No, its not illegal discrimination. Employers may freely choose who to hire, and may decide to not hire someone for any reason not specifically made illegal. The main illegal reasons prevent discrimination against certain groups, such as racial or religious groups, the elderly, or the disabled. However, there is no law which makes it illegal to not hire someone because his/her parent works there, so you would not have an actionable legal claim. It's actually not uncommon to not hire children or other close relatives of current employees, to avoid the possibility of favoritism or conflicts of interest.