In this lesson, we're going to talk about hiring employees. When you get to the point in the development of your business where you need to bring on additional talent, laws around how you recruit and how you hire employees becomes very important for your business. So in this lesson we'll talk about how to handle job postings and things to stay away from when you're advertising new jobs. And then we'll also talk about the application process and the interview process. And in doing so, we'll talk about things like employment at will or wrongful discharge of employees. So let's start with job postings. When you're posting a job for your company, you have to be very careful not to include a preference or a limitation that's based on what the law calls protected classes. At a very high level protected classes include classes around race, or color, or religion, or gender, or sexual orientation, national origin, US citizenship status. These types of like broad categories are protected by employment laws and as a result when you're posting a job, you don't want to have a preference or limitation based on these classifications. Now, state laws may be much broader in terms of what classes or what classifications are protected. So to the extent you are targeting employees or prospective employees in certain states, you want to make sure you understand the laws in those states before engaging in job postings or trying to recruit talent from those states. We should say a word here about recruiting, and word of mouth recruiting in particular. So oftentimes when you're early on, you're getting your business startup, you don't have a formal process in place for posting a job. And so you essentially are relying on word of mouth, you tell people hey, I'm looking for a good engineer, or looking for someone who's very good at product marketing. And that's how you get the word out about that, the fact that you may be hiring for your business. Now, word of mouth recruiting can lead to some issues, and here's why, if you are relying on your current employees or your current staff to do word of mouth recruiting, oftentimes, they're going to be spreading the word through their own circles. And as a result, the only people that may learn of this job opening are people who are in the similar circles as your current employees. And as a result, folks who may be in these protected classes, racial minorities, gender issues, national origin issues, folks in those protected classes may not learn of the job opening because they're not in the circles of the people who are your current employees. So a good best practice to remember if you're in a position where you're doing word of mouth recruiting, it's to supplement that word of mouth recruiting with a broader reach. Whether it's internet posting or posting your job opening through sites like LinkedIn or other ways of broadly advertising that your company may be hiring for certain roles. This is a way of increasing the chance that other folks in those protected classes have the ability to see the job opening and have the ability to apply for the opening. Now let's talk about the application process and interviews. Similar to a job posting, when you are putting out a job application, or you in the process of interviewing candidates for a job, you have to be careful not to make statements that suggest a preference or limitation based on those protected classes or other factors. So gender, age, race, citizenship, national origin, religion, disability, conviction or arrest record, education, or even like your credit status, all of these kind of factors are areas during the interview process or the application process that you want to be very careful about. And to the extent you can, to stay away from. Let's talk about a couple of these like a conviction or arrest record, or education, or credit. Now these seem like fair questions, right? You should be able to ask whether someone has been convicted or whether they have been arrested for a crime. That seems like a legitimate question to ask when you're considering hiring an employee. Education, like what type of education or previous work experience you've had, this seems like a fair question to ask. Credit, oftentimes credit can serve as a proxy for trustworthiness of a candidate. So it seems like a fair question that you should be able to ask during the interview process. Here's why questions around these types of factors can get you in trouble. And it's really around a legal construct called disparate impact. And disparate impact means that while there may not be a discriminatory conduct against a particular person, the conduct by virtue of it may have attending impact on the class of people who are in one of these protected classes. And as a result, the law has evolved such that if conduct has this type of disparate impact on a protected class, it's treated as if it's in fact discriminatory. So what issues like conviction or arrest records, it's very clear that oftentimes racial minorities, for example, have higher instances of convictions or arrest. And so as a result, if you're basing your hiring decision on conviction or arrest records, you may have a disparate impact on racial minorities. Similarly, with with credit issues, a very similar thing, racial minorities, the stats suggest that racial minorities sometimes have lower credit scores or credit reporting type issues. And so if your job posting, if you're basing that decision on a preference for higher credit ratings, or preference for folks who don't have certain credit marks on their credit reports, then you may have a disparate impact on racial minorities for example. And because of that, it can get you into trouble in terms of employment law issues. So, as you're thinking through like how you're structuring your interview process or your application process, some things that may not seem obvious to you could come into play in terms of employment, the analysis. So, one of the things to keep in mind as you're thinking through developing that process is how does disparate impact issues impact the types of questions I'm looking for, the statements I'm making regarding the preference or limitations with respect to the job posting. Now let's talk about at-will employment. >> Now, most employees are hired as at-will employees, and at-will employees essentially means there's no contract or agreement in place to maintain the employment relationship for a specific period of time. So as a result, either party, the employer or the employee can terminate the relationship at any time and for any reason, except you can't have a discriminatory or an illegal reason for breaking the relationship. So keep in mind that if you hire your employee absent a contract that specifies a duration of the employment relationship, that employee can quit at any time. You as an employer, you can get rid of that employee at any time, as long as that decision to get rid of the employee is not discriminatory or illegal. Now, if it is discriminatory or illegal, you get into issues around wrongful discharge. So in addition to discriminating against an employee or terminating an employee as a result of some of those protected classes we talked about gender, race, national origin, citizenship, you can also have a wrongful discharge around issues like public policy issues. So for example, if an employee refuses to break the law at your request, you can't fire an employee for that. Or if you have a whistleblowers, an employee that seized wrong for conduct happening at the company and raises his or her hand to report such conduct, you can't fire that employee for being a whistleblower, that's against public policy. Also, if an employee has a legal right and they exercise that legal right, you can't fire them for exercising a legal right. This issue oftentimes comes up in like workers compensation scenarios where an employee was injured on the job, 1000 workers compensation claim, the employer is now responsible for that workers comp, and then employer decides to get rid of this employee because they're injured, they're not able to bring a good service to the company anymore by virtue of the injury, and they filed a workers compensation claim. So that decision is a bad decision, and it's a wrongful discharge for firing someone for exercising a right that they have a legal right to exercise. Let's also talk about implied contracts. Now, implied contracts, in the employment scenario is an exception to at-will employment. So while most employees are hired at-will, given certain conduct, a court will imply that the employment relationship has a contractual element to it. That the employment relationship is supposed to last for a specific period of time, or that the employer must have good cause to terminate the employment relationship. So whenever you have a contractual relationship in place in the employment context, unlike at-will where you can fire for any reason except for legal reasons, a contract situation requires the employer to prove good faith, have a good cause for terminating the employment relationship. So, in terms of how a court will decide whether to imply a contract, the court looks at a couple of factors. First, they look at whether the employee has been with the employer for a long period of time. So if you have a long term employee with a very good record, it may be hard for you to terminate that employee for any reason. A court may imply a contract based on that record, that employment history with you. Also, if you're making oral or written assurances to an employee, if you have a manager or director of your company that tells an employee, hey, you're doing very well here, we look forward to having you on board for the next five years. Those types of written or oral assurances can lead a court to imply that, hey, this manager said that this employee is doing a good job and we're looking forward to having them on board for the next five years. That implies a contract that this employee will be hired for five years. So be careful about those types of oral and and written assurances to an employee if you want to ensure that you maintain the at-will employment relationship. Also, courts imply that a covenant of good faith and fair dealing. So the way to deal with this is to make sure you treat your employees fairly if you are, let's say an employee is entitled to a stock vest, and that's going to entitle the employee to an additional $50,000 in the company or more equity ownership in the company. And to avoid that, you decided to get rid of the employee before that vesting, and that's what's motivating you to avoid the $50,000 equity here. That would be bad faith, and as a result, the court would impose upon you this this duty to act in good faith and to deal fairly with your employees. And failure to do so can allow a court [COUGH] to ignore the conduct that you committed and to imply an employment contract instead. So in summary, the legal framework around employment issues are designed to prevent discrimination and harassment in the workplace. So as an employer you should be careful about comments that you make in job postings, in applications, and during the interview process to ensure that you're not engaging in conduct that can be considered discriminatory or in violation of other employment laws. Now most employment is at-will employment, but a court under certain circumstances can imply an employment contract based on conduct that the employer is engaging in.
