Case study: withdrawing a job offer

Adentist offered an applicant a job. She was working for another employer and gave her employer her resignation notice.

Adentist offered an applicant a job. She was working for another employer and gave her employer her resignation notice. The dentist then received information that made him change his mind about hiring her. He called the applicant and rescinded his job offer. He is now being sued for promissory estoppel, which entails breach of promise, substantial detriment, and damages.

Considerations

When an applicant is offered a new job and is employed elsewhere, that person resigns from his or her current position. If the offer is then withdrawn, the individual is left without a job and may suffer financially until he or she can find new employment.

Employers have occasionally felt free to withdraw offers of employment if someone better came along. Their rationale was that if an applicant is offered “at-will” employment, then employment could end at any time, even after only a few minutes on the job. It is now apparent that this is not necessarily the case.

In fact, a recent court ruling held that a job seeker who quits his or her position to take a new job could, through “promissory estoppel,” recover lost wages due to the new employer withdrawing the job offer.

Since an employment offer is typically not a promise of employment for any defined period of time - and therefore not a promise of any future wages - the court ruled that the wages lost were the income that the employee would have earned from the former employer if the employee had not quit the position.

Because of the above decision and its updated interpretation of promissory estoppel regarding lost wages, it is likely to be accepted by states that currently allow disappointed applicants to seek redress, such as California, Alaska, Minnesota, and New Jersey. It may be adopted eventually by other states.

The safest approach is to avoid withdrawing or rescinding a job offer. Effectively screening resumes, coupled with taking the time to effectively interview and check the references of potential applicants, will increase your odds of hiring the right person the first time. If you make the right hiring decision, then you won’t be faced with this problem.

If there is a chance you may have to withdraw a job offer, then take these precautionary steps to potentially mitigate your risks.

Solutions

1. Make sure you are an “at-will” employer. Include a statement in your application form such as, “If hired, I understand that employment with the practice is not for a specified term and can be terminated at-will, with or without cause and with or without notice, at any time.” A word of caution. Many dentists think if their practice is located in an at-will state, they can discharge at will. This is not necessarily so because there are issues that override the “at-will” prerogative.

2. Check the accuracy and validity of the information provided to you by the applicant. Studies indicate information provided on an application form contain incomplete or inaccurate information 73 percent of the time. The applicant needs to know such errors could be the reason for the withdrawal of a job offer. Include a statement in your application form such as, “I understand that any misrepresentation, falsification, or omission of material information on this application may result in my failure to receive an offer, or, if I am hired, my dismissal from employment.”

3. The Verbal Job Offer. The verbal offer usually includes an agreement on wages, benefits, a starting date, and that employment is “at-will. If there is no reason to suspect a possible job offer withdrawal, it is recommended that the employer follow up with an Offer of Employment letter, such as our Form #107, which confirms the details of the agreement.

4. The Conditional Job Offer. If you have concerns and may want to withdraw the job offer, make your offer conditional upon receipt of satisfactory information such as references, a medical report (if required), valid licenses or certifications, or other types of information you may need. Verify your agreement by providing a Conditional Offer of Employment letter, such as our Form #107C. Although it is usual to discuss a prospective start date, do not include a start date in this letter. Let the candidates know that you don’t expect them to give notice until they have a confirmed job offer.

Bent Ericksen is the founder and Tim Twigg is the president of Bent Ericksen and Associates. For more than 25 years, the company has been a leading authority in human resources and personnel issues, helping dentists successfully deal with the ever-changing and complex labor laws. Both authors are members of the Academy of Dental Management Consultants. To receive a complimentary copy of the company’s quarterly newsletter or to learn more, contact them at (800) 679-2760 or at www.bentericksen.com.

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