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Legal Constraints with Employees

Question

What kind of legal constraints do I subject myself to when I hire employees?

Answer

In addition to all of the extra costs of unemployment taxes, workers' compensation taxes, social security taxes, etc., you are subject to numerous labor laws and fair hiring practices and you open the door to federal regulators into your business.  There are several key federal regulations that you need to be aware of, such as:
  • Civil Rights Act of 1964 - Prohibits discrimination on basis of race, color, sex, religion, national origin
  • Equal Pay Act of 1963 - Prohibits different rates of pay based on sex
  • Age Discrimination in Employment Act (ADEA) - Prohibits discrimination on the basis of age for people 40 and over
  • Rehabilitation Act of 1973 (Section 504) - Prohibits discrimination on the basis of a disability
  • Immigration Reform & Control Act of 1986 (IRCA) - Requires employers to complete an employment eligibility verification form on anyone hired after 11/06/86
There are a host of issues you should make sure you are aware of such as the following (from an old checklist):

  • Hiring - Many of the questions found on applications for employment have become sources of discrimination suits. A non-discriminatory job application should not contain questions about the following:
    • Race, age, sex, religion, and national origin. An employer may ask if an applicant is 18 years of age or older and has a legal right to work in this country either through citizenship or status as a resident alien.
    • Marital status, maiden name, and number, names, and ages of children or other dependents.
    • Employment of the spouse and child-care arrangements unless such queries are made of both male and female applicants.
    • A woman's pregnancy or related condition.
    • Arrest records that did not result in convictions. It is permissible to inquire about convictions or pending felony charges.
    • The existence, nature, or severity of a disability. An employer may ask about an applicant's ability to perform specific job functions.
    • An applicant's height and weight, except in specific professions such as law enforcement, when valid guidelines have been established for various national organizations.
    • Organizational affiliations except those pertaining to professional memberships related to the specific job.
    • Military history unless the job requires such a background.
    • Status as a high school graduate. It is permissible to request the applicant to supply the details of his or her educational history.
    • Lowest salary acceptable for a specific position.
An interview can often be more litigiously threatening than the employment application, because uninformed interviewers often ask seemingly harmless questions that may, in fact, be discriminatory. An interviewer may casually ask a 32-year-old female applicant if she anticipates having a family. If she responds affirmatively and subsequently is not hired, she could file suit for discriminatory hiring practices. Experts say the general rule of thumb is: if a question does not have anything to do with the job, or is not vital to determining the applicant's ability to perform the responsibilities associated with the job, do not ask it.
  • Firing
    • Improperly handled employee terminations generate a significant number of lawsuits against corporations. Complete and accurate records of such actions protect the interests of both the employer and the former employee.
    • Firing generates stress for the employee being discharged, the individual who does the terminating, and the employees who remain with the company. Human error made before, during, and after the discharge is completed can significantly affect the attitudes and reactions of all involved as well as the vulnerability of the employer.
  • Before Firing an Employee
    • Be sure the action is approved by top management and conforms to written company policy. Corporate legal advice may be sought regarding severance conditions for higher-level employees.
    • Except in a for-cause dismissal, an employee is entitled to a documented, concise explanation of the reasons for his or her dismissal. Plan the interview carefully to anticipate responses and defuse reactions.
    • Federal law requires 60-day advance notification of employees affected by layoffs and plant or office closings. Prematurely early notification may significantly affect production and possibly invite undesirable reactions.
    • Consider the possibility of an irrational response by a dismissed employee. Take the necessary precautions to change security codes, access codes to computers, and entry to the corporate premises.
  • Handling a Termination
    • Be honest and clear about the reasons for a discharge. Avoid personal statements that might degrade or humiliate the individual, or vague statements which might suggest that the situation is reversible.
    • It is sometimes helpful to have another individual, such as a professional from human resources, present as a witness and a support for the employee, particularly if emotional reactions are anticipated.
    • Present a precise explanation of severance pay procedures benefits continuation forms, pension or profit-sharing payouts, and other available assistance, such as outplacement counseling. In larger corporations, the human resources department handles the filling out of the necessary forms and documents.
    • Allow the individual to remove personal belongings at a low-visibility time, after hours or on a weekend. Prepare a checklist of company property that should be accounted for, including keys, credit cards, ID cards, and computer disks.
    • Respond to all questions and discuss the [response] when future employers inquire about the individual... 
  • After Firing an Employee
    • Document the termination in writing immediately, detailing conversation, reactions, and emotional tone of both parties. This is essential for a response to any future challenge to the termination.
    • Inform the staff or co-workers of the termination by word of mouth or by memo. In the case of for-cause termination, the incident should be mentioned only briefly, in a non-defamatory manner. If performance is the reason, experts suggest that simply stating that the employee and the organization have agreed to part company should suffice.
    • In the case of staff reduction or layoffs, the remaining staff should be assured that downsizing was warranted and that no additional layoffs are anticipated at this time. (If additional reductions are expected, employees should he informed that such an action may be required, and that they will be informed on or before a specific date.)
    • Invite employees who have additional questions and concerns to meet with specified representatives of the company privately.
    • Inform clients or customers who deal with the discharged individual that the company will continue to serve their needs. When necessary, name a specific individual who will replace the terminated employee.
I would strongly recommend buying some inexpensive HR software or using the services of a payroll provider, which can help you understand and abide by all necessary regulations.  On key decisions such as employment agreements, layoffs, etc., you can use on of our employee-related document downloads, but you should also seek the advice of a competent attorney.

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