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What situations allow an employer to rescind a job offer?

A potential employer may legally rescind a job offer for a variety of reasons, and a rescission may or may not be accompanied by a formal Employment Rejection Letter. However, under federal law, employers may never rescind an offer for a discriminatory reason. This includes rescissions that are based on an applicant’s gender, sex, race, nationality, ethnicity, pregnancy status, or other protected factors. Employers are generally permitted to rescind a job offer in the following circumstances:

Failed criminal history background check: In all states, employers are permitted to inquire about felony actions before hiring an employee. While employers may not be permitted to ask about your criminal history on a job application, they are allowed to ask before making the final decision to hire you.

Failed drug test: Employers are permitted to rescind an offer to hire you if you test positive for the use of illegal substances. While state laws vary, offers may generally be rescinded, especially if the employer has made the job offer contingent on passing the drug test.

Failed background check for other reasons: Depending on the background check service used by a potential employer, a background check may uncover a variety of items, such as your driving record, criminal history, civil court history, education history, employment history, and even your credit history. If an employer uncovers an item in your background check that calls your character into question in a way that may affect your ability to perform your job duties, they may very well rescind your job offer. In some states, such as California, you can request a copy of your background check in order to verify the potential employer has received the correct information about your history.

Bad responses from references: Potential employers may contact your references to inquire about your work history. No federal laws prevent your references from giving a potential employer factual, negative information about your past performance. However, many states have their own laws that set the parameters around what types of information a former employer can provide to your potential employer. For example, in Arizona, information about your job performance, reasons for termination, skills, education, and professional conduct are all fair game, while in Hawaii, former employers can only disclose information pertaining to job performance.

Lying on the application: If an employer finds out you have been untruthful on your job application, or in your resume, they are permitted to rescind your offer. Always be sure to supply potential employers with accurate and verifiable employment and education history.

Surprise budget cuts: Your potential employer may rescind your offer due to unexpected budget cuts across the company or within the department to which you were hired to work.

Change in workload for the company: Unexpected changes in revenue can mean a dip in the company’s workload. If a company lost the contract they hired you to work on, it may no longer have work for you to do, and a reason to rescind an employment offer.

Is a job offer a legally binding contract?

Whether or not your job offer represents a legally binding contract depends heavily on the exact language used in your Employment Offer Letter. In some instances, a judge may rule that a job offer is legally binding if it reads like a contract.

Factors that may weigh in favor of your offer being construed as a legally binding contract include the promise of a salary or specific employment time frame. If these items are present, your Employment Offer Letter may be enough to hold your potential employer accountable to the agreement.

To protect themselves, employers often outline all pre-employment screening information or other conditions that would lead to a rescinded job offer. The Employment Offer Letter is an opportunity to make it clear that the offer is conditional and not an Employment Contract.

What does “at-will” employment mean in an offer letter?

In all U.S. states except for Montana, the employer-employee relationship is considered “at will.”

According to the National Conference of State Legislatures, “at-will” employment means that “an employer can terminate an employee at any time for any reason, except an illegal one, or for no reason without incurring legal liability. Likewise, an employee is free to leave a job at any time for any or no reason with no adverse legal consequences.” At-will employment can be rescinded at any point, and for any legal reason, unless a signed Employment Contract says otherwise.

Many states recognize the concept of at-will employment as an almost absolute bar to any potential employee’s claims for damages incurred as a result of a rescinded job offer. In other words, if your job offer is rescinded and you sue—even to recover expenses you’ve actually lost—you likely have little chance of winning back lost money in most states.

When can an employee file a lawsuit over a rescinded job offer?

Laws vary from state to state, and some states are more receptive to the claims of job seekers who have had their offers rescinded than others. Typically, if an offer is rescinded, the would-be employee may be able to seek payment for moving expenses, if they moved in reliance on the job offer and the employer knew they would be moving to accept the job. Additionally, if they quit a job to accept the offer, that may also be the basis of a legal claim in states that allow these claims.

Some states, including New York, have interpreted at-will employment to include the period before employment technically begins, meaning the rescission of a job offer may be deemed proper as long as it’s not discriminatory. In jurisdictions like these, recovering damages in a lawsuit for a rescinded job offer may be especially tough.

In other jurisdictions, such as New Jersey, exceptions to the at-will employment rule have been made for certain circumstances, including when a job seeker has relied on the offer to their detriment by, for example, leaving their job or moving.

The rights and obligations surrounding a rescinded job offer are complicated and vary based on your location. If you have more questions about your rights after receiving a job offer, reach out to a Rocket Lawyer network attorney for affordable legal advice.

This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.


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