My boss' sister works for the County Assessors Office and verbally made an offer of employment to an individual (she was going to start sometime next week). In the meantime since the offer was made she found a more suitable candidate that she would like to hire instead of the first person. Since she only made a verbal offer what would be the best protocol? Should she simply call the first person & explain that someone more qualified came in and the office decided to hire that person instead? That (in my opinion) is the best, albeit most uncomfortable way to do it, but I also am wondering what, if any, would the ramifications of this be????

Even if this is legal, I find it unethical.  In any event, the call should be made ASAP in the event the candidate quit another job to take this one; perhaps she can talk the former employer into keeping her old job.

This actually happened to me when I was first starting out.  I quit a job at a company I really liked because I got a job with a NAME company (and I mean well known and highly respected).  When I showed up for the first day, they told me that in the interim (my 2 weeks notice to old company) someone internally was given the job I had interviewed for, and now I was getting her old job!  I was young and just accepted this.  I hated the substitute job and left after a year.

If the verbal offer was accepted in good faith and the candidate quits her current job and is then notified that the job has gone to someone else, I wonder about the damages aspect of that.  She can show in court that she acted in good faith by leaving her job, and now faces unemployment due to the job offer being rescinded in favor of another candidate. (Most jobs will not let you resend your resignation)

If might be different if the job was eliminated due to downsizing etc, something that was not foreseeable at the time of the offer.  But to just change your mind, I agree it is unethical. 

I would also into account who the other candidate is; will it be offered to a man over a woman, a white person over a minority.  You could also be looking at a very sticky situation. 

I agree with the other posters.  It is not worth opening yourself up for possible discrimination claims and is certainly not worth the ill-will and bad press this will surely bring should the rescinded employee speak to others about his/her treatment.

The decision your boss' sister made was done with the information she had at the time and she chose to make an offer to the best candidate she found at that time.  Once the offer is accepted, she needs to consider the position closed.  There may always be others out there, but imagine if everyone were able to just rescind an offer because someone walked in the door in the interim before the person hired started? 

It's just not good business practice.

There is no question of whether or not there is liability in revoking a job offer made to a person who subsequently quits their job (that they were not in danger of losing otherwise) in order to take the job someone at your company offered to them.  Whether or not they can prove it is another thing, and how you treat that fact is between you, your conscience, and perhaps your defense attorney as well as anybody else who may know about the offer having been extended.  Even if they can retain their job with their former employer, there is also no question of damage being done to their future with that company.

It is generally safer to fire someone than to revoke a job offer.  The new candidate better be head and shoulders above the person to whom your company extended the job offer in order to minimize the risks associated with having your company's decision formally questioned.

Ethically and legally, I think you are on much stronger ground keeping your word to the original candidate.  Honestly, I'm a little surprised that the hiring manager would have hired someone they felt was not reliable in the first place.  Assuming you can know, in advance, how reliable one person is in comparison to another through the standard intake process, then I would expect that the hiring authority had in mind a "reliability" threshold and the first candidate met that threshold and it should be adequate, all things considered.  If the candidate wasn't adequate on a primary dimension, that's the hiring manager's fault and that needs to be addressed but I wouldn't address it by punishing the candidate to whom an offer was extended.

The other thing that I don't think has been mentioned yet is the OP said the County Assessor's Office, which leads me to believe that this is a local county government.  Most county governments have strict rules/processes (at least the one's around here do) regarding hiring process.  The job announcement must be posted for x number of days, there is a date that all resumes/applications must be received by to be considered a candidate, there is a strict interview process that is to be followed for each candidate, and then there is a written job offer made to the candidate.  There are also usually strict rules regarding hiring a candidate once the offer is made.  It doesn't seem like any process like this was followed. 

I agree with the other posters that they are taking a large risk by pulling back this offer.