Employment Problems and the Law

Employees are the driving force of an organization and can crystallize success or hasten the demise of a company. As a general matter, problem employees can be avoided or terminated. The law, federal, state or common, influences both of these areas of potential managerial action. The law in this area gives employers wide latitude to act in the best interest of their business. However, that latitude is bounded by important laws on both the state and federal levels and is most pronounced in the area of discrimination. It is important for managers to be aware of the potential pitfalls in the hiring process to ensure compliance with the law and to avoid the problem employees. This article reviews some the legal implications of the most popular hiring methods used by employers.

Keywords Age Discrimination in Employment Act (ADEA); American with Disabilities Act (ADA); Common Law; Employment "At Will"; Equal Employment Opportunity Commission (EEOC); Statute; Title VII of the Civil Rights Act of 1964 (Title VII)

Law > Employment Problems & the Law

Overview

If a business hires a problem employee or a previously good employee turns bad, a business can suffer. A problem employee may use personal insults; invade colleagues' personal space; initiate uninvited personal contact; rely on threats or intimidation, tell sarcastic jokes, tease or insult colleagues; use their status to humiliate others, initiate public shaming or status degradation; give dirty looks; act unduly selfish or greedy; engage in petty bickering. Essentially, a problem employee is a jerk. The problem employee can cause lost productivity, decreased moral and increased costs associated with training and locating new hires to replace the problem employee or other employees that may have departed because of the problem employee.

Employee problems can be avoided through the hiring process, handled through managerial attempts to change problem behavior or by terminating the employee. An employer can typically fire an employee for any reason or no reason under the employment at will doctrine. Employment at will states that an employee without a fixed term of employment can be fired for any reason or no reason and is an accepted basic rule of employment law. A fixed term of employment generally means that the parties have an employment contract. However, the employment at will doctrine is limited by the provisions of the federal antidiscrimination statues mention later. Additionally, some employees may argue that an implied employment contract existed and was created by an employee handbook or policy manual.

From a legal perspective, there are more wrongful discharge cases than hiring lawsuits brought by unsuccessful applicants. The law tends to be less sympathetic to claims of individuals who have been denied an opportunity to obtain employment as opposed to employees whose employment, perhaps after long tenure, had been wrongfully ended. Additionally, an unsuccessful job seeker is less likely than a discharged employee to file a lawsuit because the loss is less tangible and because they are likely pursuing other employment options concurrently. However, from a business perspective, avoiding a bad hire is far easier and cheaper than discharging an employee and searching for a replacement.

The Hiring Process

The first line of defense for employers is to avoid hiring the wrong people. As a general matter, employers enjoy fairly wide discretion to adopt hiring practices that they deem valuable to their organization. This wide latitude is reflected in the manner in which the laws are written. The laws generally prohibit employers from behaving in certain ways as opposed to requiring employers to behave in certain ways; in that way, the law is more proscriptive than prescriptive. Employers may engage a variety of methods to develop a pool of potential new employees including; want ads, employment agencies, and hiring halls. The employer may screen that pool of applicants with application forms, interviews, references, or other methods of soliciting information about the individual and may require aptitude tests, physical ability tests, or drug tests. As noted, an employer's use of any particular method will violate the law only if it violates a specific legal proscription (Rothstein, 2004).

Laws Governing Hiring

There are four main sources of law that regulate the hiring process.

• For the public sector, or government, employees and some governmentally regulated employees, constitutional protections apply. As an overall observation, the Constitution of the United States regulates only government activity; private party conduct is not directly controlled by the Constitution. While rights akin to constitutional protections may be made applicable to private citizens or companies by way of statute or common law, those rights do not emanate directly from the Constitution. However, when a government employer acts, the full panoply of constitutional protections is invoked. For example, fourth amendment protection against unreasonable searches and seizures applies to drug testing of both public employees and private sector employees when the drug testing is governmental mandated.
• Second, there are federal statutes that regulate various aspects of the hiring process. For example, the Employee Polygraph Protection Act prohibits most polygraph testing in the private sector.
• Third, state constitutional law and state and local statutes also regulate the hiring process. For example, numerous states have laws prohibiting blacklisting an inquiring into an applicant's HIV status.
• Fourth, the common law, primarily tort or civil wrongs, may be available to applicants to redress injuries arising from defamation, invasion of privacy, intentional infliction of emotional distress, and other harms. The common law may also make remedies available to third parties to redress harms caused by the hiring process. Negligent hiring is an example of when an employer may be liable to a third party for hiring an inappropriate employee that caused injury to that third party (Rothstein, 2004).

Much of the legal controversy surrounding the regulation of the hiring process has to do with the regulation and access to information. There are few federal laws that are particularly important to employment, generally; Title VII of the Civil Rights Act of 1964 (Title VII), Age Discrimination in Employment Act (ADEA) and the American with Disabilities Act (ADA).

• Title VII was the first federal legislation to give broad protection against employment discrimination with respect to compensation, terms, conditions or privileges of employment based on "race, color, religion, sex [including pregnancy] or national origin" by employers, labor organizations and employment agencies.
• Three years later, Congress enacted the ADEA that extended similar coverage provided by Title VII to age discrimination.
• In 1990, Congress passed the ADA to prevent employment discrimination against people with physical or mental disabilities. The ADA prohibits discrimination and require employers to make reasonable accommodations to qualified individuals.

Employers with a minimum of fifteen employees under Title VII and ADA (minimum of twenty under the ADEA) that are engaged in activities that affect interstate commerce are covered by the anti-discrimination laws. With that introduction, we can review some law related to some popular hiring methods (Rothstein, 2004).

Methods for Hiring

Want Ads

Want ads are popular way for employers to gain interest in a position they are offering. Section 704(b) Title VII states that it is an unlawful employment practice for an employer, a labor union, or an employment agency to publish any notice or advertisement indicating any preference, limitation, specification, or discrimination in employment based on race, color, religion, sex [including pregnancy] or national origin. Many of the cases brought under this provision involve gender. For example the Equal Employment Opportunity Commission (EEOC) guidelines state that the section prohibits placing advertisements in the gender segregated newspaper columns. The ADEA contains a similar prohibition on age based want ads. Both of these federal laws coordinate with state fair employment acts and nearly every state has enacted legislation similar to the federal laws. Some state laws are broader than the federal law and may also prohibit discrimination based on factors such as marital status or sexual orientation.

Employment Agencies

Employment agencies are an important source of new employees for businesses. The states began licensing and regulating employment agencies during the Great Depression, when high unemployment caused exploitive and unscrupulous employment agency practices. Many of those laws are still on the books although many have been amended and updated. Today, about two-thirds of the states regulate employment agencies in some way. Some state laws prohibit employers from charging a fee to employees seeking to obtain or continue employment. Most state laws require employment agencies to be licensed and bonded, prohibit agencies from charging in advance of employment and set maximum fees that an agency may charge. Title VII applies to employment agencies and prohibits an agency to fail or refuse to refer for an appointment or otherwise to discriminate against an individual because of his race, color, religion, sex, or national origin.

Internet Job Boards and Screening

By the late 2000s, Internet classified sites had largely replaced the newspaper want ads. Hiring managers found the flexibility and relative cheapness of a Craigslist, Monster.com ad to be an effective means of reaching a large pool of candidates, especially young, tech savvy college graduates. The social networking site LinkedIn became a public arena where workers could network professionally, post a resume, and be found by recruiters (Hoffman, 2009). Internet job boards proliferated, many of them (e.g., Indeed.com) were general interest and nationwide; others, such as MediaBistro focused on a particular industry. Employers who posted jobs on these boards used recruitment and screening software to eliminate unqualified candidates (Wessel, 2012). In 2013, approximately 5,184,600 online job postings were listed on Internet job boards in a single month — September (Siegel, 2013).

The Employment Process

Applications

Application forms are often the critical first direct contact between an applicant and employer. Although forms vary widely, they customarily solicit personal information, such as name address, phone number, educational background, and work history. Applications are lawful unless they have the purpose or effect of discriminating in violation of Title VII or other applicable laws. Title VII does not specifically prohibit an employer from asking questions that may indicate race, color, religion, sex or national origin. Nevertheless, inquiries which either directly or indirectly disclose such information, unless otherwise explained, may be evidence of discrimination under Title VII. Consequently, because using such information to make hiring decisions violates Title VII, virtually all employers exclude such questions from their application forms. Some states take the approach of Title VII, most however, go beyond Title VII and expressly prohibit questions that ask for the applicant's race, color, religion, sex, national origin, age, or disabilities and prohibit questions that indirectly reveal that information. Indirect questions may include inquiries about hair color, eye color, height, weight, photographs, arrest record, marital status, birthplace, names and addresses of parents, ages of dependants, and references by a religious leader (Rothstein, 2004).

Job Interviews

The job interview is a well established practice in American employment. While some civil service laws specify the particulars of job interviews, the private sector job interviews are left to the employer. Because the interview is often the crucial step in deciding which applicant to hire, it is also a focus of applicants who believe they were denied employment unfairly. The courts have held, however, that an employer may refuse to hire an applicant who had a poor interview, where the applicant had an abrasive personality or had an unresponsive and unassertive demeanor. Title VII actions in this area are sometimes based on alleged gender discrimination; such as discouraging females from seeking a traditionally male job. A Title violation may also occur if an employer inquires about a woman's childbearing plans. On the other hand, it may not be a violation of Title VII for an employer to ask female applicants family oriented questions about marital status and child care arrangements.

Reference Checks

Reference checks, despite a growing reluctance of former employers to provide negative references for fear of liability despite possible questions about past employee efficacy, remain a popular tool for employers in the hiring process. Various types of written and oral statements in the employment setting can result in an action for defamation. Defamation, the act of harming another person's reputation through the publication of injurious falsehoods, may be based on a written (libel) or verbal (slander) statement. Those statements can be made about current or former employees by employers, former employers and other parties.

Criminal Record Investigations

Many employers attempt to discover if an applicant has a criminal record. The legality of those inquiries varies widely, depending on the nature of the job, the method of inquiry, and the existence of relevant state law. There are criminal records laws that require, permit, or prohibit employer use of criminal records. Some state laws mandate a pre employment criminal record review for all applicants seeking employment in certain particularly sensitive jobs, including the following: Childcare employees, child welfare employees, used attention employees, employees to supervise or discipline children, use correction employees, home health employees, pawnbrokers, police officers, security guards, correction employees, nuclear workers, and lottery employees. Some state laws also set the fees that school districts and private schools may be required to pay for criminal background checks if the applicant passes initial interview. If an employer investigates a criminal record, the employer must then determine the extent to which the information is used in the hiring process.

The second category of state law authorizes employers to gain access to criminal records, even though employers are not required to use them. For example, some of the laws grant a general right of access to the records of certain types of crimes, such as sex crimes. However, for both public and private sector employees, access to criminal records access is available only for specific jobs. In the public sector, the jobs categories include: School teachers, childcare employees, private security employees, employees of facilities for the mentally ill, employers of juvenile detention facilities, and public housing employees. In the private sector, the job categories include: Public school employees, employers with power over minors, public utility employees, bank employees, credit union employers, nuclear employers, gaming employees, and higher education security employees.

The third category of state laws restricts access to criminal records or allows individuals to apply for jobs without revealing criminal records. States may limit employer access to arrest records or restrict access to and disclosure of criminal records to prevent discrimination in employment against individuals with a criminal history. While some specific state laws attempt to prohibit unreasonable discrimination against employees with prior criminal offenses, challenges to employment discrimination based on prior conviction or arrest are based on constitutional or Title VII grounds. For example, an Iowa law that barred all convicted felons from civil service positions, was held in violation of the U.S. constitution's equal protection guarantee. State constitutional law has been used to challenge the refusal to hire individuals will arrest records. Private sector challenges to refusal to hire based on criminal records have been brought under title seven. Were court held that convictions may be considered an individual basis, but that blanket rejection of all convicted criminals may constitute disparate impact race discrimination (Rothstein, 2004).

Fingerprinting

Fingerprinting is used by employers to verify the identity of applicants and employees, often as part of a review of criminal records. As might be expected, fingerprinting is most often used in jobs concerned about potential criminal activity or public safety. A variety of Federal statute regulations require the fingerprinting of applicants and employees. Member state laws also require fingerprinting of school employees, child care employees, juvenile services employees, gaming industry employees, alcohol license commission employees, police and security officers, and health care providers. Some employers use credit information about applicants and employees as an indication that an individual is responsible, trustworthy, and stable. Use of credit information for employment purposes however, may implicate the Federal fair credit reporting act, state credit reporting laws, common law, and the Federal bankruptcy act.

The fair credit reporting act was designed to protect consumers from accurate or arbitrary information in the consumer report being used as a factor in determining an individual's eligibility for credit, insurance, employment; it governs the use and investigation of consumer reports. The consumer report bears on a consumer's credit worthiness, credit standing, reputation and work character and is used to establish a consumer's eligibility for credit, insurance or employment. An investigative consumer report is more detailed and contains personal information obtained from interviews and other communications with a consumer's friends, neighbors, and acquaintances. The Federal bankruptcy act also provides protection against employment discrimination towards applicants and employees based upon past declarations of bankruptcy or discharges of debt.

Psychological/Personality Testing

Among the commonly used devices for evaluating applicants for initial hire or promotion are professionally developed ability and intelligence tests similar to the ones use where schools for admissions of students. Psychological and personality testing, for the most part, are unregulated to facilitate proper job placement, to increase productivity, to prevent violence, drug and alcohol abuse, reduce the number of workers' compensation claims for mental health disorders, and reduce health insurance claims for mental illness. In the employment context, the use of such tests are largely unregulated but may violate Federal discrimination laws if they operate unfairly to reduce opportunities for groups on the basis of race, national origin, gender, age, or disability. There are other methods that may be relevant to a particular business's hiring decisions. For example; imposition of residency requirements, use of polygraph testing, physical ability testing, HIV testing, cigarette smoking, genetic testing and drug testing. Each of these areas and each of the topics reviewed above may be subject to a number of laws at both the state and federal level.

In addition to the business and financial consequences associated with hiring the wrong employee, a company may also incur liability to third parties for hiring certain employees. Negligent hiring is a direct cause of action against an employer for injuries to an employee or third party caused by an employee's intentional or negligent acts. In this type of case, the plaintiff's action against an employer is based upon the negligence of the employer in hiring. A related cause of action is based on negligent retention and the only difference is that negligent retention is based on conduct after hiring that should have put the employer on notice of the incompetence or dangerous situation posed by the employee.

Conclusion

Employees are the driving force of an organization and can crystallize the success or hasten the demise of a company. As a general matter, problem employees can be avoided or terminated. The law, federal state or common, influences both of these areas of potential managerial action. The law in this area gives employers wide latitude to act in the best interest of their business. However, that latitude is bounded by important laws on both the state and federal levels and is most pronounced in the area of discrimination. It is important for managers to be aware of the potential pitfalls in the hiring process to ensure compliance with law and to maximize the chances of avoiding the problem employee.

Terms & Concepts

Age Discrimination in Employment Act (ADEA): A federal law designed to prevent employment discrimination based on age.

American with Disabilities Act (ADA): A Federal law designed to prevent employment discrimination against people with physical or mental disabilities.

Common Law: The law that originated in England that has developed over years through court decisions.

Employment "At Will": The general legal doctrine that states that an employee without a fixed term of employment can be fired for any reason or no reason.

Equal Employment Opportunity Commission (EEOC): A federal agency charged with the duty of enforcing various federal employment statutes.

Statute: A law passed by a legislative body.

Title VII of the Civil Rights Act of 1964 (Title VII): A Federal law that protects against employment discrimination against any individual with respect to compensation, terms, conditions or privileges of employment based on "race, color, religion, sex [including pregnancy] or national origin" by employers, labor organizations and employment agencies.

Bibliography

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Levi, A. (2013). When a staff member is struggling. Plumbing & Mechanical, 31, 12-13. Retrieved November 15, 2013, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=89667554&site=ehost-live

Moushon, M., & Asher, G. (2007). Preventing wrongful discharge: Know your facts. Nursing Management, 38, 18-62. Retrieved October 9, 2007, from EBSCO Online Database Academic Search Premier. http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=26354024&site=ehost-live

Rothstein, M. A., Craver, C. B., Schroeder, E. P. & Shoben, E. W. (2004). Employment law (3rd ed.).St. Paul, MN: Thomson West.

Sidle, S. D. (2011). Personality disorders and dysfunctional employee behavior: How can managers cope?. Academy Of Management Perspectives, 25, 76-77. Retrieved November 15, 2013, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=61020803&site=ehost-live

Siegel, G. (2013). Jobs posted on Internet jump 209,700 in September: Report. Bond Buyer, 122(33990), 1. Retrieved November 15, 2013, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=91106752&site=ehost-live

Wessel, D. (2012, May 31). Software raises bar for hiring. Wall Street Journal - Eastern Edition. p. A2. Retrieved November 15, 2013, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=76241699&site=ehost-live

Williamson, I. O. (2013). Too much of a good thing?. Human Resources Magazine, 18, 10-11. Retrieved November 15, 2013, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=89727179&site=ehost-live

Suggested Reading

Janove, J. (2007). Jerks at work. HRMagazine, 52, 111-117. Retrieved July 25, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=24966437&site=ehost-live

Stanley, T. (2007). Hire the right person. Supervision, 68, 10-12. Retrieved October 9, 2007, from EBSCO Online Database Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=25547987&site=ehost-live

Torres, N. (2004). Bad apples. Entrepreneur, 32, 26-26. Retrieved October 9, 2007, from EBSCO Online Database Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=12070779&site=ehost-live

Zachary, M. (2006). Labor law for supervisors. Supervision, 67, 23-26. Retrieved October 9, 2007, from EBSCO Online Database Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=20838152&site=ehost-live