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Can Your Business Get Sued for Nepotism?

By Deanne Katz, Esq. | Last updated on

If you think employers only get sued for nepotism if they're hiring a lot of family members, think again. It can also include behavior towards friends as well.

Favoritism at work in general is a bad idea. But if you are giving preferential treatment to people based on your personal relationships, you could be heading for potential lawsuits from your other employees.

There are few laws specifically against nepotism. But the effects of nepotism may violate other laws that protect your employees.

What Is Nepotism?

First, let's sort out the definition of nepotism. Hiring a friend of family member doesn't always fall within that term.

Often a business owner will hire family member or a friend because that person is experienced and qualified. That's a smart business decision if you also know the person will fit in at your company.

When Nepotism Is a Problem

Giving preferential treatment to friends and family at work becomes a problem if the relationship is the basis for such treatment. Hiring or promoting people who aren't qualified or experienced because they are friends with the boss is what can get you in trouble.

If your preferential treatment for friends and family makes other employees feel like they can't receive the same promotions or treatment, you could face a lawsuit for discrimination.

Federal law prohibits workplace discrimination based on gender, race, national origin, or religion. If you seem to hire friends and family who only fall within a certain race or religion, you may be accused of violating anti-discrimination laws.

Employees could also potentially sue you for creating a hostile work environment. That kind of claim arises from pervasive conduct that is intimidating or abusive and impacts an employee's ability to get work done. Most often, the claims are bought because of offensive jokes, sexual harassment, ridicule or insults.

So those inside jokes you make with particular staff members, or the somewhat insulting nicknames you use could all be the subject of a hostile work environment lawsuit.

It's not just the victim of the hostility who can file the lawsuit. Other employees who are affected or made uncomfortable by it could also sue.

Avoiding Issues With Nepotism

To avoid these kinds of problems, keep office behavior businesslike and save your personal relationships for after work.

Even if you don't think you're giving preferential treatment to employees, someone might file a lawsuit that surprises you. If that's the case, make sure you consult an attorney who can help you make the case that nepotism is not your style.

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