Unless there is contract for employment, employment in the United States is "at-will," that is, an employer can fire an employee at anytime for any reason, and an employee can quit at any time for any reason. Usually, neither party has a claim against the other for any type of damages that arise from the termination of the employment relationship.

But, what about when a job offer is made and accepted, but the offer is rescinded, or taken back, before the prospective or "would-be" employee begins work? There is no clear-cut, universal rule: in some states the "at-will" doctrine will bar the employee from recovering damages, but in some states the prospective employee can recover damages under the theory of "promissory estoppel" or "detrimental reliance."

The use of promissory estoppel in cases where a job offer is rescinded varies from state to state and depends almost entirely on the court decisions of the state where the would-be employee was supposed to work. So, if your job offer was revoked, or if you're considering rescinding a job offer, you need to check the court decisions in your state as to whether damages are available, or seek the advice of an experienced labor and employment law attorney.

What is Promissory Estoppel?

Generally, promissory estoppel is a way to enforce a promise made to one person by another, or put another way, it's a way for the law to stop someone from denying that he or she made a promise. There are three primary requirements for promissory estoppel:

  • Someone (the "promisor") made a representation of fact which it could reasonably expect the other party to rely upon, that is, one party made a promise
  • The other person (the "promisee") did in fact rely upon the representation or promise
  • The promisee suffers a detriment or injury as a result of that reliance

Job Offers and Promissory Estoppel

In some states, promissory estoppel can't be used by a would-be employee whose job offer was revoked. That is so because, where the employment was "at will," the employer could have fired the employee at any time without any consequences. If the employer could fire the employee after one day of work, why can't the employer rescind a job offer?

Some states, however, will allow the would-be employee to recover damages when the job offer is rescinded and the elements of promissory are met, in particular the "detrimental reliance" requirement. The typical case is when the employer makes an offer of employment, the employee resigns from a current job in reliance on the offer and then the employer withdraws the offer.

In such cases, the detrimental reliance requirement is met by things like:

  • Quitting the current job
  • Moving to a new state or city to work for the new employer
  • Cutting business ties with current customers or clients

What Damages Can Be Recovered?

For the most part, the would-be employee whose offer was revoked can't recover lost wages or the salary that he or she would have made if the offer had not been rescinded. However, it might be possible for the employee to recover the wages that were lost when the employee quit his or her current job for the new job. This might include salary-related items like fringe benefits, such as insurance coverage and parking allowances.

Most commonly, prospective employees are able to recover various expenses that are related to the job offer. These expenses include things like moving expenses and clothes or tools that were bought for the new job.

Questions for Your Attorney

  • I offered someone a job, and he's supposed to start in 2 weeks. However, because of the economy, I don't think we'll be able to afford his salary right now. Can I rescind the job offer without having to pay him anything?
  • I had to move to a new state when I accepted a job offer. The employer later rescinded the offer. Can I get the employer to pay for the expenses of moving to the new state and the expenses for moving back to my home state?

Tagged as: Labor and Employment, Employment Search, job promise, rescinded offer