How to Rescind a Job Offer in 5 Steps [+ Free Letter Template]
Need Help Hiring?
Get Your Free Hiring Ebook With Downloadable Templates
Charlette has over 10 years of experience in accounting and finance and 2 years of partnering with HR leaders on freelance projects. She uses this extensive experience to answer your questions about payroll.
Jennifer Soper is an HR Specialist and staff writer for Fit Small Business, with over 15 years of experience in accounting, payroll, and human resources.
This article is part of a larger series on Hiring.
Learning how to rescind a job offer the right way is important for professional, reputational, and legal reasons. First, you need to determine your reasoning doesn’t violate labor laws (i.e., discrimination against a protected class). You’ll then notify your candidate of the decision, preferably speaking directly with them and explaining the reason the offer is being rescinded. You should give the candidate an opportunity for follow-up questions or to explain the circumstances of a failed background check or drug screen, for example—although that may not change your decision. Lastly, formalize your decision by sending a letter to the candidate.
Use our free sample letter template to create and customize a letter that suits your company’s needs.
Thank you for downloading!
Step 1: Keep It Legal
The reason for the withdrawal of employment must be legal. Rescinding a job offer cannot be for reasons that are protected by law, such as discriminatory-related reasons—including race, religion, gender, gender identity, pregnancy, age, and national origin.
Many states have at-will employment. As long as the reason for denying employment doesn’t break any federal hiring or employment laws and isn’t for reasons relating to previous whistleblowing activities, employers can terminate the employment relationship at any stage in these states.
Follow these tips to protect from potential claims:
- When you send the original job offer letter, include a written and signed employment agreement. Be sure you have at-will language in your agreement.
- Keep all records relating to the hiring process. If you have shown due diligence to hire the individual and you must now rescind the offer due to company issues (such as downsizing) or candidate issues (such as a failed drug test) you will have what you need to back up your reasons.
- Consider deferring the offer, instead of rescinding, if your reason is due to company downsizing or a hiring freeze. You can let the candidate know that the offer is being rescinded at this time, but when hiring begins again you will consider them first for the position.
We recommend that you consult with legal counsel to ensure you are not violating any laws when rescinding a job offer.
Step 2: Notify the Candidate
Rescinding an offer has limited risk to the organization prior to sending an offer letter, even if a verbal indication was made. So, contact the candidate and clearly state that the job offer has been rescinded.
Delivering the news in person is most ideal, with initial contact usually done over the phone; this isn’t news you want to convey on a voice message. If you are unable to speak with the candidate, ask them to call you back. Although uncomfortable, speaking directly with the candidate can best express the compassion and professionalism that represents your company.
When notifying the candidate that you have rescinded their job offer, be sure to
- Express that the call is confidential
- Describe the reason the job is being rescinded
- Offer the candidate the opportunity to explain or ask questions
Step 3: Describe the Reason
In clear terms, describe the reason the offer is being rescinded. Much of the time, companies rescind a job offer due to a failed pre-employment drug screen or background check. Share your company’s concerns without displaying judgment or accusations of dishonesty.
There may be a simple explanation, and if the candidate is still eligible for this or another position in your organization, you want to stay on good terms. If it is due to an internal company decision, such as budget limitations or a change in strategy, be sure to apologize to the candidate.
Step 4: Allow for a Follow-up
Provide the candidate with an open invitation to follow up with the company with questions they may come up with after the fact. In addition, if the rescinded job offer was due to candidate error or findings, you will want to allow them to explain. Although this may not change your decision, it is a best practice.
Step 5: Send a Formal Letter
When you rescind a job offer, it is not complete until you have delivered a formal letter to the candidate, explaining what occurred and what was discussed over the phone. This letter may be sent by email or regular mail but should be delivered to the candidate within three business days of your call. Customize our sample letter for rescinding a job offer to the candidate.
Your physical letter should include the following:
- The candidate’s name and address
- A reference line that clearly states the official job offer is being rescinded
- The title and date of the position that was originally offered
- The reason the offer is being rescinded
- The signature of the hiring manager, position manager, or owner of the company
Why Employers Rescind Job Offers
Employers rescind job offers for many reasons. They include both external (or candidate) factors, including failed background or drug tests, and internal (or company) factors, such as budget issues or the offer being made to the wrong candidate.
Bottom Line
Rescinding a job offer is the act of canceling an offer of employment that was previously made to a candidate, usually because the employer stumbled on to an area, or multiple areas, of concern. Another reason for rescinding a job offer is due to a change of plans internally.
Although the employer indeed has the right to exercise business-related decisions that best serve the company, it is important to understand how to rescind a job offer the right way. Rescinding an offer of employment should be done professionally and legally. Customize our sample letter for a quick and legal process.
