Withdrawing a job offer: Proceed at your own risk

After several months of recruiting, you've finally found an applicant you like.

For more on this topic, go to www.dentaleconomics.com and search using the following key words: recruiting, hiring, job offer, employment relationship, Tim Twigg, Rebecca Crane.

After several months of recruiting, you've finally found an applicant you like. You offer him the job, he accepts, gives notice at his current place of employment, and is scheduled to start work in a few weeks. Perfect, you think.

As part of your final process before the new person starts, you decide to conduct a background check, and the results that come back are not good. As a result, you withdraw the job offer.

The problem is, this person cannot keep his current job after giving notice of resignation and is now unemployed. Angry at what happened, he threatens to sue you or turn you in to the labor board for unfair labor practices.

Your response: “First, I'm not guilty because I never technically hired the person, and second, I'm an ‘at–will' employer; therefore, nothing will come of this.”

But the question is, is that true?

Although withdrawing a job offer is not necessarily illegal, the action does have some inherent risks, which should be taken into consideration by any doctor who may want to exercise his/her right to hire, fire, and/or withdraw job offers “at–will.”

Regardless of what leads an employer to withdraw a job offer, the individual subject to that action can make a legal argument based on fraud, breach of contract, promissory estoppel, and/or discrimination.

Claims of fraud

An individual who relies on misinformation provided by an employer during the recruiting process can file claims of fraud, fraudulent misrepresentation, or negligent misrepresentation.

This happens most often when the dentist, or the person doing the hiring, embellishes or conceals facts in order to snag the candidate for hire. You can certainly be enthusiastic and positive during the recruiting process regarding the business when trying to convince a candidate to work for you. It is best, however, to answer questions as truthfully and accurately as possible in order to avoid problems in the future.

To make this argument, an individual would have to show that the practice made a false representation, knew it was false, and intended for the applicant to rely on that false information as part of his/her decision–making process for accepting a position with the practice. If the individual is later subject to adverse actions because of this, then he/she could have a very strong case for a fraud claim.

Breach of contract

Contracts can be created by an employer through both verbal and written communication. Based on the language used, the employee or job candidate may believe that a contract has been created and his/her “at–will” status has been altered.

During the hiring process, this most often occurs with verbal or written job offers such as: “We look forward to having you on board and enjoying a long employment relationship,” or “Employment with us will continue until we have just cause to terminate the relationship.” These statements can be construed as creating a contract, which can undermine “at–will” prerogatives.

Consequently, it is very important that employers carefully craft their verbal and written job offer language to avoid inadvertently creating contracts.

Promissory estoppel

Promises made, promises broken; that is what promissory estoppel is all about.

It happens like this: The employer makes a promise of employment with the expectation that the prospective employee will take measures to begin employment at a certain date; the prospective employee gives up something of value or suffers economic loss based on the offer; then the employer rescinds the job offer.

Whether or not an employer will prevail in these types of claims is most significantly determined by how substantially the prospective employee is hurt by the action taken by the employer. Merely quitting a job may not be enough, but often accepting employment elsewhere entails much more than that — for example, changes in child care or school, purchasing transportation, a move to be near or closer to the office, purchasing new clothes, even selling a home, relocating to another state, and purchasing a new home.

Now, the bar can be sufficiently high enough for the employer to find him/herself in trouble when an offer is withdrawn.

Discrimination

A claim of discrimination can occur if the person originally slated for hire is in a protected class and, after having his/her job offer rescinded, discovers that the employer hired someone else who is outside the protected class. The legitimacy of the reason for the job offer withdrawal will greatly influence the validity of a discrimination claim.

The employer would have to demonstrate that his/her decision to rescind the offer was based on legitimate and nondiscriminatory reasons — for example, newly acquired knowledge indicating the candidate isn't suited for the job. Ultimately, it is the employer's responsibility to justify his/her actions as legal.

Preventing liability

In an ideal world, the employer will have completed all the phases of the recruiting process before making an offer of employment. The recruiting phases are different at each practice, but most often include applicant screening, interviewing, reference checking, background checking, personality assessments, drug testing, and — when appropriate — a skills assessment.

Legally, there are only two parts of the recruiting process that must be done after the job offer, if applicable. One is a medical exam; the other is workers' compensation history inquiries during a background check in those few states that allow it.

Aside from these two, there is no reason why an employer cannot complete a thorough screening of the candidate prior to hiring him/her. This will help prevent learning information post–job offer that causes the employer to change his/her mind about employment.

When making job offers either verbally or in writing, consider the following guidelines to protect your practice:

  • Include “at–will” language and disclaimers that the offer is not to be construed as a contract or a guarantee of employment.
  • State that the offer is “contingent on” or “conditional upon” successfully passing other steps in the process, such as a medical exam. Fully outline conditions so there are no surprises.
  • If you do include start date or salary information, preface this information by stating “tentative.” Avoid giving the impression that the offer is an absolute done deal.

Contact our office for a sample copy of our Offer of Employment Letter (Form No. 107) or our Conditional Offer of Employment Letter (Form No. 107A).

Last resort — withdrawing an offer

If an employer is faced with having to withdraw a job offer, his/her timing and technique will go a long way in preventing legal action.

Notify the applicant immediately once the decision has been made. The further along in the process the applicant is, the more likely the applicant has made changes in his/her life that will result in anger and resentment when the offer is taken away.

When informing the applicant of the withdrawal, be open and honest. Sugarcoating or lying can compound the issue if later challenged in the courts.

The employer may also want to contemplate reimbursing the applicant for any costs incurred as a result of the job offer and subsequent withdrawal.

If the case against the employer is fairly strong, including an amount for wage reimbursement in addition to expense reimbursement may certainly be a lower cost alternative to court proceedings. An attorney can assist an employer in making this determination and drawing up a settlement agreement.

Conclusion

Saying “no” after saying “yes” to an applicant carries potential problems for employers. It is best not to offer employment until the employer has fully researched the applicant's background and character to the best of his/her ability and knows the applicant is qualified. Withdrawing job offers should be done as an absolute last resort and handled with great care. The employer's reputation can be at stake, not to mention an individual's livelihood, none of which should be taken lightly.

Tim Twigg is the president of Bent Ericksen & Associates, and Rebecca Crane is a human resource compliance consultant with Bent Ericksen & Associates. For 30 years, the company has been a leading authority in human resource and personnel issues, helping dentists successfully deal with the ever–changing and complex labor laws. To receive a complimentary copy of the company's quarterly newsletter or to learn more about its services, call (800) 679–2760 or visit the company Web site at www.bentericksen.com.

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