If you accepted a job offer and the employer rescinded it (took it back) before you started work, you might have legal claims for breach of contract, promissory estoppel, or even fraud. However, you should carefully consider your options before filing a lawsuit: These cases can be hard to prove, and the damages if you win might not be worth your time and trouble.
In the United States, most employees work at will. An at-will employee can quit at any time, for any reason; the employer can also fire the employee at any time, for any reason that is not illegal. (Illegal reasons for firing include discrimination and retaliation for exercising a legal right, for example.)
If you accepted a job offer to be an at-will employee, you don’t have much of a legal claim. You are generally an at-will employee unless the employer agreed to hire you for a particular length of time. Be aware, though, that employers often have employees sign a “contract” for at-will employment. However, this type of agreement merely confirms your status as an at-will employee: Either you or the employer can end the employment relationship at any time. In fact, the employer could have waited for you to start work and fired you on your first day without facing any legal consequences.
On the other hand, if you signed a contract that promised continued employment for a certain period of time, you might have a claim for breach of contract. For example, if you signed an employment contract agreeing to work at the company for two years, during which time you could be fired only for good cause, your employer’s decision to renege on the deal might be a breach of that contract. Similarly, if you had an oral agreement (for example, “If you accept this position, we can guarantee you a job for at least a year,”) you might have a claim for breach of contract. (For more on the different types of contracts, see What Does It Mean to Have an Employment Contract?)
Even if you didn’t formally enter into an employment agreement, you might have a promissory estoppel claim. Promissory estoppel is a legal theory that turns a promise into an enforceable agreement, if the person to whom the promise is made reasonably relies on the promise to his or her detriment.
For example, let’s say you were offered a position as Chief Financial Officer at a start-up company in another state. The job offer was made after lengthy negotiations, in which you explained that you would need a higher salary so you could afford to quit your job and move with your family to take the position. You accept the offer, give notice, put your family home on the market, and purchase a new home near your new job. The employer then rescinds the job offer. In this situation, you took action in reasonable reliance on the employer’s promised job, and you suffered harm as a result.
Not every state recognizes promissory estoppel claims in the context of job offers, but some do. An experienced employment lawyer can explain how your state handles these claims.
Fraud and Other State Law Claims
Your state might allow you to bring other types of claims based on the employer’s misrepresentations. For example, if your employer intentionally misrepresented the position to you, or never intended to hire you but wanted you to quit your current job (because you work for a key competitor, for instance), you might have a claim for fraud. However, these claims are rare and difficult to prove. An experienced employment lawyer can explain whether any other legal theories might apply to your situation.
What Damages Can Be Recovered?
Even if you have a legal claim against an employer for rescinding a job offer, the bad news is that your case might not be worth much money. In order to win your case, you need to have suffered some monetary or other loss, called “damages.”
If you have a contract claim, your damages are usually measured by what you would have earned if the employer had held up its end of the bargain. So, for example, if your employer breached a one-year employment agreement, you would be entitled to one year of salary. However, those damages are offset by any amount you can reasonably earn during the same period. In other words, you can’t just sit at home for a year and collect a paycheck; you have to look for work. If it only takes you a month to find a new job, your damages are equal to one month’s salary. That’s hardly worth the time and effort of going to court. (To learn more about this topic, see our article on damages in a breach of employment contract case.)
In a promissory estoppel case, you can usually collect the financial losses you suffered in relying on the employer’s promise, such as the wages you lost because you quit your job, moving expenses, and so on. State law determines what damages are available if you win.
If you bring a different type of claim (such as a fraud claim), state law will determine what damages are available to you. An employment lawyer can let you know what your case is worth and whether it makes sense to sue the employer or spend your time and money looking for a new job instead.
Questions for Your Attorney
- My prospective employer promised me a one-year employment contract, but when I arrived for work I was presented with an at-will agreement. Do I have to sign it?
- I was out of work when I accepted a job offer, which was later rescinded. Do I have any damages?
- Can I collect unemployment if a prospective employer rescinds a job offer?