. Punitive damages to punish the employer may be awarded as well in egregious cases.

How can unlawful withdrawal of a job offer be proven?

To have a case, the applicant must be able to clearly document:

  • They received a formal offer of employment for a specific position and compensation.
  • They definitively accepted the employment offer.
  • The employer rescinded the offer after acceptance.
  • There was no legitimate basis for the employer to withdraw the offer.

Written records like emails, offer letters, and signed contracts provide the strongest evidence. But witness testimony can also be used to substantiate a claim.

Is verbal acceptance of a job offer binding?

Accepting a job offer verbally, such as saying “I accept the position” over the phone, can form a binding employment agreement under the law. Written acceptance is not required. However, a verbal agreement may be more difficult to conclusively prove if a dispute arises.

If an employer wants ironclad evidence the applicant accepted the offer, they should use a written offer letter requiring written acceptance by a certain date. This avoids “he said, she said” situations over whether a verbal agreement was reached.

Should employers make conditional offers when possible?

While unconditional job offers provide the greatest certainty for applicants, employers should consider making offers contingent where feasible. Common contingencies like background checks, drug tests, and reference checks help minimize the risk of making commitments to candidates who may have misrepresented themselves or be unsuitable for the role.

If an employer may need to withdraw an offer for any reason, stating clear contingencies in the offer letter provides more legal protection. Documenting and demonstrating the contingency was not fulfilled becomes essential.

What if an employer simply made a mistake in the offer?

Sometimes clerical errors lead to job offers that overstate the salary, benefits, job title, work location, responsibilities or other key terms. In these cases, the employer may be able to withdraw the erroneous offer if:

  • The mistake is proven to be unintentional – not simply changing their mind.
  • The mistake is substantial enough that the employee should have reasonably known the offer was an error.
  • The employer gives notice and withdraws the mistaken offer very soon after it was made.

However, the window for the employer to claim a clerical mistake is very narrow, and they generally must honor an accepted offer.

When can an employer withdraw an offer due to business changes?

If an employer’s financial condition or other business needs change unexpectedly after making a job offer, they may be able to justifiably withdraw the offer in some cases. This generally requires proving:

  • The new financial or business circumstances were unforeseeable and outside the company’s control when the offer was made.
  • The changes are dire and extraordinary enough that going through with the planned hiring would substantially damage the company.
  • The company can document the sudden business reversal and need for layoffs or a hiring freeze.

Unless the company’s survival is on the line, this exception rarely allows withdrawing a job offer once accepted. And changes in business conditions that are not dramatic are unlikely to provide sufficient justification.

Withdrawing an Offer Based on Prior Salary

While employers typically have the right to ask candidates about their salary history, they cannot legally rescind a job offer solely because they deem the applicant’s prior pay rate too high or too low. Withdrawing an offer on this basis could constitute employment discrimination.

Can you withdraw a job offer after negotiating salary?

In most cases, an employer cannot withdraw a job offer solely because the applicant tried to negotiate or counter the salary, benefits, or other terms in the offer. Negotiating over pay and employment terms is protected activity for candidates.

However, if the offer letter specifically said any negotiations or counter-offer would make the offer void, the employer may have grounds to withdraw it if the candidate still tries to negotiate. Such “no negotiations” clauses should be used carefully to avoid deterring candidates.

Withdrawing an Offer Letter Template

If an employer determines they have legal grounds to withdraw a job offer, they should inform the candidate in writing as soon as possible. A rescinded offer letter might include:

  • Regret for having to withdraw the offer
  • An explanation that a binding contract was not formed or that a contingency allowing withdrawal applies
  • The specific reason for revoking the offer – the contingency not met, mistake, changed circumstances etc.
  • Supporting evidence where applicable – results showing a failed drug test, sudden major business changes etc.

The letter should be brief but provide clarity on exactly why the offer cannot move forward to reduce the chance of legal action by the disappointed candidate.

Should you hire an attorney if an offer is withdrawn?

A candidate who believes an employer unlawfully withdrew their job offer may benefit from consulting with an employment attorney. An attorney can assess the evidence and merits of the case. They can also handle contacting the employer to try to resolve the situation before deciding whether to file a lawsuit.

It is especially prudent to obtain legal representation if the withdrawn offer damages the applicant’s finances, career prospects, or ability to secure other jobs. An attorney can advocate to recover these damages if the offer retraction was illegal.

Key Takeaways

  • Once a candidate accepts a formal job offer, a legally binding employment contract is generally formed.
  • An employer cannot simply revoke a job offer on a whim – there must be specific circumstances allowing withdrawal.
  • Accepting an offer verbally forms a contract, though written acceptance is more protective.
  • Contingent offers can be rescinded if the stated conditions are not met.
  • Substantial mistakes in the offer terms may allow withdrawal but the window is very narrow.
  • An employer should provide evidence and reasons justifying withdrawing an accepted offer.

Conclusion

While employers may have limited grounds to revoke a job offer under certain circumstances, they cannot arbitrarily go back on their word once a candidate accepts. Unless the offer was contingent, mistaken, or the company experiences dire unforeseen events, reneging on a job offer after acceptance generally violates the binding employment agreement formed. Candidates should review the specific facts to determine if legal action is advisable if an accepted offer is rescinded improperly.

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