Employment Agreement

Can I back out of a Job Offer after Signing?

Sep 12, 2023

Needing to back out of a job offer after signing happens more often than you’d expect. You might be a graduating student that got something better than your internship return offer, your current employer countered with something you couldn’t refuse, or an unexpected life event occurred requiring new decisions from before. In those cases, everyone asks, “Can I back out? What are the consequences?” This week we’re addressing what happens, both legally and practically.

At-Will Employment offers Flexibility

In the case of At-Will Employment, you are able to stop working for your employer at any time for any reason. That condition includes before you even start the job, meaning there’s rarely legal consequences for backing out of an accepted job.

In terms of practical consequences, make sure you are able to return any types of compensation received from your company, such as signing bonus, relocation stipend, and work-from-home setup. Most companies will require some or all of those benefits to be returned if you leave within the first year. For monetary compensation, ensure you are able to accurately process the tax withholdings to avoid paying back more than you were given where possible.

Finally, if you have signed Non-Disclosure or Confidentiality agreements during the hiring process, review those documents as they will likely still be in effect after you decline the offer.

Review your Employment Agreement for Requirements

Outside of At-Will Employment, there’s a two common setups in Employment Agreements that can impact your early, voluntary termination:

  1. Notice Period: You are required to provide early notice before resignation, such as 2 weeks.

  2. Minimum Duration of Service: You are required to provide service for some period, such as 1 year.

In these cases, reneging the offer before starting would technically breach the contract. However, it’s not easy for companies to financially penalize you for leaving early unless they can prove financial loss due to your departure. For example, if they paid for your college degree as part of your offer, they cannot fully recoup that cost after your early departure. However, similar to At-Will, if you are able to return what was given to you by the company before starting, it’s difficult for the company to challenge you.

Always End on a Good Note

In most cases, there aren’t significant legal penalties to walk away from a job even after you’ve signed as long as you return everything the company gave to you. However, there are plenty of potentially negative consequences for your career if reneging is handled unprofessionally. Here are some tips:

  1. Communicate your gratitude for being extended the offer, and focus on the positive attributes of your current company.

  2. Acknowledge that walking away was never your intention, while being honest about the circumstances that have since changed.

  3. Let your current company lead when it comes to reopening negotiations to try and keep you, as it’s generally frowned upon to aggressively push for a better offer after you’ve already accepted.

Most importantly, try to have this conversation live first over the phone or in person and not over email. The same formalities you followed during accepting the offer should be followed when you decline.

Our inspiration for this post came from graduating seniors who were ecstatic about receiving return offers but nervous about the job security of an offer 10 months away given the current economic climate. At Ask Ginkgo, we are particularly sympathetic to folks at the start of their career, and this post provides helpful information to enter the real world with confidence and security.

For advocacy and beyond,
The Ask Ginkgo Team

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