Recently, a business owner asked me if it is illegal to hire relatives to work in his company.  I replied, “No, but sometimes it is.” Confused, he continued, “A few of the people who already work here are related to other employees, but should I establish a policy prohibiting nepotism?”  My response was, “Yes, but maybe not in the way you think.”  There is no easy answer to the question of how to handle nepotism in the workplace.  Employers must strike a balance in their policies and practices to avoid pitfalls on both sides of the issue.

During these tough economic times, many employers understandably want to help struggling family members by offering them employment opportunities.  Generally, in the private sector, nepotism – which most people understand to mean favoritism directed toward relatives regardless of merit – is not illegal.  Therefore, no one has a legal cause of action against a private employer simply for engaging in such hiring or promotion practices.  Nevertheless, there are limited circumstances where nepotism in the workplace can cause trouble for an employer.  By the same token, however, absolutely prohibiting nepotism in the workplace can also be discriminatory.

The Kentucky Civil Rights Act (KRS Chapter 344), the commonwealth’s law adopting the protections set out in Title VII of the Civil Rights Act of 1964, prohibits employment discrimination on the basis of race, color, religion, national origin, sex, age (40 years and older), disability (as long as the person is otherwise qualified), or smoking status (as long as the employee complies with any workplace smoking policy).  The law covers employers with eight or more employees, except for the provision prohibiting disability discrimination, which applies to employers with 15 or more workers (the same as in the American with Disabilities Act).  The Kentucky Equal Opportunities Act also prohibits employment discrimination based on physical disability, including acquired immunodeficiency syndrome (AIDS), ARC (AIDS-related complex), and human immunodeficiency virus (HIV) infection.  That law covers employers with eight or more employees.

No Kentucky law specifically addresses the employment of related individuals in the private sector.  (Some states do regulate nepotism in private workplaces).  Even so, if an employer hires relatives and fails to consider people with disabilities or those of other races, creeds, genders, or ages, he or she may be discriminating against such groups.  Likewise, if an employer forces out an existing employee to make room to hire a relative, the employer may be liable.  Further, some employers prohibit nepotism altogether. Depending upon how they are written or applied, policies and practices which prohibit the employment or restrict the advancement of spouses or relatives may also be discriminatory.

The best practice for an employer is to strive to hire or promote the best qualified person for a position.  To that end, he or she should establish a policy which neither restricts nor favors  any individual in matters of hiring, pay, promotion, assignment, or other working conditions on account of a familial relationship with another company employee.  Also, procedures should be in place to ensure, to the extent possible, that company managers do not supervise relatives.  A well-crafted and evenly-applied policy will reduce the perception of nepotism by providing that individuals cannot influence the hiring, promotion, or discipline of a close relative.