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The risks of rescinding a job offer

July 12, 2021
It takes a lot of time and work to recruit new hires. But missing or skipping steps can have consequences you might not be aware of. Rebecca Boartfield discusses the importance of doing your legwork ahead of time.

You’ve gotten through what can be a long, frustrating process of recruiting, and you believe you have (finally!) found the right person for your practice. You’re excited. Your team is excited. You all can’t wait for this person to begin working and start helping the practice grow and succeed.

With the job market being as tight as it is, you jump to making an offer of employment in the hopes of getting this person before someone else can make an offer. The person accepts, and you set a start date—things are going great! Whew. This challenge is over; next is the more enjoyable part of onboarding. You breathe a sigh of relief.

Later you realize that in your haste you haven’t completed all the steps for recruiting. You haven’t called references or previous employers. You haven’t conducted a background check. You didn’t perform a job match assessment. You got ahead of yourself, but that’s okay, you’ll cover those bases now. This is a great candidate, what could possibly go wrong?

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Sound familiar? It’s not uncommon during the recruiting process to skip steps, purposefully or not, or otherwise miss something along the way. Recruiting has never been described as easy. The problem is that cutting corners, skipping steps and then backtracking, or otherwise “winging it” or rushing through the recruiting process can lead to problems when you later learn of something, after an offer and acceptance, that causes you to decide you no longer want that person working for you.

This happens all too frequently. You might learn something from a past employer when you finally get around to conducting reference checks. Something negative could show up on a background check. Your colleague down the road could enlighten you about some concerning information. Your employees could discover red flags on the person’s social media. There is a plethora of ways in which this can go sideways after the fact.

While you may think that the solution is as simple as rescinding the job offer and moving on, the reality is that action can create liability—so it’s best to avoid putting yourself in that position if at all possible.

What are the risks? Following are some examples that could cause you some serious headaches.

Promissory estoppel

Promissory estoppel is the principle that a promise is enforceable by law. Job offers, whether verbal or written, are a form of a promise. Candidates who experience their job offer being rescinded could bring a claim under this doctrine.

This can most commonly occur when the candidate lost something in the process of accepting the job and having it rescinded. For example, they lost a lucrative job, or they experienced significant expense to relocate (selling a house, moving, etc.). The promise of a job offer has now been to their detriment, which can ignite legal action.

Breach of contract

Job offers that have not been carefully crafted can be considered a form of contract. As such, rescinding an offer can result in a breach of contract claim.

Discrimination

Claims of discrimination are not limited to after someone is hired—they can happen at any point in the hiring process, too. If a candidate is in a protected class (age, race, religion, pregnancy, sexual orientation, sex, etc.) and the job offer is rescinded, this can trigger a discrimination claim. This is especially true if their protected status is learned after the job has been offered. For example, the candidate informs the new employer she is pregnant, or has a special religious observance request. Suddenly rescinding the job could very well lead to lawsuits.

Don’t fall prey to thinking that rescinding job offer is risk-free. It is not. Many employers have experienced very real consequences for these actions. Resist the urge to speed through the recruiting process. And even leaving aside the potential risks of rescinding a job offer, skipping important steps in the hiring process frequently results in a bad hire, which later can lead to termination—which carries its own set of risks. Create and stick to proven recruiting steps and follow them with every applicant regardless of how desperate you may be to fill the position. Managing this well will take patience and restraint, but it will be worth it.

Editor's note: This article appeared in the July 2021 print edition of Dental Economics. It was originally posted in 2021 and is updated regularly.

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