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Hiring Laws: Frequently Asked Questions

Hiring a new employee can be an exciting and daunting task. An employer must follow various laws related to hiring. In this article, you can find answers to some of the frequently asked questions when hiring a new employee.

The Department of Labor's Wage and Hour Division sets basic rules on federal minimum wage, wage rates, and hour laws. Your state's requirements may differ, so consult an employment law attorney near you when hiring new workers.

For more articles on this topic, see FindLaw's The Hiring Process section.

What laws do I need to follow when hiring a new employee?

An employer must consider many potential hiring laws when hiring a new employee. Here is a list and brief description of the most common hiring laws:

Under federal law, employers must verify an employee's eligibility to work in the United States by completing an I-9, Employment Eligibility Verification within three days of the employee's start date.

Should I have a new employee sign an employment contract?

Maybe not. Employers aren't required to have written contracts with their employees. A written contract may make sense for higher-level workers or employees in complex working arrangements. Specifying each party's rights and obligations can be both helpful and restrictive. Balance the needs of each party before having a new employee sign a written employment contract.

Small-business owners may want a contract if they offer health care insurance, sick leave, or other benefits. A contract also describes the employee's duties, disciplinary process, and other terms of employment.

Are there any special rules I should consider when hiring a foreign worker?

Yes. Title VII makes discriminating against applicants and employees illegal based on their national origin or citizenship. Do not ask a potential employee where they are from. Instead, ask whether the potential employee is legally authorized to work in the U.S. full time.

The U.S. Department of Labor (DOL) certifies positions for temporary and permanent employment of foreign workers. Once certified, the employer must petition the U.S. Citizenship and Immigration Services (USCIS) for the worker's visa. The foreign worker must also establish that they are admissible to the U.S. under provisions of the Immigration and Nationality Act (INA). The USCIS website provides helpful information for employers interested in hiring a foreign worker when a U.S. citizen is unavailable.

Are there any special rules I should consider when hiring an independent contractor?

Yes. The IRS taxes employees and independent contractors differently. If you misclassify an employee as an independent contractor, you may be liable under the Fair Labor Standards Act. You will owe back taxes, workers' compensation, and employee benefits. If you need more clarification, you can file a Form SS-8 with the IRS to get an official determination about the potential hire's status.

Are there any special rules I need to consider when hiring someone with a disability?

Yes. The Americans with Disabilities Act (ADA) prohibits discrimination against people with disabilities in hiring. Employers with 15 or more employees must provide reasonable accommodations for individuals with disabilities. A reasonable accommodation is any change in the work environment or job requirements that allows the individual to perform the job function.

Are there any special rules I need to consider when hiring minors?

Yes. You must comply with the federal Fair Labor Standards Act (FLSA) and state labor laws to hire minors. Generally, the FLSA and state labor laws divide minors into two categories: 14- to 15-year-olds and 16- to 17-year-olds.

Federal laws dictate the minimum wage for minors and limit 14- and 15-year-olds to part-time work. They may only work three hours per day and not more than 18 hours per week when school is in session. Those ages 16 and 17 may work full time, but minors may not work in hazardous jobs. The list of hazardous jobs is extensive, although there are exemptions for student learners in some skilled-labor positions.

Can I run a credit check on a potential employee?

Under the Fair Credit Reporting Act (FCRA), employers must get an employee's written consent before seeking an employee's credit report. If you decide not to hire or promote someone based on the information in the credit report, you must provide a copy of the report. The applicant has a right to challenge the report under FCRA. Some states have more stringent rules limiting the use of credit reports.

Can I run background checks on potential employees?

Yes, but you need to be careful. Here are some general types of background checks employers often want to run:

  • Criminal Records: Many states only allow you to run a criminal background check if it's related to the job (i.e., hiring for a security job). The ability to run a criminal records check varies from state to state, so review your state laws before running a check.
  • Lie Detector Tests: The Employee Polygraph Protection Act prohibits most private employers from using lie detector tests for pre-employment screening or during employment.
  • Medical Records: You can only get an employee's medical records with the employee's consent. In most cases, it is illegal to ask for medical records.
  • Bankruptcies: The federal Bankruptcy Act prohibits employers from discriminating against applicants because they have filed for bankruptcy.
  • Workers' Compensation Records: Workers' compensation appeals are public records. Employers can only use this information if they show that the applicant's injury might interfere with their ability to perform the required job duties.
  • School Records: Under the Family Educational Rights and Privacy Act and similar state laws, educational records are confidential and require the applicant's consent for release.
  • Military Service Records: Release of military service records generally requires consent. The military may disclose name, rank, salary, duty assignments, awards, and duty status without the person's consent.

Can I ask a potential employee about their previous wages or compensation?

It depends on what state you're in. As of this date, employers in 22 states cannot ask prospective employees questions about prior salary or wages. If the applicant volunteers the information, the employer may not use it to set the employee's new salary or make any hiring determination. These are state-specific laws, so check with an employment law attorney before adding this to your list of interview questions.

Can I ask a prospective employee if they are pregnant or planning to become pregnant?

The Equal Employment Opportunity Commission (EEOC) does not prohibit asking questions about pregnancy. EEOC guidance says, "because such questions may indicate a possible intent to discriminate based on pregnancy, we recommend that employers avoid these types of questions."

The problem with such questions is there is no way to phrase them without being sexually discriminatory. Employers cannot reasonably ask both genders this question, and they cannot ask one gender questions they do not ask the other. If there are health concerns about the job site, employers can protect themselves and all employees by providing information to all workers and ensuring medical leave is available when requested.

Answering Other FAQ

Small businesses may not have a human resources department, but you can still have a list of questions ready. The EEOC understands that this can be hard for people to navigate, and they have a small business resource guide that may answer questions not answered here. Or you can check FindLaw's page on Small Business Law for answers about new hires, wages, and changing laws.

Getting Legal Help

Failure to comply with applicable hiring and employment laws can result in a lawsuit or issues with government agencies such as the IRS. If you're unsure which laws apply to your business and need help determining if your hiring process is legal, contact a local business and commercial attorney.

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