What are legal risks of anti-nepotism policies?

I am the Personnel Director for a small state agency. Our state has nepotism laws which make illegal the hiring of relatives within a state agency if there will exist a chain-of-command relationship between the relatives. It appears from my research courts have upheld such laws.

We have an unwritten policy relatives are not to be hired within the same office. Other than the potential of an adverse impact lawsuit (of which we are aware), are we on shaky legal ground with our policy?

We've experienced unpleasant situations which have caused us to shy away from relatives in the same office: spouses engaged in a bitter divorce, the termination of the daughter of a well-respected staff member (and mama wasn't happy), etc.

Thanks for you help on this.

Rita Risser's response:

When relatives bring their personal problems to work and it affects their performance or the performance of others, clearly you can coach, counsel, warn and ultimately terminate their employment.

In cases where relatives did not cause a problem at work but were fired merely because of an anti-nepotism policy, courts in some states found the employees had been discriminated against on the basis of marital status. Such policies penalize employees who are married as compared to unmarried employees whose relationships are equally intimate. 38 states prohibit marital status discrimination.

Having a more general policy prohibiting employees who co-habit from working in the same area would not violate marital status laws but could be considered an invasion of common law privacy, which is recognized in most states. What business is it of the organization if people co-habit? How are you going to know who is living together? The prohibition against invasion of privacy by the government (of which your organization is a part) is even more strictly enforced.

One of our clients has a policy that says co-habiting employees can even have a direct reporting relationship, as long as their relationship does not affect the workplace. Of course, this, too, is difficult to enforce. But it seems to me the best among the various available options, because it treats people like adults.

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