April 22, 2008, 5:44 PM — What do you do when a prospective employer offers you a job but pulls the rug
out from under you and rescinds the offer before you start work? What happens
if you've sacrificed a good, stable job for one that doesn't materialize, or
if you spent thousands of dollars to relocate? What recourse do you have, if
any?
Most job seekers don't know the answers to these questions, according to Mimi
Moore, a partner in the labor and employment group at Bryan Cave LLP. She says
job seekers tend to be unaware of the specter of rescinded job offers: "People
understand that a job may not work out, that the company might have to do a
reduction in force, but they don't think of a rescinded job offer being a possibility,"
she says.
In fact, rescinded job offers are a growing reality in a weakening economy,
and Moore expects to see an uptick in the coming months. "I think fewer
job offers are going to be extended, and the ones that are will have a higher
probability of being rescinded," she says.
The risk of having a job offer revoked is even greater for executives than
for lower-level workers, says Moore, because executives are often hired so much
farther in advance of their start date. An employer's needs can change between
the time an offer is made to an executive and the time she starts, which can
be six months later. By contrast, lower-level workers are usually hired to fill
an immediate need.
Job seekers at all levels can protect themselves from being blindsided by a
rescinded job offer by asking incisive questions about a prospective employer's
hiring practices and by negotiating certain protections into offer letters and
employment contracts. Moore elaborates on these details for employers and employees
in this Q&A.
CIO: What do employees need to know about rescinded job offers?
Moore: An employer can rescind a job offer at any time. Absent a signed
employment contract between an employee and an employer that provides for a
specific term of employment and specific provisions for breach by either side,
a job offer is essentially a contract for employment at will. Many people think
once they have an offer, it's in writing, they sign it and return it, they think
it's a contract. But really it's a contract for employment at will, which can
be terminated at any time.
Candidates are not employees until they go to work. Even at that point, they're
employees at will. After the first day of work, either party can end the relationship.
Individuals don't have a right to a position [that's been offered to them].
Under what circumstances do employers rescind job offers?
Typically, job offers get rescinded in situations where employers, for one
reason or another, do not have the need for a job that they predicted they'd
have when they first offered the job to a candidate. A typical situation is
an employer interviewing on a college campus, extending offers to college grads.
By the time the college grad is supposed to start working, whether that is over
the summer or in the fall, the employer no longer needs them because of either
a downturn in their business or in the general economy.
Rescinded job offers typically occur in clumps of people. For example, a law
firm believes it needs five new associates. It makes those hiring decisions
in September or October, but people won't be starting for another year. The
same thing goes for companies interviewing on college campuses. They're making
hiring decisions far in advance of an actual start date. If there's subsequently
been a change in their business or in the economy that results in there no longer
being a need for an employee, they may rescind a job offer.
Higher-level candidates can see offers rescinded when a company decides to
do a restructuring and to eliminate the position they've offered for economic
reasons: The company decides it would be better to vacate a position they've
offered to someone instead of terminating their employment, in order to save
employees who've been working there for a long time.
Alternatively, job offers occasionally get rescinded when something [bad] is
discovered about an individual or their references don't check out.
What can job seekers do to protect themselves from rescinded job offers?
