Having a job offer withdrawn can cause stress and confusion. This situation can happen for various reasons, and understanding the legal landscape is the first step toward figuring out your options. This article explains the legality of withdrawing an offer, potential exceptions, and what steps you can take if you find yourself in this position.
The Legality of Withdrawing a Job Offer
An employer’s ability to rescind a job offer is rooted in the principle of “at-will employment.” This legal doctrine, which applies in nearly all U.S. states, means either party can terminate the employment relationship at any time for any non-illegal reason. This concept extends to the period before employment officially begins, allowing employers to revoke a job offer in many cases.
The at-will doctrine creates a high bar for a prospective employee to challenge a rescinded offer. The core idea is that if an employer can terminate an employee on their first day, they can also cancel the job before it starts. This framework applies to both verbal and written offers, as the act of extending an offer does not remove the at-will status of the potential employment.
Common Reasons an Offer Is Rescinded
An employer might withdraw a job offer for legitimate, non-discriminatory business reasons. A frequent reason is a failed background or reference check, as offers are often contingent upon successful screenings. If a background check reveals a criminal record or if references provide negative feedback, an employer may withdraw the offer. Discovering that a candidate misrepresented their qualifications is also a basis for rescission.
Internal company changes can also lead to a withdrawn offer. Sudden budget cuts, a company-wide reorganization, or a hiring freeze can eliminate a previously approved position. In other cases, the role may be filled by an internal candidate or leadership may decide the position is no longer necessary.
Exceptions for Illegal Offer Retractions
While employers have latitude to rescind job offers, this power is not absolute. Federal and state laws prohibit employers from making employment decisions, including withdrawing an offer, for discriminatory reasons. These laws create exceptions to the at-will doctrine, protecting applicants in a protected class.
The U.S. Equal Employment Opportunity Commission (EEOC) enforces federal laws that forbid discrimination based on race, color, religion, sex, national origin, age (40 and older), disability, or genetic information. Withdrawing an offer after discovering a candidate is pregnant or requires an accommodation for a disability could be grounds for a discrimination claim.
An employer also cannot rescind an offer in retaliation for a candidate engaging in legally protected activity. This includes situations where an employer discovers the candidate previously filed a discrimination complaint or opposed discriminatory practices. To prove retaliation, a candidate must show a link between their protected activity and the decision to withdraw the offer.
The Role of an Employment Contract
The rule of at-will employment can be modified by an employment contract, which can provide greater legal protection if a job offer is withdrawn. It is important to distinguish between a standard offer letter and a legally binding employment contract. A typical offer letter outlines basic terms like salary and start date but often includes language confirming that the employment is “at-will.”
This document is not considered a binding contract for a specific duration. A formal employment contract is a more detailed legal agreement that may specify a fixed term of employment and conditions under which termination can occur. If a candidate has a signed contract guaranteeing employment for a specific period, an employer who rescinds the offer may be in breach. Even an oral promise can sometimes be considered an enforceable contract, though proving its existence and terms can be challenging.
Pursuing a Claim for Financial Loss
Even without a formal contract, a candidate who suffers financially from a rescinded offer may have recourse under a concept known as “promissory estoppel” or “detrimental reliance.” This principle applies when a candidate takes significant, foreseeable actions based on a clear promise of employment. To make a successful claim, a candidate must prove the following:
- There was a clear and definite job offer.
- The employer expected the candidate to rely on it.
- The candidate’s reliance was reasonable.
- They suffered a tangible loss as a result.
Common examples of detrimental reliance include quitting a stable job, selling a house, incurring relocation expenses, or turning down other job offers. If these conditions are met, a court may require the employer to compensate the candidate for financial damages, such as reimbursement for moving costs or lost wages from the job they quit.
Your Next Steps After a Rescinded Offer
If a job offer is withdrawn, remain professional in all communications with the employer. Politely ask for a clear reason for the decision in writing, as this documentation can be useful if you decide to explore legal options.
Next, carefully review the offer letter and any other written correspondence you received. Note any language about the employment being “at-will” or any conditions attached to the offer, such as passing a background check.
If you believe the offer was rescinded for an illegal reason or if you incurred significant financial losses, consider consulting with an employment lawyer. They can help you understand your rights and determine if you have a viable claim. Finally, resume your job search as soon as you feel ready, focusing on new opportunities.