Withdrawing a job offer can be difficult. There's no way around it. Aside from handling the awkward phone call and letting your prospect down, you also have to worry about the legal issues a rescinded job offer can pose.
Whether it’s for budgetary reasons or because you've learned new information about your candidate, it’s never easy to rescind a job offer.
If you're facing the difficult decision to do so, here are some of the most important things to know.
5 Valid Reasons for Rescinding Your Job Offer
While never an easy or enjoyable task, there are plenty of legitimate reasons why you may need to rescind a job offer you previously made.
Generally, a job offer (even a written one) is not legally binding until both the employer and the candidate sign it. Even then, most employers write their job offer letters to be conditional on things such as background checks, reference checks, and drug tests.
Likewise, a job offer letter should always include a termination or expiration date so it doesn't remain open for long-term acceptance.
So, what are some of the most common reasons to rescind a job offer?
1. The Structure of Your Business Has Changed
Among the most straightforward reasons for withdrawing a job offer is that your business has simply experienced a change in circumstances.
This could be from a sudden economic downturn in your region, industry fluctuations, or a simple company restructuring. Perhaps you've decided not to fill the vacancy at all, or maybe you wish to wait until a later date to find a new candidate.
As long as you made your employment offer conditionally and no employment contracts have been signed, you have nothing to worry about here.
Of course, this will still be disappointing news for your candidate.
This is why it's a good idea to reassure the candidate in a withdrawal letter that the decision wasn't personal and that there may be opportunities for them to work with you in the future.
2. You've Exceeded Your Hiring Budget
In a 2022 survey of small business owners, 57% reported cutting back on business spending since the spring of 2020 (the beginning of the pandemic). Additionally, another recent survey reveals that 91% of U.S. CEOs believe the country is on the path to an economic recession.
The biggest takeaway?
An organization's finances could change in the blink of an eye.
If you're facing budget cuts or layoffs, one of the first things you may need to do is to put a hold on new hires.
After all, the costs associated with onboarding and training a new employee can be substantial—this, of course, doesn't even factor in the candidate's salary and benefits.
If you have to rescind a job offer due to budget changes, this is yet another situation where it will be important to explain that the decision is internal and not a reflection of the candidate's skills.
3. The Candidate Misrepresented Their Credentials
One of the more difficult reasons for rescinding a new job offer is that the candidate lied during their interview or misrepresented themselves on an application.
Unfortunately, this situation is more common than you may think.
Studies find that 32% of Americans admit lying on a resume, with 40% of those respondents reporting that their job offers were later rescinded as a result.
You might only find out that a candidate has lied or misrepresented themselves after you've already offered them the job, have received a callback from a reference, or obtained the results of the candidate's background check.
This is why it's crucial to verify the candidate’s information before making an offer.
Lastly, you can also often find out a lot of information about a job seeker with just a quick online search.
4. The Candidate Failed a Drug Test
In another scenario, your prospective new hire might fail a required drug test after you’ve already made them a job offer.
Depending on your industry and/or company’s policies, this may be grounds for rescinding an offer. (Some states, however, have protections for medical marijuana users, so it’s necessary to get sound legal advice before rescinding an offer on these grounds.)
If the job offer depends on the candidate passing a drug test, then make sure the candidate is aware of this requirement. In most cases, it’s easier to withdraw a job offer for failing a drug test than it is to fire an employee for failing one.
5. The Candidate Signed a Non-Compete Agreement
Another possible reason to rescind a job offer is that the prospective candidate turns out to have signed a non-compete agreement with another employer (possibly making it illegal for them to accept your offer).
This situation often arises when a candidate signs an agreement at the start of employment with a competitor; they likely don't remember signing it, but it may have come up while you checked references or ran a background check.
Although the candidate hasn't deliberately lied or misrepresented themselves, moving forward with the hire could still open you up to legal action from the former employer. With this in mind, you're well within your rights to withdraw the job offer.
How to Politely Rescind an Offer
If you need to rescind an offer, it's important to do it tactfully and professionally.
Not sure where to begin? Follow these steps to withdraw a job offer as gracefully as possible.
1) Consult an Expert and Perform a Legal Review
Start by meeting with a legal advisor, such as a reputable employment or corporate lawyer, to ensure you're on sound legal grounds to rescind the offer.
The last thing you want is to face a breach of contract or discrimination lawsuit, so consulting with a lawyer will help you cover your bases. If any legal risks are associated with withdrawing the job offer, an experienced lawyer can walk you through them.
2) Make Sure the Position is Filled or Removed
Throughout the hiring process, you likely will have selected a few candidates who would be a good fit for the position. If you have to rescind an offer to one candidate, be sure to fall back on those previous applicants to fill the position as promptly as possible.
After all, vacant positions can cost your company tens or even hundreds of thousands of dollars.
If you've decided not to fill the position due to budget cuts or other internal changes, promptly remove all job listings.
3) Reach Out by Calling the Candidate or Leaving a Voicemail
Next, it's time to reach out to the candidate personally. This is never fun, but it's necessary—and you have the freedom to decide exactly how you'll break the news.
Many hiring committees prefer to rescind job offers over the phone or (in some cases) in person. This provides an opportunity to personally explain the reason for the withdrawal and speak with the candidate one-on-one.
If the candidate doesn't answer the phone, leaving a voicemail and providing a phone number or email address for a follow-up is also appropriate.
4) Send an Official Rescinded Job Letter
Regardless of how you decide to break the news, it's important to send an official withdrawal letter or notice to the candidate as well.
This will ensure that you have a formal withdrawal in writing so there's no confusion or miscommunication. Consider sending your letter via Certified Mail that requires a signature so that you can prove the candidate received the delivery.
5) Provide a Follow-Up Contact
Understandably, your job candidate may have questions about the withdrawal. Do them the courtesy of providing a follow-up contact, such as a human resources manager within your company.
You can include this information in your formal withdrawal letter, during a phone call, or in a voicemail.
Examples of Employment Withdrawal Letters
Once you're sure you have valid, legal grounds for rescinding your job offer, you might need to construct a withdrawal letter for the candidate. Below are two examples of how to gracefully withdraw an offer of employment in a letter.
Feel free to use either of these as a template to draft your own withdrawal letter.
Example 1: Candidate Misrepresentation
It is with regret that we must inform you of our intent to rescind the offer of employment sent you to you on [date] for the job of [position] at [Company X].
As noted in our original offer letter and per our discussion during your interview, our standard hiring process includes a background check and verification of prior education and employment.
During this process, we were unable to verify the BA degree from [University name] on your application.
In addition, your previous/current employer, [Company name], could only verify a record of part-time, temporary employment, not the full-time salaried role that was listed on your resume and described in the interview.
While we welcome any information that would clear up this discrepancy, the job offer sent to you on [date] is no longer valid at this time.
Example 2: Internal Budget Cuts
We’re writing to follow up on our offer of employment, sent to you by email and during a phone call on [date].
Unfortunately, recent budget cuts have made it so that the advertised role for which you applied is no longer available to be filled.
Everyone on our team enjoyed getting to know you over the past few weeks. We want to stress that this is not a reflection of your skills or your suitability for this position.
In fact, we encourage you to reapply if future positions open up. We know this must be a disappointment and are genuinely sorry for any inconvenience this may cause.
Hunt Club Can Help
Having to rescind a job offer can be uncomfortable. But when you seek legal counsel and ensure your bases are covered, your human resources team can tactfully and respectfully handle an offer withdrawal. From there, you can move on with doing what's best for your company.
Looking for more guidance on finding the right candidate for your next job opening? Hunt Club is here to help.
Our extensive network gives you access to quality talent that you may be missing with your other recruitment channels. Plus, you'll enjoy best-in-class service and technology-powered recruiting to make your next hiring process a seamless one.
Get in touch with our team today to learn more about what we can do for your growing business!