Withdraw a Job Offer: What Are the Risks?

question-29017_1280Q. We collected an applicant a job and the applicant accepted the job.  The starting date was agreed on.  Prior to the starting date, we decided we do not want to employ this person.  Can we retract the offer of the job? If so, what are some of the possible legal implications?

A. Yes, you can retract the offer of a job, just as you can terminate an employee for any legal reason at all.  But, further questions arise.

  • Will you be liable for paying the applicant unemployment insurance? No.  Because no employer-employee relationship was established.

An employer-employee relationship does not come into existence when you merely agree to create such a relationship at some date in the future.  Until such an agreement is undertaken by acts of the parties (example: employee begins work, or the employer begins paying the employee), none of the results of an employer-employee relationship can exist.

  • Could the applicant sue you for unlawful discharge? Again, the answer is “no” because no employer-employee relationship is established.
  • Could the applicant sue you for breach of contract? In some instances, yes.  Depending on whether a contract was established, when you offered the job and the applicant accepted the job.  The decision on whether a contract existed would depend on the circumstances in each situation.

Example: If the applicant, relying on the offer of the job and his or her acceptance of the offer, turned down other employment offers or if the applicant in the same situation expended money to move to the community in preparation of starting work, the applicant could argue he or she had been damaged by the withdrawal of the offer.  Such situations raise the possibility of a suit for breach of contract.  And the damages would be any amounts expended or otherwise lost in reliance on the promise of employment.

  • Could the applicant file a discrimination charge against you? Yes, depending on the circumstances in each case.  If the applicant had reason to believe the offer of the job was withdrawn because of some illegal discriminatory reason, the applicant could file a discrimination complaint and argue based on those circumstances.

The applicant would have to assert your withdrawal of the offer of employment based on one or more of those factors which the law says creates discrimination, such as age, sex, religious affiliation, physical handicap or ethnic background.  If the person involved happens to be a member of one of these protected classes, you as an employer will want to use extreme care in documenting the exact reasons for withdrawing the offer of employment.

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