Can You Trust A Potential Employer? Here Are Some Tips!

Finding a job is hard enough without having to worry about the integrity of your employer. However, the amount of scams out there is numerous and if a potential employee is not careful, they can be the victim of one that can have major consequences for their career. It is vital to get informed and know what to ask and look for in a potential employer.

Here’s a section of my book “The Employee Rights Handbook” that deals with tips an employee should know before taking any position at a company. Get informed and know your rights to see how these laws may affect you!

Tips to Avoid Being Hired by a Deceitful Employer

No matter what type of job you are considering, always investigate the potential employer even if you desperately need the job. Typical information you would like to learn are facts regarding the employer’s business reputation, credit rating, financial status, rate of employee turnover, morale problems with workers, whether the company has been involved in any employee-related lawsuits recently (and if so, did the employee win or lose?), and commitments to the community in which the company is located.

For example, if you are being hired to replace someone in an important position, try to obtain the name of the person you might be replacing and find out why the individual is no longer there. Better still, by speaking to that person you could learn valuable information to influence your decision. Many applicants who follow this advice discover that the individual decided to resign because he or she was being harassed on the job by a supervisor, the job was long and tedious, or promised commissions, bonuses, raises, and promotions were not given.

It is particularly important to do your homework when you are being offered an important position that includes long-term employment, stock options, profit sharing, and other valuable financial benefits. Such an investigation should be made to assess the chances that the employer has sufficient assets to pay these benefits or that the employer will still be in business when you retire.

Most lawyers and accountants who represent successful business clients obtain the following kinds of financial information from credit reporting agencies and the banks with whom the company does its business. The following list of questions is a good starting point in this area:

1. WHAT IS THE LEGAL FORM OF THE EMPLOYER? Is it a corporation, an S corporation, a limited liability corporation, a partnership, or a sole proprietorship? (You should know the legal distinctions among these terms for additional protection.)


3. WHAT IS THE FINANCIAL HISTORY OF THE EMPLOYER? Is it a recently established business, or has it been in existence for a while? (Many new businesses fail within the first few years, hurting employees in the process by firing them suddenly and not paying adequate severance benefits. I always instruct clients wishing to join non-established employers to proceed with caution.)

4. WITH WHOM DOES THE EMPLOYER MAINTAIN BANKING RELATIONS? For how long has it done so? What is the average balance on deposit? Does the employer have a line of credit? If so, for how much?

5. HOW MANY PEOPLE WORK FOR THE COMPANY? Do any of them belong to a union? Is the employer opposed to union participation? Could you join a union? What additional benefits would you receive if you joined a union? Has the employer recently been involved in any litigation with any of its employees? What was the lawsuit about? Did the employer win? What was the effect on employee morale? What is the rate of employee turnover?

6. DOES THE EMPLOYER OFFER GENEROUS BENEFITS? These include such items as liberal sick day and vacation policies, paid maternity and paternity leaves, etc., and will be discussed in greater detail in the next chapter.

7. HAS THE EMPLOYER FILED A RECENT FINANCIAL STATEMENT? Was it a certified statement? (Certified financial statements are usually more accurate and verifiable than regular financial statements.) What are the company’s assets and liabilities? Does it have an unusually high late-paying accounts receivables problem? (This might indicate a cash flow problem and potential bankruptcy situation if the receivables aren’t paid.)

8. WHAT ARE THE EMPLOYER’S ASSETS? Does it own real estate, patents, inventions, licenses, and other tangible assets?

9. WHAT DOES THE LATEST BALANCE SHEET REVEAL? This is an important document. It shows the employer’s financial status on the last date of the reported fiscal year. For example, you can learn what the employer owns in terms of cash, marketable securities, accounts receivable, inventory, and property and equipment. The balance sheet will also indicate money owed for unpaid bills and taxes, loan repayments to banks, bondholders, and other lenders. You may also be able to determine the amount of the employer’s working capital, costs of doing business, and other pertinent information. If you are being hired for an important position and are given stock or stock options, be sure that you obtain copies of such documents for the current year and several past years of the employer’s operations.

10. WHAT ARE THE LIABILITIES OF THE EMPLOYER? Are there any outstanding encumbrances, judgments, or liens?

11. HAS THE BUSINESS BEEN SOLD RECENTLY? Did the new owners assume the liabilities or just purchase the assets? This is important. Suppose you are owed bonuses which the old employer refuses to pay. The new owners may be able to step away from this obligation if they only purchased the company’s assets and not its liabilities.


You should never accept a new job blindly, particularly when a high salary and other substantial benefits are offered. Negotiating a job is a two-way street. The employer spends much time and expense verifying the personal background, job qualifications, and prior references of job applicants. You should try to gather as much information as possible on the employer’s history, management style, and financial stability as well. In certain instances, what you learn may give you second thoughts–you may come to suspect that you will not be promoted properly or even that the company may not be around in the future.

Thus, try to gather as much information as possible before making your decision. Talk to fellow workers; listen to what they say. Many are accessible and honest and will give you a true picture of the way the employer really runs its business (as opposed to what you’re told at the interview).

Better still, speak to friends and business associates in the industry to learn more about the employer’s business reputation. For example, if you learn names of customers, suppliers, or distributors of the employer, it may be a good idea to inquire discreetly to learn their opinions about the company. What you learn may surprise you. The same is true for reputable employment agencies who have dealt with the employer in the past and can tell you about the company’s reputation and business methods. Finally, if you are about to work for a large company, you may be able to locate written information in the business press or Internet.

Remember, ask questions and do your homework. You may learn information that will save you money and aggravation in the future.

For a full depth analysis on this topic and many more, visit to purchase “The Employee Rights Handbook” today!

2 thoughts on “Can You Trust A Potential Employer? Here Are Some Tips!”

  1. You made a great point about looking for an employer that maintains good relations with different areas of interest. My husband and I are looking for an employment attorney that can help his company deal with some legal issues. We will keep these tips in mind as we search for a professional that can help us best.

  2. You made a great point about how many people work for the company and if there is a union. My husband and I are looking for an employment rights law attorney that can help his company with their employee’s rights. We will keep these tips in mind as we search for a professional that can help us best.

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