Is “Nepotism” permissible under California labor laws?

In California, nepotism itself is generally permissible in the private sector workplace. But in the public sector, it is unlawful. Even in the private sector, nepotism can be the grounds for a variety of discrimination claims under state or federal law. When your employer favors friends and relatives over you, it can sometimes amount to discrimination against you.

What is nepotism?

Nepotism is a form of workplace favoritism. It happens when decision-makers favor their family or friends over others, without regard to merit.

In California, nepotism is defined as an employee’s use of their influence or power to hire, transfer, or promote someone else because they are related by:

• blood,
• adoption,
• marriage, whether that marriage is current or a former one,
• domestic partnership, or
• cohabitation.¹

Nepotism, or even the perception of nepotism, can be a serious issue in the workplace. It can:

• reduce worker morale,
• increase turnover,
• decrease productivity,
• diminish employee loyalty to the company,
• make workers care less about the quality of their work than their personal relationships in the workplace, and
• create poor management personnel.

Nevertheless, nepotism is common in California workplaces. This is especially the case in small businesses and family-owned companies. However, nepotism can be a problem even in large corporations.

Is favoritism permissible in California?

It depends on the nature of the employer. Nepotism is not unlawful in private companies. However, it is unlawful in the public sector. In the public sector, nepotism violates the California state constitution.

Even in the private sector, though, nepotism can give rise to claims of workplace discrimination.

Private employers

In California, nepotism in private workplaces is generally not illegal or unlawful. There are no state or federal laws that explicitly forbid employers from favoring their family or friends in the workplace.

However, both California and federal employment laws include anti-discrimination laws. These laws cover most private workplaces. Workplace favoritism can violate these anti-discrimination laws by favoring or disfavoring workers based on a protected class.

Public employers

Nepotism is prohibited in public workplaces in California. This includes the following employers:

• the State of California,
• counties in California,
• towns and cities in the state, and
• public school districts.

Under the California Constitution and state law, all permanent appointments and promotions must be done based on merit.²

California Code of Regulations, Title 2, Section 87 expressly states:

“Appointing powers shall hire, transfer, and promote all employees on the basis of merit and fitness in accordance with civil service statutes, rules and regulations. Nepotism is expressly prohibited in the state workplace because it is antithetical to California’s merit based civil service system.”

This means that all of the following employment actions in the public sector must be based on merit:

• hiring decisions,
• transferring, and
• promoting.³

Additionally, state agencies must adopt anti-nepotism policies. These policies have to include:

• a commitment to a merit-based hiring system and a condemnation of nepotism as antithetical to that system,
• an accurate definition of nepotism and a description of the necessary personal relationships that fall within that definition,
• a prohibition against state employees participating in the hiring process or the first-line supervision of someone with whom they have a personal relationship, and
• the process for addressing issues of direct supervision between employees that have personal relationships.⁴

When can nepotism lead to a discrimination claim?

Even with private employers, nepotism can lead to a claim of discrimination in violation of California or federal law. Depending on the situation, the claim is often for discrimination on the basis of:

• race,
• national origin,
• religion,
• sex, or
• marital status.

These claims can stem from the actions of an individual boss or hiring partner, or from a company-wide policy.

For example: Lou is known for committing sexual harassment and having affairs with female subordinates. He then uses his hiring power to give them promotions. Edna is not having an affair with Lou and she is passed over for a promotion. If Edna can show that the sexual favoritism is severe or pervasive enough to create a hostile work environment, it can amount to sex discrimination.⁵

For example: An employer relies entirely on a “word-of-mouth” hiring process where current employees spread news of an open position. No public notice of the position is made available. The result is a workforce filled with friends, family members, and church members, and with no racial diversity. Potential job applicants may have a discrimination claim based on religious beliefs or race.⁶

Many claims that stem from nepotism invoke national origin as the basis for discrimination. When hiring personnel bring in friends and family, the new employees are likely to be disproportionately of the same heritage. The disparate treatment of job applicants from other backgrounds can amount to discrimination.

Discrimination based on marital status can also come from workplace nepotism. When spouses receive preferable treatment, this can amount to discrimination against others based on marital status.

However, employers also have to avoid discriminating against current or potential employees because they are married to each other. Doing so is also discriminatory. Many employers have policies that aim to take reasonable efforts to prevent conflicts of interest in the workplace brought on by employees who are spouses. These policies, however, cannot take adverse employment decisions against you because of your marriage to a coworker.⁷

What can I do if I lost a workplace opportunity to nepotism?

If you think that workplace nepotism has amounted to discrimination, you should get the legal advice of a California labor lawyer from a reputable law firm. A lawyer can help you file a claim with

• the U.S. Equal Employment Opportunity Commission (EEOC) or
• the California Civil Rights Department (CRD) (formerly known as the Department of Fair Employment and Housing (DFEH)).

Only after this administrative process has been exhausted can you file a lawsuit for discrimination against your employer.

It is also wise to bring the issue to the attention of your employer’s human resources (HR) department, first. This can put your employer on notice of the nepotism problem in your workplace. This can help you succeed in a later discrimination claim. It can also resolve the issue without your need to take your claims any further.

If necessary, you can file a discrimination claim under the federal anti-discrimination law, Title VII of the Civil Rights Act of 1964, with the EEOC. This claim must be filed within:

• 180 days of the alleged discrimination, or
• 300 days if a California agency prohibits the discrimination on the same basis, which is often the case with nepotism-related claims.

After filing the formal complaint, the EEOC has 180 days to investigate the claim. They may choose to pursue the case on your behalf or issue you a right to sue letter so you can file a lawsuit.

You can also file a discrimination claim under the state California Fair Employment and Housing Act (FEHA) with the CRD. These state claims under California law must be filed within 3 years of the discrimination.

Once the claim has been filed, the CRD would investigate your claim. Your complaint would also be served on your employer and anyone else named in the complaint. They would have the opportunity to respond to your claims. The CRD would try to resolve the case administratively.

If no resolution is possible, the CRD may issue you a right to sue letter. Once you have the letter, you can file an employment discrimination lawsuit in state court.

By establishing an attorney-client relationship with an attorney, you can protect your workplace rights.

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