Features

What do you do when a prospective employer offers you a job but pulls the rug out from under you and rescinds the offer before you start work? What happens if you've sacrificed a good, stable job for one that doesn't materialize, or if you spent thousands of dollars to relocate? What recourse do you have, if any?

Most job seekers don't know the answers to these questions, according to Mimi Moore, a partner in the labour and employment group at Bryan Cave LLP. She says job seekers tend to be unaware of the spectre of rescinded job offers: "People understand that a job may not work out, that the company might have to do a reduction in force, but they don't think of a rescinded job offer being a possibility," she says.

In fact, rescinded job offers are a growing reality in a weakening economy, and Moore expects to see an uptick in the coming months. "I think fewer job offers are going to be extended, and the ones that are will have a higher probability of being rescinded," she says.

The risk of having a job offer revoked is even greater for executives than for lower-level workers, says Moore, because executives are often hired so much farther in advance of their start date. An employer's needs can change between the time an offer is made to an executive and the time she starts, which can be six months later. By contrast, lower-level workers are usually hired to fill an immediate need.

Job seekers at all levels can protect themselves from being blindsided by a rescinded job offer by asking incisive questions about a prospective employer's hiring practices and by negotiating certain protections into offer letters and employment contracts. Moore elaborates on these details for employers and employees in this Q&A.

CIO: What do employees need to know about rescinded job offers?

Moore: An employer can rescind a job offer at any time. Absent a signed employment contract between an employee and an employer that provides for a specific term of employment and specific provisions for breach by either side, a job offer is essentially a contract for employment at will. Many people think once they have an offer, it's in writing, they sign it and return it, they think it's a contract. But really it's a contract for employment at will, which can be terminated at any time.

Candidates are not employees until they go to work. Even at that point, they're employees at will. After the first day of work, either party can end the relationship. Individuals don't have a right to a position [that's been offered to them].

Under what circumstances do employers rescind job offers?

Typically, job offers get rescinded in situations where employers, for one reason or another, do not have the need for a job that they predicted they'd have when they first offered the job to a candidate. A typical situation is an employer interviewing on a college campus, extending offers to college grads. By the time the college grad is supposed to start working, whether that is over the summer or in the fall, the employer no longer needs them because of either a downturn in their business or in the general economy.

Rescinded job offers typically occur in clumps of people. For example, a law firm believes it needs five new associates. It makes those hiring decisions in September or October, but people won't be starting for another year. The same thing goes for companies interviewing on college campuses. They're making hiring decisions far in advance of an actual start date. If there's subsequently been a change in their business or in the economy that results in there no longer being a need for an employee, they may rescind a job offer.

Higher-level candidates can see offers rescinded when a company decides to do a restructuring and to eliminate the position they've offered for economic reasons: The company decides it would be better to vacate a position they've offered to someone instead of terminating their employment, in order to save employees who've been working there for a long time.

Alternatively, job offers occasionally get rescinded when something [bad] is discovered about an individual or their references don't check out.

Next: What job seekers can do to protect themselves.