Legal Pitfalls of the Hiring Process
by Darrell Hughes
Posted: 10/2/2008
Most of us have seen the devastating impact a poor hiring decision can have on a company. It can be just as damaging, however, if your hiring process does not comply with state and federal law. To avoid any unnecessary liability in this area, keep in mind the following:
Job Postings/Applications/Interview Process
A variety of federal and state statutes prohibit employers from discriminating during the hiring process based on a candidate’s race, color, religion, sex, national origin, age, disability, or military status. As an employer, it is important that you continue to have an on-going review of your postings, job applications and interview questions to ensure that discrimination is not occurring.
The wording used in job postings and applications as well as questions that intentionally or unintentionally probe into a candidate’s protected status will be viewed as suspicious by courts and enforcement agencies. Inquiries as generic as the type of associations or clubs a candidate belongs to can prove problematic if memberships in such organizations are unrelated to the job in question. If you are found to have illegally discriminated during the hiring process, you could be liable for compensatory damages, attorney fees, and punitive damages.
Background Checks
Once you have narrowed down the list of applicants to one or two people, it is not uncommon to conduct background checks to identify any characteristics that would disqualify a candidate. While background checks are an invaluable tool, you need to be aware of the notice and disclosure requirements under the Fair Credit Reporting Act (“FCRA”).
Prior to obtaining a consumer report or an investigative consumer report, you must obtain a written release from the job applicant and provide the applicant with the requisite FCRA disclosure. Before taking any adverse employment action based on the contents of either type of report, you must first provide the job applicant with a copy of the report along with summary of their rights. Failure to follow these procedures could result in fines and penalties ranging from $100 to $1,000. In certain circumstances, criminal penalties may be imposed.
Employment Eligibility Verification - Form I-9
Another important piece of legislation is the Immigration Reform and Control Act of 1986 (“IRCA”) which requires all employers to confirm the employment eligibly of the individuals they hire. This is done by using the Form I-9 that has been created by the U.S. Citizenship and Immigration Services.
Although the Form I-9 is fairly straight forward, some employers still have difficulty ensuring the form is filled out properly and in re-verifying eligibility when needed. Employers also get tripped up on how long a copy of the Form I-9 is to be maintained, whether an electronic Form I-9 can be kept versus a hard copy, whether a Form I-9 can be filled out electronically, and what type of electronic signature is permitted with a Form I-9. Civil penalties for improperly filling out or incorrectly maintaining Form I-9s range from $110 to $1,100 for each paperwork violation. For knowingly employing an ineligible employee, fines can range from $275 to $11,000, in addition to be subjected to criminal sanctions.
Other Areas to Consider
Job postings, employment applications, interview questions, background checks, and the Form I-9 are just a few areas that create exposure for employers during the hiring process. You also need to be aware of other potential problems associated with:
- Administering pre-hire drug testing;
- Conducting pre-hire fitness tests and other medical exams;
- The negligent hiring of an employee; and
- Claims of intentional interference with business contracts when hiring an employee is in violation of the employee’s non-compete agreement with a former employer.
To avoid the legal pitfalls identified above, it is best to consult with a trusted advisor. If you to create a legally complaint hiring process from the start, you can then focus on hiring the right person.
About the Author
Darrell Hughes is General Counsel for Sequent.
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