Employment Law Series: Recruiting and Hiring
Recruiting
In order to find the best employees, recruiting is key. When recruiting, the employer must ensure that the prospective new hires are in compliance with their obligations to their former employers. If prospective new hires signed restrictive covenants or a non-compete agreements with their former employers, they must abide by the terms of that agreement. Valid restrictive covenants will be enforced, and hiring employees that violate the terms of a restrictive covenants can expose your company to unnecessary risks and liabilities. In addition, new hires cannot share or use any proprietary information from their former employer—so do not ask them to.Also, during interviews, the interviewer should stick to questions that are related to the job, and not ask potentially sensitive, “protected” questions regarding age, race, religion, sexual orientation, pregnancy, etc. Depending on the nature of the business, companies also need to be aware of laws concerning background checks, discrimination, and affirmative action obligations.
Hiring
Before hiring any employees, companies must comply with numerous federal and state filing, reporting, insurance, and access requirements including:1. Only hiring employees legally authorized to work in the United States;
2. Maintaining or paying into funds to support insurance to protect their workforce, including worker’s compensation insurance, unemployment insurance, and state disability insurance; and
3. Providing reasonable accommodations for employees with disabilities and for their religious practices.
Additionally, once a company finds a suitable new hire, the employer must properly classify that employee. Classification as an employee or independent contractor is governed by the federal Fair Labor Standards Act and specific state laws. Everyone that works for your company cannot be classified as an independent contractor to avoid employment law requirements. Most people that work for a company are, and should be, classified as employees. Generally, to be properly classified as independent contractors, the person or persons must have a separate business, be free from direction and control of the employer, and provide their own tools and workspace, etc.
The penalty for misclassifying employees can be severe, and the standard for classifying employees is not always clear. It is important for companies to consult with experienced attorneys to remain aware of, and in compliance with, changes in this area.
The Employment Contract
Finally, employers must decide whether to hire employees “at-will” or to enter into a more formal employment agreement. If you are employed at-will, your employer does not need good cause to fire you. However, even if you are an at-will employee, you still cannot be fired for reasons that are illegal under state and federal law. An employer may not fire an employee because of race, color, religion, sex, national origin, age, or disability. Additionally, an employer may not fire an at-will employee for refusing to commit illegal acts, taking family or medical leave, or in retaliation against the employee for a protected action taken by the employee, including suing or testifying as a witness for wrongful termination, harassment or discrimination.For employees with employment agreements—typically, upper level management or someone with access to sensitive company information—essential terms of an employment agreement include the employee’s role and responsibilities, the date employment will begin and the duration of employment, standard work hours, salary, and benefits. When appropriate, employers should also include provisions covering confidentiality and ownership of intellectual property created while the employee is working for the company. Many times, intellectual property and trade secrets are a company’s most valuable asset, so they should be protected.
Many times, companies should consider requiring new hires to sign non-compete agreements, also referred to as restrictive covenants. Courts generally disfavor restrictive covenants, so they have to be drafted so they are reasonable. Generally, a restrictive covenant is reasonable if it requires no more than what is absolutely necessary to protect the legitimate interest of the employer, does not impose an undue hardship on the employee, and is not injurious to the public. It is essential to consult an attorney when adding a restrictive covenant to an employment agreement to ensure that covenant is valid so if and when the need arises, it can be enforced in court.
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Posted - 05/31/2016
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