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Can Your Client Rescind Offer of Employment?

by | Nov 12, 2021 | Placement Process, Top Echelon Blog

The full cycle recruiting process is almost over. Your client extended a job offer and the candidate accepted. But then, your client decides they want to rescind offer. Can an employer take back a job offer?

Can an employer revoke a job offer?

According to PBS, it is common for companies to rescind job offers. And in many cases, it is completely legal, unless your client is unlawfully discriminating against the candidate.

Can your client revoke a job offer if the employee has signed the offer letter? Because the majority of states have employment-at-will statutes, employers can terminate employment at any time, even before it begins. This is true even if the candidate signed the job offer letter.

Most offer letters disclose that the worker is an “at will” employee, meaning your client can terminate their employment at any time. And, the employee can leave at any time if they are employed “at will.”

However, a signed contract between an employer and employee is a different story. If employees are not “at will” employees, your client cannot terminate them if they signed the contract. Your client can only rescind a job offer to an employee who has signed a contract if the employee violates one of the contract terms.

As the recruiter, you will most likely get caught in the middle if your client decides to take back the offer on the table. You will act as the go-between to let the candidate know. And, you need to do it tactfully so you don’t burn bridges when rejecting a job applicant.

It’s also a good idea for you and your client to provide ample documentation to prove why the company is pulling the job offer. This can protect you and your client in case the candidate decides to sue.

5 Reasons why your client might withdraw offer

Your client might rescind offer for a number of reasons. Some of them might be because of something the candidate did, or it could be related to your client’s company.

1. Negative things came up during the background check

More than 98% of businesses conduct background checks. And, many hiring managers extend job offers contingent on the results of the background check.

A background check is essential to limiting negligent hiring claims and verify the candidate is truthful. If you and your client find something alarming during the background check, like an undisclosed criminal record, your client can rescind the offer.

Or, the background check could reveal that the candidate lied about their education or work history. For example, the candidate might have claimed they worked somewhere, but after the background check you find out they did not. Your client can revoke the job offer if they find resume lies.

2. The candidate failed their drug test

According to SHRM, 90% of companies conduct drug and alcohol screenings. Along with the background check, drug tests are an integral part of you and your client doing your due diligence.

Job offers might be contingent on whether the candidate successfully passes their drug test. If the candidate fails their drug test, your client can withdraw the offer.

3. Client’s company scrapped the position

Can an employer revoke a job offer if they decide to get rid of the position? Because the employment-at-will statute instituted in most states, your client can rescind offer if they decide to scrap the position. This is true even if you have already extended the job offer.

Your client might have decided they have enough employees performing the work. Or, they might eliminate the position from their company. Whatever the reason, they can rescind their offer of employment.

4. Client had financial setbacks

If your client’s company can no longer afford to hire a new employee, they can also rescind the job offer. Regardless of whether they faced a drop in sales or repercussions of a poor investment, financial setbacks can lead to your client pulling the job offer.

5. Another hiring manager found a better candidate

You might not be the only recruiter trying to find and place candidates. If you have a non-exclusive contingency search assignment, your client has more than one recruiter on the job.

Your client might decide to place one of your candidates, only to rescind offer and place another recruiter’s candidates. Hopefully, though, your client will decide which candidate they want before they have made an offer.

If clients rescind offer, do you still get paid?

Now to the question we’ve all been wanting to ask…if your client rescinds their job offer, will you still earn your recruitment fee? Well, it depends.

There are a few variables that could determine whether all your hard work is for nothing.

First, do you have a contingency recruiting agreement, or a retainer agreement? With a contingency agreement, you are only paid if you successfully place a candidate. With a retainer agreement, you are paid a percentage of the fee even if you do not place a candidate.

Next, your fee also depends on whether the client will use you to find a new candidate after the offer is rescinded. Your client may want you to place their second choice or restart the process, giving you a chance to earn your recruitment fee.

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