Parties involved in litigation should always keep an open mind about mediation at every stage of litigation.  Cases that resolve without having to go through a trial or arbitration can potentially save the parties a lot of time and money in litigation.  This article touches on five items parties need to understand about mediation.

1. Mediation is non-binding.
Mediation is a voluntary process in which litigants (or even parties prior to litigation) agree to use a private third-party to help settle the case. People sometimes confuse mediation with arbitration. Arbitration is when parties agree to use a private third-party to hear their case, much like a judge, to make decisions about the case, and eventually decide the case. Arbitration can be binding on the parties, and the arbitrator actually decides who is right and wrong as a matter of law. On the other hand, a mediator is not deciding any issues about the case, but is simply hearing both sides’ positions, and then works with the parties to see if there is a potential resolution that the parties would both agree to. The mediator has no ability to decide issues of the case, or make any binding rulings about the case. The mediator is only an unbiased third-party attempting to get the parties to consider a possible resolution to the case.

2. Mediation takes place with a private mediator –usually not the court.
The parties voluntarily agree upon the selection of a mediator. Usually the mediator has expertise in the area of the law that the case involves so that he or she can move quicker into the substance of the parties’ disagreement. There are many retired judges or lawyers that work as mediators. Some mediators are active practicing lawyers that also have a mediation service established.
The mediation usually takes place at the mediator’s office. Normally the mediator has the parties in separate rooms, and the mediator walks between the two rooms. There are many mediations during which the parties will not see other side the entire day.

3. Negotiations during the mediation are privileged and cannot be used against either party during litigation.
California law prevents any of the negotiations or potential admissions made during mediation from being brought up in court or during litigation. The rationale for this rule is that the courts want people to be able to negotiate during mediation, this involves some give and take. Therefore, in order to assist the mediation process, any of the discussions or negotiations during mediation are prevented from being used against the other party. This allows parties to discuss items more freely during mediation in hopes of having a better chance at resolving the case. However, it should be noted that if a party makes an admission during mediation, the other party can still conduct discovery after the mediation and bring that admission into the case through the standard discovery process. So parties should follow their counsel’s advice about which facts to share during the mediation process. But rest assured, the fact that one party agreed to offer a certain amount to settle the case during mediation, this offer to settle cannot be brought up to the jury later in the case as a way to establish liability.

4. The mediator’s only role is to get the case settled.
The mediator is not there to make friends, tell you if he believes you more than the other side, or make a value judgment about the case or people involved. His or her role is simply to get the case resolved. This usually means that for a successful mediator both sides don’t like the mediator. This is because the mediator was able to move two opponents to agree to a resolution of the case, and to get to this point usually means that both sides are unhappy with the resolution.

5. Even if the case does not settle at mediation, it could still be a successful mediation.
The parties need to understand that mediation is a process and it is hard to settle cases in one day – even a long day – of mediation. Sometimes it is clear during the mediation that the parties cannot settle the case. Sometimes it takes the mediator working with the parities for weeks after the mediation to arrive at a settlement. If the case does not settle, it is also beneficial for the parties that during the course of a mediation to realize that maybe they are still too far apart to agree to a settlement and there needs to be further discovery and motions filed to narrow down the issues that are being litigated.

It is important for employers in California to make sure that their front-line managers dealing with employees on a day-to-day basis are knowledgeable about different employment issues that routinely come up in the employment context.  This week’s Friday’s Five covers five areas that employers should review with their managers to ensure they inform the appropriate executives about any potential issues in the workplace:

1. At-will employment

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. There are some major exceptions to this rule, but generally California law recognizes that employers and employees may, at any time, and for any legal reason, terminate the employment relationship.  Of course managers should consult with human resources or the appropriate executive before terminating an employee, but managers need to understand that they can terminate employees with or without cause and should be trained on the legal parameters of at-will employment.

2. Anti-harassment, discrimination and retaliation

California employers with 50 or more employees are required to provide at least two hours of classroom or other effective interactive training and education regarding sexual harassment to all supervisory employees who are employed as of July 1, 2005, and to all new supervisory employees within six months of assuming a supervisory position.  All covered employers must provide sexual harassment training and education to each supervisory employee once every two years.  In 2015, California requires that a portion of the training also address “abusive conduct.”  More information about what topics must be covered in the training, who qualifies to provide the training, as well as other requirements about the training can be found here.

Managers should also be trained about the employer’s obligation to prevent sexual harassment in the workplace.

3. Timekeeping requirements

California law requires employers to track start and stop times for hourly, non-exempt employees. The law also requires employer to track the start and stop times for the employee’s thirty minute meal periods. The time system needs to be accurate, and the employer needs to be involved in the installation and setup of the system. Do not simply use the default settings for the hardware and software. Understand what the system is tracking and how it is recording the data. Since the statute of limitations for California wage and hour violations can extent back four years, it is recommended that employers take steps to keep these records at least four years.  Employers should also have a complaint procedure in place and regularly communicate the policy to employees in order to establish an effective way to remedy any issues.

4. Meal and rest break requirements

As I’ve written about many times previously, employers must have a compliant meal and rest break policy.  Indeed, given the California Supreme Court’s ruling in Augustus v. ABM Security Services in December 2016, employers should review their rest beak policy to ensure it complies with this ruling.

5. Responding to requests for records and legal notices

There are many different Labor Code provisions that obligate the employer to provide current and former employees with a copy of their personnel files and/or payroll records.  For example, Labor Code section 432 permits employees to obtain a copy of any document they signed, Labor Code section 1198.5 allows current and former employees to obtain copies of their personnel records, and Labor Code section 226(c) permits employees to inspect or copy payroll records within 21 days after making a request to do so.

Managers need to be trained to immediately inform management or Human Resources about any requests to obtain these records by current and former employees.  In addition, managers should be trained to immediately report receiving any legal notices, including the following:

A new decision, Garcia v. Border Transportation Group, LLC, analyzes the California Supreme Court’s decision in Dynamex Operations West, Inc. v. Superior Court, which changed the test for independent contractors under California law.  In Border Transportation, Plaintiff Jesus Cuitalhuac Garcia filed the case against Border Transportation Group, LLC and its owners for wage and hour violations stemming from his classification as an independent contractor.  The trial court agreed with the company’s classification as an independent contractor in granting Border Transportation’s motion for summary judgment.  Plaintiff appealed the ruling granting the motion for summary judgment, and while the appeal was pending, the California Supreme Court issued Dynamex Operations West, Inc. v. Superior Court.

The appellate court, in Garcia v. Border Transportation Group, LLC, held that summary adjudication should not have been granted as to the wage order claims, but was proper as to the non-wage-order claims.  Here are five key take-aways from the Border Transportation decision:

1. Borello factors for distinguishing “employees” from “independent contractors”

Border Transportation filed a motion for summary judgment before the trial court arguing that it did not exercise control over Garcia, who was a taxi driver for the company.  The company also argued that Garcia’s supervisor’s role was limited to collecting payments from plaintiff and other drivers, and never reprimand plaintiff during his employment.

The court set out that the California Supreme Court in Borello “defined a general approach to determine whether a worker is an employee or an independent contractor.”  In Borello, the court explained that the “principal test of an employment relationship is whether the person to whom the service is rendered has the right to control the manner and means of accomplishing the result desired.”  The right to discharge the worker at will, without cause, is strong evidence of an employment relationship.

In addition to the “control” over the workers, Borello also set forth other factors (“secondary indicia”) to review in determining worker’s employment status:

(a) whether the one performing services is engaged in a distinct occupation or business; (b) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision; (c) the skill required in the particular occupation; (d) whether the principal or the worker supplies the instrumentalities, tools, and the place of work for the person doing the work; (e) the length of time for which the services are to be performed; (f) the method of payment, whether by the time or by the job; (g) whether or not the work is a part of the regular business of the principal; and (h) whether or not the parties believe they are creating the relationship of employer-employee.

Borello also makes it clear that the classification used by the parties can be considered, but it is not determinative of how the employee should be classified.

2. “Suffer or permit to work” definition of employment

In Martinez v. Combs, the California Supreme Court reviewed the definitions of “employ” under the IWC Wage Orders and held that there were three alternative definitions of employ.  The broadest definition of employ is to “suffer or permit to work.”  Generally, the court explained that employers who know people are working and not being paid for the work or by not preventing unpaid work from occurring, “clearly suffers or permits that work” and is liable for the wages for these workers.

The court set forth that “the Supreme Court [in Dynamex] explained, the trial court properly applied the ‘suffer or permit to work’ definition of employment in Martinez, instead of the ‘control’ test in Borello, to evaluate class certification for wage order claims.”  However, the Dynamex decision did not address “what standard applies to non-wage-order claims.”

Under the ABC test set forth in Dynamex, a worker is presumed to be an employee, unless the hiring entity establishes each of the following:

(A) that the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact; and (B) that the worker performs work that is outside the usual course of the hiring entity’s business; and (C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed. (Dynamex, supra, 4 Cal.5th at p. 957.)

3. Wage orders issued by the Industrial Welfare Commission (IWC) set forth requirements for employers that are distinct from the Labor Code.

As the court explained, the IWC developed “constitutionally authorized, quasi-legislative regulations” that “impose obligations relating to the minimum wages, maximum hours, and a limited number of very basic working conditions (such as minimally required meal and rest breaks) of California employees” in various industries.  Employers are required to comply with the requirements set forth in the wage order that applies to their industry (click here for a list of the 17 IWC wage orders).

4.The Dynamex ABC test only applies to wage-order claims, and the Borello test applies to all other claims.

The court in Border Transportation held that “Dynamex applied the ‘suffer or permit to work’ standard contained in the wage order without deciding what standard applied to non-wage-order claims, such as claims for expense reimbursement (such as for fuel or toll road fees) under Labor Code, section 2802.  The court in Border Transportation explained:

[Dynamex] did not reject Borello, which articulated a multifactor test for determining employment status under the Worker’s Compensation Act. Nor did it address the appellate court’s ruling that “insofar as the causes of action in the complaint . . . are not governed by the wage order” and predicated solely on the Labor Code, “the Borello standard is the applicable standard for determining whether a worker is properly considered an employee or an independent contractor.”

The court held that the “suffer or permit to work” and the ABC test was applicable to the wage order claims because the wage orders define “employ” in this language, and the wage orders regulate very basic working conditions and are meant to cover the widest class of workers.

Therefore, the court held that plaintiff’s wage-order claims for unpaid wages, failure to pay minimum wage, failure to provide meal and rest periods, failure to furnish itemized wage statements, and Unfair Competition Law (UCL) are governed by the “suffer or permit to work” standard set forth in Dynamex.  Plaintiff’s remaining claims for overtime (the wage order does not apply to taxicab drivers), wrongful termination and waiting time penalties under Labor Code section 203, are not covered by the wage orders, and therefore are subject to the Borello test.

Therefore, the court found that as to plaintiff’s wage order claims, there is a triable issue of fact as to whether plaintiff was an employee under the ABC test.  The ABC test “presumes a worker hired by an entity is an employee and places the burden on the hirer to establish that the worker is an independent contractor.”

5. Part C of the ABC test under Dynamex requires the company to show an existing independent business operation for independent contractors. 

The court explained that “Dynamex makes clear that the question in part C is not whether [Border Transportation] prohibited or prevented [plaintiff] from engaging in an independently established business.”  Instead, the analysis is if the plaintiff “independently has made the decision to go into business for himself or herself” and “generally takes the usual steps to establish and promote his or her independent business – for example, through incorporation, licensure, advertisements, routine offerings to provide services of the independent business to the public or to a number of potential customers, and the like.”

Defendant relied upon a 2015 Massachusetts Supreme Court case, Sebago v. Boston Cab Dispatch, Inc., to argue that Boston taxi drivers who leased medallions from owners were “customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed.” In rejecting this analogy to the facts in this case, the court held that “Dynamex makes clear that California follows the version of part C that requires an existing, not potential, showing of independent business operation.”  The court held that based on the facts in this case, plaintiff was dependent on the company for his taxi permit, and therefore did not have the ability to independently operate on his own accord.  Indeed, the court noted that defendant “did not establish that [plaintiff] ‘is customarily engaged in an independently established trade, occupation, or business.”

Regular readers of the blog probably know about my YouTube channel for the Employment Law Report.  This Friday’s Five focuses on recent popular videos I’ve published covering employment law updates, best practices, and an interview with a restaurant consultant.  Hope you enjoy the videos, and please subscribe to the channel to make sure you don’t miss any future updates.

1. 5 Huge Misconceptions About California Employment Law

2. California’s Paid Sick Leave – Quick Update

3.California’s New ABC Test For Independent Contractors

4. My Five Free Resources for California Employers

5. My interview with Salar Sheik from Savory Hospitality

I am not sure of the cause, but my office has seen an increase in Labor Commissioner claims filed over the last two months.  Employers need to prepare and plan on how to defend these claims, and with some planning, the process is a lot less daunting.  Here are five effective strategies in defending Labor Commissioner claims:

1. Understanding the claims made by the employee.

Employers usually become aware of a complaint to the Labor Commissioner when they receive a Notice of Claim and Conference from the Labor Commissioner’s office.  Employers are not required to file any paperwork in response to the notice of conference, but the employer or an employer’s representative is required to appear at the conference at the date and time indicated on the notice.  The conference is not the actual hearing on the matter, rather the conference is structured as a non-binding settlement conference during which the Labor Commissioner discusses the various allegations, the employer’s response, and will attempt to mediate a resolution between the parties.

2. Ensure the claims alleged by the employee can be heard by the Labor Commissioner.

The Labor Commissioner can only hear disputes for “any action to recover wages, penalties, and other demands for compensation.”  Labor Code section 98(a).  Therefore, the Labor Commissioner cannot adjudicate any other types of employment claims, such as harassment or discrimination.  Likewise, if the employer has a counter claim against the employee, it cannot be heard by the Labor Commissioner, but must be filed in court.

Likewise, if the employee has an arbitration agreement with the employer, the employer can compel arbitration of the claim and remove jurisdiction from the Labor Commissioner.

3. Decide if legal representation is required during the Labor Commissioner complaint process.

Neither the employee and the employer are required to have an attorney during any stage of the Labor Commissioner process.  Whether or not an employer decides to have legal representation during the process depends on how comfortable the employer is with handling these issues and how well they understand the law in order to articulate the appropriate defenses available to them.  Also, many employers attend the settlement conference (discussed below) without legal representation if they are comfortable with the issues, and if the case does not settle and is set for a hearing, then the employer has an attorney assist with the hearing.

4. Understanding strengths and weaknesses of case going in to settlement hearing.

Although it is not mandatory, most Labor Commissioner offices will often set the matter for a settlement conference.  Employers often misunderstand the purpose of the initial settlement conference.  The settlement conference is not the hearing on the matter in which the Labor Commissioner takes sworn testimony and makes a decision.  While this step is not the actual hearing that will determine who should prevail, employers should prepare evidence and documents that will be persuasive during the settlement conference to establish defenses to the employee’s claims.  It is also good to listen to the employee’s facts and learn what they are claiming, what evidence they may have, and who may be witnesses.  It is important to learn this information in the event that the case does not settle and is set for a formal hearing.

It is important for employers to review the paperwork provided from the Labor Commissioner’s office to ensure that they gather and bring the required paperwork to the settlement conference.

Usually the Labor Commissioner requires the following background information from the employer:

  1. Completion of the DLSE’s Report of Workers’ Compensation Insurance
  2. City business license
  3. Articles of information filed with the Secretary of State
  4. Any documentation that may be applicable to the employee’s claims: payroll records, time sheets, handbook and applicable policies, correspondence with the employee, etc.…

The employer should also review the employee’s allegations in the notice of claim and prepare an outline of defenses and facts that support their position.

Employers should also understand the arguments in support of their defenses so that those can be articulated to the employee and Labor Commissioner.  The more persuasive the employer’s case is, the more likely that the case can be resolved for a nominal amount during the settlement conference.

Employers should be prepared to negotiate during the settlement conference and be prepared with a range of how much they would be willing to settle the case. An experienced employment law attorney can help address the strengths and weaknesses of the claims and can help advise on the appropriate settlement offer, if any, that could be made.

5. Preparing for hearing.

If the case does not settle at the settlement conference, or if there was never a settlement conference set, the Labor Commissioner will set the matter for a hearing pursuant to Labor Code section 98(a).  The hearings are often referred to as “Berman” hearings after the name of the legislator who sponsored the bill creating this procedure.  The basic idea behind Berman hearings is to provide a relatively fast way to resolve wage disputes.  However, with the state budget constraints, the hearings are usually set for about one year from the date that the settlement conference takes place.

The hearing takes place in the Labor Commissioner’s office, and is usually in a conference room.  The Labor Commissioner will tape record the hearing, and all witnesses’ testimony is provided under oath, just like it would be if they were testifying in court.  The Labor Commissioner can issue subpoenas compelling the attendance of parties at the hearing, as well as compelling parties to produce documents at the hearing.

  • Direct examination questions for the employer’s witnesses
  • Cross-examination questions for claimant, and potential cross-examination questions for any witnesses that claimant may bring to the hearing
  • Prepare key exhibits. Prepare to have documents that support the employers case ready to present at the hearing (generally it is good to have multiple copies of the exhibits so that they can be handed out during the hearing and everyone has a copy to refer to).  Handbook policies, meal and rest break policies and acknowledgments, timekeeping policies, and time records are generally the types of exhibits that an employer would rely on in establishing that the employee was permitted to take breaks and was paid for all time worked.
  • Prepare witnesses that support defense. Employers can bring in witnesses that support the employer’s defense.  For example, evidence can be submitted through managers or supervisors that are able testify to the fact that the employee was always clocked-in when they were working or had the ability to take meal and rest breaks.  Also, co-workers who worked with the claimant are also good witnesses to establish that they always saw the claimant take breaks and never saw them working off the clock.

Generally, employers need to be prepared but flexible for how the hearing will proceed.  The Labor Commissioner conducting the hearing has a lot of flexibility on how the parties are to present witnesses and conduct cross-examinations.  The rules of evidence are not controlling in the proceeding, but the Labor Commissioner generally has discretion to control the evidence presented during the hearing.  The Labor Commissioner can, and usually will, ask questions of their own to get a better understanding of certain issues.

After the hearing, the Labor Commissioner will issue a written order that must be served on all parties.  Unless this order is appealed, it is a binding judgment against the parties, and a certified copy of the order is filed with the superior court and judgment is entered.

Last Sunday was the deadline for Governor Brown to sign any new bills into law, and I was fielding a lot of questions about the bills that were signed by the Governor (as well as the bills that were vetoed) this week.  So, I thought it would be appropriate for this Friday’s Five to be a round up of my recent content across various social media platforms California employers should not miss:

1. My article on the new employment bills signed by Governor Brown that will impact employers as well as the major bills that were vetoed by the Governor.

2. I published a new episode on my podcast discussing in a bit more detail the new employment bills signed by Governor Brown.

Listen and subscribe my podcast available on Spotify (link here) or iTunes (link here).

3. I’ve also been publishing a few thoughts on Instagram.

4. My recent Facebook post on wage and hour issues that employers need to understand.

5. Portion of a recent panel I moderated on how California employers manage meal and rest breaks in California (on YouTube or available below):

Have a great weekend.

Yesterday, September 30, 2018 was the last day for Governor Brown to sign or veto legislation passed by the California legislature this year.  Here is a list of the employment bills that were signed and will impact California employers in 2019 (the bills will become effective January 1, 2019, unless the bill specifies otherwise):

AB 3109 by Assemblymember Mark Stone (D-Scotts Valley) – Contracts: waiver of right of petition or free speech.  This bill makes unenforceable any provision in a contract or settlement agreement entered into on or after January 1, 2019, that waives a party’s right to testify in an administrative, legislative, or judicial proceeding concerning alleged criminal conduct or alleged sexual harassment on the part of the other party when the party has been required or requested to attend the proceeding pursuant to a court order, subpoena, or written request from an administrative agency or the legislature.

SB 224 by Senator Hannah-Beth Jackson (D-Santa Barbara) – Personal rights: civil liability and enforcement.  This bill adds “investor, elected official, lobbyist, director, and producer among those listed persons who may be liable to a plaintiff for sexual harassment” under Civil Code section 51.9 of who may be personally liable for sexual harassment.

SB 820 by Senator Connie Leyva (D-Chino) – Settlement agreements: confidentiality.  Prohibits provision in settlement agreements that prevents the disclosure of factual information relating to certain claims of sexual assault, harassment, or discrimination.

SB 826 by Senator Hannah-Beth Jackson (D-Santa Barbara) – Corporations: boards of directors. Requires public companies who have principle executive offices in California to have a set number of women on the board of directors.  The Governor’s signing message can be found here.

SB 1252 by Senator Richard Pan (D-Sacramento) – Payroll records.  Existing law grants current and former employees of employers who are required to keep this information the right to inspect or copy records pertaining to their employment, upon reasonable request. Existing law requires an employer to respond to these requests within a specified time.  This bill provides that employees have the right to receive a copy of the employment records described above and apply the associated time requirements and penalty provisions in this context.

SB 1300 by Senator Hannah-Beth Jackson (D-Santa Barbara) – Unlawful employment practices: discrimination and harassment.  Prohibits an employer, in exchange for a raise or bonus, or as a condition of employment of continued employment, from requiring the execution of a release of a claim or right under FEHA or from requiring an employee to sign a nondisparagement agreement or other document that purports to deny the employee the right to disclose information about unlawful acts in the workplace, including, but not limited to, sexual harassment.  The bill also provides that a prevailing defendant is prohibited from being awarded fees and costs unless the court finds the action was frivolous, unreasonable, or groundless when brought or that the plaintiff continued to litigate after it clearly became so.

SB 1343 by Senator Holly Mitchell (D-Los Angeles) – Employers: sexual harassment training: requirements.  This bill requires employers with 5 or more employees, including temporary or seasonal employees, to provide at least 2 hours of sexual harassment training to all supervisors and at least one hour of sexual harassment training to all nonsupervisory employees by January 1, 2020, and one every 2 years thereafter.

SB 1412 by Senator Steven Bradford (D-Gardena) – Applicants for employment: criminal history.  The bill permits employers to conduct background checks for employees under certain narrow exceptions.

Governor Brown vetoed the following employment bills, which will not become effective:

AB 1867 – by Assemblymember Eloise Gómez Reyes (D-Grand Terrace) – Employment discrimination: sexual harassment: records. This bill would have required employers with 50 or more employees to retain records of sexual harassment complaints for at least five years.  The Governor’s veto message can be found here.

AB 1870 – by Assemblymember Eloise Gómez Reyes (D-Grand Terrace) – Employment discrimination: limitation of actions. This bill would have extended the statute of limitations for employment discrimination claims under California’s Fair Employment and Housing Act from one year to three years.  The Governor’s veto message can be found here.

AB 2079 by Assemblymember Lorena Gonzalez Fletcher (D-San Diego) – Janitorial workers: sexual violence and harassment prevention training. The Governor’s veto message can be found here.

AB 2732 by Assemblymember Lorena Gonzalez Fletcher (D-San Diego) – Employment: unfair immigration-related practices: janitorial workers: sexual violence and harassment prevention training. The Governor’s veto message can be found here.

AB 3080 by Assemblymember Lorena Gonzalez Fletcher (D-San Diego) – Employment discrimination: enforcement. The Governor’s veto message can be found here.  I previously wrote about this bill, and the potential effect it would have on employers in California here.

AB 3081 by Assemblymember Lorena Gonzalez Fletcher (D-San Diego) – Employment: sexual harassment. The bill would have created a rebuttable presumption of unlawful retaliation that any adverse employment action within 30 days for anyone that was a victim of sexual harassment.  The bill would have also created joint liability for employers who use contractor labor for any harassment supplied by that labor contractor.  The Governor’s veto message can be found here.

I’ll definitely be writing more about the new laws that will be taking effect.  Please subscribe to the blog (enter email in top right hand column) to receive email notifications when the blog is updated.

Employers need to be aware of the requirements and tight deadlines they have in responding to an employee’s request for various employment documents under California law.  This Friday’s Five focuses on five areas of records that are typically requested by applicants, current or former employees, and some common deadlines to comply with those requests.

1. Current and former employees have a right to their personnel records under Labor Code section 1198.5.

Under California Labor Code section 1198.5(a) provides that every current and former employee, or their representative, has the right to inspect and receive a copy of their personnel records.  In terms of requests pursuant to 1198.5, the request must be made in writing through two methods:

  • Written and submitted by the current or former employee or his or her representative.
  • Written and submitted by the current or former employee or his or her representative by completing an employer-provided form.

Employers must comply with the request no later than 30 calendar days from receipt of the written request.  Labor Code section 1198.5(b)(1).

2. The terms “personnel records” or “personnel file” are not defined in the Labor Code.

Because Labor Code section 1198.5 refers to the terms “personnel records”, but never defines the term, there is considerable ambiguity about what documents should be keep in an employee’s personnel file and what documents must be made available upon a request to inspect or copy the personnel records.  While not legally binding on employers, there is some guidance from the Division of Labor Standards Enforcement(“DLSE”) expressing the following view:

Categories of records that are generally considered to be “personnel records” are those that are used or have been used to determine an employee’s qualifications for promotion, additional compensation, or disciplinary action, including termination. The following are some examples of “personnel records” (this list is not all inclusive):
1. Application for employment
2. Payroll authorization form
3. Notices of commendation, warning, discipline, and/or termination
4. Notices of layoff, leave of absence, and vacation
5. Notices of wage attachment or garnishment
6. Education and training notices and records
7. Performance appraisals/reviews
8. Attendance records

However, Labor Code section 1198.5(h) clearly sets forth that this section does not apply to: (1) records relating to the investigation of a possible criminal offense, (2) letters of reference, (3) ratings, reports, or records that were: obtained prior to the employee’s employment, prepared by identifiable examination committee members, or obtained in connection with a promotional examination.  In addition, employers may redact the names of “any nonsupervisory employee” contained in the personnel file being requested.  Labor Code section 1198.5(g).

Labor Code section 1198.5 provides that employers must keep a copy of the employee’s personnel records for three years after the employee has left the company.  Labor Code section 1198.5(c)(1).

3. The right to inspect a personnel file under section 1198.5 stops once a lawsuit is filed.

If the current or former employee files a lawsuit that “relates to a personnel matter against his or her employer or former employer” the right to inspect personnel records under Labor Code section 1198 ceases.  Labor Code section 1198(n) and (o).

4. Labor Code section 432 provides applicants and employees with a right to a copy of any document he or she signed.

An employee or applicant is entitled to receive any document relating to the “obtaining or holding of employment.”  The employee or applicant must be provided the document “upon request.”  Labor Code section 432.

5. Employers have 21 days to provide payroll information required under Labor Code section 226.

Employers are required to provide employees with itemized wage statements or pay stubs that lists various items.  I’ve written about the requirements of what must be on wages statements previously here, and the DLSE provides examples of compliance pay stubs on its website for hourly employees here and for employees paid by piece rate here.

Under Labor Code section 226(c), employers have 21 calendar days to respond to written or oral requests to inspect or copy the records covered by this section.  Under this Labor Code section, employers can take reasonable steps to ensure the identify of a current or former employee, and the actual costs of reproduction can be charged by the employer.

A request for personnel records and payroll records cannot be taken lightly by employers, and failure to comply with the various requirements can expose employers to liability.  It is important to seek legal counsel immediately once an employee or their representative makes a verbal or written request for employment related documents or ensure compliance with the request.  It is also a key time period to evaluate whether the employee may file litigation, and to take steps to resolve any potential issues prior to litigation, if at all possible.

Recently I had the honor of moderating a panel discussion on issues facing restaurant operators in California.  The panelists were Joseph Pitruzelli owner of Wurstküche, Francis Drelling General Counsel at Specialty Restaurants Corporation, Naz Moin former director of Human Resources at PizzaRev, and Madelyn Alfano owner of Maria’s Italian Kitchen.   

 You can listen to the discussion on my podcast available on Spotify (link here) or iTunes (link here).

 Even though the discussion is focused on the hospitality industry, the lessons are applicable to companies, owners, and human resource managers operating in nearly every type of company and industry.  This Friday’s Five covers the top five points I took away from the discussion: 

  1.  There is no one background that is best in determining success.  As you will hear, the panelists all are successful in their respective companies, but all have different backgrounds, and backgrounds that you would not necessarily think would make them successful in their respective positions.  Pursue what interests you, and you will be successful.   
  2. Single restaurant owners face the same issues as multi-unit operators.
  3. Hire for personality – everything else can be taught. 
  4. Back of the house workers do affect the company culture. 
  5. Employees should not be surprised when they are let go.  Constant coaching, counseling, and documentation is critical in managing employees.  Also, remember to give positive feedback to employees who you see doing exceptional work.   

I would like to thank the panelists again for joining me for the excellent discussion.  I hope you learn as much as I did from the conversation.

Here are five questions that a company, either through its managers or human resources department should be asking its employees on a routine basis:

1. Are you aware of the company’s open-door policy?

If the employee is not aware of the policy, explain it to them, and document the conversation.  If done right, this can go a long way in making employees more comfortable in voicing concerns or making complaints.  As I always explain to clients, it is better knowing the bad facts and issues sooner than later.

2. Can you explain the company’s meal and rest break policy?

See if the employees can explain the policy.  If they can, great – document the conversation.  If they cannot, explain the policy to them and go over any questions they have and document that this was done.  Then follow up with the employee to ensure that they have been able to take all of their meal and rest breaks.

3. You have not had any complaints in the past, do you have any now?

Proactively asking employees if they have any complaints can help address issues before they become problematic.  This is taking an active approach to the open-door policy.  I like to call it the active-door policy – you are actively engaging employees to talking with the company and given them an opportunity to voice any concerns.  These conversations should be documented.

4. Are there any employees you simply do not like working with?

Some employers might feel that this is too direct, but I think the question may draw out potential areas of conflict between employees.  While workplace conflict is not illegal in and of itself, the quicker employers can address and resolve conflict greatly reduces the likelihood of litigation.  If the company can address these concerns, and potentially deal with or move employees so that they do not have to work with others they do not like, it could be a solution to a more productive workforce.

5. Would you recommend that your friends should work here?

If yes, then ask for the recommendations.  The answer is no, ask follow-up questions about why.  Again, the quicker the employer can address potential problems, the better.

As noted above, these discussions should be documented.  The documentation will be good evidence that the company has an open-door policy and is effectively dealing with employee’s complaints on a timely basis.  This could be essential in defending many types of claims that could arise through litigation.