Hiring members of the same family can create a tricky situation for your company. You can't let personal relationships influence business decisions. An anti-nepotism policy can help prevent problems from cropping up by setting clear standards for your workforce.

What Is Nepotism?

Nepotism is when an employee or applicant gets preferential treatment because of an existing familial or personal relationship. For example, a supervisor who gives only his brother a raise, at the exclusion of other employees, may be engaging in nepotism.

If your employees suspect nepotism, it could be terrible for morale; they might begin to question the value of performing to their potential. Nepotism could also lead to people ending up in the wrong jobs. Imagine what might happen if you were to hire an unqualified family member for a position they were not equipped to handle.

The Legality of Nepotism

With few exceptions, workplace nepotism is generally permissible in the private sector, but employers may be subject to other risks when hiring or promoting relatives. Nepotism may create legal trouble if it results in a discriminatory impact, or if it violates certain laws requiring employers to disclose potential conflicts of interest, which may including the hiring of relatives.

For example, you are not allowed to base hiring decisions on protected characteristics such as race, gender or religion. If a business predominately hires family members and treats them preferentially to the detriment of other employees, this could result in a discrimination claim.

Why You Need an Anti-Nepotism Policy

An anti-nepotism policy sets up rules to help prevent the potential issues that can arise from hiring relatives and friends. For example, you could prohibit related employees from being in a direct supervisor-subordinate relationship. In this case, you could transfer one employee to another department or make it against the rules for a supervisor to hire a family member. Your policy could also instruct new applicants to disclose any relationships with current employees.

As you write your policy, review your state and local anti-discrimination rules. Some states and cities recognize familiar or marital status as a protected characteristic. Additionally, some regulated industries have clear rules governing the hiring or employment of family members. If you are unsure what the laws governing your state or industry are, consult with your own legal counsel before finalizing your policy.

Establish Clear Standards for Decisions

Another way to help prevent trouble is to set clear standards regarding policies relating to hiring, salary increases and promotion eligibility. Employees may question circumstances where a relative is hired or given a salary increase without any business justification. If every job posting clearly lists the job requirements and expectations, you will be in a better position to justify each hire by referring back to their qualifications. When you negotiate employee pay raises, the discussion should be based on set criteria (for example, every employee who meets a set sales goal gets a raise). If employees know why decisions are made, they may be less likely to feel cynical or undervalued.

Suspicions of nepotism can disrupt your workforce, even if the family members you hire are amazing candidates. By incorporating these best practices, you can help quell these concerns and confidently hire family members.

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