the manager's legal handbook 4th (2007)

The Manager’s
Legal Handbook
By Attorneys Lisa Guerin and Amy DelPo
4th edition
Fourth Edition NOVEMBER 2007
Cover Design SUSAN PUTNEY
Book Design TERRI HEARSH
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Guerin, Lisa, 1964–
Manager’s legal handbook / by Lisa Guerin & Amy DelPo 4th ed.
p. cm.
Includes bibliographic references and index.
ISBN-13: 978-1-4133-0718-4 (pbk.)
ISBN-10: 1-4133-0718-3 (pbk.)
1. Labor laws and legislation United States Popular works. 2. Labor contract
United States Popular works. 3. Employee rights United States Popular works. 4.
Executives United States Handbooks, manuals, etc. I. DelPo, Amy 1967– II. Title
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Acknowledgments
The authors would like to thank:
On the first edition, our wonderful editor, Shannon Miehe, whose sense of humor,
organizational skills, lightning-fast speed, and careful editing made working on this
book a pleasure.
On subsequent editions, our editor and friend, Stephanie Bornstein, who helped
transform the book into a must-have legal guide for managers.
Mary Randolph, Jake Warner, and Janet Portman, all of whom helped us figure out
how to organize this material—and how to avoid the dreaded “scope creep.”
Ella Hirst and Alayna Schroeder for meticulously researching and compiling the
state charts.
Stan Jacobsen, for his research help and ever-positive attitude.
John M. True, III, formerly of Leonard Carder, LLP, in Oakland, California, for writ-
ing some of the privacy material and helping out with the information on unions.
Philip Monrad, also of Leonard Carder, for his generous help with the unions
chapter.
Table of Contents
Introduction
Navigating the Maze of Employment Law 1
How to Use This Book 2
Additional Resources 3
1
Hiring 7
Advertisements 9
Interviews 10
Making Promises 12
Applicants With Disabilities 14
Testing Applicants 15

Background Checks 18
Young Workers 20
Offer Letters 22
Written Employment Contracts 23
2
Compensation and Hours 61
The Fair Labor Standards Act 62
Deciding What to Pay People 63
The Minimum Wage 68
Overtime 70
Meal and Rest Breaks 74
Travel Time 76
On-Call Time 77
Flexible Work Schedules 79
Pay Docking and Unpaid Suspensions 80
Garnishments 82
Equal Pay 85
Record-Keeping Requirements 86
3
Discrimination 121
Antidiscrimination Laws 122
Race and National Origin 126
Age 130
Gender, Pregnancy, and Sexual Harassment 131
Sexual Orientation 134
Religion 134
Expression of Religious Beliefs 136
Disability 137
4
Personnel Basics 159

Personnel Policies and the Law 161
At-Will Employment 162
Employee Handbooks 166
Preventing Sexual Harassment 169
Communicating With Employees Effectively 171
Performance Appraisal 176
Creating and Maintaining Personnel Files 179
Family-Friendly Workplace Policies 182
5
Time Off 197
Vacation and Sick Leave 198
Family and Medical Leave 199
Pregnancy and Parental Leave 204
Jury Duty and Voting 207
Military Leave 207
Other Types of Leave 209
6
Privacy 243
The Right to Privacy 245
Testing Current Employees 247
Electronic Monitoring 250
Off-Duty Conduct 257
Workplace Searches 259
7
Health and Safety 269
Health and Safety Laws 267
Workers’ Compensation 269
Smoking 270
Drugs and Alcohol 272
8

Unions 295
The National Labor Relations Act 296
Representation Elections and Organizing Campaigns 298
Election Statements 300
Shop Talk 301
Union Shops and Union Dues 303
Collective Bargaining 305
Company Unions and Employee Committees 308
Strikes 309
9
Independent Contractors 319
Classifying Workers 320
Benefits and Drawbacks of Using Independent Contractors 325
Important Documents When Hiring Independent Contractors 328
Written Agreements With Independent Contractors 330
Copyright Ownership 337
10
Trade Secrets 341
The Law of Trade Secrets 343
Protecting Trade Secrets 346
Nondisclosure Agreements 351
Noncompete Agreements 352
Nonsolicitation Agreements 355
Hiring From Competitors 356
11
Handling Workplace Problems 361
Disciplining Workers 363
Investigating Complaints 365
Retaliation 372
Workplace Violence 374

Liability for an Employee’s Actions 378
12
Firing and Layoffs 387
Illegal Reasons for Firing Employees 388
Firing Employees With Employment Contracts 390
Making the Decision to Fire 393
How to Fire 396
Before Conducting a Layoff 401
Making the Cut 403
Conducting a Layoff 404
13
Departing Workers 427
References 429
What to Tell Coworkers When an Employee Leaves 432
Health Insurance 432
Severance 433
Releases 437
Unemployment Benefits 438
Appendix
Resources 457
Internet Resources 458
Federal Agencies That Enforce Workplace Laws 459
Departments of Labor 460
Agencies That Enforce Laws Prohibiting Discrimination in Employment 465
State OSHA Laws and Offices 470
Index 470
INTRODUCTION
Navigating the Maze of Employment Law
How to Use This Book 2
Additional Resources 3

2
THE MANAGER’S LEGAL HANDBOOK
S
ome managers learn the hard way
that good intentions aren’t enough.
In these days of burgeoning employ-
ment laws, regulations, and lawsuits,
successfully and safely managing workers
(employees and independent contractors
alike) requires a whole lot more than just
following your instincts. Lawmakers and
courts have created a complicated web
of dos and don’ts that covers the entire
spectrum of workplace issues, from hiring
and firing to discrimination and harass-
ment. If you are a supervisor, manager, or
human resources specialist, you’ve got to
learn how to navigate this legal maze—or
risk serious trouble for your company and
yourself.
Fortunately, learning what you need to
know to manage workers on a daily basis
doesn’t have to be time-consuming or
difficult—or even unpleasant. This book
distills these complicated issues down to
the basics, providing the most important
information you need to know when you
walk into your workplace every day.
How to Use This Book
This book gives you the information you

need to deal with many common work-
place concerns and issues. Each chapter
focuses on a specific employment law
topic—such as hiring, compensation and
hours, privacy in the workplace, and so
on—and breaks that subject down into the
issues managers are most likely to face.
Of course, every company is different
and every manager has different areas of
responsibility and expertise. Although this
book explains the legal rules that apply to
managers and companies alike, not every
manager will have the authority to make
ultimate decisions on matters of policy or
serious personnel matters, such as firing
and layoffs. We provide this information
to give you some legal background that
will help you understand your role in the
process, as your company defines it.
Each chapter includes:
•Frequently Asked Questions (FAQs).
We introduce you to the chapter
topic through quick answers to
questions that managers and
employers commonly face.
•Articles. We break down the chapter’s
topic into a series of separate articles,
so that you can get right to the
information you need. That way,
you can focus only on the rules that

apply to the situation at hand without
having to wade through an entire
book looking for your answer.
•50-State Charts. We provide you with
a summary of information on your
state’s legal requirements where
necessary, in addition to the federal
law covered in the chapter.
•Lessons From the Real World. Learn
from the failures and victories of
companies that have been taken to
court by their employees.
•Legal Dos and Don’ts. We provide a
handful of strategies to follow—and
INTRODUCTION: NAVIGATING THE MAZE OF EMPLOYMENT LAW
3
traps to avoid—as you implement the
information in each chapter.
•Test Your Knowledge. Find out how
well you understand each topic by
taking our quiz at the end of each
chapter.
You can read through the entire book
at once, pick and choose among chapters
of special interest to your company, or use
the book as a desk reference by consulting
particular articles as issues come up.
No matter how you use the book, the
basic information we provide will help
answer your most common employment

questions.
Additional Resources
Although most managers will rarely need
more information than what we provide
here, you might occasionally have a prob-
lem that requires you to seek additional
help. We alert you to those potential trou-
ble spots and point you toward resources
that can give you the extra information
you need.
The appendix (at the end of the book)
contains a list of resources you can consult
for more information. These resources
include:
•Contactinformationforthefederal
agencies that enforce federal work-
place laws, including the Equal
Employment Opportunity Commission
(EEOC), the Occupational Health and
Safety Administration (OSHA), the
Department of Labor (DOL), and the
Federal Trade Commission (FTC).
•Contactinformationforthestate
agencies that enforce state workplace
laws, including a list of state
depart ments of labor and state fair
employment offices.
•AlistofInternetresources,including
government agencies and private
organizations whose websites

provide helpful information about the
topics we cover here.
•AlistofNolo’semploymentand
human resources titles, including
books that will help you investigate
workplace problems, evaluate
employee performance, create legally
sound independent contractor
agreements, draft an employee
handbook, and much more. n
Advertisements 9
Interviews 10
Making Promises 12
Applicants With Disabilities 14
Testing Applicants 15
Avoiding Disability Discrimination 15
Skills Tests 16
Aptitude, Psychological, and Personality Tests 16
Lie Detector and Honesty Tests 17
Medical Tests 17
Drug Tests 17
Background Checks 18
Young Workers 20
Hazardous Jobs 21
Agricultural Jobs 21
Nonagricultural Jobs 22
Offer Letters 22
Written Employment Contracts 23
Advantages 23
Disadvantages 24

1
Hiring
6
THE MANAGER’S LEGAL HANDBOOK
H
iring can be a tough task for
managers. It’s challenging
enough to find the right hire
for the job—someone with the skills,
attitude, personality, and other important
qualities to be a success at your company.
When you add legal concerns to the mix,
hiring can seem like a truly daunting
responsibility.
But you cannot ignore your legal
obligations when hiring new employees.
Federal and state employment laws reach
beyond current employees; many also
protect those who apply for jobs by, for
example, prohibiting discriminatory job
postings, putting limits on the information
you can gather in a background check,
or outlawing certain kinds of applicant
screening tests. What’s more, the things
you say and do during the hiring process
could come back to haunt you and your
company later, particularly if an employee
claims that you offered a job contract or
promised job security.
The good news is that following

sensible and careful hiring practices will
keep your company out of immediate
legal trouble, help you find the most
qualified employees, and—by screening
out problem employees from the get-go—
help prevent management headaches and
possible lawsuits down the road.
This chapter explains the legal ins and
outs of hiring, including practical advice
on how to find, interview, and seal the
deal with your lucky new hire.
Frequently Asked Questions About Hiring
n
Do I have to advertise open positions?
No. Although federal, state, and local govern ments typically have to post
openings, private companies don’t. Nonetheless, there are some very good
reasons to advertise:
• Youcanchoosefromalargerpoolofapplicants,whichincreasesyourodds
of finding a great person for the job.
• Youavoidunintentionaldiscrimination.(Forexample,ifyourelysolelyon
word of mouth when looking for applicants and you only know people of
your race or ethnicity, then your hiring process may be discriminatory—
even though that is not your intention.)
• Youcanavoidtheappearanceofnepotismorfavoritism.Ifyouhire
your friends, family members, or neighbors to come work for you, the
employees who currently report to you may think you’ll play favorites. By
posting open positions and choosing your hires from a broad range of
CHAPTER 1: HIRING
7
Frequently Asked Questions About Hiring (continued)

applicants, you can show your reports that you hire—and manage—on
meritalone.(Foradviceoneffectiveandlegaljobadvertisements,see
“Advertisements,” below.)
n Are there questions I cannot ask during a job interview?
Yes. For example, you may not ask whether an applicant has a disability, what
country an applicant comes from, and, in some states, whether an applicant
haseverbeenarrested.(Tolearnwhatquestionsyoucanandcannotaskan
applicant during an interview, see “Interviews,” below.)
n Are there things I shouldn’t say when I’m trying to convince a really
strong applicant to take a job?
Absolutely. Although you’ll be tempted to sell your company during a job
interview, don’t overdo it. If you exaggerate—or out-and-out lie—about the
position, the company’s prospects, or other important facts, and the applicant
takes the job based on your statements, that employee can sue the company if
yourstatementsturnouttobefalseoroverlyoptimistic.(Formoreinformation
on statements to avoid when hiring, see “Making Promises,” below.)
n Can I ask whether an applicant has a disability?
No.TheAmericanswithDisabilitiesAct(ADA)prohibitsyoufromasking
whether an applicant has a disability. Instead, you should focus your interview
questions on the applicant’s abilities—for example, you may ask whether and
how an applicant would perform each essential job function. If you know that
anapplicanthasadisability(becauseitisobviousortheapplicanthastoldyou
about it), you may ask whether the applicant will need an accommodation to
performthejob.(Formoreonavoidingdisabilitydiscriminationwhenhiring,
see “Applicants With Disabilities,” below.)
n Can I ask every applicant to take a lie detector test?
No.TheEmployeePolygraphProtectionAct(EPPA)prohibitsliedetectortests
by all but a few types of employers—those that provide certain types of security
servicesormanufacturepharmaceuticals,forexample.(Formoreinformation
on what tests you can—and can’t—ask applicants to take, see “Testing

Applicants,” below.)
8
THE MANAGER’S LEGAL HANDBOOK
Frequently Asked Questions About Hiring (continued)
n
Can I run background checks on applicants?
It depends on the information you plan to collect. You can check information
that is relevant to the job for which you are hiring. However, state and federal
laws restrict you from gathering or using certain types of records. If you are
considering running a background check, you should ask applicants to consent
tothecheckinadvance,inwriting.(See“BackgroundChecks,”below,formore
information.)
n Can I hire teenagers to do clerical work?
Generally, yes. Teenagers who are at least 16 years old may work unlimited
hours in any profession that the government has not deemed hazardous. You
can also hire younger teens, although the law restricts how many hours they
maywork.(Formoreinformation,see“YoungWorkers,”below.)
n If I want to offer someone a job, do I have to do it in writing?
There is no law that governs how you offer someone a job. You can do it in
person, over the phone, or with a formal letter. However, you should probably
send written offer letters just to make sure potential hires understand exactly
what you are offering. Offer letters aren’t without their pitfalls, however, so be
carefulwhatyouwrite.(Tolearnmore,see“OfferLetters,”below.)
n When I hire someone, should I use a written contract?
It depends on the circumstances. The law does not require you to use a written
employment contract and, for the most part, you probably won’t want to.
However, there may be times when writing a contract is a good idea—for
example, if you want the employee to make a long-term commitment to the
company.(Tolearnaboutwhenyoushouldandshouldnotuseanemployment
contract, see “Written Employment Contracts,” below.)

CHAPTER 1: HIRING
9
Advertisements
Although most “help wanted” ads contain
only a handful of words, using the wrong
sort of words can land your company in
legal trouble. Any job requirement that
discriminates against applicants based
on a characteristic protected by law (for
example, race or gender) violates federal
law and the laws of many states. (To learn
which characteristics are protected by
federal and state law, see Chapter 3.)
Some off-limits topics are obvious—
most managers know that an ad can’t
state “only white males need apply.” But
companies can get into trouble by posting
an ad that discriminates on a more subtle
level—and they may not even realize it
until it’s too late.
For example, let’s say you want to hire
a technician for your company’s infor-
mation systems department. Almost all
of the technician’s day would be spent
at a computer. On occasion, however,
technicians at your company have to install
new equipment, which might require them
to carry computers, monitors, printers,
and so on. Should you write an ad saying
that you are looking for someone who

can lift at least 50 pounds? Well, that
kind of requirement would screen out
applicants with certain disabilities, as well
as disproportionate numbers of women.
Because the lifting is only occasional and
Frequently Asked Questions About Hiring (continued)
n
What forms or paperwork do new employees have to complete?
In addition to paperwork your company requires—such as signing an
acknowledgment form for the employee handbook, completing benefits
registration forms, or naming someone to call in case of emergency—you
should also ask employees to complete the following documents:
• IRSFormW-4,Withholding Allowance Certificate. Employees use this form
to tell you how many allowances they are claiming for tax purposes and,
therefore, how much you should withhold from their paychecks.
• USCISFormI-9,Employee Eligibility Verification. You and the employee
each complete a portion of this form to verify that the employee is eligible
to work in the United States.
• NewHireReportingForm.Thenewhirereportingprogramrequires
employers to report basic identifying information on all new employees to
a state agency, to be used to locate parents who owe child support.
(Formoreontheserequirements,see“Checklist:FirstDayPaperwork,”below.)
10
THE MANAGER’S LEGAL HANDBOOK
could be accomplished by other means—
using machinery, for example—including
such a requirement in your ad could be
discriminatory.
Similarly, watch for words or descrip-
tions that imply you have a discrimina-

tory preference. For example, let’s say
you are looking for someone to do odd
jobs around your office, from answering
phones to filing to typing. Your ad can
say that you are looking for an “office
worker,” but if you say you are looking
for a “girl Friday,” it implies that you are
only looking for women—and therefore
that you would discriminate against male
applicants. The same precaution applies to
terms like “handyman” or “waiter.”
So what can you say? If you follow
two basic rules, you should steer clear of
trouble:
•Focus on the essential functions of the
job.
In other words, only ask for the
skills or characteristics that the job
absolutely requires. For example,
if you are looking for someone to
proofread magazine articles, you
probably don’t need someone
with a college science degree—
unless, of course, your magazine
is a professional scientific journal
where someone might need such a
specialized education. If there is an
up-to-date job description for the
position, you can use it to focus the
ad appropriately.

•Pay attention to the literal meaning of
the words you use.
This is particularly
important with the suffix “-man”—as
in “salesman,” “repairman,” and so
on (try “salesperson” and “general
repair person” instead), or gendered
positions such as “waiter” (use
“server” or “waitperson” instead). It is
also important to be cautious when
using words that refer to age. For
example, if you want someone who
is energetic with a lot of fresh ideas,
you might want to say in your ad
“looking for worker with a youthful
attitude.” But if you do, you are
expressing an age preference—which
is discriminatory and illegal.
Interviews
The spontaneous and unpredictable
nature of the job interview makes it rife
with traps, even for managers with the
best of intentions. Well-meaning, innocent
comments could be construed by an
applicant as prejudicial or used as the basis
of a discrimination lawsuit.
For example, let’s say an applicant grew
up near your home town and attended
the same high school as you and your
siblings. You might naturally want to ask

when the applicant graduated, as a way
to find out whether you know people in
common. The problem is, the answer will
necessarily reveal the applicant’s age—and
if the applicant is at least 40 years old, this
could be part of a discrimination claim if
you later offer the job to someone else.
On the other hand, you don’t want
to get so hung up on every word you
CHAPTER 1: HIRING
11
say that you defeat the purpose of the
interview: to learn about the applicant’s
skills and experience so you can choose
the best-qualified candidate for the
position.
Here are some tips that will help you
stay out of legal trouble while also getting
the information you need to make the
right choice:
•Don’t ask about any characteristic that
the law prohibits you from considering
in making your decision.
(To learn
about these protected characteristics,
see Chapter 3.) For example, you
can’t base your hiring decisions on
an applicant’s religious beliefs or
national origin, so you shouldn’t be
asking about those things in your

interviews. In “Preemployment
Inquiries,” at the end of this chapter,
we give you some ideas on how to
get information while staying within
the bounds of the federal law.
•Respect the applicant’s privacy. Although
federal law does not require you to
do so, many state laws and rules of
etiquette do. For example, asking
applicants in California about their
sexual fantasies (yes—that actually
happened in a real life case) violates
their state-protected right to privacy.
(For more information on privacy in
the workplace, see Chapter 6.)
•If an applicant raises a delicate subject,
it’s usually best to skirt the issue.

Unless the topic is directly related
to the position—for example, the
applicant reveals that he or she
has a disability and will need
an accommodation to perform
the job—politely steer the con-
versation in another direction.
Although it might seem a bit
awkward, you’ll be better off
in the long run if you don’t
take the applicant’s comments
as an invitation to start a long

conversation about, for example,
relationship troubles or political
beliefs.
•Ask open-ended questions to get
the candidate talking.
There’s a
big difference between a closed
question—such as “How many
supervisory positions have you
held?”—and an open one—such
as “Tell me about your most
recent experience supervising
others.” The more open your
questions, the more you invite
the candidate to talk. This will
not only give you the factual
information you need to make
a decision, but will also let you
see how well applicants carry
themselves, think on their feet,
and so on.
•Ask behavioral questions, if
possible.
It can be tough to find
out whether applicants have im-
portant, yet some what intangible
qualifications, such as problem-
solving skills or the ability to work
well as part of a team. If you just
come out and ask, all but the most

dim-witted applicants are going
12
THE MANAGER’S LEGAL HANDBOOK
to know the correct answer. (“Are
you good at solving problems?” “You
bet!”) On the other hand, if you ask
about specific instances in which the
applicant had to use that skill, you’re
more likely to get a helpful response.
To find out about a candidate’s prob-
lem-solving skills, for example, you
could say, “Tell me about a problem
you recently faced in your current
position and how you handled it.”
•Focus on what the job really requires.
Use the job description for the
position (if you have one) to
script some interview questions
that will help you find out if the
applicant has the necessary skills
and experience. If you don’t have a
job description, create a list of the
essential tasks the employee you
hire will have to perform, then craft
questions that will help you figure
out whether the applicant can meet
these requirements. Remember, the
law absolutely allows you to ask
questions that directly relate to the
job you are trying to fill.

•Cover similar ground with each
applicant.
You can’t ask exactly the
same questions of each applicant, nor
should you. After all, you don’t want
to miss the opportunity an interview
offers to ask follow-up questions
spontaneously or delve more deeply
into particular topics. On the other
hand, you should try to cover the
same basic topics and general ques-
tions with each applicant. This will
help you compare candidates when
it’s time to choose your hire; it will
also help you avoid claims of dis-
crimination by applicants who don’t
get the job.
Making Promises
A common mistake managers make during
hiring is to exaggerate about the prospects
of the business (“We’re expanding like
wild fire—those stock options will be
worth millions in no time!”) or about
the security of the job (“We never fire
anybody; if you do good work, you’ll have
a job for life!”). Lots of companies and
managers embellish when they’re trying to
sell an especially desirable applicant on a
job. No harm in that, right?
Wrong. If you tell a prospective employee

something about a job, you’d better be
able to back it up. If the employee takes
the job in part because of what you said,
then that employee can turn around and
sue if your promises or statements later
prove false. Courts sometimes decide that
a promise or statement you make to a
prospective employee turns into a contract
if the employee accepts the job offer
because of what you said. If the position
doesn’t live up to your statements, your
company has broken the contract—and
might have to pay damages to the
employee.
It’s easy to avoid making inflated
promises if you follow one simple rule:
Tell the truth. After all, job applicants are
CHAPTER 1: HIRING
13
trying to figure out whether the job will
fit with their career goals, skills, and lives
outside the workplace. They deserve to
know the truth so they can make the right
decision.
This strategy will not only keep you
out of legal trouble, but also increase your
chances of finding an employee who is
right for the job and for your business.
No one wants a disgruntled employee on
the payroll. If you’ve told the applicant

the truth and he or she still wants the job,
then you’ve probably found a good fit.
Here are a few rules that will help you
avoid common promise pitfalls:
•Don’t make predictions about your
company’s financial future.
Even if
you honestly believe that your com-
pany is headed for the Fortune 500,
keep your optimism to yourself. If the
applicant asks about the company’s
prospects, stick to the facts—and if
you make any statements about what
the future might bring, clearly identify
them as hopes, not predictions. For
example, you might say, “Our busi-
ness has doubled in each of the last
three years, and we’re hoping that
growth trend will continue,” but you
shouldn’t say, “We’ll be the industry
leader by this time next year.”
•Don’t estimate the future value of stock
options.
Let’s face it: You simply can’t
know what your company’s stock
options will be worth in the future.
It’s fine to explain the stock option
program to applicants and to tell
them that you hope the options will
be valuable, but don’t say things like,

“When these options vest, we’ll all be
millionaires!”
•Don’t say anything that might limit your
right to make personnel decisions in
the future.
If you tell an applicant
that your company fires workers
only for poor performance, this will
limit your ability to terminate that
person for any other reason—such
as personality conflicts or economic
downturns—if he or she accepts the
job. Similarly, if you promise pay
increases at regular intervals, the
employee could hold you to that
promise, even if your company’s
financials or the employee’s perform-
ance don’t warrant a raise.
•If layoffs are likely, say so. If your com-
pany is considering staff reductions
and there is even a remote chance
that the applicant you are interview-
ing might lose that new job as a re-
sult, disclose this before the applicant
accepts the job. Otherwise, you may
find your company slapped with a
lawsuit—especially if the employee
left a secure job elsewhere to come
work for your company. Of course,
this strategy might make it difficult to

find new employees, but it really isn’t
fair (or legal) to hire people on false
pretenses.
•Be accurate in describing the position.
Don’t exaggerate to land an appli-
cant—and don’t play bait and switch
by offering an applicant one job, then
placing him or her in another. It may
14
THE MANAGER’S LEGAL HANDBOOK
not matter much to you who does
what, but it will matter a lot to the
employee. An employee who accepts
the position based on statements that
turn out to be false will have grounds
for a lawsuit.

Lessons From the
Real World
A California company paid the price
for intensely recruiting an employee
with promises it couldn’t keep. Rykoff-
Sexton, Inc., promised Andrew Lazar
job security, significant pay increases,
an eventual executive position, and a
bright future with a company that was
financially strong. Lazar took the bait
and left a lucrative job in New York
City, his home of 40 years.
Although Lazar excelled in his new

job, the pay increases and bonuses
never came. Eventually, Rykoff fired
Lazar because of a “reorganization.”
Lazar sued and won. He argued
to the California Supreme Court
that Rykoff should have to keep the
promises it used to recruit him, and the
court agreed. The court decided that
Rykoff’s broken promises amounted
to fraud because it knew the promises
were untrue when it made them.
Lazar v. Rykoff-Sexton, Inc., 12
Cal.4th631(1996).
Applicants With Disabilities
Of all the antidiscrimination laws,
none con fuses managers more than the
Americans with Disabilities Act (ADA), 42
U.S.C. §§ 12101-12213, especially when it
comes to hiring. Managers want to find
out if the person they hire can actually
perform the job but often aren’t sure how
to explore this issue without running afoul
of the law. (For information on how the
ADA applies to employees, see “Disability”
in Chapter 3.)
If you remember one simple rule, you’ll
be in good shape: You can ask candidates
about their abilities, but not about their
disabilities. This means that you can ask
how an applicant plans to perform each

function of the job, but you cannot ask
whether the applicant has any disabilities
that will prevent him or her from perform-
ing each function of the job.
One way to ensure that you stay with-
in the rules is to attach a detailed job
description to the application or describe
the job duties to the applicant during the
job interview. Then ask how the applicant
plans to perform the job. This approach
gives applicants an opportunity to talk
about their qualifications and strengths.
It also gives them a chance to let you
know whether they might need reasonable
accommodations to do the job.
Generally, you may not ask an applicant
questions, on an application or during a
job interview, that are likely to require the
applicant to reveal a disability. The Equal
CHAPTER 1: HIRING
15
Employment Opportunity Commission
(EEOC), the federal agency that interprets
and enforces the ADA, gives the following
examples of questions you should not ask:
•Doyouhaveadisabilitythatwould
interfere with your ability to do the
job?
•Howmanydayswereyousicklast
year?

•Haveyoueverledforworkers’
compensation? Have you ever been
injured on the job?
•Haveyoueverbeentreatedfor
mental health problems?
•Whatprescriptiondrugsareyou
currently taking?
You may ask questions like these:
•Canyouperformallofthefunctions
of this job?
•Howwouldyouperformeachofthe
job functions?
•Whatcerticationsandlicensesdo
you hold?
•Tellmeaboutyoureducationand
work history.
•Canyoumeettheattendance
requirements of this job?
If you have no reason to believe
that the applicant has a disability, you
may not ask whether the applicant will
need an accommodation to perform
the job. If, however, you know that the
applicant has a disability—because it is
obvious, for example, or the applicant
has told you about it—you may ask about
accommodations.
Testing Applicants
Many companies like to use preemploy ment
tests as a way to screen out applicants

who are not suitable for a job. These
tests include skills tests, aptitude tests,
psychological tests, personality tests,
honesty tests, medical tests, and drug
tests.
Although you are allowed to do some
testing of applicants, both state and federal
law impose numerous restrictions on what
you can do. These restrictions are often
vague and open to contradictory interpre-
tations. As a result, you should use only
tests that are absolutely necessary and you
should consider consulting with a lawyer
before administering the test to make sure
that it will pass legal muster in your state.
Avoiding Disability Discrimination
For all tests—including those described
below—you must take care to avoid dis-
criminating against applicants who are
protected by the Americans with Disabili-
ties Act (ADA). (For information on the
ADA, see Chapter 3.) To ensure that a test
does not unfairly screen out people with
dis abilities, it must accurately measure
people’s skills, not their disabilities. For
example:
•Avoidtestingmental,sensory,
manual, or speaking skills unless
they are job-related. For example,
even though a typing test is a manual

test that will screen out people who
have particular impairments, it is
16
THE MANAGER’S LEGAL HANDBOOK
acceptable if you are filling a job for
a typist.
•Accommodatepeoplewithdisabilities
by giving them a test that is “disability
neutral” whenever possible. For
example, if you are giving a written
test to applicants for a sales position
to test their knowledge of sales
techniques, you can offer to read the
test to a blind applicant. This is a
reasonable accommodation because
sight is not required for the job, but it
is required to take the test.
Skills Tests
Skills tests range from something as
simple as a typing test to something as
complicated as an architectural drafting
test. Generally speaking, these tests are
legal as long as they genuinely test a skill
necessary to perform the job, don’t violate
the ADA (see above), and don’t unfairly
exclude anyone based on a protected
characteristic.
Aptitude, Psychological, and
Personality Tests
Some companies use written tests—often

in a multiple choice format—to learn
about an applicant’s general abilities,
personality, and/or work style. However,
using these tests leaves you vulnerable to
various types of lawsuits. For example:
•Amultiplechoiceaptitudetest
may discriminate against minority
applicants or female applicants
because it really reflects test-taking
ability rather than actual job skills.
(Studies have shown that some
aptitude tests are biased against
women and minority test takers.)
•Apersonalitytestcanbeevenriskier.
Such a test may invade a person’s
privacy by inquiring into topics that
are personal in nature, such as sexual
preferences or religious beliefs.
(Many states specifically protect
a person’s right to privacy—even
from inquiries by employers.) In
addition, these tests can lead to a
discrimination lawsuit. For example,
if you decide not to hire someone
based on his or her answers to
questions dealing with religious
issues, the applicant could argue
that you discriminated based on his
or her religion. (For more about
discrimination, see Chapter 3.)

•Psychologicalandpersonalitytests
are treated like medical tests (see
below) when they ask for answers
that would indicate whether the
applicant has a mental disorder or
impairment. If they do, they will be
governed by the Americans with
Disabilities Act (ADA) and all of
its restrictions. (For more on hiring
and the ADA, see “Applicants With
Disabilities,” above.)
If you decide to use one of these
types of tests, proceed with extreme
caution. Make sure that the test has been
screened scientifically for validity and
that it genuinely correlates to necessary
CHAPTER 1: HIRING
17
job skills. Review the test carefully for
any questions that may intrude into an
applicant’s privacy. And, depending on the
complexity and purpose of the test you
use, your company may need to hire an
expert to interpret the results.
Lie Detector and Honesty Tests
The federal Employee Polygraph
Protection Act, 29 U.S.C. §§ 2001 and
following, generally prohibits employers
from requiring applicants to take a lie
detector test or from asking applicants

about the results of previous lie detector
tests. The law contains a few narrowly
defined exceptions for certain types of
employers, including those that provide
armored car, alarm, or guard services,
and those that manufacture, distribute, or
dispense pharmaceuticals.
Even though no federal law specifically
outlaws written honesty tests, these tests
sometimes violate federal and state laws
that protect against discrimination and
violations of privacy. Plus, the tests can be
unreliable.
Some states have adopted their own
rules about polygraph tests—and some
of these rules are even stricter than
the federal law. To find out what your
state requires, see “Employee Polygraph
Examination Laws,” at the end of this
chapter.
Medical Tests
Medical testing is tricky. To avoid violating
the Americans with Disabilities Act, you
shouldn’t ask for an applicant’s medical
history or conduct any medical exam
before you make a job offer.
However, once you decide to offer the
applicant a job, you can make the offer
conditional on the applicant passing a
medical exam. You must require the exam

for all entering employees doing the same
job. If you only require people whom
you believe or know to have disabilities
to take the exam, you will be violating
the Americans with Disabilities Act. If the
exam screens out disproportionately large
numbers of disabled applicants, you may
administer it only if it is job-related and
correlates to necessary job skills.
Drug Tests
The laws on drug testing vary widely from
state to state. Some states allow these tests
only for jobs involving public safety; some
states allow them only for drivers; some
states allow them for any occupation;
some states don’t allow them at all. Consult
“State Drug and Alcohol Testing Laws,” at
the end of this chapter, for information on
your state’s rules.
18
THE MANAGER’S LEGAL HANDBOOK

Lessons From the
Real World
Rent-A-Center, Inc., a company that
offers furniture and other household
goods on a rent-to-own basis, required
applicants for certain management
positions to take the Minnesota
Multiphasic Personality Inventory test

(MMPI),answeringquestionssuchas:
• Iseethingsoranimalsorpeople
around me that others do not see.
• Mysoulsometimesleavesmy
body.
• AttimesIhavetsoflaughing
and crying that I cannot control.
• Ihaveahabitofcountingthings
that are not important such as bulbs
on electric signs, and so forth.
Applicants who were required to
takethetestsued,arguing(among
other things) that the test violated
the ADA because it was a medical
examination designed to reveal mental
impairments. Although the trial court
rejected this argument, the federal
Court of Appeals agreed with the
applicants. Rent-A-Center stopped
using the MMPI, and was ordered to
destroy all test results in its possession;
it also had to pay the plaintiff class’s
attorney fees.
Karraker v. Rent-A-Center, No. 06-2617
(7thCir.July9,2007);Karraker v. Rent-A-
Center,411F.3d831(7thCir.2005).
Background Checks
When you are making hiring decisions,
you might need a bit more information
than applicants provide. After all, some

folks—surveys estimate between 30%
and 40% of applicants—give false or
incomplete information in employment
applications. And workers probably don’t
want you to know certain facts about
their past that might disqualify them from
getting a job. Generally, it’s good policy to
do a little checking before making a job
offer.
However, you do not have an unfettered
right to dig into applicants’ personal
affairs. Workers have a right to privacy in
certain personal matters, a right they can
enforce by suing your company if you pry
too deeply. How can you avoid crossing
this line? Here are a few tips to keep in
mind:
•Make sure your inquiries are related
to the job.
If you decide to do
a background check, stick to
information that is relevant to the
job for which you are considering
the worker. For example, if you are
hiring a security guard who will carry
a weapon and be responsible for
large amounts of cash, you might
reasonably check for past criminal
convictions.
•Ask for consent. You are on safest

legal ground if you ask the applicant,
in writing, to consent to a background
check. Explain clearly what you plan
to check and how you will gather