According to the US Labor Department, employers added 156,000 jobs last month. Additionally, the participation rate increased to 62.9%. And the average hourly earnings moved 0.2 percentage points. These figures indicate a steadily increasing U.S. economy. But the Labor Department also found that the unemployment rate last month increased from 4.9% to 5%.

A rising unemployment rate means more eligible workers are seeking employment. With increased hiring, there are a few important things that both employers and employees need to take into consideration when it comes to seeking new employment.

State and Federal Laws Affect the Hiring Process

Companies, especially those without a dedicated HR staff, need to have a working knowledge of state and federal employment laws. While there are too many of these regulations to be discussed here, a few critical areas employers need to be concerned about when it comes to new hires include physical examinations,  background checks, and non-compete restrictions.

• Physical Examinations

The Americans with Disabilities Act (ADA) and similar states’ laws, restricts when employers can conduct medical related physical examinations. An employer cannot request or require a medical examination before a prospective employee is given a conditional job offer. Employers can inquire about one’s ability to perform specific job functions before offering the job, but not about a disability. Or as the EEOC puts it:

It [the employer] cannot make any pre-employment inquiry about a disability or the nature or severity of a disability. An employer may, however, ask questions about the ability to perform specific job functions and may, with certain limitations, ask an individual with a disability to describe or demonstrate how s/he would perform these functions.

The EEOC provides a number of responses to commonly asked questions about complying with the ADA. Those responses are available here.

• Background Checks

Employers are allowed to conduct background checks on prospective employees, but they are still legally required to follow applicable laws about discrimination throughout the hiring process. One limitation is that employers cannot use information within a background check to discriminate against a potential employee based on age, race, genetic information, age, etc.

It is also prudent to make sure that your company’s background checks are consistently applied. On this point, the EEOC warns that, “[i]t’s illegal to check the background of applicants and employees when that decision is based on a person’s race, national origin, color, sex, religion, disability, genetic information (including family medical history), or age (40 or older).” For additional information on the ADA’s restrictions on background checks, click here.

• Non-compete Obligations

Another important consideration for both employers and employees to consider are non-compete obligations. Consider the following:

1. Employees Seeking New Employment – Be sure to determine what, if any, non-compete restrictions you may have entered into. We often represent individuals who are threatened with litigation for breaching a non-compete agreement that they signed five, six, or even ten years ago but honestly forgot about entering into the post-employment restriction. Even so, it is important to carefully consider any non-compete restrictions before quitting your current position. Additionally, if you are switching jobs, it’s critical that you return all employer owned documentation, emails, etc. Never download or forward any company information to a personal account because, that too, could lead you to legal trouble during you job transition.
2. Employers and New Hires – For employers, it is important to screen prospective hires for any post-employment obligations. If a potential employee has a non-compete obligation, it may interfere or restrict the candidate’s ability to perform in his or her new position. This issue should be discussed and documented in the hiring process before making an offer.

There are many other restrictions and guidelines for the hiring process, but these are a few important ones to keep in mind. For more information about complying with federal or Michigan employment laws, contact Michigan employment attorney Jason Shinn. Since 2001, he has represented businesses and individuals in non-compete disputes and claims arising under federal and Michigan employment laws.