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Hiring Laws: Frequently Asked Questions

Hiring a new employee can be an exciting and daunting task. An employer must comply with various laws related to hiring a new employee. In this article, you can find answers to some of the frequently asked questions when it comes to hiring a new employee. For more articles related to this topic, see FindLaw's The Hiring Process section.

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

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

Under federal law, employers are required to 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?

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

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

Yes. It's illegal to discriminate against applicants and employees based on their national origin or citizenship, so never ask a potential employee where he or she is from. Instead, ask whether the potential employee is legally authorized to work in the U.S. on a full-time basis.

In addition, the U.S. Department of Labor (DOL) is responsible for certifying positions for temporary and permanent employment of foreign workers. Once the application is certified by the DOL, the employer generally must petition the U.S. Citizenship and Immigration Services (USCIS) for a visa on behalf of the foreign worker. The foreign worker must also establish that he or she is 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 not available.

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

Yes. First of all, since the IRS treats taxation of employees and independent contractors differently, it's important to ensure that your prospective hire is really an independent contractor. If you misclassify your worker as an independent contractor and the IRS believes the worker is an employee, you may be liable under the Fair Labor Standards Act and owe back taxes, workers' compensation benefits, and employee benefits. If you're not sure, you can file a Form SS-8 with the IRS to get an official determination as to 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) has two major effects on hiring an employee with a disability. First, the ADA prohibits discrimination against people with disabilities in the hiring process. Second, the ADA requires employers with 15 or more employees to provide reasonable accommodations for individuals with disabilities unless it would case the employer undue hardship. A reasonable accommodation is any change in the work environment or in the way a job is performed that enables a person with a disability to enjoy equal employment opportunities.

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

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

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 and let the applicant know of his or her 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 extremely 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 a security job) and since the ability to run a criminal records check varies from state to state, you should 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 the course of employment.
  • Medical records: Generally, you can't get an employee's medical records with the employee's consent. It's also generally illegal to even ask for medical records.
  • Bankruptcies: Although bankruptcies are a matter of public records, the federal Bankruptcy Act prohibits employers from discriminating against applicants because they have filed for bankruptcy.
  • Workers' compensation records: Workers' compensation appeals are public record, however, employers can only use this information if they can show that the applicant's injury might interfere with his or her ability to perform the required job duties.
  • School records: Under the Family Educational Rights and Privacy Act, as well as similar state laws, educational records are confidential and can't be released without the applicant's consent.
  • Military service records: Military service records may be released under limited circumstances and generally requires consent. The military may, however, disclose name, rank, salary, duty assignments, awards and duty status without person's consent.

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 not sure which laws apply to your business and need help determining if your hiring process is legal, you may want to contact a local business and commercial attorney.

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