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Are Nepotism and Favoritism Probable for Lawsuits?

Updated on September 10, 2015

An Inside Tip for Business Owners

I am speaking from experience from working in large corporations to working in small family owned businesses. In large corporation’s nepotism and favoritism exists; however it is not encouraged in some and not allowed in others.

Each employee received a company Handbook when hired in large businesses; one knows the rules of the company as well as the policies. In large corporations there is a legal department; where the company lawyers are in charge of the legalities of protecting the corporation and its CEOs and department heads.

In some small businesses nepotism and favoritism reigns and operates mostly without a company Handbook existing. In other words, they are flying by the seat of their pants without legal assistance; until needed and then sometimes it is too late.

Savvy small businesses operate like a large corporation with a company Handbook and with an attorney on speed dial for quick service. These small businesses do not hire relatives nor do they hire friends of the owners.

Working in a" Family" business can produce stress with the employee who are not family.
Working in a" Family" business can produce stress with the employee who are not family.

Family Owned American Businesses

Over 75% of America's businesses are family owned, Therefore, savvy owners need to have their legal ducks in a row and know the negatives and positives in hiring relatives and friends.

In small town America and in the cities Nepotism is prominent. Most new employees are not aware of it until after the fact.

Nepotism is like a legal disease which will cause chaos and destroy profits.
Nepotism is like a legal disease which will cause chaos and destroy profits.

Have You Heard the "Nepotism Bell Ring?"

Do not despair should this happen to you. Most small towns hire their family members in their businesses so everyone knows beforehand about the nepotism.

Therefore, applying for a job in this situation with that knowledge is the choice of the applicant.

In cities sometimes one finds out about nepotism after becoming an employee. In most cases it will not affect the new employees until they start to move up the career ladder.

Then, the Nepotism Bell sounds loud and clear when one experiences being overlooked for a promotion; which was given to the CEO’s son, daughter or other relatives.

Have you heard the Nepotism Bell? Lawsuits are going on daily about someone in power who has hired relatives instead of the non-relatives.

Therefore, these relatives get benefits in health insurance, benefits and retirement. In a large percentage of cases it will be in government offices that this unfortunate act occurs.

The non-relatives who were not hired in the government agencies will be the ones in essences paying for the nepotism's benefits including retirement. What part of this is fair? It is the reason for many lawsuits.

Nepotism is a form of discrimination against an employee who is not related to the owner, manager or supervisor. Nepotism might fall under the discrimination laws then, if an employee can show proof of discrimination filing a lawsuit might be a sound judgment step.

Favoritism---Hiring Friends

Many lawsuits occur because of favoritism for hiring friends and if you are a savvy business owner it is best to think before hiring. Other employees will watch for preferentialism instead of having their mind on their duties. If employees feel discriminated against then a lawsuit could result from discrimination in the workplace.

Employee Handbook

All businesses should have an “Employee Handbook” that without equivocation states the Policies and Procedures in hiring non-relatives and relative employees. Make sure every employee has one when hired and each returns a signed form stating they read and understood the handbook. Keep the signed form in their personnel file.

If you think your small business does not need an Employee Handbook think again. In court it will be the boss against the employee in a situation: he said/she said. This can only get worse for the businesses owners if it goes to court without written words stating the policies and procedures of the company. Business owners can end up in the abyss of legal woes.

Nip Nepotism in the bud before it grows weeds of discontent in business.
Nip Nepotism in the bud before it grows weeds of discontent in business.

Treat All Applicants and Employees Equal

If you insist on hiring relatives and friends make sure their screenings are like the other employees, drug screening, background checks, references completed including tests given to the non-relative employees. You will probably need to interview with a witness to confirm the conversation and if you are shrewd have notes taken.

A word to the wise a relative or a friend who has bad references should never be hired because they will be a crimp in running a smooth workplace environment.

No business needs imprecision ambiance among the employees workplace. Tell everyone before the interview that you are legally bound by your Employee Handbook in hiring anyone.

Employers first consideration will always be the employees and the business; which furnishes a livelihood.

Favoritism---Destroys Employees Morale and Business Profits
Favoritism---Destroys Employees Morale and Business Profits

Before Hiring Friends or Relatives---Announce it in a Staff Meeting

Announcing the of hiring a relative or friend must happen in a staff meetings. And ask if anyone has anything to say about it positive or negative please share your thoughts I welcome your input.

This way it is no surprise to anyone; consequently letting the employees know their thoughts and opinions are relevant.

Preparing ahead is an intelligent guideline for any owner. Therefore, the business might benefit from tax breaks in hiring relatives it is best to check with your attorney if you do not know the current tax laws.

Since the business is the owner’s source of revenue owners should not feel remorse for not hiring a relative or a friend who does not qualify after screening. The handbook’s policies and procedures are the legal written rules and regulations of the business followed by all.

Employees want the business to succeed. Listen to their comments.
Employees want the business to succeed. Listen to their comments.

Business Owners Maintain a Professional Business

We are not living in the time of our parents or grandparents in reference to employment. It was a different time when people were just grateful for a job and suing the hand that fed one was just not done.

Business owners should think of their employees as a legal contract that has conditions and agreements in the workplace.

It is very important for owners to conduct themselves and their businesses in a professional manner. Respecting works both ways in any business relationship and it makes a more harmonious environment for everyone.

PurvisBobbi44 is the sole author of this article and if copied anywhere else on the Internet or printed in magazines or books it was taken without written consent and is strictly prohibited.

Nepotism or Favoritism

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© 2013 PurvisBobbi44


Submit a Comment
  • PurvisBobbi44 profile imageAUTHOR


    6 years ago from Florida


    I am happy for your visit and I hope all is well with you and yours. Are you still doing tattoos? And writing music? I am glad you enjoyed my hub.

    Bobbi Purvis

  • thelyricwriter profile image

    Richard Ricky Hale 

    6 years ago from West Virginia

    I know, it's been too long!! Sorry for the late visit Bobbi. Great resourceful paper first off. Voted up, useful, interesting, and shared. This is exactly why it is often difficult to work when your an outsider. I never knew it was 75%, wow! I've always had issues when I worked for such businesses. If you're lucky to get in, you still catch unfair labor, my opinion of course. I know I always have. Great info Bobbi, hope all is well my friend. Best wishes.

  • PurvisBobbi44 profile imageAUTHOR


    6 years ago from Florida

    Hi Teresa Coppens,

    Thanks for your visit and comment. Yes---I know about small towns and working in University Cities---one has to be flexible and sometimes I did felt like a pretzel.

    Have a wonderful week.

    Bobbi Purvis

  • Teresa Coppens profile image

    Teresa Coppens 

    6 years ago from Ontario, Canada

    Great hub. Small towns where there is little movement of the local residents seem to be the worst offenders.

  • PurvisBobbi44 profile imageAUTHOR


    6 years ago from Florida

    Hi teaches12345,

    So nice to have you visit and comment. The workforce is a maze and it is the savvy employee who makes it though the nepotism and favoritism.

    Have a great Sunday.


  • teaches12345 profile image

    Dianna Mendez 

    6 years ago

    I have worked in companies where nepotism covers about half of the work force. It takes some very careful navigating to get through the politics. Still, hiring family with great work ethics will certainly prove useful. Great post!

  • PurvisBobbi44 profile imageAUTHOR


    6 years ago from Florida

    Hi Jeannieinabottle,

    Thank you for your visit and comment. I do hope you and your co-workers get a promotion---soon. It seems some professional people believe the rules and laws do not apply to them. I believe in what goes around comes around again---sometimes to bite the guilty in the backside.

    Have a great weekend.

    Bobbi Purvis

  • Jeannieinabottle profile image

    Jeannie Marie 

    6 years ago from Baltimore, MD

    I work for a non-profit where sons, daughters, and friends are fired all the time. The rest of us sit there never getting promotions. They are pretty much just sitting on a lawsuit should anyone decide to pursue it. Thanks for sharing this information! Voted up!

  • PurvisBobbi44 profile imageAUTHOR


    6 years ago from Florida

    Hi Eddy,

    I hope all is well with you. Have a wonderful weekend.

    Thanks for the visit and comment.


  • Eiddwen profile image


    6 years ago from Wales

    So well written and very interesting Bobbi ; voting up and wishing you a great day to come.


  • PurvisBobbi44 profile imageAUTHOR


    6 years ago from Florida

    Hi Vinaya,

    In any government agency nepotism is against the law. In businesses in the private sector one has to sue to prove nepotism was the reason for not receiving a promotion or whatever reason they felt discriminated against.

    Have a great weekend.


  • PurvisBobbi44 profile imageAUTHOR


    6 years ago from Florida

    Hi Sis,

    It is great to have you visit and comment. I am sorry you had such an unpleasant experience. You have a great weekend.


  • PurvisBobbi44 profile imageAUTHOR


    6 years ago from Florida

    Hi Bill,

    I am happy for your visit and comment. You have a great weekend.


  • Vinaya Ghimire profile image

    Vinaya Ghimire 

    6 years ago from Nepal


    I'm not sure about the percentage, however, most of the corporate houses in my country are also family business, which means nepotism and favoritism are very common. I'm not sure but I think we don't have any legal provision to stop this.

    Thanks for sharing your views.

  • Angela Blair profile image

    Angela Blair 

    6 years ago from Central Texas

    A right-on Hub if one was ever written. Most of us have experienced -- at least favoritism -- in the workplace. The worst scenario in that instance, for me, was when I was chosen to be the "favorite" and suddenly all my co-workers resented me. I quit -- end of story! Best/Sis

  • billybuc profile image

    Bill Holland 

    6 years ago from Olympia, WA

    I have seen firsthand the destructive effects of both nepotism and favoritism, and you are correct on all points in this important article. Well done Bobbi!

    Sending friendship your way



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