If you need help at work, hiring friends and family members can seem like a no-brainer. You want employees you can count on, and if you can’t trust Mom, your cousin or your old college roommate, who can you trust?
In reality, though, hiring loved ones comes with special challenges, too.
Follow these five steps to help avoid the drama, ensure your team will hit the ground running and be prepared for any pitfalls.
1. Ensure All Pre-Employment Procedures Are Followed
Does the position you’re filling require a background check or a drug screen? A valid driver’s license or a clean driving record? If so, you’ll need to make sure your friend or family member can meet these conditions.
While you’re at it, make sure they fill out all the paperwork any other employee would be required to complete, such as:
- Employment application
- Benefits paperwork (even if they plan on waiving coverage)
- Form I-9
- Tax documents (including federal and state withholding forms)
2. Understand Labor Laws When Hiring Family Under Age 18
Employing younger family members can allow children to gain valuable work experience and can create tax advantages if the business owner is their parent. However, you’ll need to follow all applicable child labor laws and wage reporting requirements, both on the state and federal level.
If your business is a sole proprietorship or a partnership in which each partner is the parent of the child, you are not required to report FICA or FUTA as long as the child is below certain age limits. But the child’s wages are subject to income tax withholding rules and minimum wage rules for your industry.
Adhering to payroll record requirements—such as the hourly rate paid, number of hours worked and the amount earned for each pay period—will also help protect your business in the event you are ever audited by the Internal Revenue Service.
Be mindful of other applicable labor laws. These may limit the number of hours a child is allowed to work daily or weekly based on their age, and they may prohibit children from performing certain types of work.
3. Alter the Reporting Structure, and Use Creative Scheduling
One of the best ways to curtail difficult situations is to create a reporting structure where your friend or family member reports to another supervisor or member of management. You should create this structure before the employee begins work.
Take time to create a policy about nepotism and abide by it. (Bonus points if you already have one, but make sure you review it.) This can help with morale and prevent any appearance of impropriety.
Ensure the new employee’s manager understands your expectations, and give them leeway to manage as they would anyone else. The manager should have the ability to determine performance expectations, fit wages and pay increases within the existing budget, and handle performance reviews.
If your business requires shift work, as in the retail or restaurant industry, try to schedule employees who have out-of-the-workplace relationships (spouses, for example) in different areas or on opposite shifts. This will help you to avoid scheduling pitfalls should a family emergency occur or some other unexpected event arises that would require both parties to be absent at the same time.
4. Be Prepared for Requests for Special Treatment
Your friend or family member may want, or expect, extra freedom due to your existing relationship. They might try to give you more input than you would typically expect (or want) from someone in their position. This can also take the shape of them wanting more scheduling flexibility. They might look at your deadlines or processes as suggestions instead of the mandates they actually are.
If you decide that you’d rather overlook this kind of behavior, be prepared for overall employee morale to suffer. Or other employees may start to “follow the leader” and begin to exhibit these behaviors as well. A simple conversation with the friend or family member ahead of their start date can help set expectations.
Friends and family members may ask you to consider hiring someone close to them as a special favor. Remember, the best hiring decisions generally do not start out as favors. There are exceptions to every rule, but if a person is having difficulty finding a job and needs additional help getting a foot in the door, it is likely that person is not a top candidate in his or her field. Be prepared and adjust your expectations accordingly if you decide to extend this person an opportunity.
5. Keep Your Door Open, and Be Ready to Have Tough Conversations
Unfortunately, sometimes when a friend or family member leaves the company to pursue another opportunity, you will hear things regarding their performance or work ethic that you had no idea about while they were employed. Practice an open-door policy with supervisors and employees to help keep you informed. Shut down any issues before they grow out of hand.
Working with friends and family can be a rewarding experience. Again, there are exceptions to every rule, but before you make your next hire, remember to have these important conversations early and set the precedent for a harmonious working relationship.
