Is it legal for employees who are spouses to be reporting to one another? Should you have a policy against nepotism? Or should you allow it with some qualifications?
There is no law against employing relatives. In fact, nepotism is quite common in the United States. That said, there are some precautions worth considering.
As a best practice, it is generally recommended allowing family members to work together, but not directly report to one another or have access to one another’s confidential employment information. That way you’re free to hire applicants who may be the best fit for your organization, but you avoid potential conflicts and complaints of unfair treatment that can come with direct reporting relationships among relatives.
Exceptions to a policy like this are regularly made for minor children of employees who may be hired to do something fairly simple over summer or winter breaks and often will report directly to their parent. This situation is less problematic because the parents are in charge of their children outside of work and their working relationship is temporary.
When creating your policy, make sure it clearly states which relationships you allow and do not allow, and what will happen if a relationship arises after hiring (e.g. a marriage of a supervisor and subordinate who met at work). Then make sure you follow it consistently.
It’s worth noting that if you already have relatives reporting to one another, it’s best to not have a policy like this. You don’t want to create a policy that you’re already violating.