Employers' Rights & Responsibilities

by | March 31, 2009

A list of things to keep in mind when you set out to hire employees.

At some point during your business venture, you may need to hire people to help you manage your workload. When you do, you'll be held accountable to a host of state and federal laws that regulate your relationship with your employees. Among the things you'll be expected to know and understand:

  • proper hiring practices, including how to write appropriate job descriptions, conduct interviews and respect privacy rights
  • wage and hour laws, as well as the laws that govern retirement plans, healthcare benefits and life insurance benefits
  • workplace safety rules and regulations
  • how to write an employee handbook and conduct performance reviews, including what you should and shouldn't put in an employee's personnel file
  • how to avoid sexual harassment as well as discrimination based on gender, age, race, pregnancy, sexual orientation and national origin, and
  • how to avoid trouble if you need to fire an employee.

This section provides you with an overview of your role as an employer.

First things first. How can I write advertisements that will attract the best pool of potential employees--without getting in legal hot water?

Many small employers get tripped up when summarizing a job in an advertisement. This can easily happen if you're not familiar with the legal guidelines. Nuances in an ad can be used as evidence of discrimination against applicants of a particular gender, age or marital status.

There are a number of pitfalls to avoid in job ads:

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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 Wait Staff
Young Energetic

Also, 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."

Probably the best way to write an ad that meets legal requirements is to stick to the job skills needed and the basic responsibilities. Some examples:

"Fifty-unit apartment complex seeks experienced manager with general maintenance skills."

"Mid-sized 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." To show your intent to be fair, you may want to include this phrase in your ad even if you're not a federal contractor.

Any tips on how to conduct a good, forthright interview--and again, avoid legal trouble?

Good preparation is your best ally. Before you begin to interview applicants for a job opening, write down a set of questions focusing on the job duties and the applicant's skills and experience. For example:

"Tell me about your experience in running a mailroom."

"How much experience did you have in 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?"

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By writing down the questions and sticking to the same format at 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.

To break the ice, you might give the applicant some information about the job--the duties, hours, pay range, benefits and career opportunities. 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 applicant 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 applicant who volunteers such information or promises to bring secrets to the new position; such an applicant will probably play fast and loose with your own company's secrets, given the chance.

For more information, see Legal & Illegal Pre-Employment Inquiries.

I've heard horror stories about employers who get sued for discriminating--both by employees and even by people they've interviewed but decided not to hire. What's the bottom line?

Federal and state laws prohibit you from discriminating against an employee or applicant because of race, color, gender, religious beliefs, national origin, physical disability--or age if the person is at least 40 years old. Also, many states and cities have laws prohibiting employment discrimination based on marital status or sexual orientation.

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. As an employer, you must be prepared to show that your hiring and promotion decisions have been based on objective criteria and that the more qualified applicant has always succeeded.

Still, when hiring, you can exercise a wide range of discretion based on business considerations. You remain free to hire, promote, discipline and fire employees and to set their duties and salaries based on their skills, experience, performance and reliability--factors that are logically tied to valid business purposes.

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The law also prohibits employer practices that seem neutral, but may have a disproportionate impact on a particular group of people. Again, a policy is legal only if there's a valid business reason for its existence. For example, refusing to hire people who don't meet a minimum height and weight is permissible if it's clearly related to the physical demands of the particular job--felling and hauling huge trees, for instance. But applying such a requirement to exclude applicants for a job as a cook or receptionist wouldn't pass legal muster.

How can I check out a prospective employee without violating his or her right to privacy?

As an employer, you likely believe that the more information you have about job applicants, the better your hiring decisions will be. But make sure any information you seek will actually be helpful to you. 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, previous job experience is much more important than the grades the applicant received in a community college bookkeeping program 10 years ago. On the other hand, if the applicant is fresh out of school and has never held a bookkeeping job, a transcript may yield some insights. Similarly, if you're hiring a switchboard operator, information on a credit report would be irrelevant. But if you're filling a job for a bar manager who will be handling large cash receipts, you might want to see a credit report to learn if the applicant is in financial trouble.

To avoid claims that you've invaded a prospective employee's privacy, always obtain the applicant's written consent before you contact a former employer, request a credit report or send for high school or college transcripts.

Finally, it's usually not wise to resort to screening applicants through personality tests; laws and court rulings restrict your right to use them in most states.

Protection for Recovering Addicts

With drug and alcohol use on the rise--along with increased pressure to make solid hiring decisions--many employers are resorting to drug and blood tests in an attempt to weed out problem employees before they're hired.

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The legal rules on whether this testing is permissible are a bit complicated. What may be most mystifying is what you can do with information you discover. For example, after you've made a conditional offer of employment and as part of a pre-employment medical screening, you may discover that a job applicant had a drug problem in the past. The Americans With Disabilities Act (ADA) prohibits you from discriminating against people because of past drug problems. This includes people who no longer use drugs illegally and are receiving treatment for drug addiction or who have successfully recovered from an addiction.

To make sure that drug use isn't recurring, however, you may request evidence that a person is participating in a drug rehab program. You may also ask for the results of a drug test.

You can refuse to hire someone with a history of alcoholism or illegal drug use if you can show that the person poses a direct threat to health or safety. You must show that there's a high probability that the person will return to the illegal drug use or alcohol abuse, and a high probability of substantial harm to the person or others--harm that you can't reduce or eliminate through what the ADA deems a "reasonable accommodation," such as changing the employee's job duties to eliminate working with toxic chemicals or heavy machinery.

How do I avoid legal problems when giving employee evaluations?

Be honest and consistent with your employees. If a fired employee initiates a legal action against you, a judge or jury will analyze not only your evaluations, but other actions regarding that employee as well. For example, a jury will sense that something is wrong if you consistently rate a worker's performance as poor or mediocre--but continue to hand out generous raises or perhaps even promote the person. The logical conclusion: you didn't take seriously the criticisms in your evaluation report, so you shouldn't expect the employee to take them seriously, either.

It's just as damaging to give an employee glowing praise in report after report--perhaps to make the employee feel good--and then to fire him or her for a single infraction. That strikes most people as unfair. And unfair employers often lose court fights, especially in situations where a sympathetic employee appears to have been treated harshly.

If your system is working, employees with excellent evaluations should not need to be fired for poor performance. And employees with poor performance shouldn't be getting big raises.

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As a small employer, what should I keep in personnel files--and what right do employees have to see what's inside?

Create a file for each employee in which you keep all job-related information, including:

  • job description
  • job application
  • offer of employment
  • INS form I-9, the Employment Eligibility Verification, and supporting documents
  • IRS form W-4, the Employee's Withholding Allowance Certificate
  • receipt for employee handbook
  • periodic performance evaluations
  • sign-up forms for employee benefits
  • complaints from customers and co-workers
  • awards or citations for excellent performance
  • warnings and disciplinary actions, and
  • notes on an employee's attendance or tardiness.
Medical Records: A Serious Case

The Americans With Disabilities Act (ADA) imposes very strict limitations on how you must handle information obtained from post-offer medical examinations and inquiries. You must keep the information in medical files that are separate from non-medical records, and you must store the medical files in a separate locked cabinet. To further guarantee the confidentiality of medical files, designate a specific person to have access to those files.

The ADA allows very limited disclosure of medical information. Under the ADA, you may:

  • inform supervisors about necessary restrictions on an employee's duties and about necessary accommodations
  • inform first aid and safety workers about a disability that may require emergency treatment and about specific procedures that are needed if the workplace must be evacuated, and
  • provide medical information required by government officials and by insurance companies that require a medical exam for health or life insurance.

Otherwise, don't disclose medical information about employees. Although the confidentiality provisions of the ADA protect only some disabled workers, the best policy is to treat all medical information about all employees as confidential.

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Many states have laws giving employees--and former employees--access to their own personnel files. How much access varies from state to state. Typically, if your state allows employees to see their files, you can insist that you or another supervisor be present to make sure nothing is taken, added or changed. Some state laws allow employees to obtain copies of items in their files, but not necessarily all items. For example, a law may limit the employee to copies of documents that he or she has signed, such as a job application. If an employee is entitled to a copy of an item in the file or if you're inclined to let the employee have a copy of any document in the file, you--rather than the employee--should make the copy.

Usually, you won't have to let the employee see sensitive items such as information assembled for a criminal investigation, reference letters and information that might violate the privacy of other people. In a few states, employees may insert rebuttals of information in their personnel files with which they disagree.

I hear a lot about disabled workers being protected by the Americans with Disabilities Act (ADA), but the law is long and hard to understand. How can I make sure I comply?

The ADA states that when making hiring and employment decisions, it's illegal to discriminate against anyone because of a disability. If a person is qualified to do the work, or to do it once a reasonable accommodation is made, you must treat that person the same as all other applicants and employees. Although the concept is simple, the ADA requirements are immensely complicated--primarily because the statute is poorly drafted.

Many of the legal battles involving the ADA are waged over this imprecise language--particularly the meaning of "reasonable accommodation." The idea of is quite simple: you may have to make some changes to help a disabled person do a job. This can take a number of forms, such as changing the job, an employment practice or the work environment. And you need not be psychic. Generally, the person with the disability needs to ask an employer to make the change.

The added twist is that the ADA doesn't require you to accommodate a disabled applicant or employee it would place an undue hardship on the business--that is, if it would require significant difficulty or expense.

For employers, the ADA has its heaviest impact on the hiring process. For example, you must:

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  • write job descriptions that focus on essential tasks so that a person with a disability isn't eliminated because he or she can't perform a marginal job duty
  • avoid questions in job applications and interviews that focus on possible disabilities, and
  • defer pre-employment medical exams and inquiries until after you've made a conditional offer of employment.

See Disability Discrimination for more information about the ADA.

ADA Coverage Is Broad

Under the ADA, you can't discriminate against a person with a disability in any aspect of employment, including:

  • applications
  • interviews
  • testing
  • hiring
  • job assignments
  • evaluations
  • disciplinary actions
  • training
  • promotion
  • medical exams
  • layoffs
  • firing
  • compensation
  • leave, and
  • benefits.

In addition, you can't deny a job to someone or discriminate against an employee because that person is related to or associates with a person who has a disability. For example, you can't:

  • refuse to hire someone because that person's spouse, child or other dependent has a disability
  • refuse to hire someone because that person's spouse, child or other dependent has a disability that's not covered by your current health insurance plan or that may cause increased healthcare costs, or
  • fire an employee because that the employee has a roommate or close friend who has AIDS, or because the employee does volunteer work for people who have AIDS.

My employees' religious differences are causing strife in the workplace. What am I required to do?

This is a tricky area. An increasing number of employees are claiming religious discrimination. And unfortunately, the law in this delicate area is unclear.

First, make sure your own plate is clean. You have the legal right to discuss your own religious beliefs with an employee, if you're so inclined, but you can't persist to the point that the employee feels you're being hostile, intimidating or offensive. So if an employee objects to your discussion of religious subjects or you even get an inkling that your religious advances are unwelcome, back off. Otherwise, you may find yourself embroiled in a lawsuit or administrative proceeding.

If employees complain to you that a co-worker is badgering them with religious views, you have a right--if not a duty--to intervene, although you must, of course, use the utmost tact and sensitivity.

While you may feel that the best way to resolve these knotty problems is to simply banish religion from the workplace, that's generally not a viable alternative. You're legally required to accommodate the religious needs of employees--for example, allowing employees to pick and choose the paid holidays they would like to take during the year. You don't, however, need to do anything that would cost more than a minimum amount or that would cause more than minimal inconvenience.

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Some of my employees insist they have a right to smoke during breaks and at lunch, and another group claims they'll quit if I allow smoking on the premises. I'm caught in the middle. What should I do?

It's well established that second-hand tobacco smoke can harm the health of nonsmokers. Consequently, in many states and municipalities, employers are legally required to limit smoking in the workplace. And a number of locales have specific laws that ban or limit smoking in public places; if your workplace falls within the legal definition of a public place--a bar, restaurant or hotel, for example--your legal rights and responsibilities will be clearly spelled out in the law.

A rule proposed recently by the Occupational Health and Safety Administration (OSHA) would allow only two choices: you'd have to either prohibit smoking in the workplace, or limit it to areas that are enclosed and ventilated directly to the outdoors. Under the rule, you couldn't require employees to enter the smoking areas when performing their normal job duties.

Given the scientific facts and the general direction in which the law is moving, your safest legal course is to restrict smoking in the workplace--and a total ban may be the only practical solution. That's because in many modern buildings, it's too expensive--maybe even impossible--to provide a separate ventilation system for a smokers' room.

In addition to meeting the specific requirements of laws and regulations that limit or prohibit smoking in the workplace, be aware that you may be legally liable to nonsmoking employees if you don't take appropriate actions on their complaints.

It's been a bad year for my business--and it looks as though I may have to lay off some workers. Are there legal problems to avoid?

Generally, you're free to lay off or terminate employees because business conditions require it. But if you do cut back, don't leave your business open to claims that the layoffs were really a pretext for getting rid of employees for illegal reasons.

Be sensitive to how your actions may be perceived. If the layoff primarily affects workers of a particular race, or women or older employees, someone may well question your motives. It's better to spread the pain around; don't let the burden fall on just one group of employees.

I have to give a reference for a former employee I had to fire. I don't want to be too positive about him, but I am also afraid he might sue me for unflattering remarks. Advice?

The key to protecting yourself is to stick to the facts and act in good faith. You'll get in trouble only if you exaggerate or cover up the truth--or are motivated by a desire to harm your former employee.

Former employees who feel maligned can sue for defamation--called slander if the statements were spoken or libel if they were written. To win a defamation case, a former employee must prove that you gave out false information and that the information harmed his or her reputation. If you can show that the information you provided was true, the lawsuit will be dismissed.

And even if it turns out that the information provided is untrue, employers in most states are entitled to some protection in defamation cases. This protection is based on a legal doctrine called "qualified privilege." To receive the benefits, you must show that:

  • you made the statement in good faith
  • you and the person to whom you disclosed the information shared a common interest, and
  • you limited your statement to this common interest.

The law recognizes that a former employer and a prospective employer share a common interest in the attributes of an employee. To get the protection of the qualified privilege, your main task is to stick to facts that you've reasonably investigated and to lay aside your personal feelings about the former employee.

A practical policy--and one that gives you a high degree of legal protection--is simply not to discuss an employee with prospective employers if you can't say something positive. Just tell the person inquiring that it's not your policy to comment on former workers.

Where an employee's record is truly mixed, it's usually possible to accent the positive while you try to put negative information into a more favorable perspective.

Filed Under: Job Search


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