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Small Businesses Hiring Employees: What You Need to Know

Hiring an employee for your small business in Massachusetts is a huge event, especially if it is your first hire – bringing on your first employee is the clearest sign possible that your business is growing and succeeding.

However, hiring an employee is also very serious for another reason: If done improperly, it can expose your small business to some significant legal liabilities under federal or Massachusetts state employment law.

The small business attorneys at the Katz Law Group have guided numerous local businesses in Norfolk and Middlesex Counties, as well as the MetroWest region, through this important but risky process. Here are four of things that they think are important for small business owners to know.

1. Certain Factors Complicate the Hiring Process

Just like with many other areas of business and contract law, there is no one-size-fits-all approach to hiring a new employee. Some important details about your small business and the products or services that it provides can alter your legal obligations during the hiring process.

Just a few of the most important factors that can alter the legal issues surrounding a hire include:

  • Whether the hire is under the age of 18
  • Whether your small business handles regulated products, like alcohol
  • Whether you are conducting a background check of job applicants or asking for their Social Security number
  • Whether you are offering paid time off or other benefits
  • How many employees you have, already

Any of these issues can drastically complicate the process, like if a package store wants to hire an employee who is under the legal drinking age. Even when none of these factors are present, though, the hiring process is not risk-free for the business.

2. There are Questions You Cannot Ask Job Applicants

A common slip up that small business owners make when they hire their first employee is asking the wrong questions during the job interview. Both state and federal law prohibit discrimination in the workplace and during the hiring process. Avoiding even an allegation of employment discrimination is crucial because, even if the allegation is groundless, it can spread quickly in the community, harm your business reputation, and tarnish your brand.

State and federal law forbid discrimination that targets a protected trait. These include things like:

  • Race
  • Religion
  • Gender or gender expression
  • Sexual orientation
  • National origin
  • Marital status
  • Pregnancy
  • Disability
  • Age

It might sound easy to avoid bringing up these issues or other protected traits during a job interview. However, many small business owners make what they think are harmless remarks during the interview, often to relieve the stress of hiring someone. Some potentially discriminatory remarks or questions include things like:

  • Commenting on a wedding ring
  • Seeing an ethnic name and asking about it
  • Asking for the applicant's age, other than whether they are over the age of 18

Even if you do not intend to use this information to make a hiring decision, asking the question or making the comment can create the perception that you will. This can lead to a lawsuit and can put you in the unenviable position of trying to prove the allegations wrong.

By being careful during the interview process you can avoid this awkward situation entirely.

3. You Can Only Consider an Applicant's Criminal History in Limited Circumstances

Massachusetts has some of the strictest laws concerning criminal background checks in the country. Chief among them are the legal protections afforded by Massachusetts General Laws Chapter 151B, § 4(9.5). This state employment law forbids covered employers from asking about a job applicant's criminal record on their initial application form, unless certain criminal offenses would make the applicant ineligible for hire under state or federal law.

Known as a “ban the box” provision, this law is meant to ensure that people who have been convicted of a crime get a fair chance to make a living once they have been released from prison. For small business owners, though, it can be a hassle because it keeps them from quickly weeding out job applicants that would not be a good fit.

However, the law only forbids you from seeking someone's criminal history early in the application process. Later on, it can be permissible to consider it.

4. Certain Information Comes With Additional Legal Obligations

When you gather information about job applicants, some of that information triggers legal obligations on the business' behalf to keep it confidential.

Two important examples are a job applicant's:

  1. Social Security number, and
  2. Credit report.

Many small businesses request a job applicant's Social Security number in order to gather other information about them, like their criminal record, credit report, or to confirm other information that the applicant has already provided. If you do so, however, you have to comply with Massachusetts regulations that require you to take steps to ensure that you have adequate data privacy protections to keep that information confidential. If you are not up to the task of complying with these laws, it may be better to not ask for the information in the first place.

Occasionally, small business owners may want to check a job applicant's credit history. Some employers find that it sheds light on the applicant's trustworthiness or their financial literacy. However, doing so triggers the requirements of the federal Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.), which require you to:

  • Get the applicant's written consent for the information,
  • Warn the applicant that the credit report may be used to refuse to make a job offer, and
  • Provide an Adverse Action Notice if their credit report is used to deny employment.

Massachusetts lawmakers have repeatedly considered bills that would ban the use of credit reports during the hiring process, but none have become law.

The Katz Law Group: Lawyers for Small Businesses in Massachusetts

Small businesses face legal issues every day that they operate. The risks of legal liability jump, though, when you hire an employee. Bringing one on to your team triggers all of your legal obligations under both state and federal employment law.

The small business lawyers at the Katz Law Group have four decades of experience guiding employers – both big and small – through those obligations. Contact them online or call their central Massachusetts law office at (508) 480-8202.

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We focus on preventative counseling, objective advice and guiding our clients toward strategies for mitigating risk while efficiently and effectively conducting business. Call today for a consultation.

Katz Law Group, P.C.
1900 West Park Drive, Suite 280
Westborough, MA 01581
(508)-480-8202
(508)-480-8204 (fax)

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