Are Nepotism and Favoritism Forms of Illegal Employment Discrimination?

One of the most common questions clients ask an employment discrimination attorney is whether nepotism is illegal. Clients come into an attorney’s office because their employer is hiring or promoting family or friends over others who are more qualified. In some cases, a client has complained about another employee who was incompetent, only to find out that employee was a relative or friend of their supervisor. Ultimately, they get fired for the complaint.

Clients with these stories are always disappointed to hear that, although these situations are completely unfair, they are typically not illegal. Playing favorites, so to speak, is not illegal; nor is it illegal to hire or promote your relatives over someone else for that reason alone. There may be some exceptions, though. Here is what you need to know.

Government employersmust avoid conflicts of interest

Each state has its own laws regarding conflicts of interest in government employment situations. The purpose of those laws is to not only avoid conflicts of interest between family members or other relationships but also to avoid the appearance of any conflict. These conflicts can become an issue in hiring, other employment activities, and the award of contracts to certain employees. These issues do not arise, however, in the private sector.

Conflict of interest under Sarbanes-Oxley

There are numerous federal laws that protect against illegal employment actions. One particular law is the Sarbanes-Oxley act passed in 2002, for the purpose of protecting investors from the fraudulent accounting activities of corporations. Under Sarbanes-Oxley, management officials are required to disclose potential conflicts of interest. That means publicly-held companies are required to disclose to their shareholders the hiring of relatives, as well as any other potential conflicts of interest. Any allegations that such conflicts were hidden will likely lead to an SEC investigation. In the employment law arena, if you report this type of violation and your employer takes any action against you, then you may be protected as a whistleblower.

Sexual harassment and the “paramour” preference

While sexual favoritism may be legal in many cases, if a supervisor gives favors to employees who engage in consensual sexual relationships, but takes negative action against you because you don’t, there may be a claim for sexual harassment or discrimination.

Paramour preference refers to situations where a supervisor grants preferential treatment to a sexual partner in the workplace. Any employees who are not engaged in a relationship with the supervisor and, as such, do not receive preferential treatment, are the ones that usually bring the claim for sexual harassment.

According to the EEOC, the sexual favoritism or paramour preference must be widespread in the workplace. In that situation, the conduct can then establish a hostile work environment regardless of whether any objectionable conduct was directed at them. It also would not matter if those who are treated favorably were willing participants. Put another way, those who receive preferential treatment do not have to be victims of quid pro quo sexual harassment.

If you feel you have been the victim of discrimination or retaliation in the workplace, or if you have any questions regarding your employment rights, please contact Wrady & Michel, LLC, either online or by calling us at (205) 265-1880

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