One of the most unpleasant tasks that business owners face is having to terminate someone – whether because of poor performance or as part of a larger layoff. Almost as unpleasant is having to rescind a job offer that’s been made and accepted.
That can happen for a number of reasons. Maybe you have to cut your budget and just can no longer afford to hire the person. Perhaps you or someone else on your team found someone much more qualified. Maybe the applicant seemed so perfect that you got ahead of yourself and made the offer before all the background checks, drug tests or other due diligence came back.
Some business owners are afraid to rescind an offer even when they have good reason to out of fear that the applicant will sue them. They believe their offer letter is legally binding – at least once it’s accepted.
When you need to be cautious about rescinding an offer
In most cases, as long as you haven’t actually signed a person to a contract – which is different than an offer letter – you can’t be held legally liable for rescinding an offer. There’s an important caveat, however.
If the applicant is part of a protected class, and they can show that you rescinded the offer when you learned of their identity, they could sue you for discrimination. Here in Kentucky, the protected classes for employment are race, religion, national origin, color, age, disability and sex.
Say you issued an offer after interviewing someone over Zoom or another video conferencing app. Then you ran into them at the store and saw that they were using a wheelchair. Maybe when you ran into them, they told you they had just left services at their temple.
If you then have to rescind your job offer, you may need to be prepared to show that you had a valid reason to do so (like budget constraints or an issue with their background checks), so that it’s clearly not an act of discrimination. It certainly will be helpful if you have other employees who are in the protected category of that applicant.
It’s best to avoid being in a position where you have to rescind an offer. If you do have to, it may be wise to seek legal guidance to help prevent serious issues.