May 1, 2006
The Employer's Legal Handbookby Fred S. Steingold, Barbara K. Repa
New laws affect every aspect of being an employer -- from interviewing and hiring, to handling employee benefits to firing.
The most complete guide to your legal rights and responsibilities, The Employer's Legal Handbook shows you how to comply with the most recent workplace
The plain-English resource every employer, manager and HR professional needs.
New laws affect every aspect of being an employer -- from interviewing and hiring, to handling employee benefits to firing.
The most complete guide to your legal rights and responsibilities, The Employer's Legal Handbook shows you how to comply with the most recent workplace laws and regulations, run a safe and fair workplace and avoid lawsuits. Learn everything you need to
The 8th edition updates the book's easy-to-use legal charts to provide your state's currentemployment laws. It also covers the latest developments, such as the Supreme Court's new definition of "retaliation," and why the number of claims against
employers are going up.
May 1, 2006
- Publication date:
- Edition description:
- Older Edition
- Product dimensions:
- 7.04(w) x 8.99(h) x 1.00(d)
Read an Excerpt
Many state and federal laws -- as well as countless court decisions -- set out legal protocol for every phase of the employment relationship, including the hiring process. If you've correctly sensed that many workers today are well informed about their legal rights and are willing to fight to enforce them, you may be concerned about making costly mistakes during hiring.
Fortunately, you can steer clear of most of the legal perils of hiring employees by understanding and following these sensible guidelines:
- Avoid illegal discrimination.
- Respect each applicant's privacy rights.
- Don't imply job security -- unless you mean it.
- Protect against unfair competition.
- Observe the legal rules for hiring young workers and immigrants.
The first part of this chapter discusses these key principles -- some of which apply
throughout the employment relationship and are discussed elsewhere in this book as well.
The rest of the chapter will explain how to keep legal risks to a minimum as you write job
descriptions, advertise for workers, design job applications, interview applicants, check into
their backgrounds, and offer them jobs.
Those hiring independent contractors should consult Chapter 12, where you'll find a detailed discussion of the legal and practical issues you'll have to consider.Legal Guidelines for Hiring Employees
Most large companies maintain human resource departments and in-house lawyers to lead them through the intricacies of employment law -- but it's a costly endeavor. And if you run a small or midsized company, this is an unaffordable luxury. Ineither case, the guidelines discussed here should reduce your need for outside legal help when hiring employees.
Avoiding Illegal Discrimination
Federal and state laws prohibit all but the smallest employers from discriminating against an employee or applicant because of race, color, gender, religious beliefs, national origin, disability, or age. Also, many states and cities have laws prohibiting employment discrimination based on other criteria, such as marital status or sexual orientation.
These antidiscrimination laws -- covered in depth in Chapters 8 and 9 -- apply to all stages of the employment process: preparing job descriptions, writing ads, conducting interviews, deciding whom to hire, setting salaries and job benefits, promoting employees, and
disciplining and firing them.
These laws apply only to employers who have more than a certain number of employees, which differs for each antidiscrimination law. And, many state laws apply to smaller employers who are not covered by the federal laws. To find out whether your business must comply with
these laws, see Chapters 8 and 9.
A particular form of discrimination becomes illegal when Congress, a state legislature, or
a city council decides that a characteristic -- race, for example -- bears no legitimate
relationship to employment decisions. A law or ordinance is then passed prohibiting workplace
discrimination based on that characteristic -- making the characteristic protected. Courts
get involved, too, by interpreting and applying antidiscrimination laws and ordinances.
Obviously, as an employer, you need to know what types of discrimination are illegal.
At the same time, however, antidiscrimination laws don't dictate whom you must hire. You can exercise discretion based on a wide range of business considerations. You remain free, for example, to hire, promote, discipline, and fire employees and to set their salaries based on their skills, experience, performance, or reliability -- or your whim. You risk violating
antidiscrimination laws only when you treat a person or a group differently for reasons based
on a protected characteristic.
Some illegal practices are obvious -- such as advertising a job for people ages 20 to 30 or paying lower wages to women than men. Other types of discrimination are more subtle, but just as illegal. Employment practices that have a disproportionate and discriminatory impact on protected groups are also barred by antidiscrimination laws. For example, if your main means of seeking job candidates is through word of mouth and your workforce consists entirely of
white men, the word-of-mouth recruitment can be illegal discrimination; it's likely that
few people other than white men will hear about the job openings. The effect of the procedures is what counts.
To avoid violating antidiscrimination laws at the hiring stage, do all of the following:
- Advertise job openings in diverse places so they come to the attention of diverse people.
- Determine which skills, education, and other attributes are truly necessary to perform the job so that you don't impose job requirements that unnecessarily exclude capable applicants.
- Avoid application forms and screening techniques that have an unfair impact on any group of applicants.
Running afoul of antidiscrimination laws can be both time-consuming and costly. An unhappy employee or applicant may sue your business. Federal and state agencies also may take legal action against it. And publicity about a violation of antidiscrimination laws can adversely affect your business reputation, driving down revenues. If word gets out that a company has discriminated against female employees, for example, female customers may avoid dealing with the company for years -- even long after the discriminatory practices have been dropped.
Respecting Applicants' Privacy Rights
As an employer, you likely believe that the more information you have about job applicants, the better your hiring decisions will be. But there's a potential problem in delving too deeply. Your desire to gather information about an applicant can conflict with the applicant's right to privacy and can sometimes violate federal and state laws.
For example, there are a number of laws that regulate how and when you can request transcripts, credit reports, and other background information. In addition, laws and court rulings restrict your right to screen applicants through aptitude tests and drug tests. We discuss those issues more fully below.
You need to be careful, too, about rejecting applicants because of their off-duty, nonwork
activities. It's easy to understand why you might want to limit your payroll to people who don't smoke, drink alcohol, or use drugs -- even off the job -- to hold down health care costs or to keep a harmonious workforce. But the emerging law is that you can't dictate such off-the-job behavior. Where legal restrictions are in place, screening out applicants based on nonworkplace behavior can get you into trouble.
Even if you're located in a state where it's legal to reject applicants based on their lifestyle or their conduct away from work, caution is in order. To be on safe legal ground, it's best to avoid rejecting an applicant for lifestyle reasons or off-duty conduct unless you have a convincing business purpose. And, even then, be sure to apply your selection criteria
evenhandedly. If, for example, you choose not to hire single parents, you must apply this
standard to men and women alike or risk a discrimination lawsuit.
Because the laws vary depending on which state you are in, it's best to contact your state
labor department before rejecting an applicant based on off-duty conduct or lifestyle unless it is firmly rooted in a business reason.
Avoiding False Job Security Promises
If there's no contract for a fixed term of employment, an employee works at the will of the employer and employee. The employer can fire the employee at any time -- and the employee is free to quit at any time -- for any reason or for no reason at all. That's the basic law, although you can't fire someone for an illegal reason -- because of the color of the employee's skin, for example, or because you prefer to put a younger person in the job.
The at-will relationship gives you maximum freedom to fire employees, but preserving your
legal right to fire at will can be tricky. Courts in many states have held that if employers are not careful about what they tell employees, what they write in employee handbooks, and
what they say in documents and letters, they may lose that right. For example:
- A law firm hired Joan as a receptionist and fired her eight months later. Joan sued the law firm. She claimed that when she was hired, she was assured that she would remain employed as long as she did a good job. The court held that such assurance was sufficient to create a contract that Joan would be fired only for a legitimate business reason. (Hetes v. Schefman & Miller Law Office, 393 N.W.2d 577 (1986).)
- A bingo hall hired Scott as a general manager and gave him an employee handbook. Later, Scott was fired without warning or suspension. He sued, claiming that the handbook stated that
the employer could fire an employee only after warnings were given and disciplinary procedures were followed. The court ruled that the employer was required to follow the procedures set
out in its own employee handbook and couldn't fire Scott at will. (Lukoski v. Sandia Indian Management Co., 748 P.2d 507 (1988).)
During the hiring process, don't give assurances that you may not be able to honor and that may give an applicant a false sense of security. It can be difficult to restrain yourself when you're trying hard to entice an attractive candidate to join your workforce. You'll have a natural tendency to say positive things about your business, the candidate, and the future employment relationship. But those upbeat statements can be turned against you if your promises don't come true or if the employee is later fired.
Your best protection is to make sure your application forms, employee handbooks, and offers of employment state that the job is at will -- and to have the applicant acknowledge this in writing. Then you'll have an excellent chance of terminating the employment on your own terms, without legal repercussions. Be aware, however, that some judges approach the whole idea of at-will employment with a measure of hostility or skepticism. These judges may disregard even the most carefully worded at-will language if it seems to be contradicted by other oral or written statements you've made to the applicant or new employee.
Here's an example of language you may wish to include in your job application form.
[At-Will Employment Acknowledgement] omitted for online sample chapter.
Another way to protect yourself is to make sure that you always have a good business-related reason for firing an employee. In legal parlance, this is called firing "for cause." If you fire for cause, the firing will be lawful, even if a court later finds that the employee was not an at-will employee after all.
Preventing Negligent Hiring Claims
The main reason to investigate an applicant's background is to make sure the person will do a good job for you and fit in with your other employees. But sometimes there's an additional, equally powerful reason to make a thorough investigation. When you hire someone for a position that may expose customers or others to danger, you must use special care in checking references and making other background checks.
Legally, you have a duty to protect your customers, clients, and visitors and members of the general public from injury caused by employees whom you know, or should know, pose a risk of harm to others. In some states, you may also have a duty to protect other employees from an employee whom you know -- or should know -- is dangerous. If someone gets hurt or has property stolen or damaged by an employee whose background you didn't check carefully, you can be sued
for negligent hiring.
Be especially vigilant when hiring maintenance workers and delivery drivers, whose jobs give them easy access to homes and apartments.
Example: The Village Green, a 200, hires Elton as a maintenance worker and gives him a master key. Elton enters an apartment and sexually molests a four-year-old girl while the child's parents are running an errand. Had the company checked before hiring Elton, it would have discovered that Elton had just completed a prison term for
a sexual offense. The child's parents sue The Village Green for negligent hiring.
Doing a background check can be a delicate matter, because you are also legally required to respect the applicant's privacy. If you hire people for sensitive jobs, you must investigate
their backgrounds as thoroughly as possible -- without stepping over the line and violating
their privacy rights. You can be faulted for not looking into an applicant's criminal convictions -- but not for failing to learn about prior arrests that didn't result in convictions, since such arrest records are generally protected by privacy laws.
In doing background checks on applicants for sensitive jobs, check for felony convictions.
Also, be diligent in contacting all previous employers. Keep a written record of your investigation efforts. Insist that the applicant explain any gaps in employment history.
Consider turning over the prehire investigation to professionals who do this for a living. If
you choose to follow this route -- and can afford it -- it can go a long way toward refuting
later claims that you failed to use reasonable efforts to learn about the employee's history.
Strict rules may apply to background checks. Any time you hire a business -- such as a
credit bureau or investigative agency -- to gather information about applicants (or employees), you must follow the strict guidelines set forth in the Fair Credit Reporting Act or FCRA. (15 U.S.C. §§ 1681 and following.) This federal law requires you to, among other things, get the applicant's consent to the investigation and give the applicant a copy of the investigative report if you decide not to hire the applicant based on its contents.
Protecting Against Unfair Competition
Whenever you hire workers, you run the risk that they'll later start a competing business or go to work for a competitor. If so, they may use information or contacts they gained at your workplace to draw away business that otherwise would be yours.
Meet the Author
Attorney Fred S. Steingold practices law in Ann Arbor, Michigan. An expert on small business law, he represents and advises many small businesses. He is the author of Legal Guide for Starting & Running a Small Business and The Employer's Legal Handbook. His monthly column, "The Legal Advisor," is carried by trade publications across the country.
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