HMD 402 UNLV Employee Privacy Policy for A New Hospitality Company Paper

Do your own independent research into employee privacy issues. (There is a chapter called “Employee Privacy” in the book, The Essential Guide to Federal Employment Laws)

You will then draft a “Employee Privacy Policy” for your new Hospitality Company. Do not simply copy something from the Internet

if you do, I will refuse to accept your work. No plagiarism rate over 15%. Turnitin Plagiarism check report needed. It must be in your own words. Make sure your policy covers all the important issues you think your employees need to be aware of.

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Acknowledgments
Several people generously contributed advice and information in the
preparation of this book, including:
• James Bruno
• Fred Daily
• Tony Duerr
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• Joel Hearshen
• Jon Huegli
• Diane Hunter
• Nancy Keppelman
• Lonnie Loy
• Len Pytlak
• William Simmons, and
• Dave Tiedgen.
Special thanks to Barbara Kate Repa, Amy DelPo, Lisa Guerin, Alayna
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guidance and to Jake Warner for his excellent additions to the manuscript.
About the Author
Fred S. Steingold practices law in Ann Arbor, Michigan. He represents and
advises many small businesses and frequently leads seminars on how to
start and run a small business. He is the author of several books published
by Nolo, including Legal Guide for Starting & Running a Small Business,
and Legal Forms for Starting & Running a Small Business.
Table of Contents
All the Law Employers Need to Know…………………………………………………………1
1
Hiring…………………………………………………………………………………………………………………………………..3
Legal Guidelines for Hiring Employees………………………………………………………………………..5
Job Descriptions………………………………………………………………………………………………………………..16
Job Advertisements………………………………………………………………………………………………………….18
Job Applications………………………………………………………………………………………………………………..20
Interviews………………………………………………………………………………………………………………………….. 26
Testing………………………………………………………………………………………………………………………………….29
Investigations……………………………………………………………………………………………………………………..35
Making a Job Offer…………………………………………………………………………………………………………..43
Rejecting Applicants………………………………………………………………………………………………………. 46
Tax Compliance…………………………………………………………………………………………………………………47
Immigration Law Requirements………………………………………………………………………………… 48
New Hire Reporting Form……………………………………………………………………………………………..49
2
Personnel Practices…………………………………………………………………………………………………53
Employee Files………………………………………………………………………………………………………………….. 54
Employee Handbooks……………………………………………………………………………………………………..59
Employee Performance Reviews………………………………………………………………………………… 66
Disciplining Employees…………………………………………………………………………………………………. 72
3
Wages and Hours………………………………………………………………………………………………………75
Overtime and Minimum Wage Requirements……………………………………………………….76
Equal Pay Requirements……………………………………………………………………………………………….. 94
How to Pay Employees………………………………………………………………………………………………….. 96
Calculating Work Hours…………………………………………………………………………………………………97
Record-Keeping Requirements………………………………………………………………………………….101
Child Labor Rules…………………………………………………………………………………………………………..102
Payroll Withholding………………………………………………………………………………………………………105
The Consequences of Bending the Rules……………………………………………………………….108
4
Employee Benefits………………………………………………………………………………………………….111
Health Care Coverage………………………………………………………………………………………………….. 113
Retirement Plans…………………………………………………………………………………………………………….120
Other Employee Benefits…………………………………………………………………………………………….126
5
Taxes……………………………………………………………………………………………………………………………….. 131
Employer Identification Numbers…………………………………………………………………………… 133
Federal Employment Taxes…………………………………………………………………………………………136
Federal Self-Employment Taxes……………………………………………………………………………….. 141
Federal Tax Deductions for Salaries and Other Expenses…………………………………142
Independent Contractors……………………………………………………………………………………………146
Statutory Employees……………………………………………………………………………………………………. 147
6
Family and Medical Leave………………………………………………………………………………..149
Who Is Covered……………………………………………………………………………………………………………… 151
Reasons for Taking a Leave…………………………………………………………………………………………. 151
Scheduling Leave……………………………………………………………………………………………………………156
Temporary Transfer to Another Job……………………………………………………………………….. 157
Substituting Paid Leave………………………………………………………………………………………………..157
Advance Notice of Leave…………………………………………………………………………………………….. 159
Certification…………………………………………………………………………………………………………………….160
Health Benefits……………………………………………………………………………………………………………….163
Returning to Work…………………………………………………………………………………………………………164
Related Laws……………………………………………………………………………………………………………………167
Enforcement…………………………………………………………………………………………………………………….169
7
Health and Safety………………………………………………………………………………………………….. 171
The Occupational Safety and Health Act………………………………………………………………172
Getting Help……………………………………………………………………………………………………………………181
State OSHA Laws……………………………………………………………………………………………………………183
Hazardous Chemicals…………………………………………………………………………………………………..183
Workers’ Compensation………………………………………………………………………………………………185
Disease Prevention………………………………………………………………………………………………………..193
Tobacco Smoke………………………………………………………………………………………………………………193
Drug and Alcohol Abuse……………………………………………………………………………………………..194
Repetitive Stress Disorder……………………………………………………………………………………………198
8
Illegal Discrimination………………………………………………………………………………………….201
Title VII of the Civil Rights Act………………………………………………………………………………….203
Harassment…………………………………………………………………………………………………………………….. 211
Age……………………………………………………………………………………………………………………………………..218
Pregnancy…………………………………………………………………………………………………………………………221
Citizenship……………………………………………………………………………………………………………………….224
Genetic Information……………………………………………………………………………………………………..224
Religion……………………………………………………………………………………………………………………………..225
Sexual Orientation………………………………………………………………………………………………………..227
Gender Identity………………………………………………………………………………………………………………228
State and Local Antidiscrimination Laws………………………………………………………………228
9
Workers With Disabilities………………………………………………………………………………..231
The Americans with Disabilities Act………………………………………………………………………..232
Businesses That Are Covered……………………………………………………………………………………..233
Who Is Protected…………………………………………………………………………………………………………..233
Exceptions to Coverage……………………………………………………………………………………………….238
Providing Reasonable Accommodations………………………………………………………………. 241
Workers With Emotional or Mental Impairments……………………………………………..248
Financial Assistance……………………………………………………………………………………………………… 251
Health and Safety Standards………………………………………………………………………………………252
Medical Exams………………………………………………………………………………………………………………..254
Enforcement…………………………………………………………………………………………………………………….255
10
Termination……………………………………………………………………………………………………………….257
Wrongful Discharge Cases………………………………………………………………………………………….259
Guarding Against Legal Claims………………………………………………………………………………….263
Guidelines for Firing Employees………………………………………………………………………………..265
Investigating Complaints Against Workers……………………………………………………………268
Alternatives to Firing…………………………………………………………………………………………………….270
The Firing Process………………………………………………………………………………………………………….271
Heading Off Trouble……………………………………………………………………………………………………..276
Final Paychecks……………………………………………………………………………………………………………….278
Continuing Health Insurance…………………………………………………………………………………….279
Unemployment Compensation………………………………………………………………………………..279
Protecting Your Business Information…………………………………………………………………….282
Handling Postemployment Inquiries……………………………………………………………………….285
11
Employee Privacy…………………………………………………………………………………………………..289
Monitoring Employees at Work………………………………………………………………………………..292
Searches…………………………………………………………………………………………………………………………….298
Off-Duty Activities………………………………………………………………………………………………………..300
12
Independent Contractors………………………………………………………………………………..303
Comparing Employees and Independent Contractors……………………………………..304
The IRS Rules……………………………………………………………………………………………………………………309
Workers Automatically Classified as Employees…………………………………………………. 319
State Laws…………………………………………………………………………………………………………………………320
The Risks of Misclassification…………………………………………………………………………………….320
Hiring Independent Contractors………………………………………………………………………………322
13
Unions…………………………………………………………………………………………………………………………….325
The National Labor Relations Act…………………………………………………………………………….326
Unionizing a Workplace………………………………………………………………………………………………327
Employer Rights and Limitations……………………………………………………………………………..330
Employee Rights and Limitations……………………………………………………………………………..331
Making Unions Unnecessary……………………………………………………………………………………..332
14
Lawyers and Legal Research…………………………………………………………………………..333
Getting Help From a Lawyer………………………………………………………………………………………334
Paying a Lawyer………………………………………………………………………………………………………………337
Resolving Problems With Your Lawyer…………………………………………………………………..340
Legal Research…………………………………………………………………………………………………………………342
Appendix………………………………………………………………………………………………………………………347
Labor Departments and Agencies……………………………………………………………………………348
State Drug and Alcohol Testing Laws……………………………………………………………………..349
State Laws on Employee Arrest and Conviction Records…………………………………363
State Laws on Access to Personnel Records………………………………………………………….376
State Minimum Wage Laws for Tipped and Regular Employees……………………383
State Meal and Rest Break Laws………………………………………………………………………………..392
State Health Insurance Continuation Laws…………………………………………………………..400
State Family and Medical Leave Laws…………………………………………………………………….. 414
State Laws Prohibiting Discrimination in Employment…………………………………….425
Agencies That Enforce Laws Prohibiting Discrimination in Employment…..440
State Laws That Control Final Paychecks……………………………………………………………….445
Index……………………………………………………………………………………………………………………………………….453
All the Law Employers Need to Know
F
or over 20 years, The Employer’s Legal Handbook has been the go-to
resource for thousands of employers seeking authoritative answers to
workplace questions, quickly and easily. This comprehensive guide,
now in its 13th edition, covers, in plain English, all the latest employment
law issues you need to know about, including:
• legal guidelines for interviewing, screening, and hiring employees
• best personnel practices—employee files, handbooks, performance
reviews, and discipline
• wage and hour laws—requirements for overtime, minimum wage,
and equal pay
• health care insurance and other employee benefits
• employee taxes and deductions
• workers’ compensation and employee health and safety
• family and medical leave
• illegal harassment and discrimination, and special issues for workers
with disabilities
• guidelines for terminating, laying off, or firing employees
• employee privacy, including policies for Internet and social media
use, and
• independent contractors, unions, employment lawyers, and much more.
The Employer’s Legal Handbook will help you run an efficient, fair workplace
by staying on top of the myriad and frequently changing employment laws.
Knowing how employment laws affect your business will help you cut the
number of expensive visits or calls you’d otherwise make to a lawyer’s office
and reduce the risks of costly lawsuits. Your employees will appreciate being
treated fairly, and you’ll save time, money, and hassles—it’s a true win-win.
2 | THE EMPLOYER’S LEGAL HANDBOOK
Get Employment Law Updates on Nolo.com
As we go to press, the White House is changing parties, along with all of the
executive agencies. Many of those agencies—such as the Department of Labor,
the Equal Employment Opportunity Commission, the National Labor Relations
Board, and more—write regulations, set enforcement policies, and give guidance
and advisory opinions that help shape employment law. At times like these, it’s
more important than ever to stay up to date.
When there are important changes to the information in this book, we’ll post
updates online, on a page dedicated to this book:
www.nolo.com/back-of-book/EMPL.html
l
C H A P T E R
Hiring
Legal Guidelines for Hiring Employees……………………………………………………………………… 5
Avoiding Illegal Discrimination………………………………………………………………………………… 6
Respecting Applicants’ Privacy Rights……………………………………………………………………. 7
Avoiding False Promises of Job Security………………………………………………………………… 8
Preventing Negligent Hiring Claims……………………………………………………………………….11
Protecting Against Unfair Competition……………………………………………………………….12
Hiring Young Workers………………………………………………………………………………………………..16
Hiring Immigrants……………………………………………………………………………………………………….16
Job Descriptions……………………………………………………………………………………………………………….16
Necessary Elements…………………………………………………………………………………………………….16
Permitted Discrimination…………………………………………………………………………………………17
Job Advertisements…………………………………………………………………………………………………………18
Job Applications……………………………………………………………………………………………………………….20
Avoiding Unlawful Questions………………………………………………………………………………….20
The Legal Effect of Job Applications………………………………………………………………………24
Interviews……………………………………………………………………………………………………………………………26
Interviewing Protocol…………………………………………………………………………………………………26
Legal Restrictions on Questions……………………………………………………………………………..27
Testing………………………………………………………………………………………………………………………………….29
Skills Tests………………………………………………………………………………………………………………………29
Aptitude and Psychological Tests…………………………………………………………………………..29
Honesty Tests………………………………………………………………………………………………………………. 30
Medical Tests………………………………………………………………………………………………………………..31
Drug Tests………………………………………………………………………………………………………………………33
1
4 | THE EMPLOYER’S LEGAL HANDBOOK
Investigations…………………………………………………………………………………………………………………….35
The Fair Credit Reporting Act………………………………………………………………………………… 36
Information From Former Employers……………………………………………………………………38
School Transcripts……………………………………………………………………………………………………….39
Credit History……………………………………………………………………………………………………………… 40
Criminal History…………………………………………………………………………………………………………. 40
Driving Records…………………………………………………………………………………………………………….42
Making a Job Offer…………………………………………………………………………………………………………..43
Rejecting Applicants……………………………………………………………………………………………………… 46
Tax Compliance………………………………………………………………………………………………………………..47
Immigration Law Requirements………………………………………………………………………………. 48
New Hire Reporting Form…………………………………………………………………………………………….49
CHAPTER 1 | HIRING | 5
M
any state and federal laws—as well as countless court decisions—
set out legal protocol for every phase of the employment relation­
ship, 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 promise 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.
RELATED TOPIC
Hiring independent contractors? 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. If you run a
small or midsized company, however, this is an unaffordable luxury. In either
case, the guidelines discussed here should reduce your need for outside legal
help when hiring employees.
6 | THE EMPLOYER’S LEGAL HANDBOOK
Avoiding Illegal Discrimination
Federal and state laws prohibit all but the smallest employers from discriminat­
ing against an employee or applicant because of race, color, gender, religious
beliefs, national origin, disability, age, or genetic information. Also, many
states and cities have laws prohibiting employment discrimination based on
other criteria, such as marital status or military service.
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.
Federal 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 an 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 even on your whim. You risk violating anti­
discrimination laws only when you treat a person or a group differently for
reasons that are 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 primary means of
seeking job candidates is through word of mouth and your workforce consists
entirely of white men, the word-of-mouth system could constitute illegal
CHAPTER 1 | HIRING | 7
discrimination if it results in an applicant pool of mostly white men. The effect
of the procedures is what counts, even if you did not intend to discriminate.
To avoid violating antidiscrimination laws at the hiring stage, you should do
all of the following:
• Advertise job openings in a variety of places so they come to the
attention of a wide pool of applicants.
• 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 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 may conflict with the applicant’s right to privacy or 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 offduty, 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, depending on your state, you may not be allowed to dictate such off-the-job
behavior. Where legal restrictions are in place, screening out applicants based on
off-duty conduct can get you into trouble.
8 | THE EMPLOYER’S LEGAL HANDBOOK
Even if you’re in a state where it’s legal to reject applicants based on their
lifestyles 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 offduty conduct unless you have a convincing business purpose. And, even then,
be sure to apply your selection criteria evenhandedly.
Avoiding False Promises of Job Security
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.
CAUTION
The rules are different in Montana. There, an employee is at will only during
the “probationary period”: the first six months of the employment relationship, unless the
employer specifies a different probationary period while hiring. After the probationary
period is over, the employer must have “good cause” to fire the employee, defined as
“reasonable job-related grounds for dismissal based on a failure to satisfactorily perform
job duties, disruption of the employer’s operation, or other legitimate business reason.”
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 hires Joan as a receptionist. The managing partner assures
her that she will remain employed as long as she does a good job. Eight
months later, Joan is fired. She sues the firm. The judge says that the
managing partner’s assurance created a contract that the firm would fire
Joan only for a legitimate business reason. The firm doesn’t come up with
a good business reason for the firing, so Joan is entitled to damages for
breach of contract.
CHAPTER 1 | HIRING | 9
• A restaurant hires Scott as its general manager and gives him an employee
handbook. The handbook says that the restaurant can fire an employee
only after warnings are given and disciplinary procedures are followed.
Later, the restaurant fires Scott without warning and without following
the disciplinary steps outlined in the handbook. Scott has a solid basis
for suing the restaurant for wrongful discharge.
During the hiring process, don’t make promises that you may not be able to
honor. 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 require the
applicant to acknowledge this in writing. This will protect your right to terminate
the employment relationship on your own terms, without legal repercussions.
Here’s an example of language you may wish to include in your job
application form regarding at-will employment.
At-Will Employment. I acknowledge that if hired, I will be an at-will employee,
subject to dismissal or discipline without notice or cause, at the discretion of the
employer. I also understand that this means I am free to quit my employment at
any time, for any reason, without notice. I understand that no representative of
the company, other than the president, has authority to change the terms of the
at-will relationship and that any such change can occur only in a written contract.
JNO
Initials
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.
10 | THE EMPLOYER’S LEGAL HANDBOOK
Be Truthful With Job Applicants
Statements you make while interviewing candidates and making job offers could
cause problems later, if you speak falsely or make promises you don’t keep. If an
employee relies on your statements in deciding to take the job, you could be sued
for breach of contract or fraud.
For example, you must be accurate in describing the type of work the
employee will do for your company. Employees often leave one employer to join
another—or turn down opportunities—because a particular job seems to offer
a greater chance for career advancement. To avoid claims that you misled an
applicant about the nature of the work, stick to what you know the work will
consist of, rather than what you think the applicant wants to hear.
Similarly, if your company is considering staff reductions in the near future—
because, for example, a major account is about to move out of the state—you
must disclose this to applicants. Otherwise, you might find yourself on the
receiving end of a lawsuit, especially if the employee left a secure job elsewhere to
come work for you.
Consider, for example, Andrew Lazar. He had a good job in New York City that
paid well. When he interviewed for a job at a Los Angeles company, the company’s
executives strongly urged him to take the position, which they characterized
as secure and offering significant pay increases. They portrayed the company
as financially strong, with a profitable future. When Lazar asked for a written
employment contract, they told him, “Our word is our bond.”
Based on that assurance, Lazar quit his New York job, bought a home in
California, moved there with his wife and children, and started work. Two years
later, the company fired him as part of a reorganization. He sued, claiming that the
company fraudulently induced him to quit his old job and move to California. He
said that the executives concealed the company’s bleak financial condition when
they interviewed him, and that the company was already planning to eliminate his
job when they hired him. The California Supreme Court found that he could sue
for fraud and for breach of contract. (Lazar v. Superior Court (Rykoff-Sexton Inc.),
49 Cal. Rptr.2d 377 (1996).)
CHAPTER 1 | HIRING | 11
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 conduct
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 other background information.
Legally, you may have a duty to protect your customers, clients, 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 might be subject to a lawsuit for negligent hiring.
Be especially vigilant when hiring maintenance workers and delivery drivers,
whose jobs give them easy access to people’s homes.
EXAMPLE: The Village Green, a 200-unit apartment complex, hires Elton as a
maintenance worker and gives him a master key. Elton enters an apartment and
sexually molests a young 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, because such arrest records
are often 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
12 | THE EMPLOYER’S LEGAL HANDBOOK
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.
CAUTION
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.
Obviously, you don’t need to be too concerned about the employee you
hire to flip hamburgers or the clerk you hire to handle dry cleaning orders.
But employees who have access to inside information about product pricing
or business expansion plans, for example, may pose competitive risks. The
same goes for employees who serve valuable and hard-won customers, such
as the salesperson who handles your largest accounts.
You can help protect your business from unfair competition by asking
new hires to sign agreements not to take or disclose trade secrets and other
confidential information. You can also ask select employees to sign covenants not
to compete with your business. Such covenants must be carefully written so that
a former employee has a reasonable chance to earn a living, however, and they
aren’t legal in all states.
Trade Secrets
In hiring and working with employees, some business owners need to protect
their unique assets from misuse. Some possibly protectable business assets may
include, for example:
CHAPTER 1 | HIRING | 13
• a restaurant’s recipes for a special salad dressing and a muffin that draw
people from miles away
• a heating and cooling company’s list of 500 customers for whom it
regularly provides maintenance, or
• a computer company’s unique process for speedily assembling computer
boards.
If they are treated as such, the recipes, the customer list, and the assembly
process are all trade secrets. Other examples are an unpatented invention,
engineering techniques, cost data, a formula, or a machine. To qualify for trade
secret protection, your business information must meet two requirements.
First, you must show that you’ve taken steps to keep the information secret
by, for example:
• keeping it in a secure place such as a locked cabinet or passwordprotected database
• giving employees access to it on a need-to-know basis only
• informing employees that the information is proprietary, and
• requiring employees to acknowledge in writing that the information is a
trade secret.
EXAMPLE: Sue works at Speedy Copy Shop. She has daily access to the list of
larger accounts that are regularly billed more than $2,000 per month. Sue quits
to open her own competing shop. Before she does, she copies the list of major
accounts. One of her first steps in getting her new business going is to try to get
their business away from her former employer. Speedy sues Sue for stealing its
trade secret. At trial, Speedy shows that it keeps the list in a secure place and
permits access only to selected employees who need the information. In light of
these precautions, the judge orders Sue not to contact the customers on the list
and requires her to compensate Speedy for any profits she has already earned on
those accounts.
Second, the information must not be freely available from other sources.
Trade secrets lose their protected status if they are published or disclosed to the
public. For example, if the recipe for a restaurant’s award-winning custard tart
can be found in a standard American cookbook or is readily available on the
14 | THE EMPLOYER’S LEGAL HANDBOOK
Internet, it’s no longer a trade secret. On the other hand, a publication that is
brief, temporary, or obscure will not cause a trade secret to lose its protected
status. For example, if the restaurant’s chef found the recipe in a medieval
French cookbook in a provincial museum, translated it, and figured out how
to adapt it to currently available ingredients, that is probably obscure enough
that the trade secret will still be protected.
In addition to the requirements that a trade secret must be guarded infor­
mation that is not generally available, judges sometimes look at how valuable
the information is to you and your competitors and how much money and
effort you spent in developing the trade secret.
Covenants Not to Compete
To prevent an employee from competing with you after leaving your work­
place, consider having him or her sign a covenant not to compete (also called
a noncompete agreement). In a typical noncompete, the employee agrees not
to become an owner or employee of a business that competes with yours for a
specific period of time in a specific location.
The best time to secure a covenant not to compete is when you hire an
employee. An employee who is already on the payroll may be more reluctant
to sign anything. You’ll also have less leverage to negotiate the agreement.
CAUTION
Not all states honor noncompete agreements. Noncompete agreements
can be difficult—or impossible—to enforce. In California, for example, courts virtually
never enforce noncompete agreements, and other states enforce noncompetes only
in limited circumstances. Even in the states where they are enforced, it’s often hard
to overcome a judge’s reluctance to interfere with an employee’s ability to earn a
living. One way around this potential uphill battle is to ask employees instead to sign
a nonsolicitation agreement and a nondisclosure agreement. Some courts are more
willing to enforce these agreements because they are less restrictive. They can keep
ex-employees from using your client or customer lists, luring employees to a competing
business, or stealing your trade secrets. If you can get all of these protections, you don’t
lose much by forgoing a noncompete agreement.
CHAPTER 1 | HIRING | 15
Battles over the legality of these agreements must usually be resolved in
court. Judges are reluctant to deprive people of their rights to earn a living, so
the key to a legally enforceable covenant not to compete is to make its terms
reasonable. In evaluating whether a covenant not to compete is reasonable,
focus on these three questions:
• Is there a legitimate business reason for restricting the future activities of the
particular employee? There probably is if you expect to spend significant
time and money training a high-level employee and plan to entrust
the employee with sensitive contacts on lucrative accounts. Such an
employee could easily—and unfairly—hurt your business by competing
with you. This would motivate a judge to find that you have a legitimate
business reason for the covenant. On the other hand, if you require
a new receptionist or typist to sign a similar covenant, a judge would
probably find that you have no valid business purpose for restricting the
employee’s ability to work elsewhere.
• Is the covenant reasonably limited in time? Agreements lasting a year or
two are more likely to be upheld than agreements stretching well into
the future.
• Is the covenant reasonably limited as to geographic scope? A limit spanning
several states might not be deemed reasonable, but you may be able to
prohibit an employee from competing within your city limits or larger
urban area.
EXAMPLE: When Mary hires Sid to be the office manager for her profitable travel
agency, she realizes that Sid will have access to major corporate accounts and
daily contact with the corporate managers who make travel arrangements. Mary
also knows that she’ll spend considerable time training Sid and invest more than
$4,000 in specialized seminars that she will require Sid to attend. She asks Sid to
sign a covenant not to compete in which Sid promises that while working for
Mary and for two years afterward, he won’t work for or own a travel agency within
50 miles of Mary’s agency. After six months, Sid quits and starts a competing
agency one mile from Mary’s. The judge enforces the covenant not to compete by
forbidding Sid from operating his new business and by awarding damages to Mary.
16 | THE EMPLOYER’S LEGAL HANDBOOK
Hiring Young Workers
Federal and state laws restrict your right to hire workers who are younger than
18 years old. These laws limit the type of work for which young people may be
hired and the hours they may work. (See Chapter 3 for more information.)
Hiring Immigrants
Federal law prohibits hiring workers not authorized to work in the United States.
You and each new employee are required to complete Form I-9, Employment
Eligibility Verification (discussed below).
Job Descriptions
Write a job description for each position you’re seeking to fill. Listing the skills
and attributes you’re looking for in applicants will make the hiring process more
objective. It will also give you ready standards to measure which applicants are
most qualified. Current employees can often help you write job descriptions.
They know how the business operates and the kind of skills that are needed.
In writing job descriptions, be careful not to violate the laws that prohibit
discrimination in employment.
Under federal law, you can’t discriminate against applicants on the basis of
their race, skin color, gender, religious beliefs, national origin, disability, age
(if the applicant is at least 40 years old), pregnancy, or genetic information.
In addition, many states prohibit discrimination based on a variety of other
characteristics, including marital status and sexual orientation. To learn about
laws prohibiting discrimination in employment, see Chapter 8.
Necessary Elements
A well-drafted job description usually contains these components:
• Qualifications, such as necessary skills, education, experience, and licenses.
Be careful in setting requirements for education and experience. If
set too high for the job, your requirements may have an unintended
discriminatory effect on groups protected by antidiscrimination laws.
CHAPTER 1 | HIRING | 17
• Essential job functions. The federal Americans with Disabilities Act (ADA)
has forced employers to take a fresh look at job descriptions and decide
what really is the core of each job. (For more on the ADA, see Chapter 9.)
To help eliminate unfair discrimination against people with disabilities,
the ADA seeks to make sure a person isn’t excluded from a job simply
because the individual can’t perform some marginal duties listed in a
job description. For example, suppose your job description for a file clerk
includes lifting heavy boxes of office supplies, but the basic functions of
the job are to file and retrieve written materials. Employees who work in
the mail room usually handle the boxes of office supplies. Someone with
an injured back may have a lifting restriction that precludes moving the
boxes, but be perfectly able to file and retrieve papers. Lifting the boxes
isn’t an essential job function and shouldn’t be listed as one.
• Nonessential job functions. You may wish to specify functions and duties
that are desirable but not required for a particular job. That’s okay as long
as the job description clearly states that these additional functions and
duties are not job requirements. Suppose you’re seeking a receptionist.
If you never or seldom require the receptionist to type, typing isn’t an
essential function. You could, however, mention typing as a desirable
function if you made it clear that it’s not required.
RESOURCE
Want help writing job descriptions? Check out The Job Description
Handbook, by Margie Mader-Clark (Nolo), which provides step-by-step instructions for
crafting effective job descriptions.
Permitted Discrimination
Antidiscrimination laws recognize that in certain very limited circumstances,
an employer may have a legitimate reason to seek an employee of a particular
gender, religion, or ethnicity, even though such a preference would ordinarily
be illegal. These are called bona fide occupational qualification (BFOQ)
18 | THE EMPLOYER’S LEGAL HANDBOOK
exceptions. Religion, sex, or national origin can be a BFOQ only if it’s a
reasonably necessary qualification for the normal operation of a business
or enterprise. Not surprisingly, courts almost never find that the BFOQ
exception applies. Race can never be a BFOQ.
Here are some guidelines.
Religion. Religion can be a job requirement if the job involves religious
duties. The U.S. Supreme Court has ruled that the First Amendment gives
religious entities the right to decide who will “preach their beliefs, teach
their faith, and carry out their mission.” This is sometimes referred to as the
“ministerial exception” to the usual antidiscrimination rules. Although the
usual antidiscrimination rules apply to positions that are not ministerial
(such as administrative workers), a religious employer has more freedom
in choosing those who will carry and teach its message when it comes to
ministerial positions.
National origin. National origin can be a BFOQ, but only very rarely.
For example, an American subsidiary of a Japanese company involved in
international trade might be allowed to make Japanese nationality a job
requirement because of the need for language proficiency and cultural
background, but only if the company could show that this restriction is
reasonably necessary to do the job. Aside from such a narrow situation, you
can’t use national origin as a BFOQ.
Gender. About the only time that gender can be a BFOQ is for jobs affecting
personal privacy—for example, restroom attendants or security guards who are
required to search employees—and acting and modeling work.
Job Advertisements
Even if you write a great job description, you can still get tripped up when
summarizing the job in an advertisement, especially if you let someone who’s
not familiar with the legal guidelines write your ad. Nuances in an ad can be
used as evidence of discrimination against applicants of a particular gender,
age, or other protected characteristic.
CHAPTER 1 | HIRING | 19
Here are a number of semantic pitfalls to avoid when posting a job.
Don’t Use
Use
Salesman
Salesperson
College student
Part-time worker
Handyman
General repair person
Gal Friday
Office manager
Married couple
Two-person job
Counter girl
Retail clerk
Waiter
Server
Young
Energetic
Requiring a high school or college degree may be discriminatory in some
job categories. You can avoid problems by stating that an applicant must have
“a degree or equivalent experience.”
The best way to write an ad that meets legal requirements is to keep it short
and sweet. Stick to the skills needed and the basic responsibilities the job
entails. Some examples:
• “Fifty-unit apartment complex seeks experienced manager with general
maintenance skills.”
• “Midsized manufacturing company has opening for accountant with tax
experience to oversee interstate accounts.”
• “Cook trainee position available in new vegetarian restaurant. Flexible
hours.”
Help wanted ads placed by federal contractors must state that all qualified
applicants will receive consideration for employment without regard to race,
color, religion, sex, or national origin. Ads often express this with the phrase
“An Equal Opportunity Employer” or “EOE.”
Some employers who are not federal contractors also use this phrase in their
ads; it’s a good shorthand way to let potential employees know that you’ll
give them a fair shake, which can help you attract a more diverse group of
applicants.
20 | THE EMPLOYER’S LEGAL HANDBOOK
Job Applications
Develop a standard application form to make it easy to compare the experience
and skills of applicants. Limit the form to job-related information that will
help you decide who’s the best person for the job. Questions like these are
fairly standard:
• What is your name, address, and phone number?
• Are you legally entitled to work in the United States?
• What position are you applying for?
• What other positions would you like to be considered for?
• If you are hired, when can you start work?
• What is your educational background, including high school, college,
graduate school, and other (including school names, addresses, number
of years attended, degree, and major)?
• Describe your employment history, including name, address, and phone
number of each employer, supervisor’s name, dates of employment, job
title and responsibilities, and reason for leaving.
• Do you have any special training or experience relevant to this position?
Avoiding Unlawful Questions
The chart below (“Preemployment Inquiries”) outlines the type of information
that you can ask for in applications and during job interviews. Follow the chart
to comply with federal laws. The chart may also be sufficient for complying
with the laws of your state, but to be sure, check with your state’s fair employment office. (You can find charts listing state fair employment laws and offices
in the appendix.)
In addition to the areas covered in the chart, the ADA prohibits any
preemployment questions about a disability. Before you make a job offer,
you may ask questions about an applicant’s ability to perform specific job
functions. You may not, however, inquire about the nature or severity
of a disability, ask about medical history or treatment, or require any
CHAPTER 1 | HIRING | 21
medical exam. These rules apply to application forms, job interviews, and
background or reference checks. See Chapter 9 for more on the ADA.
After you make a conditional job offer and before an applicant starts work,
you’re free to gather more details. At that point, you can require a medical
exam or ask health-related questions, but only if you require this for all
candidates who receive conditional offers in the same job category.
Employers may not ask questions that would tend to elicit information
about an applicant’s disability before a job offer is made. According to the
Equal Employment Opportunity Commission (EEOC), the federal agency
that enforces workplace discrimination laws, you may not ask questions like
these in an interview, on an application form, or in any other context before
making a job offer:
• Do you have a disability? Have you ever had a disability?
• Have you ever had or been treated for (followed by a list of conditions and
diseases, such as a heart condition, cancer, asthma, diabetes, and so on)?
• How many days were you sick last year?
• Have you ever filed for workers’ compensation?
• Have you ever been treated for mental health problems?
• What prescription drugs are you currently taking, if any?
• Are you a drug addict or an alcoholic?
22 | THE EMPLOYER’S LEGAL HANDBOOK
Preemployment Inquiries
Subject
Lawful Preemployment
Inquiries
Unlawful Preemployment Inquiries
Name
Applicant’s full name
Original name of an applicant whose name has
been changed by court order or otherwise
Have you ever worked
for this company under a Applicant’s maiden name
different name?
Is any additional information relative to a different
name necessary to check
work record? If yes, explain.
Birthplace
None
Birthplace of applicant
Birthplace of applicant’s parents, spouse, or
other close relatives
Requirements that applicant submit birth
certificate, naturalization, or baptismal record
Age
Are you 18 years old or
How old are you? What is your date of birth?
older? (This question
may be asked only for the
purpose of determining
whether applicants are of
legal age for employment.)
Religion or
creed
None
Inquiry into an applicant’s religious
denomination, religious affiliations, church,
parish, pastor, or religious holidays observed
Race or color
None
Complexion or color of skin
Inquiry regarding applicant’s race
Photograph
None
Any requirement for a photograph prior to hire
Height
None
Inquiry regarding applicant’s height (unless you
have a legitimate business reason)
Weight
None
Inquiry regarding applicant’s weight (unless you
have a legitimate business reason)
Marital status Is your spouse employed
by this employer?
Requirement that an applicant provide any
information regarding marital status or children
Are you single or married? Do you have any
children? Is your spouse employed? What is your
spouse’s name?
CHAPTER 1 | HIRING | 23
Preemployment Inquiries (continued)
Subject
Lawful Preemployment
Inquiries
Unlawful Preemployment Inquiries
Gender
None
Disability
These [provide applicant Inquiries regarding an individual’s physical or
with list] are the essential mental condition that are not directly related to
functions of the job. How the requirements of a specific job
would you perform them?
Citizenship
Are you legally authorized Questions about subjects below are unlawful, but
to work in the United
the applicant may be required to reveal some of
States on a full-time basis? this information as part of the federal I-9 process:
• country of citizenship
• whether an applicant is naturalized or a
native-born citizen; the date when the
applicant acquired citizenship
• requirement that an applicant produce
naturalization papers or first papers
• whether applicant’s parents or spouse are
naturalized or native-born citizens of the
United States, and, if so, the date when such
parent or spouse acquired citizenship
National
origin
Inquiry into language
applicant speaks and
writes fluently
Education
Inquiry into the academic,
vocational, or professional
education of an applicant
and public and private
schools attended
Experience
Inquiry into work
experience
Inquiry into countries
applicant has visited
Mr., Miss, Mrs., Ms. or an inquiry regarding
gender; inquiry as to ability or plans to reproduce
or advocacy of any form of birth control
Inquiry into applicant’s lineage, ancestry,
national origin, descent, parentage, or
nationality, unless part of the federal I-9 process
in determining employment eligibility
Nationality of applicant’s parents or spouse
Inquiry into how applicant acquired ability to
read, write, or speak a foreign language
24 | THE EMPLOYER’S LEGAL HANDBOOK
Preemployment Inquiries (continued)
Subject
Lawful Preemployment
Inquiries
Unlawful Preemployment Inquiries
Arrests
Have you ever been
convicted of a crime
(depending on state and
local law)?
Are there any felony
charges pending against
you?
Inquiry regarding arrests that did not result in
conviction (except for law enforcement agencies)
Relatives
Names of applicant’s
relatives already
employed by this
company
Address of any relative of applicant, other than
address (within the United States) of applicant’s
father and mother, husband or wife, and minor
dependent children
Notice in case Name and address of
of emergency person to be notified
in case of accident or
emergency
Name and address of nearest relative to be
notified in case of accident or emergency
Organizations Inquiry into the orgaList all clubs, societies, and lodges to which the
nizations of which an
applicant belongs
applicant is a member,
excluding organizations the
name or character of which
indicates the race, color,
religion, national origin, or
ancestry of its members
The Legal Effect of Job Applications
A well-written application form can help get the employment relationship
started on solid legal footing. Because it’s filled out very early in the process,
you can use the form to let the applicant know the basic terms and conditions
of the job and the workplace. And, because the applicant signs the application,
it can be a valuable piece of evidence if a question comes up later about what
you actually promised about the job.
CHAPTER 1 | HIRING | 25
You can also use the job application to obtain the employee’s consent to
a background investigation and reference check. If the applicant consents
to your investigation, the applicant will have a tough time later claiming an
invasion of privacy. Indeed, if you plan to pull a credit report or hire someone
to conduct a background check, you will be legally required to get the
applicant’s consent first.
Impress on the applicant the need to be honest and accurate in completing
the form. Lying or giving incomplete information on an application can be
a good legal reason to fire an employee if the correct story later surfaces. So
serious is application fraud—or résumé fraud as it’s sometimes called—that
some courts have allowed employers to use it to justify a firing even if they
didn’t know of the fraud until the employee was gone.
EXAMPLE: Dolores, age 42, applies for a job as a land surveyor with Progressive
Engineering Consultants (PEC). On her application, Dolores states that she has
a civil engineering degree from a prestigious college and is licensed by the state.
The application form warns that false information will be a cause for immediate
discharge. Relying on the application, PEC hires Dolores. Six months later, PEC
becomes dissatisfied with Dolores’s work and fires her, replacing her with a 30-yearold man. Dolores sues, claiming that the firm discriminated against her based on
age and gender. PEC belatedly looks into her application statements and discovers
that Dolores has neither the degree nor the license she said she had. Because of
Dolores’s lies, the judge dismisses her wrongful termination case without getting
into the discrimination charges.
Including the following language in an application form can help you
establish that you clearly told the applicant about the consequences of lying.
Accuracy. I verify that the statements I have made in this application are true and
complete. I understand that if I am hired, any false or incomplete statements in
this application will be grounds for immediate discharge.
JNO
Initials
26 | THE EMPLOYER’S LEGAL HANDBOOK
Interviews
Before you begin interviewing applicants for a job opening, write down a set of
questions focusing on the job duties and the applicant’s skills and experience.
Some examples include:
• “Tell me about your experience running a mailroom.”
• “How much experience did you have making cold calls on your last job?”
• “Explain how you typically go about organizing your workday.”
• “Have any of your jobs required strong leadership skills?”
By writing down the questions and sticking to the same format in all
interviews for the position, you reduce the risk that a rejected applicant will
later complain about unequal treatment. It’s also smart to summarize the
applicant’s answers for your files, but don’t get so involved in documenting
the interview that you forget to listen closely to the applicant. And don’t be
so locked in to your list of questions that you don’t follow up on something
significant that an applicant has said or try to pin down an ambiguous or
evasive response.
Interviewing Protocol
Get the interview started by giving the applicant some information about
the job: the duties, hours, pay range, benefits, and career opportunities. This
will give the applicant a chance to get comfortable before you start in on the
questions. Questions about the applicant’s work history and experience that
may be relevant to the job opening are always appropriate. But don’t encourage
the employee to divulge the trade secrets of a present or former employer,
especially a competitor. That can lead to a lawsuit. And be cautious about an
employee who volunteers such information or promises to bring secrets to the
new position; such an employee will probably play fast and loose with your
own company’s secrets, given the chance.
Keep your antennae tuned carefully to the applicant who spouts a litany of
complaints against former employers. If you hire that person, your business
may well become the next object of the applicant’s invective. But watch your step
if you learn that the applicant has sued a former employer for discrimination
or filed a discrimination charge with the Equal Employment Opportunity
CHAPTER 1 | HIRING | 27
Commission (EEOC). If you refuse to hire the applicant because of the prior
proceedings, the EEOC may treat your refusal as a form of illegal retaliation,
even though your business wasn’t involved in the earlier dispute. See Chapter 8
for more on retaliation claims.
Give applicants plenty of time to answer questions. Make sure they understand
your questions; ask them to let you know if something is unclear. Also ask
them if they have any questions about your company or the job for which
they’re applying. Finally, let them know your time frame for getting back to
them with a hiring decision so they won’t bug you with premature phone calls.
RESOURCE
Want additional suggestions on interviewing? See 267 Hire Tough Proven
Interview Questions, by Mel Kleiman (HTG Press), and The Manager’s Book of Questions:
1001 Great Interview Questions for Hiring the Best Person, by John Kador (McGraw Hill). In
addition, Nolo’s Dealing With Problem Employees, by Amy DelPo and Lisa Guerin, devotes
an entire chapter to the hiring process, including effective interviewing techniques.
Legal Restrictions on Questions
The rules of etiquette once dictated that you avoid discussing sex, religion,
or politics in a social setting. While that standard has been relaxed, it still
applies to job interviews, along with similar cautions to avoid focusing on
an applicant’s age, ethnicity, birthplace, or personal finances. In fact, such
inquiries are not only bad manners; they may be illegal—plain and simple.
Review the legal restrictions on what you can and can’t ask in a job application.
(See “Job Applications,” above.) The same guidelines and restrictions apply to
interviews. As with job applications, the focus of your interviews should be
to find the best person for the job based on skill, experience, education, and
other relevant qualifications.
To avoid improper inquiries, stay focused on job requirements and company
policies. Suppose you’re concerned that an applicant with young kids may
spend too much time talking with them on the phone. You can’t ask: “Do you
have children?” or “Who watches the kids when you’re at work?” But you can
say to the applicant: “We don’t allow personal phone calls during work hours.
28 | THE EMPLOYER’S LEGAL HANDBOOK
Do you have a problem with that?” The applicant then knows the ground rules
and can let you know if a problem exists. Just be sure you apply your phone
policy to all employees.
During an interview, you can ask about the applicant’s ability to perform
job tasks and about any needed accommodation. Remember, disability discrimination laws prohibit questions about an applicant’s disability. Focus on
the applicant’s ability to do the job, not on the applicant’s disability.
EXAMPLE: Zack, who has only one arm, applies at ABC Industries for a job that
requires driving. The interviewer avoids asking Zack if or how this disability would
affect his driving. Instead, to comply with the law, the interviewer asks: “Do you
have a valid driver’s license?” and “Can you drive on frequent long distance trips,
with or without an accommodation?” The interviewer continues: “At least 80% of
the time of this sales job must be spent on the road covering a three-state territory.
What is your outside selling experience? What is your accident record?” All are
permissible questions.
You can describe or demonstrate the specific job tasks, then ask whether
the applicant can perform these tasks with or without an accommodation. If
you’re interviewing an applicant for a mailroom job, you can say: “The person
in this job is responsible for receiving incoming mail and packages, sorting the
mail, and taking it in a cart to many offices in two buildings, one block apart.
The mail clerk must also receive boxes of supplies weighing up to 50 pounds
and place them on storage shelves six feet high. Can you perform these tasks
with or without an accommodation?”
You can ask applicants to describe or show how they will perform specific
job functions, but only if you require this of everyone applying for a job in
this category. For example, a telemarketing firm could require all applicants to
demonstrate selling ability by taking a simulated telephone sales test.
Be mindful that some applicants with disabilities will need accommodations
to participate in the interview process. For example, you may need to provide
an accessible location for an applicant in a wheelchair or a sign interpreter for
a deaf person. (See Chapter 9 for an extensive discussion of the disability law
requirements.)
CHAPTER 1 | HIRING | 29
Testing
Preemployment testing—which might include skills testing, aptitude testing,
honesty testing, medical testing, and drug testing—is most common in larger
businesses. But no matter what size your business is, you should know the legal
limits on your ability to test applicants.
Skills Tests
Most small businesses—especially new ones—operate on a slim profit margin.
This means that your employees must be up to speed from Day One. If you’re
hiring a data input clerk, you may want to test the applicant for typing speed
and accuracy. If you’re hiring a person to be a clerk in your bookstore, you may
want to test the applicant’s knowledge of literature. If you’re hiring a driver
for a delivery van, a road test would be appropriate. As long as the skills you’re
testing are genuinely related to the job duties, a skills test is generally legal.
To avoid discriminating against applicants protected by the ADA, be sure
your tests measure the actual skills and abilities needed to do a job. (For more
on the ADA, see Chapter 9.)
Aptitude and Psychological Tests
Some employers use written tests—usually multiple choice tests—to get
additional insight into applicants’ abilities. Others attempt to probe the
psyche of their applicants.
These tests are going out of fashion and for good reason. A multiplechoice aptitude test may discriminate illegally against women and minority
applicants, because it really reflects test-taking ability rather than actual job
skills. A personality test can be even riskier. Besides its potential for illegal
discrimination, such a test may invade an applicant’s privacy (by inquiring, for
example, into religious beliefs or sexual practices).
If you do decide to use aptitude or personality tests, proceed cautiously.
Make sure that the tests have been screened scientifically for validity and
that they are correlated to job performance. Review them carefully for any
questions that may intrude into the applicant’s privacy.
30 | THE EMPLOYER’S LEGAL HANDBOOK
Another concern for employers is the ADA, which lets you give a psycho­
logical test or exam to a job applicant only if the test or exam isn’t medical.
This can be tricky. A psychological test or exam is considered medical if it
provides evidence that can help identify a mental disorder or impairment. A
test or exam is permissible if it measures only such things as honesty, tastes,
and habits. But if it helps identify whether the applicant has excessive anxiety,
depression, or a compulsive disorder, it qualifies as a medical test and is illegal
if given at the wrong time.
Be aware, too, that the ADA sets special requirements when you test people
who have impaired sensory, speaking, or manual skills. Sensory skills include
the abilities to hear, to see, and to process information. If applicants wouldn’t
have to use the impaired skill on the job, you must design your tests so that
they don’t have to use the impaired skill to take the test.
EXAMPLE: Joe is applying for a position as a food handler, a job that does not
require reading. Because of dyslexia, Joe has a very difficult time reading. He
should be given an oral rather than a written aptitude test. By contrast, if you were
interviewing Joe for a proofreader job—which clearly requires the ability to read
without help—a written test would be appropriate and legal.
RESOURCE
Want more on how to avoid legal problems when using screening tests?
Check out the EEOC’s guidance on employment tests and selection procedures. You
can find it at www.eeoc.gov/policy/docs/factemployment_procedures.html.
Honesty Tests
Lie detector or polygraph tests—rarely used by small businesses—are virtually
outlawed by the federal Employee Polygraph Protection Act. With just a
few exceptions, you can’t require job applicants to take lie detector tests and
you can’t inquire about previous tests. The only private employers who can
use lie detector tests to screen applicants are businesses that offer armored
car, alarm, and guard services or that manufacture, distribute, or dispense
pharmaceuticals. Even in those situations, there are restrictions on which
applicants can be tested and how the tests must be administered.
CHAPTER 1 | HIRING | 31
About the only time a typical employer can use a lie detector test is to
question an employee who is reasonably suspected of being involved in a
workplace theft or embezzlement.
You must post a notice of the Employee Polygraph Protection Act where
employees and job applicants can readily see it. For a poster containing the
required notice, contact the local office of the Wage and Hour Division of the
U.S. Department of Labor. (See the appendix for contact details.)
Some employers use written honesty tests to screen job applicants. Because
these tests are often inaccurate and can invade an applicant’s privacy or have a
discriminatory impact, the legality of the tests is doubtful in most states.
Limit honesty tests to situations in which you have a legitimate business
reason to be concerned about workers’ honesty, such as when hiring workers
who will be handling large amounts of cash. Before using a test, ask to see
scientific backup establishing the test’s accuracy. And, to protect yourself
against charges of illegal discrimination, test all applicants for a particular job.
RESOURCE
Want to know more about the Polygraph Protection Act? For detailed
information, including whom the law covers, what the law requires and prohibits,
tips for compliance, and exceptions to the law, see The Essential Guide to Federal
Employment Laws, by Lisa Guerin and Sachi Barreiro (Nolo).
Medical Tests
To avoid violating the ADA, don’t ask applicants about their medical history
or conduct any medical exam before you make a job offer. You can, however,
offer a job conditioned on an applicant’s passing a medical exam. If you
do require such a postoffer exam, you must require exams for all entering
employees who will be doing the same job. You can’t single out for testing
employees who appear to have disabilities.
32 | THE EMPLOYER’S LEGAL HANDBOOK
EXAMPLE: Cornerstone Corporation has openings for construction crane operators.
It offers Bill a job conditioned on a medical exam showing he doesn’t have a medical
condition, such as uncontrolled seizures, which may be risky to other workers.
Because Cornerstone requires such exams for all the crane operators it hires, and
because the exam screens out only those workers who would not be able to do the
job safely, the exam is legal.
If you require medical exams only for people with known disabilities or
those who you believe may have a disability, you’ll violate the ADA. But
the scope of medical exams needn’t be identical for all employees. You can
give follow-up tests or exams if further information is needed. Suppose, for
example, that your restaurant requires all prospective kitchen workers to fill
out a questionnaire about exposure to foodborne illnesses. If one person’s
questionnaire indicates symptoms of typhoid fever, which is a foodborne
illness, you can require further tests for that employee to determine whether
there is a risk of the employee passing the illness to others.
After making a conditional job offer, you may require a full physical exam
and you may ask questions that you couldn’t ask at the preemployment stage
(for example, questions about previous illnesses, diseases, or medications).
You can probe to find out whether the person has the physical or mental
qualifications needed to perform the job or to determine whether a person can
perform the job without posing a direct threat to the health or safety of others.
If you withdraw a conditional job offer based on results of an exam or
inquiry, you must be able to show both of the following:
• Your reasons were job related and consistent with business necessity, or
the person was excluded to avoid a direct threat to health and safety.
• No reasonable accommodation could be made or such an accommodation
would cause undue hardship. (For more guidance, see Chapter 9.)
To avoid claims that you discriminated against a person with a disability,
carefully document all medical inquiries and the responses to them. If you
reject a prospective employee, be prepared to show how the medical facts
relate to the person’s ability to perform the job or reveal a direct threat to
health and safety.
CHAPTER 1 | HIRING | 33
EXAMPLE: Kendra’s medical exam reveals an impairment that will require her
to frequently be away from work for lengthy medical treatment. The job requires
daily availability for the next three months. The company doesn’t hire Kendra.
This is permissible under the ADA because Kendra isn’t available to perform the
essential functions of the job, and no accommodation is possible.
Drug Tests
You have a legal right to insist on a drug-free workplace. The only problem
is that testing to weed out drug users may conflict with workers’ rights to
privacy. The laws on drug testing vary widely from state to state and are
changing quickly as legislators and judges struggle to strike a balance between
workers’ rights and the legitimate needs of businesses. (See “State Drug and
Alcohol Testing Laws,” in the appendix.) Some state statutes allow you to test
employees only in a narrow range of jobs, such as those concerned with safety.
TIP
Federal contractors must comply with the Drug-Free Workplace Act. The
law requires federal contractors and grantees to agree to maintain a drug-free workplace.
If your business has a contract with the federal government for $100,000 or more (for
something other than goods you’re selling to the government), you need to notify
employees that they’re prohibited from unlawfully making, distributing, possessing, or
using controlled substances in your workplace. And you need to set up an awareness
program that tells workers about the dangers of drug abuse while at work and lets them
know about assistance programs that may be available. For detailed information on
these requirements, check out the Drug-Free Workplace Programs page of the Substance
Abuse and Mental Health Administration’s website, www.samhsa.gov/workplace.
Fortunately, even restrictive states generally allow you much more leeway in
screening job applicants than in testing employees who are already on board.
If your state permits testing applicants or employees and you plan to do such
testing, use the application form to let applicants know of this policy. State
law may also require you to give applicants a written policy statement that’s
34 | THE EMPLOYER’S LEGAL HANDBOOK
separate from the application. When applicants are told up front about drug
testing, it’s harder for them to later claim that their privacy was violated.
Once an applicant becomes an employee, the rules may be more restrictive.
Testing is usually permitted when employees have been in an accident or
you’ve seen them bring illegal drugs to work. Your legal right to test at random
and without prior notice is not as clear, in some states.
With any drug testing, treat all individuals consistently, being careful not to
single out any one group. And consult with competent drug testing experts to
ensure that your test procedures are as accurate as possible. Because the laws of
drug testing are in constant flux, talk to a lawyer before administering any tests.
What About Medical Marijuana?
About half of the states have legalized the use of marijuana when a doctor
prescribes it to treat a medical condition. More recently, a handful of states
(including California) have decriminalized marijuana for recreational use.
This doesn’t necessarily mean that you can’t test employees for marijuana
use—or fire them for testing positive—however. In some states, employers may fire
employees who test positive for marijuana, even if they have a valid prescription for
the drug. Other states protect employees from termination in this context, as long
as they don’t use or possess the drug—and are not impaired—at work. This is one
of the most rapidly changing areas of law right now. If you do business in a state
that has decriminalized the use of marijuana for medicinal or recreational use, you
should definitely talk to a lawyer before you adopt a drug testing program or fire
anyone who tests positive under your existing program.
Recovering addicts are protected from discrimination, but not if they are
currently engaged in the illegal use of drugs. The ADA prohibits you from
discriminating against people because of their past drug problems. This
includes people who no longer use drugs illegally and those who are receiving
treatment for drug addiction or have successfully been rehabilitated. However,
if an applicant tests positive for drug use, addiction is not a defense. You can
make job decisions based on the current use of illegal drugs, even if it is fueled
by an underlying addiction.
CHAPTER 1 | HIRING | 35
Alcoholics are also protected from discrimination, whether they are currently
using alcohol or not. However, employers can require an alcohol-free workplace
and discipline employees if their use of alcohol affects their job performances.
RESOURCE
For help developing a drug policy, contact the Center for Substance
Abuse Prevention Workplace Helpline. You can also find lots of helpful information
on their website at www.samhsa.gov.
Investigations
Because some people give false or incomplete information in their job
applications, it’s a good idea to do some investigating to verify application
information. You might find out, for example, that an applicant doesn’t have
the work experience or occupational license listed in a job application, or
that the applicant didn’t really leave the last job voluntarily. What’s more,
you might learn that the applicant has a history of violent behavior or even a
criminal record that would disqualify the applicant from a job that may put
members of the public or other employees at risk.
Your need to investigate a job applicant is legitimate. If you go overboard,
however, you may violate the job applicant’s legal right to privacy. The best
way to reduce the risk of an invasion of privacy claim is to do both of the
following:
• Seek only the background information you really need to figure out
whether the applicant is suited for the job.
• Inform the applicant, in the job application, that you will be requesting
information from, for example, schools, credit reporting agencies, former
employers, and law enforcement agencies.
As part of the application process, ask the applicant to sign a consent form.
Use a separate form rather than making the consent a part of the application.
That way, you can easily photocopy the consent and send it to the people from
whom you’re seeking information.
36 | THE EMPLOYER’S LEGAL HANDBOOK
TIP
Will it tell you what you need to know? It’s often a waste of time and
effort to acquire and review transcripts and credit reports, although occasionally
they’re useful. If you’re hiring a bookkeeper, for example, experience garnered on the
job is much more important than the grades the applicant received in a community
college bookkeeping program ten years ago. But if the applicant is fresh out of school
and has never held a bookkeeping job, then a transcript may yield some insights.
Similarly, if you’re hiring a software engineer, information on a credit report would be
irrelevant. But if you’re hiring a bar manager who will be handling large cash receipts,
you might want to find out whether the applicant is in financial trouble.
The Fair Credit Reporting Act
A federal law called the Fair Credit Reporting Act (FCRA) imposes strict rules
on the ordering and use of consumer reports, including background checks,
credit reports, and other information gathered on applicants for employment.
(15 U.S.C. §§ 1681 and following.)
Which Background Checks Are Covered?
The FCRA regulates your ordering and use of any report prepared by a
consumer reporting agency (CRA), which is any business that assembles such
reports for other businesses. If you order an applicant’s credit report from a
credit bureau, that is a consumer report covered by the FCRA. So is a report
you order from a business about an applicant’s driving record or criminal history
(though ordering similar information from a governmental agency isn’t).
You may be thinking of hiring a CRA, such as a detective agency or
professional investigator, to prepare a report based on interviews the CRA
conducts with an applicant’s friends, neighbors, and associates. This would also
constitute a consumer report—and would, therefore, be covered by the FCRA.
Checking an applicant’s references may or may not fall under the FCRA. If you
or someone within your company does the checking, the FCRA doesn’t apply; the
statute doesn’t cover any information you gather on your own. However, if you
use an employment or reference-checking agency—or anyone outside of your
company—to do the job, you must comply with the FCRA.
CHAPTER 1 | HIRING | 37
Requirements for Handling Reports
Before you get a consumer report for employment purposes, you must notify
the applicant or employee in writing and get that person’s written permission
to gather the information. This consent must be on a separate, stand-alone
document; it may not be part of your employment application form or a
general consent form allowing you to check a variety of records. And the
agency you ask to prepare the report will require you to certify that you’re
complying with the federal law and that you won’t use the information in
the report in violation of federal or state equal employment opportunity
laws. These laws—discussed in Chapters 8 and 9—prohibit certain types of
discrimination. Special rules apply if your business is in the trucking industry.
After you get the report, special rules apply if you’re going to take adverse
action against the applicant based on the report. In the hiring process, this is
most likely to come up if you decide, based on the information in the report,
not to hire the applicant. In this case, you must take the following steps:
Step 1: Before you take adverse action, you must give the applicant or employee
a copy of the consumer report and a copy of A Summary of Your Rights
Under the Fair Credit Reporting Act—a publication prepared by the
Federal Trade Commission (FTC). The business that prepared the
consumer report will give you the Summary, or you can get a copy
from the FTC’s website at www.ftc.gov.
Step 2: After you take an adverse action, you must notify the applicant or
employee that you’ve taken the action. You can give notice orally, in
writing, by email, or by fax. Your adverse action notice must:
• give the name, address, and phone number of the company (CRA)
that supplied the report
• state that the CRA didn’t make the decision to take adverse action
and can’t give specific reasons for it
• say that the applicant or employee has the right to dispute the accuracy
or completeness of any information the CRA furnished, and
• say that the applicant or employee can get an additional free
consumer report from the CRA upon request within 60 days.
38 | THE EMPLOYER’S LEGAL HANDBOOK
Penalties for Violating the FCRA
You face legal trouble if you don’t get an applicant’s or employee’s permission
before requesting a consumer report or if you don’t provide the required
disclosures about adverse action. The applicant or employee may sue you for
damages in federal court. If successful, the person may recover court costs and
reasonable attorneys’ fees. You can also be ordered to pay punitive damages—
damages intended to punish you—for deliberate violations.
Also, federal and state agencies may sue you and obtain civil penalties.
RESOURCE
Want to know more about the FCRA? For detailed information about
the FCRA, including whom it covers, what it requires and prohibits, and tips for
compliance, see The Essential Guide to Federal Employment Laws, by Lisa Guerin and
Sachi Barreiro (Nolo).
Information From Former Employers
Some job applicants exaggerate or even lie about their qualifications and
experience. The best way to uncover this kind of puffery is to ask some former
employers for the inside story.
Former employers are often reluctant to say anything negative for fear that
if they speak frankly, they may be hit with a lawsuit for defamation. They’re
hesitant to do anything more than to verify that the former employee did
in fact work there and to give the dates of employment. This can make it
hard to get an accurate picture of an applicant’s job history. As mentioned, it
may be helpful to send the former employer a copy of the applicant’s signed
consent to a full disclosure of employment information. (See Chapter 10 for
suggestions on giving references for former employees when you’re the one
being asked for information.)
CHAPTER 1 | HIRING | 39
When speaking to former employers, read between the lines. If a former
employer is neutral, offers only faint praise, or overpraises a person for one
aspect of a job only—“great with numbers” or “always on time”—there’s a
good chance some negative informat…