California Employment Law Report

California Employment Law Report

The latest litigation trends, court decisions, & issues on California Employment Law

Friday’s Five: Five Terms To Include In Job Offer Letters

Hiring new employees? For the next job oJob offerffer, instead of relying on the old job offer letter you have a lawyer review in the 1990’s, it is recommended to review the offer letter to ensure it is up to date with current law. While some of the items discussed below are not necessarily new aspect to California law, it is always good to review the terms set out in the offer letter to ensure it includes the relevant terms, and incorporates the any changes in the law. Here are the five terms employers should consider to include in job offer letters:

1. At-will designation

It should be clearly set forth that the employee is being hired as an at-will employee, and that employment may be terminated by either party with or without notice at any time. Under California law, it is presumed that all employment is terminable at-will. California Labor Code section 2922 provides: “An employment, having no specified term, may be terminated at the will of either party on notice to the other.” The at-will doctrine means that the employment relationship can be terminated by either party at any time, with or without cause, and with or without advanced notice. Even though the law presumes all employment is at-will, it should be clearly set out in the offer letter as well.

2. Description of the job

It is a good practice to have job descriptions for all positions in a company. If the company does not have a job description, be as detailed as possible about the duties of the position the applicant is being hired for in the offer letter. This will help avoid potential disputes about whether certain duties are essential functions of the position for reasonable accommodation purposes, and could also be evidence in defending claims that the employee was misclassified as exempt. The job offer could also set forth whether the position is non-exempt or exempt, and have the duties reflect the designation.

3.  Integration Clause

Place language into the agreement that the terms set forth in the offer letter supersede any other offers or promises. This type of term is referred to as an integration clause. Including an integration clause into the offer letter will assist in countering any claim later on that other promises were made to the employee at the time of hire and the employer failed to comply with those promises.

4.  Set forth commission terms if employee is eligible for commissions

As of January 1, 2013, all commission agreements must be in writing. The agreement must be signed by the employer and the employee. Employers should review the offer letter to see if the offer letter meets these requirements. If it does not, or the commission structure is too complex to include in the offer letter, commission agreements still must be set out in writing and signed by the employer and the employee. Employers should approach the issue of commissions carefully to ensure that the agreement is properly defined. In addition, in the case of non-exempt hourly employees, employers must be careful on how the commissions will affect the calculation of the regular rate of pay for overtime purposes.

5.  Confidentiality provisions

Set forth if your company will require the employee to enter into a confidentiality agreement. If possible, attached the confidentiality agreement and have the applicant sign the agreement at the same time the job offer is accepted. The offer letter should also contain language to the effect that the applicant does not have any agreements with prior employers that would interfere with their duties and that the applicant will not use any confidential information learned at prior positions with the new employer.

Photo: Mark Seton

Five items that should be on every employer’s end of employment checklists

Many employers have new hire packets and hiring procedures, but just as important, and often overlooked by employers, is to have a process for departing employees. It is important to ensure an employee departing the company provides all items back to the company and is provided any legally required documentation, and is a good opportunity to take steps to address potential liability. Today’s Friday’s Five provides the five items that should be on California employers’ separation checklist:

1. List of documents to be provided by employer.

As I previously wrote about, employers should have a termination packet of documents that it is required to provide to separating employees, such as:

  • Notice of Change In Relationship
  • COBRA and Cal-COBRA notices
  • Health Insurance Premium (HIPP) notice

The Company should also consider generating its own forms requesting company property to be returned (such as laptops, parking cards, keys, etc…) from departing employees.

2. Ensure final paycheck is issued in accordance with the deadlines set by law.

The law generally requires the employer comply with the following deadlines for providing final paychecks:

  • An employee who is discharged must be paid all of his or her wages, including accrued vacation, immediately at the time of termination. This does not mean that the company cuts the check and mails it to the employee, the check must be provided to the employee at the time of termination. See below for more details about when and where final checks have to be presented to employees.
  • An employee who gives at least 72 hours prior notice of quitting, and quits on the day given in the notice, must be paid all earned wages, including accrued vacation, at the time of quitting.
  • An employee who quits without giving 72 hours prior notice must be paid all wages, including accrued vacation, within 72 hours of quitting.
  • An employee who quits without giving 72-hours’ notice can request their final wage payment be mailed to them. The date of mailing is considered the date of payment for purposes of the requirement to provide payment within 72 hours of the notice of quitting.
  • Final wage payments for employees who are terminated (or laid off) must be made at the place of termination. For employees who quit without giving 72 hours’ notice and do not request their final wages be mailed to them, is at the office of the employer within the county in which the work was performed.

3. Evaluate the need for an exit interview.Termination Meetings

Not every situation would warrant conducting an exit interview. If the separation is not amicable it may make the situation worse if conducted, or it may be an opportunity to separate on a better note. It simply depends on the situation. However, employers should consider whether it is needed to not and not simply have a policy not to conduct them.

4. Evaluate whether a severance agreement would be appropriate.

Under California law, severance is not required. However, employers can offer severance to employees for numerous reasons: there is a layoff and the employer wants to provide something to the employees, the company entered into a contract with an executive to provide severance if certain conditions were met, or the separation is high risk and there is potential litigation between the parties. If an employer offers severance payment to a departing employee, they should always have the severance agreement reviewed by an employment attorney to ensure that it contains a broad release of claims. My previous article discussed in more detail issues about severance and severance agreements.

5. Have established protocol for references and disclosing why the employee left the company within the company itself.

Employers often establish that it will only confirm the title and dates of employment for former employees, and, if authorized by the former employee, the former employee’s final pay rate. Employers do this to avoid potential claims for misrepresentation, violation of privacy, and defamation. If employers provide more information about former employees, it should be done very carefully with the guidance of employment counsel. Also, employers need to be careful about disclosing the reason for an employee departure within the company, as that may violate the former employee’s privacy rights as well. Employers should remind employees and management not to disclose this information to people in the company that do not have a reason to know.

California’s paid sick leave law amended – what employers need to know

For additional information about the changes for California’s paid sick leave signed into law on July 13, 2015, click here.

Governor signs bill to amend California’s paid sick leave law 13 days after employees begin accruing paid sick leave.

Are you tired of employmSacramentoent lawyers’ obnoxious headlines asking if you are sick over California’s paid sick leave law yet?  I’ll spare you the play on words and get to some of the major amendments to California’s paid sick leave law, which took effect immediately upon the Governor’s signature of AB 304 on July 13, 2015.  Therefore, the amendments apply to employers going forward.  For today’s Friday’s Five, here is a summary of five of the major amendments employers should note:

1.      Employers may now use a different accrual method other than one hour of paid sick leave for every 30 hours worked.

In order to simplify the math for employers, the law was amended to provide that an employer may use an alternative accrual method as long as it is (1) on a regular basis, and (2) the employee has no less than 24 hours or three days paid sick leave or paid time off by the 120th calendar day of employment, or each calendar year, or in each 12-month period.

2.      If an employer pays out accrued paid time off to an employee at time of termination, the employer does not have to reinstate the previously accrued and unused paid sick days.

The law requires that if an employee separates from employment, but is rehired within one year, the previously accrued and unused paid sick leave must be reinstated.  This amendment clarifies that if the employer pays the accrued but unused sick leave out at the time of separation (which is not required under the sick leave law), then the employee is not entitled to reinstatement of the paid sick leave that was already paid out to them earlier.

3.      If an employer provides unlimited paid sick leave or unlimited paid time off to an employee, the employer meets its reporting requirements on the employee’s pay stub by indicating “unlimited” on the wage statement. 

4.      Employers have different options for calculating the amount of pay owed to employees while taking sick leave.

The amendment clarifies that the employer can use any of the following calculations when determining how much to pay employees while on paid sick leave:

a) For non-exempt employees, the regular rate of pay can be calculated in the same manner as the regular rate of pay for overtime purposes in the workweek.  This is a new option for employers provided under the amendment.

b) For non-exempt employees, the regular rate of pay can be calculated by dividing the employee’s total wages, not including overtime premium pay, by the employee’s total hours worked in the full pay periods of the prior 90 days of employment.  This method was permitted for employers to use under the original law.

c) For exempt employees, employers can calculate paid sick leave in the same manner as the employer calculates wages for other forms of paid leave time.

5.      Employers are not required to inquire into or record the purpose of why the employee uses paid leave.

Employers have many other record keeping requirements under the new law, but now it is clear that they are not required to maintain the reasons why employees used the sick leave.  The original requirement created under the paid sick leave law, and unchanged by these amendments, requires employers to document and keep records of the hours worked and paid sick days accrued and used by an employee for at least three years. Employees (as well as the Labor Commissioner) have the right to access these records. Failure to keep the required records creates a presumption against the employer that the employee is entitled to the maximum number of hours provided for under the law.

Photo: Franco Folini

Five wage deductions California employers cannot make

1)      Gratuities

All tips are the empMoney close uployee’s property, and cannot be taken by the employer.  Labor Code section 350 states unequivocally that “Every gratuity is hereby declared to be the sole property of the employee or employees for whom it was paid, given or left for.” In addition, Labor Code section 351 clearly states that “[n]o employer or agent shall collect, take, or receive any gratuity or a part thereof that is paid, given to, or left for an employee by a patron, or deduct any amount from wages due an employee on account of a gratuity, or require an employee to credit the amount, or any part thereof, of a gratuity against and as a part of the wages due the employee from the employer.”  For more information about gratuities, click here.

2)      Costs of photographs

Labor Code section 401 prohibits the employer from requiring employees to submit a photograph from an applicant or an employee without paying for the cost of the photograph.

3)      Cost of uniforms

Employers are required to pay for the costs of uniforms.  Now, what qualifies as a uniform?  That’s a more difficult question.

4)      Business expenses

Labor Code section 2802 prohibits employers from passing on the costs of running a business to an employee.  Therefore, an employer must reimburse its employees for any costs incurred by the employee that is in direct consequence of the employee’s work.  The primary example of this requirement is that employers must reimburse employees for mileage driven in their personal cars for work errands.

5)      Cost for medical or physical exams

If an employer requires an employee or applicant to undergo a medical or physical examination as a condition of employment, the employer must pay for the exam as required by Labor Code section 222.5.

Photo: Kevin Dooley

Five things I’m thankful for this Fourth of July

1.     For the great risk and sacrifice our Founding Fathers took to establish the country. 

WhFourth of Julyen learning about the Founding Fathers in high school history class I did not have a perspective about the risks the Founders took in establishing the country.  Only now that I have a business, a family, and am relatively successful, can I realize the huge risks that the Founders took.  By all means, they were the establishment, the elite of the American society, if anyone had an interest in preserving the status quo it was them.  It is great that their sacrifices of life (theirs and their family members) and their fortunes, helped build the foundation we benefit from today.

2.     The ability to speak freely and practice or not practice any religion I want.

It is great being able to say what you want to say freely and believe in whatever you want.  It is also great be free to practice or not practice any religion you want.  We live in a very tolerant society, and it is even better when the government is not telling you how to live your life.  It is important to remember that throughout history, this has been the exception for how a government normally behaves.

3.     Our country’s ability to attract creative people.

People that like creating things and being productive want to practice their trade where the government will basically leave them alone and provide a good environment to protect their gains from their hard effort (see item #5 below).  The U.S. provides this environment, and that is why so many people come to the U.S. to create a business, or to practice their trade.  It is also important to note that if you were lucky enough to be born in the U.S., it is a great reason to remain in the U.S.

4.     My right to practice any profession I want and unlimited resources to learn the required skills.

No one is dictating what students need to be after they graduate high school or college.  Everyone is free to pursue their interest, and the market decides the value of the effort.  With basically any information freely available on the Internet, anyone can learn almost any skill, and like no other time in human history have an open almost free way to sell your services or products over the Internet.  In your mid-40’s and want to make a career change?  Perfect, and you don’t even need to go back to school as the information is freely available on the Internet.  Didn’t finish college and are 20 years old with an idea?  Perfect.  Venture capitalists don’t care about your pedigree, they basically are only interested if you work hard and don’t give up.

5.     Our legal system.

Yes, it sounds trite.  But while I don’t think our legal system is perfect by any means, it is the best system established in the history of mankind.  Everyone living in the U.S. presently is very lucky to have this benefit.  It is a foundation for many of the items I mentioned above.  Because people have a good basis for predicting the outcomes of their actions, such as being able to retain property legally obtained, and knowing if someone breaches a contract there will be repercussions, it creates an environment that attracts hard effort and the best talent from around the world.  This is why the U.S. has been the leader in ideas and new businesses.  However, just because the system is established it does not mean our work is done.  We have to be vigilant not to lose the fairness, reasonableness, and lack of corruption in legal system.

Happy Fourth of July.  I have to go start the grill.

Photo: Kim Seng

July 1 is here: Is your company compliant with California’s paid sick leave requirements?

July 1 is here – the deadline for California employers to begin offering up to three days or 24 hours of paid sick leave.  Here is a short three-minute video from a recent presentation I conducted discussing some common questions about California’s Paid Sick Leave law:

  • Do employees receive 24 hours or 3 days of paid time off?
  • Can employers require a doctor’s note in order for employee to receive paid time off?
  • What anti-retaliation provisions exist in the law and how should employers be careful not to violate them?

Another short five-minute video providing a general overview of California’s paid sick leave law can be viewed here.

Presentation: General rules to comply with California’s paid sick leave law

I’ll be posting some short clips of a recent presentation I conducted on complying with California’s paid sick leave law.  In this first video, I discuss some general rules California employers need to consider to comply with the July 1, 2015 deadline to offer paid sick leave to employees.  Topics include:

  • how to calculate pay rates for employees with fluctuating pay
  • impact of services charges on the employee’s regular rate of pay
  • the 90 day waiting period before employees can use the paid leave
  • required notices employers must use
  • key deadlines to comply with the law

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Friday’s Five: on-call time under California law

Businesses that have employees on standby waiting to be called for work must review whether this on-call time needs to be paid time.  It is a vOn Call Timeery fact intensive inquiry, that employers must ensure they get correct.  Any mistake in not paying employees for compensable on-call time can result in potential exposure for overtime, minimum wage, and additional penalties.  Here is a list of five items employers should understand about on-call time under California law.

1.      Courts generally look to the extent of control over employee in determining whether on-call time is compensable. 

In Mendiola v. CPS Security Solutions, the California Supreme Court held that, “[i]t is well established that an employee’s on-call or standby time may require compensation.”  The Court, quoted Armour & Co. v. Wantock, a seminal case on this issue, for the proposition employee on-call time may have to be paid:

Of course an employer, if he chooses, may hire a man to do nothing, or to do nothing but wait for something to happen. Refraining from other activity often is a factor of instant readiness to serve, and idleness plays a part in all employments in a stand-by capacity. Readiness to serve may be hired, quite as much as service itself, and time spent lying in wait for threats to the safety of the employer’s property may be treated by the parties as a benefit to the employer.

2.      Courts look to a number of factors in making the determination of when on-call time must be paid.

Generally courts will look at the following factors in determining whether the on-call time should be paid:

  1. whether there was an on-premises living requirement;
  2. whether there were excessive geographical restrictions on employee’s movements;
  3. whether the frequency of calls was unduly restrictive;
  4. whether a fixed time limit for response was unduly restrictive;
  5. whether the on-call employee could easily trade on-call responsibilities;
  6. whether use of a pager could ease restrictions; and
  7. whether the employee had actually engaged in personal activities during call-in time.

3.      Sleep time may be compensable when employee works 24-hour shifts.

The California Supreme Court held that security guards who were required to reside in a trailer provided by the employer at construction worksites would still need to be paid for the time they slept while on-call.  In that case, during weekdays the guards were on patrol for eight hours, on call for eight hours, and off duty for eight hours.  On weekends, the guards were on patrol for 16 hours and on call for eight hours.  The Court held that the employer was not permitted to exclude the time guards spent sleeping from the compensable hours worked in 24-hour shifts.  See Mendiola v. CPS Security Solutions, Inc.

4.      Employers may pay a lower rate of pay for controlled standby time.

Employers are permitted to pay employees a lower hourly rate for controlled standby time as long as the rate is set before the work is performed, and the rate for any hour worked does not fall below minimum wage.  In order to calculate overtime owed, the weighted average of the two rates is used to determine the regular rate of pay.

5.      Travel time may be compensable under some circumstances.

In Morillion v. Royal Packing Co., the California Supreme Court held that, “we conclude the time agricultural employees are required to spend traveling on their employer’s buses is compensable under Wage Order No. 14-80 because they are ‘subject to the control of an employer’ and do not also have to be ‘suffered or permitted to work’ during this travel period.”  Generally, travel time is considered compensable work hours where the employer requires its employees to meet at a designated place and use the employer’s designated transportation to and from the work site.

Five employment related bills California employers must monitor

With summer upon us, the California legislature is busy working on bills that could impact employers.  Here are five employment bills being considered by the state legislature that California employers should keep an eye on:

1. SB 3 – Increase in minimum wage and indexing to inflation

Currently, California minimum wage is set to increase from $9.00 per hour to $10.00 per hour on January 1, 2016.  This bill proposes to increase the minimum wage to $11 per hour on January 1, 2016, and then again to $13 per hour by July 1, 2017.  Then, beginning on January 1, 2019, minimum wage would be indexed to inflation and would be adjusted upward every January 1 thereafter.

2. SB 406 – Broadening scope of employees and employers covered by California Family Rights Act

Currently, the California Family Rights Act requires employers with 50 or more employees within a 75 mile radius to provide up to 12 workweeks of unpaid leave for certain medical issues.  This leave is job protected leave, so the employer must provide the same job to the employee upon their return from leave.  This bill would expand coverage of the law to employers with 25 or more employees.  It would also expand the employees covered and purposes for which leave is required to be provided (for example, removing any restrictions on age or dependent status in the definition of “child”).

3.  AB 359 – Employee retention mandate for grocery stores

This bill would require any purchaser of an existing grocery store to hire the employees of the previous owner and employ them for 90 days.  The bill prohibits the new owner from terminating any employees without cause during the 90-day period, and then “consider offering continued employment to those workers.”

4.  AB 465 – Prohibiting mandatory employment arbitration agreements

This bill would prohibit “any person from requiring another person, as a condition of employment, to agree to the waiver of any legal right, penalty, forum, or procedure for any employment law violations.”  The bill also shifts the burden of proof onto the employer enforcing the waiver to show that the waiver was “knowing and voluntary.”  The bill is seeking to limit the use of arbitration agreements in the employment context.  Should an employer violate this bill, the penalty is set at $10,000 per violation plus attorney’s fees to the prevailing employee.

5.  AB 67 – Double pay required on holidays

Bill would require an employer to pay at least two times the regular rate of pay to specified employees for work during Thanksgiving.