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How To Rescind A Formal Job Offer After A Failed Background Check

Posted by GlennF on Sep 30, 2021 3:00:11 PM
Imagine finding your ideal candidate. Everyone on your team liked their resume and enjoyed speaking with them during the interview process. And after getting everyone’s opinion, you made the person a formal job offer.
Unfortunately, the results from the background check revealed some issues that made you want to withdraw the offer. Here are four options to help guide you:
Step 1: Know Your State’s Law(s).
You will need to research your state’s laws before you rescind an offer of employment as many states have limitations on the use of records—for example: Not allowing private employers to use arrest records that did not lead to a conviction as a condition of employment. Other items:
  • Arrests do not always lead to conviction or mean that someone is guilty of a crime. Sometimes, people are wrongly accused.
  • You should still be cautious if your state allows the use of arrest or conviction records for employment purposes.
  • The EEOC has stated that use of conviction records might be discriminatory, given that people from minority groups are often more likely to have such a record.
  • The EEOC cautions employers should 1.) Only inquire about felony convictions, 2.) State that a criminal record does not automatically bar employment, and 3.) Ensure there was a legitimate business reason for requesting such information.

Step 2: Check Your Offer Letter.
If you use a third-party background checking service, make sure you follow the procedures of the Fair Credit Reporting Act (FCRA). Under the FCRA, you are required to get authorization before you solicit the information from the third-party vendor. A job offer letter that includes language indicating that an offer is conditional—and may be retracted based on the results of a background check—can and will help protect you. If you don’t have a letter like this in your file, we recommend adding one ASAP.
Step 3: Notify The Person.
Under FCRA rules, in order to rescind the offer, you will need to provide the applicant with an adverse action notification, which includes a description of the person’s rights under the FCRA and contact information of the organization that provided the report. Your background screening provider will likely have a notification form for you to use.
Step 4: Steps To Take Going Forward.
Owners, managers, and HR professionals must consider the liability of rescinding an offer letter. In fact, everyone in the decision making process may want to consider the following:
  • Review all “job offer” document templates immediately with an HR professional. After a template is finalized, use this template going forward (delete all others to avoid use).
  • During the initial interview, give written notice to all candidates that they should NOT leave their current job until they pass a background check and sign an offer letter.
  • Confirm every background check has been completed BEFORE giving a candidate your final offer letter.
  • Ask candidates to sign the above-mentioned offer letter.
  • Consult with legal counsel before rescinding an offer letter.

Topics: Human Resources, Leaves and Accommodations, Employee Handbook, Employee Onboarding