Is Employer Nepotism Illegal

Is Employer Nepotism Illegal?

Boy (3-5) chairing business meeting

I get this question a lot. Can an employer favor a relative over you? Is nepotism illegal?

The simple answer is, no. Nepotism is not illegal. Your employer can fire you to hire their son, daughter, nephew or second cousin twice removed.

That being said, there are some circumstances where nepotism might be illegal:
  • Public Employer: While I don't know of any state that has a law prohibiting nepotism in the private workplace, many laws exist prohibiting nepotism at government entities.
  • Foreign Corrupt Practices Act: If your company does business overseas and hires relatives of an overseas public official, they may be violating the Foreign Corrupt Practices Act.
  • Failure to Disclose: While nepotism isn't illegal under federal securities laws, it is illegal not to disclose any potential conflict of interest to shareholders. Failure to disclose might violate Sarbanes-Oxley.
  • Race Or National Origin Discrimination: If the company hires mostly relatives, they may be crossing the line into race or national origin discrimination. If they are turning down better qualified people of a different race or ethnicity, then hiring relatives, they might get crosswise with Title VII or state discrimination laws.
  • Marital Status Discrimination: If there's a no-married-couples policy, some companies make the mistake of making the woman leave when employees marry. Or maybe they just say the person of lowest rank has to go. A policy like that might discriminate against women.
Of course, many companies have policies prohibiting nepotism, or at least prohibiting relatives from hiring, promoting, supervising or firing relatives. If your boss violated that policy, then you might think about reporting them to HR. Some companies even have anonymous reporting lines that let you report violations of policy without giving your name. If you do report a violation that isn't illegal, you probably aren't legally protected against retaliation, so be very careful.    

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