As Unemployment Numbers Rise, Rescinded Job Offers Will, Too — 4 Ways to Protect Yourself

• There are many reasons employers may choose to rescind a job offer — and most of them are legally permitted, with a few exceptions.
• As a candidate, there are four scenarios in which you may be able to seek a legal recourse for a rescinded offer. 
• Signing an offer isn't enough. You can protect yourself from rescinded job offers by getting an employment agreement in writing.

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The current job market is a challenging one, to put it mildly. With new claims of joblessness rising at historic levels and such large swaths of the U.S. economy frozen, it’s understandable that attempting to find a new role in this moment may feel especially daunting. 

Unfortunately, even if you have already been extended a job offer, you may not be in the clear just yet. As budgets dry up and companies’ hiring needs change, more candidates may find themselves on the receiving end of rescinded job offers. But why would a company go to the effort of formally extending a job offer only to take it back? There are a few reasons why this happens — and, given the current financial climate we’re in, it’s wise to be prepared for this possibility. Here’s what you need to know about why companies rescind offers, and how to protect yourself.

Reasons why employers withdraw job offers

1. The economy is weak. 

This is perhaps the most common reason for a job offer to be rescinded. When the economy is weak — or when it’s in peril, as is the case during recessions — companies may be forced to pull back on hires they’d fully planned on making. This is because financial forecasting is often incredibly difficult in these situations, especially for organizations that depend on account contracts for revenue. It’s possible that a matter of days or even hours after you were made an offer, the company’s financial health has already changed drastically. 

2. An issue emerged with your background check.

Most companies will finish conducting a background check on a candidate before extending a formal, written offer (though an informal or verbal offer may already be on the table). If the company was late in completing your background check and afterward determined they weren’t happy with its results, they may at this point rescind the offer. The same goes for changes in a job offer’s status based on drug test results.

3. You tried to negotiate after signing. 

While you’re totally within your right to request more money or benefits from a company that’s made you an offer — in fact, it’s strongly advised that you do! — the time for this is prior to your formal acceptance of the role. If you’ve already completed the paperwork before telling HR that, really, you think an additional $10K is necessary for you to take the role, it’s possible they may rescind the offer.

4. The start date you agreed to no longer works for you.

Many organizations are understanding and willing to accommodate changes to a new employee’s start date — something that will hopefully hold even truer as we collectively navigate unexpected life changes in the wake of this pandemic. But if your start date needs to be pushed back by, say, a month, the company may have to rescind your offer in favor of hiring a more immediately available candidate.

5. After accepting the offer, your behavior was unprofessional. 

If you accepted an offer and afterward caused the company to doubt your professionalism, if the company is an at-will employer, this alone is sufficient reason for them to rescind your offer. 

You may be wondering: Is it illegal to rescind a job offer for reasons like these? 

The answer is usually no. Most at-will employers are legally allowed to rescind a job offer for any reason besides a discriminatory one — although, incredibly, loopholes remain that allow some states to continue certain disgustingly discriminatory hiring practices. Although the U.S. Equal Employment Opportunity Commission clearly states that “it is illegal to discriminate against someone (applicant or employee) because of that person's race, color, religion, sex (including gender identity, sexual orientation, and pregnancy), national origin, age (40 or older), disability or genetic information,” discrimination against LGBTQ+ employees, for example, is still legally permitted in 26 states. (Advocates hope that a Supreme Court ruling slated for late 2020, however, will change this.) Individuals with disabilities often remain vulnerable to discimination, too — an offer made to a specially abled person can be legally revoked, for instance, if the employer can show that the individual would be “unable to perform the essential functions of the job (with or without reasonable accommodation)” or the individual poses “a significant risk of causing substantial harm.” Additionally, one can certainly make the argument that job offers revoked on the basis of a candidate’s criminal history should be included within this framework of illegal discrimination, too.

How about whether a company can withdraw a job offer after signing a contract with you? 

This is usually still legal, as well, but it depends on the specifics of your contract. Unless the agreement is “irrevocable” — which is generally not the case for employment contracts — an at-will employer can revoke the offer without legal penalty and without owing you compensation. There are a few exceptions to this, however — more on that below.

How do you respond to a rescinded job offer?

1. Find out why the offer was rescinded. 

You’re likely upset and disappointed, and your pride may be hurt. But don’t let that stop you from inquiring (politely and professionally) why the offer was rescinded. In many situations, the rescinded offer will have nothing to do with you personally. If, however, it was the result of something you did or said in the interview process (or after it), that information could be crucial to apply to your future job search. If there was a problem with one of your references, for example, you should know not to use that same reference again. And if the company is unable or unwilling to answer why the offer was rescinded, and you believe that you’ve been discriminated against, their lack of an answer is useful to document, as well.

2. Ask what your options are.

If it was a change to the company’s financial health that caused your intended role to be eliminated, perhaps there’s another opening within the company that you’re qualified for. Take this opportunity to ask about your options, and do what you can to preserve the relationship with your would-be manager. If not now, it’s possible they could still have another opening for you down the road. Don’t be afraid to ask whether that individual may know of similar open roles outside of their specific company, as well. If their only reason for rescinding the offer was financial, chances are they feel terrible about it and will be happy to help connect you — especially since they liked you well enough to hire you themselves. Treat them like a new member of your network, because that’s what they are.

3. Can you sue if a job offer is rescinded?

As referenced earlier, at-will employers are largely protected from legal action over rescinded job offers. If you’re still feeling wronged by the situation, or if you have reason to believe you were discriminated against, there may be some avenues for legal recourse still open to you. For instance, a candidate may be able to pursue a claim against their would-be employer in these situations: 

• Promissory Estoppel: An employer may be held liable if the revokal of promised employment results in loss or harm to the candidate — for example, if the candidate incurred moving costs as a result of the offer. Protections varies from state to state.

• Fraudulent Misrepresentation: An employer may be held liable if the candidate is able to prove the company knowingly made a false offer of employment.

• Breach of Contract: An employer may be held liable if a contract, beyond that of an at-will employment relationship, was entered into with the candidate.

• Discrimination: An employer, as discussed earlier, may be held liable if the candidate can prove discrimination as a protected class. (Read more on workplace discrimination laws and protection here.)

How to minimize the chance your offer will be rescinded

Oftentimes, whether or not a job offer is rescinded is totally out of the candidate’s hands, but there are still a few protective measures that can be taken. 

1. Be savvy about what you get in writing.

Given that most paperwork used by at-will employers avoids legal culpability for rescinded offers, you may want to consider asking for certain things in writing beyond the offer itself. Unlike a written job offer, an employment contract with specific promises made between you and the employer offers more protection — for example, you might choose to negotiate for an employment agreement that includes a signing bonus or relocation allowance even if the employer rescinds the offer. As a contract goes both ways, however, you should be careful about what you’re agreeing to here, as well. You don’t want to wind up in a position where you could be sued by the employer for breach of contract, for instance, if you’re the one who reneges on the offer.

2. Be honest. 

Allow no room for an employer to claim you misrepresented yourself on your application or during the interview process. Always be totally honest with the information you’re providing, and be upfront about anything in your employment history that may give the employer pause if they discover it themselves down the line. (On the flip side, it’s also okay to protect yourself from potential discrimination if you live in a state with strong worker protections — you may not have to disclose all elements of a criminal background, for instance. Research your rights within your specific state.)

3. Be certain of the employer’s reputation. 

Although companies may be legally permitted to rescind an offer, most good companies won’t make a widespread practice of this. Read a company’s employee reviews to get a feel for the integrity and trustworthiness of its culture, as well as information on its hiring practices.

4. Have a backup plan.

This is less about minimizing your chances of an offer being rescinded and more about protecting yourself in the event it happens. Before informing a current employer of your intent to leave the company, for instance, you should always make sure you have all of the necessary information in writing and signed by your new employer. And if the new employer does go back on their offer, know what your Plan B is. Can you get your old job back? Are there other open roles you could be applying to now at different organizations as a backup until your new position starts? Not putting all of your eggs in one basket is always a good idea.