Hiring: Best Practices for Protecting Your Company
How do you minimize risk and hire great candidates? By establishing hiring best practices that you follow every time. This can help prevent complaints, claims and lawsuits. Take a critical look at your hiring practices and see if following these guidelines might help reduce your risk and help you hire the quality talent you need.
Begin with the foundation of the hiring process: job descriptions. Be specific; the more detailed you are about job duties, the more likely you are to get candidates with the experience you need.
A detailed job description can also help limit legal exposure to discrimination claims and other compliance risks. Be sure include the essential functions of the job for compliance with the Americans with Disabilities Act (ADA). Basically, the job description should state the job duties that the employee must be able to perform to effectively do the job.
Classification of positions
The job positions you are hiring for need to be properly classified before the hiring process begins. Proper classification is not as simple as being paid a salary versus being paid hourly, nor is it something for you or the employee to decide. A majority of U.S. workers are covered by the Fair Labor Standards Act (FLSA) and are classified pursuant to the FLSA as either exempt or nonexempt employees as it relates to rate of pay and eligibility for overtime.
Classifications are determined by factors such as job duties and salary tests. Things can get complicated, though, because there are also job exemptions, such as certain types of computer professionals. That is why it is always a best practice to engage experienced employment law counsel to review your job classifications. Generally speaking, however:
- An exempt employee is usually paid a salary and is not compensated based on the number of hours worked.
- Non-exempt employees are typically paid by the hour and are entitled to overtime pay.
- There are salary and job duties standards that must be met for exempt employees.
When analyzing positions, look at specific job duties, not just titles. Be careful with independent contractors (IC). The IRS has strict guidelines for ICs. For example, ICs could be considered employees if you tell them how to do their job or if you require them to work onsite during specific hours. The loss of federal and state payroll tax dollars has led to increased legislative and agency enforcement in this area. Misclassification of ICs can also lead to fines, wage claims and even class action lawsuits.
A TriNet webinar poll found that 34% of participants did not use applications. We highly recommend using them and here’s why:
- They are considered a legally binding document that requires a signature.
- You have documentation in case there is a claim of discrimination or other legal action.
- The application usually has a release that allows you to check references.
Make sure your application is up to date. Many states and municipalities have enacted “ban the box” laws. This refers to removing questions about criminal history from the form. Additionally, several states and cities have also passed laws prohibiting employers from asking about salary history.
The interview is an essential part of the hiring process. However, without a process in place that is followed every time, it can open your company up to serious legal risk.
- Regularly train managers about proper interviewing techniques.
- Prepare questions in advance; ask open-ended questions that get the candidates talking.
- Questions should be based on the knowledge, skills and abilities needed for the job.
- Avoid questions that could elicit information about age, gender, religion, national origin, marital status or any other protected class. Continue to be aware of any applicable laws that may prohibit questions regarding criminal history or salary history.
- Keep an open mind. We all have biases but we should do our best to remove them from the interviewing process.
Make sure to check employment references. Request job title, job responsibilities and special projects the applicants may have worked on. Ask the same questions of all references. Although you may only get hire and termination dates, ask anyway. Again, continue to be aware of any applicable laws that may prohibit questions regarding an applicant’s salary history.
Using a screening provider can help keep you compliant with the Federal Trade Commission under the Fair Credit Reporting Act, as well as many other federal and state laws. The following steps are important for protecting your company from increased legal risk:
- The applicant has to agree to the background screening in writing.
- It is critical that you conduct the check before the candidate starts working.
- If you decide not to hire because of unfavorable results from the screening, there are certain procedures to follow as well as various laws to comply with that vary from state to state or even city by city. Your vendor and/or legal counsel can assist you with the process and forms needed for adverse actions.
Create a core list of background checks. It can include criminal screening, verifying previous employment and education. You can add more in-depth checks according to job responsibilities.
Note: There are states that limit employers’ use of credit data unless the position deals with finances, such as chief financial officer, accountant or bookkeeper. Check your locals laws in the states that you operate. Your screening provider should be able to advise.
Social media can be used successfully for recruiting but not for screening. Social media search engines, such as Facebook, LinkedIn or Google, are not reliable sources for screening applicants because:
- The name you enter may not be a match.
The information available could be outdated or inaccurate.
Companies often do not consider the inherent risks in hiring new employees, but developing and implementing a compliant process can protect your company and help you to hire the best possible candidates. For more information, contact a TriNet expert.
This communication is for informational purposes only; it is not legal, tax or accounting advice; and is not an offer to sell, buy or procure insurance.
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