Employers Are Rescinding Job Offers Again—How to Do So, if You Must

Roy Maurer By Roy Maurer August 16, 2022
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​Stories of rescinded job offers have begun to surface, especially in fast-growth industries like technology and real estate, in another sign that the red-hot job market is starting to cool.

Organizations that have been on pandemic-driven recruitment overdrive the past two years have started to tap the brakes over fears of a looming recession. The reversal of hiring plans happened so fast that instead of just slowing down or freezing hiring and canceling requisitions, employers like Coinbase, Redfin and Twitter are rescinding job offers, a painful tactic generally only seen during an economic crisis.

It should be noted that talent acquisition experts caution that the trend of rescinding job offers—while ticking up—is still a blip on the landscape and should not be overblown.

"Rescinding job offers is rare," said Valerie Frederickson, founder and CEO of executive search and consulting firm Frederickson Partners, a Gallagher company. "These instances are typically exceptions happening among high-growth tech employers finding their sea legs for the next stage of their journey, or during a major recession when large employers overestimate hiring plans and have to trim them back. Most companies match requisition approvals with budget forecasts in real time and stay the course even during market fluctuations. The problem is that some companies that have gone through wildly high growth are in their adolescent phase and haven't had the time yet to implement best practices around workforce planning."  

Just because an employer can rescind a job offer doesn't mean they should, said Jill Chapman, SHRM-SCP, senior performance consultant at HR services firm Insperity, based in Houston. "This should be a last resort if it's for reasons other than conditions unmet by the candidate, like a failed drug test. There may be times, however, when it is absolutely unavoidable due to a downturn in the economy or a change in the business's needs, such as downsizing or an acquisition or merger eliminating the position."

Chapman added that if an economic change dictates there is no longer a need for certain staff, it would be better to vacate job offers than to conduct layoffs. That's especially true for those most typically affected by job recissions—interns or recent graduates offered a job well in advance, she said.

"In many cases, I would say that rescinding job offers is better than layoffs when the only answer is to cut payroll—every company's top operating cost," Chapman said. "That said, there are other avenues that should be explored before doing either, and the best thing is to avoid the situation in the first place through organized, well-paced growth and strategic workforce planning."

Before having discussions of pulling offers, HR should lead a thorough workforce analysis, Frederickson advised. "Look at your strategic plan, your succession plan and your employee demographics. Double-check expected retirements and turnover which may hit you in the coming months or quarters. Don't hire for general growth, and instead hire for exact requirements and positions based on the business's strategic plan for the budget. Try to find a better option," she said.

Chapman reminded HR to proceed with caution in order to reduce exposure to legal liability when rescinding a job offer. "If the employer offered someone a job, and he or she accepted, resigned from their former position and moved to be able to go to work for the new employer, they might be able to make a court claim. The potential employer made a promise and ultimately broke it, causing serious professional, financial and overall well-being consequences for the candidate," she said.

Chapman recommended the following when writing the offer letter:

  • Avoid language that states it's an employment contract, unless it is.
  • Avoid language that guarantees employment.
  • State that the offer is conditional on meeting requirements for the position.
  • State that the offer will expire within a certain time frame and is not open indefinitely.

[SHRM members-only sample form: Conditional Job Offer Letter]

If You Must Rescind, Do So with Care

However painful the experience of rescinding job offers is for the organization, it's likely far worse for the new hire, especially for those who may have already given notice, turned down other offers and, in some cases, even begun relocating.

When companies are forced to rescind job offers, experts agree that swift, transparent communication is key. "Notify those affected as soon as possible to get ahead of them giving notice to their employers, if possible," Frederickson said.

Chapman said the affected candidates should be told that the rescinded offer is "not about them nor their abilities or skills, but rather about the company trying to understand the economy and its fiscal future. It should be communicated verbally and then followed by a letter. Try to leave the candidates with as positive an experience as possible, then follow that with giving them some space to process what happened."

Treating the affected candidates with dignity and respect is essential, experts agree. "The conversation needs to be handled with the same sensitivity as conducting a layoff," Frederickson said. The worst thing to do is completely ghosting people, of which there are reports on social media.

Employers are under no legal obligation to offer financial support or help those affected find work. But assisting with a job search or severance-type compensation will go a long way toward making things right for those with revoked offers. Both Coinbase and Twitter said they are paying severance to those whose job offers they rescinded.

"Employers can offer outplacement services and stipends to cover expenses in recognition of the candidates' lost time, lost opportunity for earnings and the restart of the job search," Chapman said. "Before you offer assistance, clear it through legal counsel and also consider what kind of precedent you're setting. And when hiring resumes, look to this pool first, if possible."

In addition, employers can consider directing those with rescinded offers to alternative open positions in the organization, should there be a suitable fit.

Frederickson said intrepid recruiters should be on the lookout for announcements of rescinded offers, in order to snap up stranded talent.

Repairing Employer Brand

Everyone knows that rescinding job offers is bad for employer brand, eroding trust and signaling poor planning or operational dysfunction.

"Candidates and current employees will lose faith in the company's ability to succeed, which, in turn, affects employee engagement," Chapman said. "To overcome the damage, start by growing a social media presence to interact positively with employees, candidates and the public. Be genuine and authentic with candidates, and showcase the ways you care and are concerned for them as well as your employees."

In the court of social media, every move an employer makes is amplified, Frederickson added. Data from Glassdoor shows that the number of posts mentioning the rescinding of job offers tripled between January and July.

"I've seen employers make the announcement themselves about having to rescind offers, showing empathy and offering benefits like severance to affected new hires," Frederickson said. "The employer will clearly state that the affected employees are being negatively impacted through no fault of their own and also recommend them for future opportunities."

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