About 11% to 12% of smaller businesses face a discrimination lawsuit every year based on a limited number of reports. According to studies, some states are worse than others for the employers. But you must assume you are at risk. That alone should make a few minutes with this article valuable.

Maybe just as important, poor hiring will likely result in an unproductive, unhappy employee. Moreover, it will drag down your shop and be a cause of widespread morale issues. And, if studies are correct, it will cost you $3 for every $1 of wages to deal with the issue, lost productivity and more.

A quick note here. I am not now nor have I ever been an attorney. Always been one of you. So, given the minefield that hiring has become, it is strongly suggested you talk to your legal counsel and attend area seminars when you have a chance. One other option is to hire a freelance “human resources” person or company. But always remember, they represent you! So, if they mess up, the only difference is that you’ll have some company when you’re sued.

A good number of hiring-related lawsuits happen in the interviewing process. If you ask something off limits and then use it for hiring purposes, or lie to someone to dissuade a candidate from hiring because you learned something, even inadvertently, that bothers you. According to Monster.com there are a number of questions you may see as just chat or no big deal. But, truth is, if it’s not information required for the position, and you can substantiate that fact, assume it’s off limits. Here’s a summary in my words for the list:

• Age – after hiring, it is OK to ask if employee is over 18. Or, it may be an insurance requirement. Otherwise, hands off, and don’t estimate.

• Children – OK to ask for purposes of signing up for insurance after hiring, off limits otherwise.

• Citizenship – OK to ask if someone is legally able to work in the U.S., country of origin or other question is off limits.

• Criminal record – If bonding or clearance is needed, you ask if they are able to do that. Asking about arrests, convictions, jail time and the rest is off limits.

• Disability – Describe the work required, loads, work activities and ask if they are able to do the work. Anything else, no.

• Driver’s license – If insurance or the job requires a license, OK to ask if they have a license and if there are any restrictions relative to the job, and to order a state DMV report, especially since your insurance will require it. Otherwise, do not discuss things like past tickets, etc.

• Education – If prior education or training is needed for the job, describe that and inquire as to whether the person meets the requirements. Otherwise, don’t ask.

• Financial status – OK to gather, after hiring, for information needed to sign folks up for retirement plans etc., but nothing else. Especially do not ask about bankruptcies, loans, child support and the rest.

• Housing – State you need to be able to contact the employee, and if they have an active telephone, nothing else.

• Marital status – Just don’t discuss until after someone is hired, and then only for insurance issues, about marital status. And remember, many health-insurance plans do offer coverage for partners and significant others living in the household.

• Military status – ask about any military-related experience they could use on the job, but nothing about discharge or service branch.

• Physical data – Again, explain the physical requirements for the job, and then OK to ask if they’re able to meet those needs. It is OK to ask for the employee to get a physical exam for work-related activities or, following the process, random drug question. Stay away from anything else.

• Race – Just stay far, far, far away!

• Religion – If weekend hours are required, OK to ask if someone is able to work those hours. Nothing else.

• Relatives – If hired, can ask for emergency contact, otherwise stay away.

• Gender – Just stay far, far, far away from this one.

• Social Security – Cannot discuss until hired so you are able to set up withholding, benefits.

• Background checks – unless it’s required for insurance or something such as cash handling, don’t spend the money. Could end up getting you in trouble.

To sum all this up, unless there is a reason to know something for purposes of doing the job, you are typically safer staying away from other topics. I suspect by now you are throwing up your hands. We tend to be “people people” and tempted to hold a well-meaning conversation. But, that’s what will get you into trouble.

“You’re only as good as the people you hire.”

– Ray Kroc, founder of McDonalds

Important in your hiring process is checking listed references. According to HireRight and INC Magazine, some 85% of employees lie on their resumes and/or applications. There generally tend to be a few general points to watch for:

• Inflated experience claims

• Inflated education claims

• Listing references that either aren’t or have no idea they are listed

There are a few things you are able to do to sort these things out without asking the “danger” questions, or challenging the person. Watch for signs someone is lying:

• Won’t look you in the eyes at the point of the question.

• Will get “squishy” and not really bring out the specific details.

• Will not be able to tell the same story twice.

• Will have large gaps in their timeline.

There are others, but I suspect you know the drill. There are ways of making sure you are getting the best person possible for your money and time.

The first, and far away most important, is a simple answer, but not so easy to do. In a word, references! Call the references. Call all of the references! It’s amazing, but most business owners don’t check references. It’s understood that often a past employer will only confirm employment and dates of employment. But, be ready and you’ll often get much more.

Looking at the way the pros suggest checking a reference, and the more successful shops tend to go about it, they all have one process in common. A good check includes noting the date time and notes on the conversation, along with good questioning:

1. Hello, may I please speak to the owner manager or NAME? The purpose for my call is to get a reference for one of your former employees, NAME. Are you the person who supervised NAME personally? Yes, go ahead, No, may I please speak to that person?

2. First, according to the information provided NAME worked for you from DATE to DATE. Is this correct?

3. The job we have in mind for NAME should he/she be hired is as a TITLE. In this job they would be expected to know and do DUTIES/RESPONSIBILITIES. Is there any reason in your experience they could not do these things?

4. If NAME came in your business today looking for a job, would you rehire him/her? If not, why not?

5. What was their ending wage?

6. Was the person good at working independently and reliably in your opinion?

7. Were they generally on time for work?

8. Anything I haven’t asked that you might wish to share?

9. Thank you very much for your help!

Hopefully this is a good conversation and offers valuable insight into your prospective new employee. If the old employer will only confirm dates due to “company policy” or other reason, it may be a worrisome sign or may really be policy. But, in your zeal to find a new employee and justify your hire, be wary of these calls. What would you tell a future employer of your past employee if they were trouble on wheels? In an effort to avoid legal issues, you may well resort to the date-only answer.

Also, watch for what isn’t said. When a past employer is trying not to answer because the news isn’t good, they may tend to simply become very general in their response. Try to elicit a more detailed response.

By the way, if someone calls you to check references for an old employee, do your best to answer them. We have to rely on each other or we’ll just keep unloading our problems on others. The old Golden Rule rules here. You don’t want it done to you, don’t do it to someone else.

This is a good time to take a moment and lay a warning out there. Best to stay away from statements like “he/she was often late; they had a child with a DISEASE.” Just say what’s factual, employment related and truthful. Employees leaving may have created chaos in the shop, made your life miserable and was just generally bad news. Now is not the time to get back at them! And, if you have a particularly troublesome termination, talk to your legal pro for guidance before you answer reference checks.

Another method is to pay for a background check. These might be helpful if you are concerned enough to check someone out due to an uneasy feeling with the interview or application. Or, more likely, for a seasoned tech who you may be looking at as a long-term management candidate or even a key employee buyout down the road. In any event, the searches run from very basic to highly detailed, and the price varies from about $25 to more than $150. And, be aware you MUST get a signed permission to run the check from the applicant.

One free and quick check is to take a look at the various social media sites where people seem to be bent on sharing their most intimate life details. This is public information, lasts forever in cyberspace and, to the best of my knowledge, fair game for you to check.

One additional check you might wish to consider, or your insurance requires of the person is to drive customer cars is a drug screening. We’ll leave all of the jokes alone! But, in today’s environment I am growing more convinced that random drug and alcohol screening is important, and a necessary expense. Without alcohol included, last year, according to the Society for Human Resource Management (SHRM), 4.2% of all applicants failed their pre-employment screen.

Consider that some share above this may have cleaned up for some period knowing they were to be tested – scary! This is one area an employee must sign to authorize before testing. At the SHRM website (www.shrm.org) you’ll find all kinds of resources. And, there are a number of governmental and not-for-profit sources for information as well. Cost for screening is likely between $25 and $60.

Well, we’ve covered a lot of territory. I suspect your head is spinning with all of the rules in the new hiring landscape we now find ourselves. But use the Golden Rule, assume that you need someone’s permission in writing before you submit them to checks and screens, and you have a lot of it already.

Next month we’ll be talking about what happens next, recruiting and keeping the kind of employees you really want.