If an employer rescinds a job offer, can the candidate sue the employer for damages?

There is a claim people can make for what's called detrimental reliance or negligent representation. The concept is that the employee relies to their detriment on a job offer. They move across the country or quit a job in reliance on an offer made by a company. People have over the years made that kind of a claim to sue for damages as a result.

Courts have been reluctant to enforce those claims for two reasons:
1) It's difficult to prove damages, and
2) Typically, the offer for employment is at will and once you start working, you can be terminated for anything so long as it is not illegal or discriminatory. The day you start, you are an employee at will.

There have been some courts over the years who have upheld those claims or enforced them, but they're few and far between. It's not something I would advise employees to rely upon.

How should employers handle rescinded job offers?

Most employers rescind job offers as soon as they become aware of an issue. From a legal perspective, the employer should notify the individual as soon as possible. For example, if one company is merging with another and through that merger the company believes it will need only 25 percent of the jobs it thought it would need, typically, the employer will notify those individuals it hired before the merger goes forward, when there is an obvious, known result for those individuals.

Employers should also do what they can to treat the individual as best they can. They should help the employee find another job inside or outside the company. They don't want to get a reputation of rescinding job offers because then they'll have trouble getting people to work for them. They need to consider the ramifications of rescinding job offers and do what they can to minimize the negative results of that. Most employers are cognizant of that. They're cognizant of the detrimental reliance theory even though it hasn't borne out in courts.

SIDEBAR: 9 Facts about Rescinded Job Offers

1. An employer can rescind a job offer at any time.


2. Job offers are typically rescinded between the time the offers is made and the candidate starts the job.


3. Most job seekers are unaware that an employer might rescind a job offer.
4. Executives are at greater risk of having job offers rescinded than lower-level employees.


5. Rescinded job offers typically happen among groups of employees being hired at the same time, like college graduates.


6. Employers rescind jobs when they discover something bad about a candidate or when there's a change in their business.


7. To protect yourself in the event your job offer is retracted, negotiate stipulations into your employment offer letter.


8. Job seekers have tried to sue for damages when job offers have been rescinded, but most of their claims haven't been upheld by the courts.


9. A good employer will help you look for another job inside or outside the company if they rescind your offer.