Hiring a new employee can sometimes be time consuming and costly. However, be skeptical of shortcuts, which could result in violations of federal, state, and local laws, a bad hire, and/or increase your hiring costs. Here are seven hiring shortcuts to avoid:
#1: Advertising that "this job would be ideal for someone young/a recent college graduate" because you cannot afford to pay very much.
Various employment laws prohibit employers from making employment decisions on the basis of age and certain other protected characteristics. These protections cover all aspects of the hiring process. When screening and selecting employees, avoid statements, questions, or practices that could be construed to indicate a preference based on age. While applicants of all ages can be a "recent college graduate," this statement may disproportionately exclude older workers. If the pay is lower, you can say that the job is entry-level or simply list the wage or salary. Never assume a worker wouldn't be interested in a job based on his or her age or the salary offered.
#2: Skipping the interview because time is tight and the applicant's resume looks great.
Interviews are an integral part of the hiring process. They can reveal important job-related information you wouldn't necessarily find in a resume or job application. For example, interviews give you the opportunity to ask questions about how the candidate has handled situations in the past that are similar to what they would experience on the job. Interviews also provide an opportunity to elicit more details about what's on a resume or application. If an in-person interview isn't possible, conduct a thorough phone or video interview.
#3: Failing to conduct background or reference checks because someone you're close to "knows" the applicant.
Background and reference checks can help to ensure that you have a qualified workforce. Even though someone you know "trusts" the candidate, you may not have access to the job-related information you need to make an informed hiring decision. Additionally, regardless of whether a candidate is referred to you, avoid conducting background checks on some candidates and not others for the same position. If you conduct background checks, do so consistently for similarly situated applicants and follow the EEOC guidance outlined in the next section.
#4: Advertising "must have a clean criminal record" in your job ad.
Statements like this could be construed to mean that you have a blanket policy that bars anyone with a criminal history. Such a policy can have a disparate impact on protected classes and may violate nondiscrimination laws. Under federal law, the use of criminal records to make employment decisions must be job-related and consistent with business necessity. Additionally, some states and local jurisdictions have additional protections for applicants. Some expressly prohibit the consideration of criminal convictions until after a job offer has been made, and some expressly prohibit statements like "must have clean criminal record" in job advertisements. Employers should read and understand the EEOC's guidance on the use of criminal records as well as their state and local laws.
#5: Relying solely on employee referrals without using other recruitment methods.
Relying on one or two recruiting methods, such as employee referrals, could not only limit the quality and diversity of your applicant pool, but also increase the time it takes to fill the open role. Consider a wide variety of recruiting methods that fit your budget. If you're looking to fill a highly specialized role, consider using a professional recruiting firm or reach out to industry organizations.
#6: Saving time by cutting back on new hire paperwork.
Once you hire a new employee, one of your first responsibilities is to complete required paperwork and provide certain notices to your new hire. Failure to comply with new hire paperwork requirements may result in fines. New hire paperwork requirements include:
- Form I-9. Employers must complete a Form I-9 for each newly hired employee to confirm that the employee is authorized to work in the United States.
- Form W-4. All new hires must complete a federal Form W-4 to determine how much federal income tax to withhold from the employee's pay. Some states also require a tax withholding form.
- ACA Notice of Coverage Options. Under the Affordable Care Act (ACA), employers must provide a Notice of Coverage Options to all new hires. The purpose of the Notice is to inform employees of the availability of the Health Insurance Marketplace created in accordance with the ACA. This requirement applies even if the employer doesn't offer health insurance and/or the employee is not eligible for group health insurance.
- State requirements. Many states and local jurisdictions also require that employers provide specific notices to employees at the time of hire. For example, California requires employers to provide new hires with notices related to state disability insurance, paid family leave, workers' compensation, and other laws. Provide new hire notices in accordance with your state and local requirements.
#7: Classifying a new hire as an independent contractor to save on costs.
The presumption is that a worker is an employee, unless he or she meets certain criteria established by federal and state tests. Under each of these tests, employers must weigh a variety of factors to determine whether they can classify a worker as an independent contractor. Employers must be able to support their decision if the classification is ever challenged. If you misclassify a worker as an independent contractor, you may be required to pay fines, back taxes, back pay and overtime, and benefits.
Employers can use a number of tests to evaluate a worker's status. The most common is the Internal Revenue Service (IRS) Common Law Test, which is used for federal tax purposes. This test generally looks at the extent to which the employer has the right to control the worker. Other tests include:
- The Department of Labor (DOL) "economic realities" test to determine whether workers are covered by the Fair Labor Standards Act (FLSA). The FLSA regulates minimum wage, overtime, and other wage and hour issues.
- The Equal Employment Opportunity Commission test to determine whether workers are covered under federal nondiscrimination laws.
- Several states also have independent contractor tests to determine whether workers are entitled to unemployment compensation and other employee protections.
No one factor stands alone in making a classification determination. Carefully review each test and consult legal counsel if you have specific questions before classifying any individual as an independent contractor.
Taking ill-advised shortcuts in hiring new employees can make the process more time consuming and costly. Make sure you have an effective hiring process that complies with all laws and best practices.