Smart hiring is more important than ever. The unemployment rate is at levels not seen for 20 years or more, the baby boomers are retiring and the cost of a poor hiring decision can be extremely high. This article addresses some of the practical steps employers are taking to attract and retain employees along with tips to avoid legal pitfalls when hiring in this challenging labor market.
What can employers do to attract more candidates and hire more employees in this environment? The two most effective strategies are:
- Providing economic incentives.
- Lowering barriers to employment.
Increasing employees’ base salary and hourly rate is a time-tested way to increase the supply of interested candidates and hold on to current employees. Employers are now also offering signing bonuses, which can be effective. Requiring the employee to promise to repay the signing bonus if they leave employment within a certain period of time after joining the company can help retention. Some employers are even offering cash or other incentives simply for filling out an application or going through an interview. Helping employees with transportation and other creative benefits are also becoming more common.
Employers are also scrutinizing their selection process and burning away deadwood that may exclude some applicants. For example, some employers have eliminated the requirement of a high school degree. Others have decided to take a more liberal approach to employees with a criminal history and to become more creative in providing accommodations to employees with disabilities. The law in Wisconsin already requires employers to ignore certain convictions and to reasonably accommodate applicants and employees with disabilities; but many employers are now going beyond what the law requires to help attract and retain employees.
To avoid an unwise or unsafe hire in this environment, employers must take care. Finding and hiring a qualified applicant for the job can lead to more productivity and can help you avoid the headaches that come with a bad hire, such as employee turnover, poor morale, disputes, and performance issues. Some candidates may lie on their application and may not necessarily have the skills or other qualifications they claim. Others may have committed serious crimes in the past that they may repeat at your workplace if you hire them. Others may engage in disputes that can lead to expensive litigation. For example, a sexual harassment case can cost more than $100,000 to defend in federal court. Even a run-of-the-mill Wisconsin Department of Workforce Development, Equal Rights Division case can be costly to defend.
Avoiding these problems creates a strong incentive to carefully screen applicants. The challenge you face is the patchwork of laws that apply to the hiring process. Here are tips for avoiding common legal issues that can arise:
Create a good job description. A job description should accurately describe the job. A good one can be cut and pasted into help wanted ads. And a job description can be an important piece of evidence in litigation that can help or hurt you. A description of job duties can help prove that certain employees are exempt from overtime. And if it adequately defines the demands of a job’s essential functions, such as physical demands, a job description can help you defend a claim that you have failed to reasonably accommodate a disability.
Craft your employment applications and interview questions with care. Good selection processes focus on the ability to do the job. Also, be careful to eliminate questions that could be interpreted as being discriminatory or as inquiring into an applicant’s protected status. For example, do not ask about past arrests or whether applicants are married. Include a statement in the application that any omission or false statement on the application is grounds for not hiring or termination whenever it is discovered.
If you have an online application process, make sure it is accessible to all applicants and create alternatives that do not require online accessibility, such as permitting employees to apply over the phone or using special software designed for individuals with vision impairments.
Conduct drug and alcohol tests and physical exams, but only when appropriate for the job and business needs and proceed with caution. Such tests are permissible but conduct them after a conditional offer and on all applicants for a specific job.
Check applicants’ background to avoid hiring a “bad fit” or someone who will pose an unreasonable risk of harm to others. Avoid negligent hiring. Negligent hiring occurs when an employer fails to take reasonable care when hiring employees and that lack of care causes injury to someone. For example, suppose a company hires an employee with a history of violent assaults and that individual then assaults a customer. When that happens, the employer could be liable for the resulting damages.
You should also inquire whether the candidate is subject to legal obligations, such being subject to a non-competition or non-disclosure agreement that could be violated by coming to work for your company. When a candidate progresses to the hiring stage, ask him or her to sign a statement to the effect that he or she is not under any such obligation and acknowledging that your company has no interest in any prior employer’s confidential information or trade secrets.
Check references. Conduct criminal background checks but be careful to comply with the Fair Credit Reporting Act and Wisconsin Fair Employment Act’s rules on when conviction records can be taken into account.
The basic rule in Wisconsin is that you cannot reject a candidate because of a past conviction unless the circumstances of the conviction “substantially relate” to the job in question. The classic example is an applicant for a Chief Financial Officer position who has a conviction in the past for embezzlement. That crime would clearly and substantially relate to the job. But other cases can be more difficult to analyze.
Employers in Madison must also be mindful of the Madison Equal Opportunity Commission’s rules, which go even further than the State of Wisconsin’s. If hiring outside of Wisconsin, determine whether you need to also comply with ban-the-box laws, which typically forbid inquiring into or checking an applicant’s criminal history until after an interview or conditional offer.
The Equal Employment Opportunity Commission’s guidance recommends that you perform an “individualized assessment” of the person and the criminal background in almost all cases before deciding to reject an applicant because of a past conviction. The individualized assessment should include consideration of a number of factors, including: (1) the nature and gravity of the offense, (2) the time that has passed since the offense or completion of the sentence, and (3) the nature of the job sought.
When you have made the decision of who to hire, document it and the reasoning behind it. Remember that if there is litigation, it may not take place until a year or more has passed since the decision and you will want a record of why you decided to hire one applicant instead of others.
Draft a good offer letter that documents the basic terms and conditions of employment. That can help you avoid misunderstandings and disputes that can lead to litigation. For employees who will be given specialized training, confidential information or important customer relationships, consider having them enter into a non-disclosure and non-competition agreement, protecting your company’s legitimate business interests for a reasonable period of time after the employment relationship ends. If your company has information that qualifies as a trade secret, notify the employee about this and his or her legal obligations towards that information.
Finally, get receipts for handbooks, harassment policies and the like on the first day of hiring. They can be important pieces of evidence in litigation. And complete your I-9 obligations but remember there are exceptions for independent contractors and workers provided by temporary agencies.
