7 Tips to Keep Your Small Business Out of Legal Hot Water When Hiring

Hiring new employees? Protect your business from an unforeseen lawsuit caused by an innocent mistake.
Contributor, Amex OPEN Forum
April 20, 2012

Recent news suggests employers are finally adding jobs. If you're among those small business owners either hiring for the first time or looking to increase staff, it's necessary to take extra steps to make sure you get new hires on board without complications. 

"For many small businesses, especially those that started as result of the Great Recession, hiring can be a new thing," says Charley Moore, founder and executive chairman of Rocket Lawyer, a free online legal document service that seeks to coach small businesses away from potentially expensive mistakes. "Doing it wrong and not following the right legal process can expose businesses to significant liability."
These key tips will guide you through the process.

1. Know the interview rules

 Asking a prospective employee about an accent, or whether they prefer "Ms., Mrs. or Miss" might seem to some like simple small talk, but it's actually illegal in most cases. Make sure everyone involved in the hiring process knows the rules, not just the owner of the business.

"Businesses run into trouble when interviews are conducted by multiple members of a team who might not all be on same page," Moore says. "Have a process and policies that really get your whole staff trained about what's in and out of bounds. It's situational and should be specific to the job description."

2. Create an employment agreement

Make sure you get an employment agreement in writing. A recent Rocket Lawyer survey found that lack of written contracts ranked high on the list of small businesses mistakes.

3. Develop an employee handbook

 Set your policies for employees. Hand them something in hard copy that defines expectations and consequences when it comes to responsibilities and performance. Outline payroll, promotion and day-to-day procedures.

4. Define clear anti-discrimination policies

 Clearly define and prohibit discrimination in the workplace. Establish a no-tolerance policy for racist, sexist and classist actions and/or language.

5. Implement a no-tolerance sexual harassment policy

 Prohibit any unwelcome conduct or advance that is intimidating, hostile or offensive.

6. Learn the employee-leave rules

Familiarize yourself with the legal requirements of the U.S. Department of Labor's Family and Medical Leave Act.

7. Provide a worker’s comp program

A worker's comp program can help you avoid costly lawsuits and expenses in the event of an employee having an accident on the job.

All of this, according to Moore, is about taking a step back, understanding the needs, scale, scope and ground rules of your small business, and then expressing those to new employees in a way that's clear and legal.

James O'Brien is a correspondent for The Boston Globe, The Consumer Chronicle and Boston University's Research magazine. James blogs via Contently.com.

Photo credit: Thinkstock

Contributor, Amex OPEN Forum