Contracts & Hiring Under Employment Laws

Both federal and state laws govern what an employer can do during the process of interviewing and selecting a new employee. In general, employers must avoid illegal discrimination during the process, follow rules related to hiring immigrants, follow child labor laws, refrain from making promises they cannot keep, and respect the privacy rights of the employee.

Anti-Discrimination Laws

Important federal anti-discrimination laws that affect the hiring process include the Civil Rights Act of 1964 (Title VII), the Age Discrimination in Employment Act of 1967, the Pregnancy Discrimination Act of 1978, the Immigration Reform and Control Act of 1986, and the Americans with Disabilities Act of 1990.

An employer cannot post a job advertisement that shows a preference for hiring on the basis of race, color, national origin, sex, disability, or genetic information. For example, it would be unlawful for an employer to post an ad stating “No blacks” or “No Middle Eastern candidates.” Similarly, an employer may not use such a preference when making a decision about whom to hire.

Discrimination may be inferred if an employer asks certain questions about a protected characteristic during an interview or in an application. For example, the Americans with Disabilities Act (ADA) prohibits an employer from requesting certain medical information or information about a disability during the hiring process. The focus must stay on whether you can do the job for which you applied, with or without a reasonable accommodation.

Privacy Laws

Prospective employees also have certain privacy rights. For example, the federal Fair Credit Reporting Act (FCRA) regulates the circumstances in which consumer credit reporting agencies may share the credit reports of consumers. Some states prohibit employers from making a hiring decision based on an applicant’s credit. If it is legal not to hire a prospective employee based on a credit report, the employer must inform you of that reason, give you a copy of the report, and notify you of rights under FCRA. Moreover, section 525 of the U.S. Bankruptcy Code prohibits discrimination on the basis of bankruptcy filing status.

Certain states also prohibit employers from making hiring decisions based on arrest or conviction, unless the criminal case substantially relates to the prospective employment. For example, if you were arrested for child abuse and applied to work at a daycare, the employer could reasonably deny you employment in a job that involved direct contact with children.

Each state has additional laws that must be followed in the hiring process. For example, in many states it is unlawful for a former employer to make disparaging untrue remarks to a potential employer when asked for a reference. A former employer who does this may be liable for defamation.

Written Employment Contracts

Written employment contracts are not required. However, many employers use them when hiring for a high-level or professional position. Most written employment contracts will describe the scope and duties of the job in addition to the salary and any other compensation or benefits.

In a written employment contract, there may also be a clause related to the job’s duration, your ability to compete with the employer during the job or upon termination, grounds for termination, a provision about trade secrets or client lists, an employer’s ownership of employee work product, and a method of dispute resolution related to the employment contract.

In general, written employment contracts are written to the benefit of the employer. Highly skilled candidates may be able to negotiate provisions of the contract. A candidate's leverage may depend on their unique abilities or market worth.

Certain provisions that are heavily slanted towards an employer may be found unconscionable or in violation of public policy, depending on the state. All employers that use written employment contracts hold a special obligation to deal fairly with their employees. This obligation is the “covenant of good faith and fair dealing.” An employer can be held responsible for breaching this duty.

Last reviewed October 2024