Retention

Rescinding job offers can result in serious blowback

Coinbase rescinded a number of accepted job offers due to ‘the crypto winter.’ That could be a problem beyond reputational repair.
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· 6 min read

Coinbase, the largest cryptocurrency exchange in the US, boasting more than 98 million users and more than 4,900 employees, said in May it would be “slowing hiring so we can reprioritize our hiring needs against our highest-priority business goals,” amid a downturn in the broader crypto sector, according to a company blog post.

Just two weeks later, despite the company’s assurances that it would escape the latest crypto winter unscathed, chief people officer L.J. Brock wrote that due to “the current market conditions and ongoing business prioritization efforts, we will extend our hiring pause for both new and backfill roles for the foreseeable future and rescind a number of accepted offers.” Emphasis ours.

Coinbase isn’t alone. Spokespersons for Twitter and Redfin confirmed that both companies have also rescinded offers recently, in a phenomenon that seems to be becoming more common in the current tech industry’s climate. For a company mulling a decision to pull back offers, there are both legal and reputational considerations that must be weighed, according to experts who spoke with HR Brew.

Foremost among them is staving off a PR backlash. Rescinding job offers is a big reputational risk, as the first thing many people receiving a rescinded offer will do is go to the internet and post about their experience. Companies, said Kate Bischoff, an employment attorney in Minneapolis, “don’t want to ruin their employment reputation.”

Which kinda makes sense. Job-seekers today have lots of data to review as they are finding their next gig, whether that’s on social platforms or reading reviews on sites like Glassdoor. These pieces of information can shape a brand’s reputation.

“Companies live and die by how people perceive them,” Christopher Cathcart, an adjunct professor of public relations at California State University, Northridge and Syracuse University, explained to HR Brew.

“If there’s an impression that [companies] haven’t been honest, or operated with high levels of integrity, particularly [with] something as sensitive as hiring…it can have a ripple effect down the line to how people perceive them writ large relative to their brand and impact on their ability to sell products and provide and offer services,” Cathcart said.

Rescinding an offer is a “shitty move,” said Martin Burns, editor in chief of the Recruiting News Network, because “most folks who would have accepted offers that get rescinded have resigned from their old job. So they’re stuck.”

Ashutosh Ukey had an offer revoked by Coinbase, throwing his residency status into limbo. He told HR Brew: “I’m only allowed a certain number of days of unemployment before my visa becomes invalid and I would have to return to my home country.”

Ukey is among a recent string of job seekers who had offers revoked by Coinbase, Redfin, and Twitter and who aired grievances about the experience on LinkedIn, in posts that were swarmed with comments that drew media attention.

In statements to HR Brew, both Twitter and Redfin cited broader economic pressure as the impetus for rescinded offers, and said they are offering severance to impacted candidates. Redfin rescinded 10 offers; Twitter did not comment on the number of offers it rescinded.

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Coinbase established a database for affected applicants “to receive additional support services including job placement support, resume review, interview coaching and access to our strong industry connections,” and is issuing “generous severance” to affected candidates, Brock’s blog post noted.

Coinbase directed HR Brew to its previous statements when asked for comment on its rescinded offers.

Beyond the PR hit that a company faces when their rescinded offers catch the public eye, employers could face potential legal issues, Bischoff warned.

Legal liability. There are various ways that a rescinded offer could incur legal blowback for a company. Bischoff, who also teaches HR compliance at Mitchell Hamline School of Law in St. Paul, explained that for Coinbase, there is potential for liability.

“These were accepted offers and multiple cases,” she said. “That means that someone has given notice at another job. They might be looking for a new apartment…or a new home.”

At-will employment may play into Coinbase’s favor, however. “At-will employment means that your potential future employer can fire you at any time for any legal reason,” employment attorney Peter Whelan told HR Brew.

Bischoff agreed: “There’s nothing inherently inappropriate with [the policy] if everyone’s in an at-will employment state,” she said. All states are recognized as at-will employment states, but there are some exceptions, applying to “just-cause” terminations.

“There are statutes in some states [that say]...if you have enticed someone to move, or to change jobs, there is a potential for liability there. And it could be considered fraudulent inducement, which would also be a common-law claim,” Bischoff explained.

Even with reputational and legal risks, the uptick in reported rescinded offers that are getting passed around Silicon Valley is a piece of a bigger economic challenge companies are facing.

Why are offers reneged? When offers are rescinded, mostly it’s because of “the economy, or an industry is just struggling for whatever reason. And when they do that, it’s just to basically save money and not invest in people,” Burns said.

Coinbase’s (and Twitter’s and Redfin’s) troubles, however, come during a greater slump in the tech industry, as stocks spiral and companies issue hiring freezes and layoffs. The value of various digital currencies has also plummeted in recent weeks: Crypto exchange Gemini laid off 10% of its staff last week, and some analysts say it’s now a bear market.

The current climate might mean more tough times are ahead for tech companies, especially for those that are forced to consider rescinding offers.

“One of the worst things a company can do is appear to be insensitive regarding something as important as someone’s career,” Cathcart said.SB

Do you work in HR or have information about your HR department we should know? Email [email protected] or DM @SammBlum on Twitter. For completely confidential conversations, ask Sam for his number on Signal.

HR is challenging. HR news doesn’t have to be.

HR Brew keeps you effective in the fast-changing business environment.