Seven Mistakes Employers Should Avoid When Hiring

MISTAKE NO. 1 Failing to ensure the employee knows that she is employed at will.

Businesses employ most people at will which means the employer may terminate the employee at its discretion without cause as long as the employer has no illegal motivation. Employment at will gives the business owner maximum flexibility. Be careful what you say when you make a job offer. The statements you make about the nature of the position or the long term opportunities with the company may be construed as a promise that the job is secure for a certain period, or that you will not fire the employee with out good cause.

Don’t expose yourself to claims of wrongful termination based on over promising. To protect yourself you can write an employment letter that states the title of the position, the date the job begins, the starting salary, reiterates the at will status of the employee, and explains and limits how the at will relationship can be altered in the future and ask the employee to sign it. Hint: The employment status should only be alterable via a writing signed by you.

Employees, if the employer has promised you the job will last for a certain period or that you will not be terminated except for good cause, make sure that you do not sign any documents which negate such promises. Applications, for example often state that employment is at will.

MISTAKE NO. 2 Defining at will employment in your offer letter or employee handbook. Doing so may actually limit its effectiveness.

I suggest employers use the term at will to describe the employment status, but don’t further define it. The reason is defining at will employment may actually limit it, or give the employee, the labor commission, a judge or jury the chance to second guess you.

MISTAKE NO. 3 Engaging in discriminatory hiring practices. It’s illegal and it makes no business sense.

Anti-discrimination laws vary depending on the size of the employer and the state in which the business is operating, but for the most part state and federal laws prohibit all but the smallest firms from discriminating based upon race, color, gender, religious beliefs, national origin, disability, or age. Laws against discrimination apply to all stages of the employment process: preparing job descriptions, writing ads, settling salaries, deciding whom to hire, promote and discipline.

MISTAKE NO. 4 Asking unlawful questions in the interview. Often inadvertent mistakes can be a big problem for employers.

The U.S. Equal Employment Opportunity Commission sets out examples of questions employers may not ask on its website. Here is a partial list of general inquiries a potential employer cannot ask an applicant: birthplace, age (other than asking if the applicant is over 18), race, height, weight, gender, and “are you married?”

The Americans with Disabilities Act prohibits pre-employment questions about a disability. You may ask about the ability of the applicant to perform specific job functions. You may not enquire into the nature or severity of a disability, ask about medical treatment, or require an exam. After you make a conditional offer and before an applicant starts work, you are free to gather more details. You can require a medical exam or ask health related questions as long as you require this for all candidates who receive conditional offers in the job category.

MISTAKE NO. 5 Breaching the privacy rights of the applicant during pre-offer investigations.

Inform the person beforehand and limit the investigation to pertinent information. Some individuals give incomplete information when they apply for a position. It is makes good business sense to do some background investigation. If a person lacks the requisite experience or a criminal record, your failure to diligently investigate the employee may be problematic. If you do investigate a potential employee seek only the information you need. Be sure you inform the applicant in writing if you will request information from schools, credit reporting agencies, former employers, etc.

Employees, incomplete or inaccurate information can cost you a job offer. Make sure your application or resume contains up to date information.

MISTAKE NO. 6 Violating the Fair Credit Reporting Act. Employers must notify the applicant beforehand and obtain written permission.

A federal law imposes rules regarding obtaining and using consumer reports, credit reports, and background checks. The rules relate to any report prepared by a consumer reporting agency like TransUnion and Equifax. Employers must notify the applicant in writing before obtaining the report. Employers need the applicant’s written permission to obtain the report.

If an employer obtains a report and intends not to hire an applicant due to the information it contains, the employer must first give the person a copy of the report and a copy of A Summary of Your Rights Under the Fair Credit Reporting Act which is available from Federal Trade Commission website, or from the entity that prepared the report. After a business has taken the adverse action the business must notify the applicant. Do it in writing. The notification must give the name, address and telephone number of the company that prepared the report. It must state the company that prepared the report did not make the decision to take the adverse action; state the person has the right to dispute the accuracy or completeness of the information furnished, and state the person may obtain an additional free report from the credit agency upon request within 60 days.

MISTAKE NO. 7 Failing to fill out the paper work.

Form I-9, IRS Form W-4, New Hire Report to the State—every employer must fill out the forms, retain copies and comply with the relevant regulations. If you are a new company, before you hire any employees you must have a Federal Employer Identification Number. To obtain one file form SS-4. An employer must also register with the California EDD after paying over $100 in total wages to one or more employees in a calendar quarter. Registration forms can be ordered on the EDD website or downloaded.

Immigration laws prohibit employers from hiring persons who lack authorization to work in the United States. You and the employee must complete the Form I-9 Employment Eligibility Verification. This one page form is retained by the employer, and can be used to show that the employer complied with the law and took the steps required to determine the employee was eligible to work legally in the United States.

For Employers Avoiding Hiring Errors Is Ethical and Productive . People are not machines. Every person has preconceptions and biases; however, state and federal laws provide broad protection for employees at all stages of the employment relationship. Employer compliance with the relevant laws pays obvious dividends in greater employee job satisfaction and decreased legal problems.

Galen Gentry provides counsel on the everyday legal issues that can help businesses succeed and avoid costly litigation and legal fees in the future. Our firm focuses on transactions and disputes in commercial and employment law. Call 800 486 6814 for a free, no obligation consultation.


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