Navigating the complex world of small business compliance, including employee hiring best practices, can be difficult without the right tools and information. Here's a quick overview of the liability associated with rescinding a job offer. If you withdraw an offer, then you could expose yourself to considerable liability; that liability depends primarily on whether or not the offer has been accepted. Always consult legal counsel before withdrawing a job offer to understand whether you are exposing yourself to liability. A formal job offer letter is non-binding until the candidate accepts it. This means you can make modifications to the offer as you like, or rescind it completely, without risk. In general, if the candidate countered with different terms (i.e., in negotiation), then the initial offer is considered to have been rejected. Once the offer is accepted, you may expose yourself to liability if you withdraw it. Talk with a lawyer to examine the exact circumstances and the language of your offer letter to assess your options. Even if the offer was not explicitly provided as an employment contract and clearly stated that it was for at-will employment, the offer may be construed as a "promise." The legal concept of "promissory estoppel" specifically protects parties who suffer harm when such a promise is made and broken, even if no formal contract has been agreed to. In some cases, rescinding the offer could cost you more in damages than the salary you offered! A couple relevant examples:
If the candidate moved to another location to accept the position, and the accepted offer is withdrawn, then the candidate may seek damages and penalties in civil court.
If the candidate provided their notice of resignation to their current employer and cannot withdraw the resignation, then the candidate could lose that job, their benefits, and other career-related opportunities such as seniority or promotion. You may be liable for both current and future damages.
The safest way to minimize the risk associated with the withdrawal of an offer is a well-crafted offer letter.