California employment law is a mind field that carries huge exposure for employers not proactively monitoring legal developments and potential legal issues. There are some statements employers in California should never make, and this Friday’s Five reviews misaligned statements that can create significant liability for an employer.
1. My company has employment practices liability insurance, so there cannot be much exposure from employment lawsuits.
In California, it is very common for insurance companies to exclude wage and hour claims from the employment practices liability (EPLI) coverage. This applies to single plaintiff and class action claims and representative claims under California’s Private Attorney General Act (PAGA). This is a significant area of potential exposure for employers, and therefore, the costs and benefit analysis of an EPLI policy must take these considerations into account.
Moreover, under California law an insured cannot buy insurance to cover willful acts. See Insurance Code section 533. Therefore, if the employment lawsuit alleges willful acts, it is also likely not going to be covered by insurance.
Employers should seek coverage counsel to assist in reviewing the exclusions and limitations of any EPLI policies prior to purchasing in order to completely understand the coverage that is being purchased for the cost of the policy.
2. I’m busy right now, can you tell me about your workplace complaint tomorrow?
California employers have a legal obligation to conduct workplace investigations. California Government Code section 12940(j) provides that it is “unlawful if the entity, or its agents or supervisors, knows or should have known of this conduct and fails to take immediate and appropriate corrective action.” The law also provides that employers are liable if they “fail to take all reasonable steps necessary to prevent discrimination and harassment from occurring.” Gov. Code section 12940(k). If the employer fails to take the preventative measures, they can be held liable for the harassment between co-workers. If the harassment occurs by a manager, the company is strictly liable for the harassment. If the harassment occurred by a non-management employee, the employer is only liable if it does not take immediate and appropriate corrective action to stop the harassment once it learns about the harassment. Investigations must follow certain parameters in order to be deemed adequate under the law. Click here for more information about conducting adequate investigations.
3. There is no need for our company to record meal breaks, all of the employees know that they can take breaks whenever they want.
Meal breaks taken by the employees must be recorded by the employer. However, there is no requirement for employers to record 10-mintute rest breaks. For more information about meal and rest break obligations, see my previous article.
4. Our company’s handbook is current, it was updated four years ago.
Any California employer can attest, the employment legal landscape changes on a yearly (if not more often basis). Employers should have someone well versed on employment law reviewing the employee handbook on at least a yearly basis.
5. I’m sure my payroll company is issuing compliant pay stubs.
Employers are cautioned not to rely on their payroll companies for compliant itemized wage statements, as these companies often times do not understand the legal requirements of the Labor Code. Ensuring the required information is properly listed on the itemized wage statements is an item that employers should review at least twice a year for compliance.
Labor Code Section 226(a) requires the following information to be listed on employees’ pay stubs:
- Gross wages earned
- Total hours worked (not required for salaried exempt employees)
- The number of piece-rate units earned and any applicable piece rate if the employee is paid on a piece rate basis
- All deductions (all deductions made on written orders of the employee may be aggregated and shown as one item)
- Net wages earned
- The inclusive dates of the period for which the employee is paid
- The name of the employee and the last four digits of his or her social security number or an employee identification number other than a social security number
- The name and address of the legal entity that is the employer
- All applicable hourly rates in effect during the pay period, and the corresponding number of hours worked at each hourly rate by the employee
Here is an example of an itemized wage statement published by the DLSE.
Also, do not forget that under California’s paid sick leave law that went into effect on July 1, 2015 employers have additional reporting information regarding employees’ accrued paid sick leave and usage. Employers must show how many days of sick leave an employee has available on the employee’s pay stub or a document issued the same day as a paycheck.
Companies are ultimately liable for these violations, so it is best to double check your payroll company’s work to ensure compliance.