Joe is a successful entrepreneur operating two coffee shops with 16 employees. One of his full-time workers has just given notice. So, Joe posts "Help Wanted" signs, prints self-designed employment applications, and waits for job seekers to come forward.
After 10 days, Joe has three applicants. Only one is seeking full-time work, and from her application Joe learns that Catarina has just completed her GED and has held five jobs in two years, only one of which was in retail. Nevertheless, Joe feels that personality and work ethic are just as important as experience, so he schedules an interview.
During the interview, Joe has a hard time understanding Catarina’s thick accent and is dismayed at her attire. Catarina wears a large pendant displaying photos of two small children, so Joe asks about them. It turns out Catarina is a single mother trying to support her family. She has no car and walks her children to her mother’s house each day before taking a bus to work. Joe also finds she has no experience with a cash register, and a back problem prevents her from lifting more than 20 pounds. At the conclusion of the interview Joe promises to get in touch with Catarina when a decision has been made.
Later that day, a new job seeker arrives. Mary recently moved to the area and has 20 years of retail experience – 10 at a coffee shop. She is proficient in operating computerized cash registers, is outgoing and friendly, and lives just a block from the shop. Joe offers her the job on the spot, and Mary accepts. Then Joe sends a rejection letter to Catarina.
Six weeks later, Joe receives a letter from the Equal Employment Opportunity Commission in Washington D.C. and finds that Catarina is charging him with discrimination on the basis of her race, national origin, physical disability and status as a single parent. "How can this be?" wonders Joe. "I clearly hired the better candidate for the job."
Joe and other small business owners often don’t realize they are subject to a variety of federal laws that require them to take great care in their hiring and employment practices. Title VII of the Civil Rights Act and Title I of the Americans with Disabilities Act applies to firms with 15 or more employees. And recent court interpretations of the laws mean that juries are not always limited by monetary caps when they award certain types of damages. The courts have also ruled that employers can be liable for actions by their supervisors even if business leaders are not aware of the behavior. In addition to federal law, many states may impose additional requirements on small employers.
In order to best protect themselves from allegations during the hiring process itself, small business owners need to follow some basic procedures:
- An attorney should review all job announcements and employment applications before they are used.
- Only job-related information should be contained in an employment application.
- The application should acknowledge that the firm does not discriminate against persons in any protected class, and employment is "at will," meaning it may be terminated by either employee or employer at any time.
- All qualifications and requirements should be job-related, not personal, and presented in formal job descriptions. The employer should ask at the job interview if the applicant is capable of performing the described job duties with or without reasonable accommodation.
- Job interviews should stick to a carefully crafted script. All questions should pertain only to the job and never delve into personal matters.
- The letter sent to candidates who don’t get the job should be general and not cite specific reasons for the decision. This should also be reviewed by an attorney.
In the end, the allegations against Joe were dismissed. In fact, 80 percent of charges brought before the EEOC are either dismissed or resolved in favor of the employer. But the small business owner must realize that a favorable outcome still has costs. Significant time can be spent locating documentation, defending the allegations, and paying costly attorney fees.
While not all employment lawsuits can be prevented, making sure your business clients follow some basic risk management procedures can greatly reduce the chances. The EEOC Web site, www.eeoc.gov, offers a wealth of information for small business owners.
In addition to managing employment risks, your business clients should consider liability insurance. When reviewing insurance options, be aware that not all programs are alike. Deductible provisions and coinsurance clauses can affect the amount of protection offered. The best approach: invest in a comprehensive policy that provides risk management guidance. When it comes to potential employment issues that even the smallest business owner faces, you’ll want your "average Joe" to be protected.
For more information please contact Anne M. Smith.