Cinventure – For the Cincinnati Entrepreneur

So you’re business is growing and you needed to hire some employees.  That’s great news, but now you need to come up with a way to identify and select the best candidate for employment.  It is also important to note that employees represent not only assets to the firm, but potential liabilities as they will now represent your organization.

First let’s go over the application for employment:

Aside from the most basic information such as name and contact information (phone and address), it is imperative that the application has the following additions:

Employment at will statement.  Unless you work in a business that has union labor you must disclose to the applicant that the company may let people go if it needs to and do so without advance notice.  This statement is a two way street though, the employee can leave if and when he or she chooses as well.  Applications for unionized positions will require an arbitration agreement on a separate document from the application.

Equal Employment Opportunity statement.  Unless you’ve been living under a rock for the past 50 years, this should not be a surprise.  You cannot discriminate based on any of the protected classes: age, disability, race, gender, national origin, ancestry, and religion.  This is a great opportunity to remind you that you should have an attorney review any documents used in the pre-hire stage of your business (not just the application, but any advertising recruitment materials, any supplemental forms, etc.).

If you conduct background checks, and it is wise to do so, have a separate form that the applicant must sign giving permission to complete the background check.  The application itself can have a statement that the applicant is providing information that is truthful and accurate to the best of their knowledge. 

Disclose if you require medical examinations or drug screening prior to employment.  Make sure you state that employment is conditional and contingent upon the results of these tests.

Avoid these pitfalls:

DO NOT ask the applicant to submit a photo with the application or resume, not even a copy of a driver’s license.  I think the ONLY time this could even remotely be considered appropriate is if you are the casting director for a tv or Broadway show.  A photo opens you up to allegations of virtually all of the protected classes in the Equal Employment law.

DO NOT ask the applicant to list graduation dates from schools, colleges, and so forth.  Once again, this could be construed as a roundabout way of identifying someone’s age. 

DO NOT ask for a copy of the applicant’s driver’s license, birth certificate, green card, passport, or military ID.  For something like a driver’s license, which contains a photo as well as the person’s gender and age, this hints at several of the protected classes.  In addition to age, birth certificates can be construed as a way to determine national origin or ancestry.

DO NOT request the applicant to provide or list membership in organizations or affiliation with any affinity or charitable group.  These non work-related “community involvement” categories on applications only serve as a way to learn about someone’s political, religious, or ethnic affiliations and values.  You don’t want a question on the application to be construed as hinting at protected classes.  Even stay away from asking about involvement in trade assocations and job-related groups.  As a licensed insurance agent, this reminds me of the Women in Insurance group.  Yes, it’s a job-related group, but it specifically identifies gender.  Avoid asking about organizations and affiliations in general and you won’t have to worry about someone listing a trade group that also identifies a protected class.

DO NOT ask about marital status or sexual orientation.  No need for explanation there I hope.  While these are not protected classes, how much do you think a sexual harassment lawsuit will cost you?

DO NOT ask about medical conditions or health problems, whether mental or physical.  If the person shows up in a wheel chair or wearing sunglasses and carrying a white cane to turn in the application, don’t even think of making a note about it and certainly don’t ask a thing about it. 

DO NOT maintain multiple versions of the application.  You will not want to have to explain why you give someone one version of an application but give someone else another.

Finally, consider purchasing the following types of insurance for your business:

Employment Practices Liability Insurance.  This will protect you from claims of wrongful termination, discrimination based on a protected class, and so forth.  Each insurance company can have its own coverage form so ask your insurance agent what is covered and what is not.  Generally, you are not covered for negligent acts on your part as this insurance is not a license to sin.

Crime coverage.  Namely, Employee Dishonesty.  This is to cover the obvious employee embezzlement as stated in the title of the coverage.  A similar coverage that often accompanies this coverage or is offered in addition to it, is called ERISA coverage.  ERISA coverage is protection you may need when you administer a retirement plan, i.e. 401(k) for your employees.  This coverage guards against embezzlement or misuse of the plan’s funds.With the proper risk transfer techniques in place during the pre-hire and employment stages, you can make sure your employees contribute more to your organization as assets than liabilities.

NOTICE:  I am not an Attorney.  Nothing in the above article should be perceived or construed as legal advice or instruction.  It is important and HIGHLY RECOMMENDED that you seek legal counsel and consult with a licensed, practicing attorney to discuss any concerns and to review your business and human resource practices as well as your application and any other documents.

Thomas Goodwin is an Ohio licensed real estate agent (Realtor) and insurance agent.  He is the Founder and CEO of Northern Pine Properties, Inc., a real estate investment, development, and management company in Cincinnati, Ohio.

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