Loyal customers are the lifeblood of any business. As such, a business’s customer list may be its most valuable asset. Business owners need to ensure that their customers stay their customers. To do so, many businesses use non-compete agreements. While these agreements can provide very real benefits relating to the sale and purchase of a business, the California Supreme Court recently confirmed that such agreements are unlawful when applied to employees.
Business and Professions Code section 16600 is only thirty words long: “Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” Despite this simple, recent cases have battled for years in an effort to clarify the legal effect of non-compete agreements.
The key case in this arena is Edwards v. Arthur Andersen LLP. In this case, Raymond Edwards worked for Arthur Andersen as an accountant. The company sold part of its business, including the division where Edwards worked. Edwards had previously entered into a non-compete agreement which prohibited him from performing certain professional services for Arthur Andersen clients for 12 months and from soliciting Arthur Andersen personnel for 18 months.
The trial court held that the non-compete agreement was valid under the “narrow restraint” exception followed by some federal courts. This “narrow restraint” exception provides that a non-compete agreement does not violate Section 16600 if it imposes a limited restriction and “leaves a substantial portion of the market available to the employee.” The Court of Appeal disagreed, finding that the “narrow restraint” exception is invalid as applied to non-compete agreements.
The California Supreme Court agreed with the Court of Appeal and rejected the “narrow restraint” doctrine. The court reasoned that “Section 16600 is unambiguous, and if the Legislature intended the statute to apply only to restraints that were unreasonable or overbroad, it could have included language to that effect” (Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937, 950).
Employers are now bound by the Edwards decision. This means that non-compete agreements are unenforceable unless they relate to the sale of a business. Employers should review personnel documentation to make sure that their employees are not subjected to unlawful non-compete agreements. Also, businesses must not attempt to enforce illegal agreements, even if an employee has previously agreed.
Next month’s article will discuss the topic of trade secrets, and the steps employers can take to ensure that their trade secrets are protected.
Wednesday, November 5, 2008
Tuesday, October 7, 2008
California’s Work Sharing Program: An Option for Employers in Trying Economic Times
It is no secret that many employers in California are experiencing trying times. As the economy dips further downward, many employers will contemplate layoffs as a way to stay afloat. While layoffs have a devastating effect on the employees let go, as well as on morale at a company, often a layoff is the only option to minimize financial hardship. Yet California employers should be aware that there is an alternative to layoffs – namely California’s Work Sharing or “Partial Unemployment” Program.
The goal of the Work Sharing program is to help both employee and employer. The employee is spared the difficult period of total unemployment. The employer can avoid the high costs of hiring and retraining new employees once the economy improves. Here is how the program works, according to the Employment Development Department (EDD):
In many other states if a business with 100 employees faces a temporary setback and must reduce its work force by 20%, the employer has no choice but to layoff 20 employees. Under California’s Work Sharing program, an employer facing the same situation could file a Work Sharing plan with EDD reducing the work week of all employees from five days to four days (a 20% reduction). The employees would be eligible to receive 20% of their weekly unemployment insurance benefits. Under this plan everyone benefits. The employer is able to keep a trained work force intact during a temporary setback and no employees lose their jobs.
In essence, the program gives an employer the option to, instead of firing the employees, allow employees to work a reduced schedule and collect the percentage of their weekly unemployment insurance benefit amount equal to the percentage of their wage reduction for that week.
To be eligible, an employer must show that: (1) a minimum of 10% of the regular permanent workforce requires a reduction in wages and hours worked, and (2) at least two employees, but not less than 10% of the regular permanent workforce, will participate in the program. Employers with employees subject to collective bargaining agreements must obtain written approval from the bargaining agent. Finally, employers are required to submit their plan for approval to the EDD using form DE 8686 (available at http://www.edd.ca.gov/pdf_pub_ctr/de8686.pdf).
It is becoming more apparent that the economy will not turn around in the near future. Thus, many employers will be placed in the difficult situation of having to avoid financial adversity on the one hand, while wanting to protect their employees on the other. California’s Work Sharing Program gives employers the opportunity to do both.
The goal of the Work Sharing program is to help both employee and employer. The employee is spared the difficult period of total unemployment. The employer can avoid the high costs of hiring and retraining new employees once the economy improves. Here is how the program works, according to the Employment Development Department (EDD):
In many other states if a business with 100 employees faces a temporary setback and must reduce its work force by 20%, the employer has no choice but to layoff 20 employees. Under California’s Work Sharing program, an employer facing the same situation could file a Work Sharing plan with EDD reducing the work week of all employees from five days to four days (a 20% reduction). The employees would be eligible to receive 20% of their weekly unemployment insurance benefits. Under this plan everyone benefits. The employer is able to keep a trained work force intact during a temporary setback and no employees lose their jobs.
In essence, the program gives an employer the option to, instead of firing the employees, allow employees to work a reduced schedule and collect the percentage of their weekly unemployment insurance benefit amount equal to the percentage of their wage reduction for that week.
To be eligible, an employer must show that: (1) a minimum of 10% of the regular permanent workforce requires a reduction in wages and hours worked, and (2) at least two employees, but not less than 10% of the regular permanent workforce, will participate in the program. Employers with employees subject to collective bargaining agreements must obtain written approval from the bargaining agent. Finally, employers are required to submit their plan for approval to the EDD using form DE 8686 (available at http://www.edd.ca.gov/pdf_pub_ctr/de8686.pdf).
It is becoming more apparent that the economy will not turn around in the near future. Thus, many employers will be placed in the difficult situation of having to avoid financial adversity on the one hand, while wanting to protect their employees on the other. California’s Work Sharing Program gives employers the opportunity to do both.
Thursday, September 4, 2008
California employers avoid sick leave bombshell
California employers may not be aware of it, but they have all dodged a bullet. A controversial new law, Assembly Bill 2716, that would have required all California employers to provide paid sick leave to all employees will not be adopted during this legislative session. The California Senate Appropriations Committee recently decided to hold up consideration of AB 2716.
Overview of AB 2716
AB 2716 was modeled after San Francisco’s sick leave regulation - which was that paid sick days had to be provided to employees for the employee’s personal illness, to care for sick family members, or to recover from domestic violence or a sexual assault. The bill covers all employees, including government employees. However, it does not cover employees covered by a collective bargaining agreement that provides paid sick days.
Under the new bill, after working for seven calendar days, full and part-time employees accrue paid sick days at a rate of one hour per 30 hours worked. Employees can then use this accrued, paid sick time beginning on the 90th calendar day of employment, after which the paid sick days can be used as they are accrued. Employees would be allowed to carry over unused, accrued sick time from year to year.
Employers would be allowed, however, to limit the number of paid sick days accrued each year. “Small business employers” (10 or fewer employees) could limit employees to 40 hours or five sick days each year. All other employers could set limits of 72 hours or nine sick days per year.
Under the new bill, employers would not be required to pay employees for their accrued, unused sick time at termination or resignation. However, if an employee leaves an employer and is rehired by the same employer within one year, the employer would have to reinstate any previously accrued, unused paid sick days.
A marked change from current sick leave laws
Under current California law, employers are not required to offer sick leave to employees – although many do. Also, currently in California, if sick days are offered, they do not accrue nor vest, meaning that any unused sick leave may be forfeited at the end of a designated period of time.
Assembly Bill 2716 would change all this. And the change may be coming. The California Labor Federation (AFL-CIO) has promised to work to reintroduce the bill in the 2009 legislative session.
Employers, if you want input on this potential legislation, contact your local Chamber’s governmental committee.
Overview of AB 2716
AB 2716 was modeled after San Francisco’s sick leave regulation - which was that paid sick days had to be provided to employees for the employee’s personal illness, to care for sick family members, or to recover from domestic violence or a sexual assault. The bill covers all employees, including government employees. However, it does not cover employees covered by a collective bargaining agreement that provides paid sick days.
Under the new bill, after working for seven calendar days, full and part-time employees accrue paid sick days at a rate of one hour per 30 hours worked. Employees can then use this accrued, paid sick time beginning on the 90th calendar day of employment, after which the paid sick days can be used as they are accrued. Employees would be allowed to carry over unused, accrued sick time from year to year.
Employers would be allowed, however, to limit the number of paid sick days accrued each year. “Small business employers” (10 or fewer employees) could limit employees to 40 hours or five sick days each year. All other employers could set limits of 72 hours or nine sick days per year.
Under the new bill, employers would not be required to pay employees for their accrued, unused sick time at termination or resignation. However, if an employee leaves an employer and is rehired by the same employer within one year, the employer would have to reinstate any previously accrued, unused paid sick days.
A marked change from current sick leave laws
Under current California law, employers are not required to offer sick leave to employees – although many do. Also, currently in California, if sick days are offered, they do not accrue nor vest, meaning that any unused sick leave may be forfeited at the end of a designated period of time.
Assembly Bill 2716 would change all this. And the change may be coming. The California Labor Federation (AFL-CIO) has promised to work to reintroduce the bill in the 2009 legislative session.
Employers, if you want input on this potential legislation, contact your local Chamber’s governmental committee.
Monday, August 4, 2008
Employers finally get a break when it comes to meal breaks
At first glance, California’s law regarding meal and rest breaks seems fairly simple. Employees who work more than five hours are entitled to a meal break of 30 minutes or more. Employers must also provide rest breaks of at least ten minutes for each four hours worked by an employee. Yet these deceptively simple rules have been anything but in the hands of the courts.
In 2007, in a landmark decision, the California Supreme Court held that missed breaks are a form of “wages,” and not a “penalty” meaning that employees can go back three years to recover missed breaks.
Last month, the Fourth District Court of Appeals, in the case of Brinker Restaurant Corporation v. Superior Court of San Diego, handed down another important decision relating to meal breaks. Prior to this ruling, meal breaks and rest breaks were treated differently in one very key aspect: it was the employer’s duty to allow employees to take rest breaks, and to ensure that employees take meal breaks. Not so anymore.
The Court of Appeals ruled that meal breaks “need only be available, not ensured.” The court’s reasoning was practical in nature:
“[P]ublic policy does not support the notion that meal breaks must be ensured. If this were the case, employers would be forced to police their employees and force them to take meal breaks. With thousands of employees working multiple shifts, this would be an impossible task. If they were unable to do so, employers would have to pay an extra hour of pay any time an employee voluntarily chose not to take a meal period, or to take a shortened one."
Governor Schwarzenegger expressed his pleasure with the ruling as well: "The confusing and conflicting interpretations of the meal and rest period requirements have harmed both employees and employers. Today's decision promotes the public interest by providing employers, employees, the courts and the labor commissioner the clarity and precedent needed to apply meal and rest period requirements consistently.”
The ruling constitutes a major victory for employers, a rarity in California’s largely pro-employee law system. Yet employers are not completely off the hook when it comes to meal breaks. The ruling forbids employers from impeding, discouraging or dissuading employees from taking meal breaks. This means that employers must actually provide a work environment where an employee is free to take meal breaks that are real breaks, i.e. where they are relieved of all duty and free to leave the premises. A “meal break” that consists of an employee being required to answer phones or plow through a stack of paperwork while eating at their desk is insufficient.
In 2007, in a landmark decision, the California Supreme Court held that missed breaks are a form of “wages,” and not a “penalty” meaning that employees can go back three years to recover missed breaks.
Last month, the Fourth District Court of Appeals, in the case of Brinker Restaurant Corporation v. Superior Court of San Diego, handed down another important decision relating to meal breaks. Prior to this ruling, meal breaks and rest breaks were treated differently in one very key aspect: it was the employer’s duty to allow employees to take rest breaks, and to ensure that employees take meal breaks. Not so anymore.
The Court of Appeals ruled that meal breaks “need only be available, not ensured.” The court’s reasoning was practical in nature:
“[P]ublic policy does not support the notion that meal breaks must be ensured. If this were the case, employers would be forced to police their employees and force them to take meal breaks. With thousands of employees working multiple shifts, this would be an impossible task. If they were unable to do so, employers would have to pay an extra hour of pay any time an employee voluntarily chose not to take a meal period, or to take a shortened one."
Governor Schwarzenegger expressed his pleasure with the ruling as well: "The confusing and conflicting interpretations of the meal and rest period requirements have harmed both employees and employers. Today's decision promotes the public interest by providing employers, employees, the courts and the labor commissioner the clarity and precedent needed to apply meal and rest period requirements consistently.”
The ruling constitutes a major victory for employers, a rarity in California’s largely pro-employee law system. Yet employers are not completely off the hook when it comes to meal breaks. The ruling forbids employers from impeding, discouraging or dissuading employees from taking meal breaks. This means that employers must actually provide a work environment where an employee is free to take meal breaks that are real breaks, i.e. where they are relieved of all duty and free to leave the premises. A “meal break” that consists of an employee being required to answer phones or plow through a stack of paperwork while eating at their desk is insufficient.
Monday, July 7, 2008
Understanding vacation pay in California
Given that employers are in the middle of vacation season, this article serves as a refresher course on California’s vacation pay rules and regulations.
What is vacation pay?
There is no requirement that employers provide vacation pay, but if this benefit is offered, it must comply with numerous rules. Vacation pay is contract between the employee and the employer; it is a form of wages. Employers can set the amount of vacation that an employee earns. However, employers must be clear about how much vacation is offered, how it accrues, and when it starts to accrue. It is legal to require that a certain period of time pass before an employee starts to accrue vacation.
Because vacation is a form of wages, the right to vacation accrues on a daily basis. Employers are free to require that employees take vacation only when they have already accrued or earned it.
Use-It-Or-Lose-It Policies are illegal
Once an employee has earned vacation, an employer cannot take it away. California law strictly prohibits Use-It-Or-Lose-It vacation policies, in which an employee loses accrued vacation that has not been used by a specific time. Reasonable caps on vacation and cash-out policies are allowed, however. See below.
Reasonable cap on vacation
Employers can establish a reasonable cap plan - meaning that once a certain level of accrued vacation is earned but not taken by the employee, no new vacation will accrue until some of the accrued vacation is taken. Once some vacation is taken, vacation must continue to accrue at the regular rate.
The cap on vacation must be reasonable. The most common caps used by employers are one-and-one-half or two times the annual accrual rate. For example, if an employee earns 40 hours of vacation per year, a reasonable cap would be 60 hours or 80.
Cash-Out Policies
Employers are free to offer employees the option to cash out their earned vacation benefits. Cash-out policies can be on an “as needed” basis or allowed only once a month or once a year. Many employers require employees to accept pay at the end of each year for vacation time that
employees accrued but did not take.
Vacation must be paid at termination
Because accrued vacation is a form of wages, an employer must pay out all accrued, unused vacation at the termination of the employment relationship. This pay out must be at the employee’s final rate of pay, regardless of the rate of pay at which the vacation time was earned.
What is vacation pay?
There is no requirement that employers provide vacation pay, but if this benefit is offered, it must comply with numerous rules. Vacation pay is contract between the employee and the employer; it is a form of wages. Employers can set the amount of vacation that an employee earns. However, employers must be clear about how much vacation is offered, how it accrues, and when it starts to accrue. It is legal to require that a certain period of time pass before an employee starts to accrue vacation.
Because vacation is a form of wages, the right to vacation accrues on a daily basis. Employers are free to require that employees take vacation only when they have already accrued or earned it.
Use-It-Or-Lose-It Policies are illegal
Once an employee has earned vacation, an employer cannot take it away. California law strictly prohibits Use-It-Or-Lose-It vacation policies, in which an employee loses accrued vacation that has not been used by a specific time. Reasonable caps on vacation and cash-out policies are allowed, however. See below.
Reasonable cap on vacation
Employers can establish a reasonable cap plan - meaning that once a certain level of accrued vacation is earned but not taken by the employee, no new vacation will accrue until some of the accrued vacation is taken. Once some vacation is taken, vacation must continue to accrue at the regular rate.
The cap on vacation must be reasonable. The most common caps used by employers are one-and-one-half or two times the annual accrual rate. For example, if an employee earns 40 hours of vacation per year, a reasonable cap would be 60 hours or 80.
Cash-Out Policies
Employers are free to offer employees the option to cash out their earned vacation benefits. Cash-out policies can be on an “as needed” basis or allowed only once a month or once a year. Many employers require employees to accept pay at the end of each year for vacation time that
employees accrued but did not take.
Vacation must be paid at termination
Because accrued vacation is a form of wages, an employer must pay out all accrued, unused vacation at the termination of the employment relationship. This pay out must be at the employee’s final rate of pay, regardless of the rate of pay at which the vacation time was earned.
Wednesday, June 4, 2008
Keeping up with California’s ever-changing employment law landscape
California employment law is always changing. The laws change so fast, it is difficult for employers to keep up. Often, new legal requirements “fly under the radar,” and companies find themselves in trouble for their failure to implement the new rules. The year 2008 has been no exception. Several new laws or changes to existing laws have come into effect this year. Here are a few key changes:
Social security numbers cannot be used as identification
Beginning in 2008, employers are only allowed to use the last four digits of an employee’s social security number for an ID number on an employee’s pay stub. Employers are free to come up with another identification system that does not incorporate the employee’s social security number.
Minimum wage increase to $8.00
Chances are that most employers are aware of the California minimum wage increase to $8.00 per hour. Yet, increasing the minimum wage has a ripple effect on other workplace issues. First, employees classified as exempt under the Administrative, Executive and Professional exemptions must be paid a salary of at least twice the minimum wage in order to be properly classified as exempt. As such, as of 2008, an employee must earn at least $33,280 per year to be legally exempt from overtime.
Another employment law tied to minimum wage applies to employees who use their own hand tools. Any employee who is allowed or required to use his or her own personal hand tools at work must be paid two times the minimum wage, or $16.00 per hour.
New I-9 form and new W-4 form
Beginning in 2008, employers must use a new I-9 form and a new W-4 form. The I-9 form can be found at http://www.uscis.gov. The W-9 form can be found at http://www.irs.gov/pub/irs-pdf/fw4.pdf.
Mileage increases
Employees in 2008 were given a minor reprieve from higher fuel prices, as the recommended IRS mileage reimbursement rate increased this year to 50.5 cents per mile in January. (See my February 2008 article on the IRS mileage increase).
The IRS increased the mileage rate again to 58.5 cents per mile on June 23, 2008. The new mileage rate went into effect on July 1, 2008 and will be in effect through December 31, 2008. As you can imagine, the IRS cited rising gas prices as a motivating factor for the increase. The IRS normally raises rates only at year end – as such, many may not be aware of the increase.
Conclusion
Keeping up with our state’s ever-changing employment law landscape is simply a necessary part of doing business in California. Changes come frequently, and often with little fanfare. And while some of these changes may seem minor or limited in scope, employers can find themselves with very real problems if they do not adapt their businesses to new rules and regulations.
Social security numbers cannot be used as identification
Beginning in 2008, employers are only allowed to use the last four digits of an employee’s social security number for an ID number on an employee’s pay stub. Employers are free to come up with another identification system that does not incorporate the employee’s social security number.
Minimum wage increase to $8.00
Chances are that most employers are aware of the California minimum wage increase to $8.00 per hour. Yet, increasing the minimum wage has a ripple effect on other workplace issues. First, employees classified as exempt under the Administrative, Executive and Professional exemptions must be paid a salary of at least twice the minimum wage in order to be properly classified as exempt. As such, as of 2008, an employee must earn at least $33,280 per year to be legally exempt from overtime.
Another employment law tied to minimum wage applies to employees who use their own hand tools. Any employee who is allowed or required to use his or her own personal hand tools at work must be paid two times the minimum wage, or $16.00 per hour.
New I-9 form and new W-4 form
Beginning in 2008, employers must use a new I-9 form and a new W-4 form. The I-9 form can be found at http://www.uscis.gov. The W-9 form can be found at http://www.irs.gov/pub/irs-pdf/fw4.pdf.
Mileage increases
Employees in 2008 were given a minor reprieve from higher fuel prices, as the recommended IRS mileage reimbursement rate increased this year to 50.5 cents per mile in January. (See my February 2008 article on the IRS mileage increase).
The IRS increased the mileage rate again to 58.5 cents per mile on June 23, 2008. The new mileage rate went into effect on July 1, 2008 and will be in effect through December 31, 2008. As you can imagine, the IRS cited rising gas prices as a motivating factor for the increase. The IRS normally raises rates only at year end – as such, many may not be aware of the increase.
Conclusion
Keeping up with our state’s ever-changing employment law landscape is simply a necessary part of doing business in California. Changes come frequently, and often with little fanfare. And while some of these changes may seem minor or limited in scope, employers can find themselves with very real problems if they do not adapt their businesses to new rules and regulations.
Monday, May 5, 2008
Can individual employees be personally liable for their workplace conduct?
Employers must always be vigilant of retaliation and sexual harassment claims. Generally, retaliation cases involve situations where an employee is terminated, suspended or otherwise disciplined after complaining about workplace concerns or employment practices that violate the law.
Sexual harassment claims involve (1) Quid Pro Quo sexual harassment - usually where a supervisor conditions an employment benefit on an employee’s willingness to engage in sexual behavior; or (2) Hostile Work Environment sexual harassment - when sexual jokes, comments, cartoons, physical interference with movement (blocking or following) creates an offensive working environment.
California courts have awarded huge verdicts in retaliation and harassment cases, making this treacherous ground for employers. But what about individual employees? Can they be held personally liable for retaliation or harassment?
Individual employees are NOT liable for retaliation
Until recently, it was unknown in California whether individual employees could be held personally liable in retaliation cases. However, in March 2008, the California Supreme Court, in Jones v. The Lodge at Torrey Pines Partnership, held that employees, including supervising employees, cannot be personally liable in cases where retaliation is alleged.
In the Jones case, Mr. Jones sued the Lodge as his employer, as well as an individual supervisor. Mr. Jones alleged that he was retaliated against after he made complaints about sexual orientation discrimination and obscene jokes in the workplace. The appellate court found both the employer and the supervisor liable for retaliation.
Yet the California Supreme Court found that California’s statutes prohibiting retaliation do not provide for personal liability. The Court compared retaliation cases to discrimination cases - which also do not provide for personal liability of individually employees - and based its decision on the following: (1) corporate decisions (i.e., the firing of an employee) are often collective, and (2) it is “bad policy to subject supervisors to the threat of a lawsuit every time they make a personnel decision.”
Individual employees ARE liable for sexual harassment
The Court’s ruling with respect to retaliation claims does not apply to claims of sexual harassment. California’s Fair Employment and Housing Act allows for personal liability for supervisors who sexually harass employees. While the company as a whole can be held partially responsible for the supervisor’s conduct, the individual supervisor’s personal assets are at risk as well. As such, companies and supervisors need to make prevention of workplace sexual harassment a priority. (See my April 2008 article on Sexual Harassment training.)
A supervisor’s personal liability has its limitations. California courts have held that a supervisor with knowledge that his/her subordinate was being sexually harassed by another employee cannot be held personally liable for the harassment merely for failing to take action on the complaint. Of course the employer and alleged harasser would face liability in this situation.
Sexual harassment claims involve (1) Quid Pro Quo sexual harassment - usually where a supervisor conditions an employment benefit on an employee’s willingness to engage in sexual behavior; or (2) Hostile Work Environment sexual harassment - when sexual jokes, comments, cartoons, physical interference with movement (blocking or following) creates an offensive working environment.
California courts have awarded huge verdicts in retaliation and harassment cases, making this treacherous ground for employers. But what about individual employees? Can they be held personally liable for retaliation or harassment?
Individual employees are NOT liable for retaliation
Until recently, it was unknown in California whether individual employees could be held personally liable in retaliation cases. However, in March 2008, the California Supreme Court, in Jones v. The Lodge at Torrey Pines Partnership, held that employees, including supervising employees, cannot be personally liable in cases where retaliation is alleged.
In the Jones case, Mr. Jones sued the Lodge as his employer, as well as an individual supervisor. Mr. Jones alleged that he was retaliated against after he made complaints about sexual orientation discrimination and obscene jokes in the workplace. The appellate court found both the employer and the supervisor liable for retaliation.
Yet the California Supreme Court found that California’s statutes prohibiting retaliation do not provide for personal liability. The Court compared retaliation cases to discrimination cases - which also do not provide for personal liability of individually employees - and based its decision on the following: (1) corporate decisions (i.e., the firing of an employee) are often collective, and (2) it is “bad policy to subject supervisors to the threat of a lawsuit every time they make a personnel decision.”
Individual employees ARE liable for sexual harassment
The Court’s ruling with respect to retaliation claims does not apply to claims of sexual harassment. California’s Fair Employment and Housing Act allows for personal liability for supervisors who sexually harass employees. While the company as a whole can be held partially responsible for the supervisor’s conduct, the individual supervisor’s personal assets are at risk as well. As such, companies and supervisors need to make prevention of workplace sexual harassment a priority. (See my April 2008 article on Sexual Harassment training.)
A supervisor’s personal liability has its limitations. California courts have held that a supervisor with knowledge that his/her subordinate was being sexually harassed by another employee cannot be held personally liable for the harassment merely for failing to take action on the complaint. Of course the employer and alleged harasser would face liability in this situation.
Thursday, April 3, 2008
Employers Get Serious with Employee Health
Ask any employer and they will tell you – it’s getting tougher and tougher to provide health care for employees. Health benefits are among the most coveted by employees, but usually the most expensive to provide. And it’s getting even more expensive each year. According to the National Coalition on Health Care, in 2007, employer health insurance premiums increased by 6.1%. In response, many employers are doing something about the high cost of providing health benefits.
A recent Time Magazine article reported that many employers are embarking on a “crackdown on workers’ poor health habits involving both the carrot and the (cancer) stick.” (Mandatory Health, Time Magazine, March 24, 2008, page 58) It’s no secret that many Americans have unhealthy habits – smoking, overeating, lack of exercise – yet it’s the employer who foots the bill when these unhealthy lifestyle choices create health problems for employees. And ironically, the employer also gets the blame for the problem as well. According to the same Time article, “More than half of us cite work demands for our refusal to put down the Ho Hos and do a push-up. Eighty-four percent of Americans say we’d get healthy – honest – if only the boss insisted.”
Now many bosses are insisting. Several large companies, such as Verizon and Microsoft have offered cash bonuses and other perks for employees who lose weight or quit smoking. Other companies have assigned “health coaches” to monitor the diets and lifestyles of employees. Estimates are that up to two-thirds of large companies offer these or similar wellness programs. Your business may lack the space or funds to install a gym at the workplace, but something as simple as a company weight-loss competition can be an easy and fun way to encourage good health among employees. Last year, our law firm took the top prize in a fitness contest sponsored by the Visalia Times Delta. During the six-month contest, our employees ate healthier, exercised more, and lost weight. The participants saw their productivity increase. Our firm witnessed firsthand the benefits that come when employees take the initiative to get healthier.
Another growing trend sees employers actually taking action against employees that refuse to get healthy. Stories abound of employers firing workers for smoking. (There is no law in California prohibiting employment discrimination against those who use tobacco products.) Other employers screen job applicants for nicotine. (The California Supreme Court has allowed drug testing of job applicants; drug testing of actual employees is a much more complex issue.) As discussed in a past article in this newsletter, a San Francisco employee was fired for using medically prescribed marijuana to alleviate his back pain caused by injuries he sustained in the military. The California Supreme Court recently upheld the firing.
Employers must exercise some caution, however. Overweight employees that have been terminated have sued employers for disability discrimination. And while the California Supreme Court has excluded obesity from the definition of “disability,” if an employee’s obesity “results from a physiological condition affecting one or more basic bodily systems and limits a major life activity,” there may be disability discrimination liability in terminating the employee.
In conclusion, one thing is all but certain – employers that provide health insurance are going to find it more and more expensive to do so. As such, taking steps to improve the health of employees not only helps the company’s bottom line, but has other benefits as well: fewer sick days and happier, more productive employees. California law has made it clear that because employers are footing the bill for their employees’ unhealthy lifestyles, they have the power to do something about it.
A recent Time Magazine article reported that many employers are embarking on a “crackdown on workers’ poor health habits involving both the carrot and the (cancer) stick.” (Mandatory Health, Time Magazine, March 24, 2008, page 58) It’s no secret that many Americans have unhealthy habits – smoking, overeating, lack of exercise – yet it’s the employer who foots the bill when these unhealthy lifestyle choices create health problems for employees. And ironically, the employer also gets the blame for the problem as well. According to the same Time article, “More than half of us cite work demands for our refusal to put down the Ho Hos and do a push-up. Eighty-four percent of Americans say we’d get healthy – honest – if only the boss insisted.”
Now many bosses are insisting. Several large companies, such as Verizon and Microsoft have offered cash bonuses and other perks for employees who lose weight or quit smoking. Other companies have assigned “health coaches” to monitor the diets and lifestyles of employees. Estimates are that up to two-thirds of large companies offer these or similar wellness programs. Your business may lack the space or funds to install a gym at the workplace, but something as simple as a company weight-loss competition can be an easy and fun way to encourage good health among employees. Last year, our law firm took the top prize in a fitness contest sponsored by the Visalia Times Delta. During the six-month contest, our employees ate healthier, exercised more, and lost weight. The participants saw their productivity increase. Our firm witnessed firsthand the benefits that come when employees take the initiative to get healthier.
Another growing trend sees employers actually taking action against employees that refuse to get healthy. Stories abound of employers firing workers for smoking. (There is no law in California prohibiting employment discrimination against those who use tobacco products.) Other employers screen job applicants for nicotine. (The California Supreme Court has allowed drug testing of job applicants; drug testing of actual employees is a much more complex issue.) As discussed in a past article in this newsletter, a San Francisco employee was fired for using medically prescribed marijuana to alleviate his back pain caused by injuries he sustained in the military. The California Supreme Court recently upheld the firing.
Employers must exercise some caution, however. Overweight employees that have been terminated have sued employers for disability discrimination. And while the California Supreme Court has excluded obesity from the definition of “disability,” if an employee’s obesity “results from a physiological condition affecting one or more basic bodily systems and limits a major life activity,” there may be disability discrimination liability in terminating the employee.
In conclusion, one thing is all but certain – employers that provide health insurance are going to find it more and more expensive to do so. As such, taking steps to improve the health of employees not only helps the company’s bottom line, but has other benefits as well: fewer sick days and happier, more productive employees. California law has made it clear that because employers are footing the bill for their employees’ unhealthy lifestyles, they have the power to do something about it.
Wednesday, March 12, 2008
Sexual Harassment Training - “An Ounce of Prevention...”
Sexual harassment is among the most serious of workplace problems. It can be devastating for employees, and can be incredibly expensive and damaging for employers. California recently passed legislation showing the importance of preventing sexual harassment at work. The recently enacted California Government Code section 12950.1 requires that employers comply with certain sexual harassment training rules and procedures.
Which employers must provide training?
This law applies to employers with 50 or more employees. It is not required that all 50 employees be in California.
Who must be trained?
Training must be given to all employees who are employed as supervisors as of July 1, 2005. All employees who become supervisors after July 1, 2005 must receive training within six months of assuming a supervisory position.
Who is a supervisor?
The new law does not define the word “supervisor.” Yet, the Fair Employment and Housing Act defines a “supervisor” as, among other things, one who has the authority to hire or fire, reward or discipline other employees, direct other employees, or exercise independent judgment. This is a broad definition, and whether an employee is exempt or non-exempt for purposes of wages is not controlling.
Employers would be wise in construing “supervisors” liberally - if there is doubt as to whether an employee has a “supervisory position,” the safest bet is to train that employee.
What type of training is sufficient?
The law requires that the training be of the “classroom” variety or other “interactive training.” California’s Department of Fair Employment and Housing has strongly suggested that web-based training is sufficient as “interactive” training. However, if a trainer is not actually present, one should be available to answer questions within two business days after the question is asked. Furthermore, the training must include practical examples dealing with prevention of harassment, discrimination and retaliation.
Who can train?
Three categories of people are qualified to train: (1) attorneys, (2) professors or instructors, and (3) Human Resource professionals or Harassment Prevention Consultants. For each category, the trainers must have two years of experience.
How often must employees be trained?
Employees covered by the law must be trained every two years.
How much training is needed?
If the training is conducted as “classroom training,” the actual time instructors spend teaching must total two hours, excluding breaks. If the training is web-based, it must take at least two hours to complete the course.
What records need to be kept?
The biennial training can be tracked by the individual employee, or by using a “training year” method in which the employer chooses training years for all supervisors. Employers must remember, however, that new supervisory employees must be trained within six months of hire or promotion. A record of who received the training, when it took place and what type, and who gave the training must be kept for two years.
Important final points
Proper training does not completely safeguard employers from sexual harassment lawsuits. Also, failure to provide training does not, in and of itself, make an employer liable for sexual harassment. However, the Fair Employment and Housing Commission can order an employer to give proper training. Yet if employers fail to properly train supervisory employees, a court could find that such violates the state’s public policy, creating even more liability if an employer is sued for sexual harassment. Ensuring that employees are properly trained requires some effort and planning - yet in this regard, an ounce of prevention is clearly worth a ton of litigation.
Which employers must provide training?
This law applies to employers with 50 or more employees. It is not required that all 50 employees be in California.
Who must be trained?
Training must be given to all employees who are employed as supervisors as of July 1, 2005. All employees who become supervisors after July 1, 2005 must receive training within six months of assuming a supervisory position.
Who is a supervisor?
The new law does not define the word “supervisor.” Yet, the Fair Employment and Housing Act defines a “supervisor” as, among other things, one who has the authority to hire or fire, reward or discipline other employees, direct other employees, or exercise independent judgment. This is a broad definition, and whether an employee is exempt or non-exempt for purposes of wages is not controlling.
Employers would be wise in construing “supervisors” liberally - if there is doubt as to whether an employee has a “supervisory position,” the safest bet is to train that employee.
What type of training is sufficient?
The law requires that the training be of the “classroom” variety or other “interactive training.” California’s Department of Fair Employment and Housing has strongly suggested that web-based training is sufficient as “interactive” training. However, if a trainer is not actually present, one should be available to answer questions within two business days after the question is asked. Furthermore, the training must include practical examples dealing with prevention of harassment, discrimination and retaliation.
Who can train?
Three categories of people are qualified to train: (1) attorneys, (2) professors or instructors, and (3) Human Resource professionals or Harassment Prevention Consultants. For each category, the trainers must have two years of experience.
How often must employees be trained?
Employees covered by the law must be trained every two years.
How much training is needed?
If the training is conducted as “classroom training,” the actual time instructors spend teaching must total two hours, excluding breaks. If the training is web-based, it must take at least two hours to complete the course.
What records need to be kept?
The biennial training can be tracked by the individual employee, or by using a “training year” method in which the employer chooses training years for all supervisors. Employers must remember, however, that new supervisory employees must be trained within six months of hire or promotion. A record of who received the training, when it took place and what type, and who gave the training must be kept for two years.
Important final points
Proper training does not completely safeguard employers from sexual harassment lawsuits. Also, failure to provide training does not, in and of itself, make an employer liable for sexual harassment. However, the Fair Employment and Housing Commission can order an employer to give proper training. Yet if employers fail to properly train supervisory employees, a court could find that such violates the state’s public policy, creating even more liability if an employer is sued for sexual harassment. Ensuring that employees are properly trained requires some effort and planning - yet in this regard, an ounce of prevention is clearly worth a ton of litigation.
California Employers Free to Say “NO” to Medicinal Marijuana
The controversial Compassionate Use Act of 1996 gave people who use marijuana for medical purposes a defense to certain crimes. However, a recent California Supreme Court case, Ross v. Raging Wire Telecommunications, Inc., held that employers do not have to tolerate an employee’s use of medical marijuana.
In the Ross case, Raging Wire required Mr. Ross - who suffered from back spasms - to take a drug test, in which he tested positive for marijuana use. Raging Wire then fired Mr. Ross, prompting him to file a lawsuit claiming that the company wrongfully terminated him and discriminated against him because of his disability.
Mr. Ross argued that the Compassionate Use Act required the employer to accommodate his disability and thus allow him to use marijuana to ease his back pain. He argued that if it would violate California’s discrimination laws to fire someone who used insulin, it also violated discrimination law to fire an employee who uses other medicine deemed legal by California, in this case medicinal marijuana. The court rejected this argument, finding that the Compassionate Use Act did not actually legalize marijuana, but merely provided a defense to criminal charges in limited circumstances. The court held that the Compassionate Use Act did not give marijuana the same status as any legal prescription drug, and that no state law could completely legalize marijuana for medical purposes because the drug is illegal under federal law.
Finally, the court refused to extend the protection of the Compassionate Use Act into the employment realm, reasoning that marijuana has a potential for abuse and that employers have an interest in whether an employee uses the drug.
The case also reaffirmed that California law allows employers to require pre-employment drug tests, and that employers are free to take drug use into account in making employment decisions. However, it must be noted that certain types of employee drug testing create legal risks, so employers interested in performing drug tests should first consult with an employment law attorney.
In the Ross case, Raging Wire required Mr. Ross - who suffered from back spasms - to take a drug test, in which he tested positive for marijuana use. Raging Wire then fired Mr. Ross, prompting him to file a lawsuit claiming that the company wrongfully terminated him and discriminated against him because of his disability.
Mr. Ross argued that the Compassionate Use Act required the employer to accommodate his disability and thus allow him to use marijuana to ease his back pain. He argued that if it would violate California’s discrimination laws to fire someone who used insulin, it also violated discrimination law to fire an employee who uses other medicine deemed legal by California, in this case medicinal marijuana. The court rejected this argument, finding that the Compassionate Use Act did not actually legalize marijuana, but merely provided a defense to criminal charges in limited circumstances. The court held that the Compassionate Use Act did not give marijuana the same status as any legal prescription drug, and that no state law could completely legalize marijuana for medical purposes because the drug is illegal under federal law.
Finally, the court refused to extend the protection of the Compassionate Use Act into the employment realm, reasoning that marijuana has a potential for abuse and that employers have an interest in whether an employee uses the drug.
The case also reaffirmed that California law allows employers to require pre-employment drug tests, and that employers are free to take drug use into account in making employment decisions. However, it must be noted that certain types of employee drug testing create legal risks, so employers interested in performing drug tests should first consult with an employment law attorney.
Some Good News from the I.R.S.
With oil prices soaring ever higher, it seems like there is no good news when it comes to filling up at the pump. However, some small relief to the current high gas prices has recently come from a most unlikely source – the Internal Revenue Service. In late November of last year, the IRS raised the standard mileage reimbursement rate for 2008 to 50.5 cents per mile.
According to Labor Code section 2802: “An employer shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence” of the performance of his or her job duties. Included in these “necessary expenditures” is the cost incurred by an employee in using his or her vehicle for business purposes.
The IRS sets out a standard mileage rate to calculate the costs of operating a vehicle for business purposes. Beginning January 1, 2008, the mileage rate for the use of a car (including vans, pickups or panel trucks) was raised to 50.5 cents per mile for business miles driven. This constitutes a two-cent raise from 2007.
Employers must exercise caution in reimbursing employees for mileage. According to California’s Department of Labor Standards Enforcement, employers must reimburse employees for mileage at the IRS rate in order to comply with Labor Code section 2802. However, according to a recent California Supreme Court case, an employer may negotiate with the employee a mileage rate different from the IRS rate, so long as it fully reimburses the employee. But whenever an employer chooses to reimburse an employee below the IRS’s standard, extreme care should be taken to ensure that the negotiation was fair.
So while employees are not going to get rich from this small IRS increase, employees will no doubt be pleased to hear of some good news from the IRS. As for employers, the 2008 increase, while small, could create some headaches down the road if not followed today.
According to Labor Code section 2802: “An employer shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence” of the performance of his or her job duties. Included in these “necessary expenditures” is the cost incurred by an employee in using his or her vehicle for business purposes.
The IRS sets out a standard mileage rate to calculate the costs of operating a vehicle for business purposes. Beginning January 1, 2008, the mileage rate for the use of a car (including vans, pickups or panel trucks) was raised to 50.5 cents per mile for business miles driven. This constitutes a two-cent raise from 2007.
Employers must exercise caution in reimbursing employees for mileage. According to California’s Department of Labor Standards Enforcement, employers must reimburse employees for mileage at the IRS rate in order to comply with Labor Code section 2802. However, according to a recent California Supreme Court case, an employer may negotiate with the employee a mileage rate different from the IRS rate, so long as it fully reimburses the employee. But whenever an employer chooses to reimburse an employee below the IRS’s standard, extreme care should be taken to ensure that the negotiation was fair.
So while employees are not going to get rich from this small IRS increase, employees will no doubt be pleased to hear of some good news from the IRS. As for employers, the 2008 increase, while small, could create some headaches down the road if not followed today.
Military Spouse Leave
Recently, Governor Schwarzenegger signed Assembly Bill 392 into law, effective immediately, creating a new leave of absence right for spouses of military personnel while the military spouse is on leave from active duty. The law allows for 10 days of unpaid time off.
Which employees are eligible?
To be eligible, the employee must have a spouse who is on active duty for any of the Armed Forces, National Guard or Army Reserves, in an area of military conflict. Leave will only be provided during: 1) periods of declared war, or 2) periods of deployment of the National Guard or Reserves.
Only employees who work an average of 20 or more hours per week are eligible.
Which employers are affected?
This new law applies to private and public employers with 25 or more employees.
What does an employee have to do?
In order to take the leave, the employee must give notice to the employer no later than two business days after receiving an “official notice” that the military spouse will be on deployment leave. The employee must also notify the employer of an intent to take the time off work during the spouse’s deployment. In addition, the employee must provide written documentation certifying that the spouse will be on leave from deployment during that time.
Employers should proceed carefully
The law creates some potential hazards for employers. First, the law does not address whether employers have flexibility in demanding that the ten-day leave be taken in such a way that will best facilitate the business’ needs. Therefore, employers should be as flexible as possible when employees request this leave. Second, taking such leave does not affect the employee’s right to any other leave or benefit. Third, it does not appear that there are circumstances under which an employer would be allowed to deny an employee’s request for leave - all the more reason for employers to be flexible and careful. Finally, this law prohibits any sort of retaliation against an employee who requests or takes such leave.
Which employees are eligible?
To be eligible, the employee must have a spouse who is on active duty for any of the Armed Forces, National Guard or Army Reserves, in an area of military conflict. Leave will only be provided during: 1) periods of declared war, or 2) periods of deployment of the National Guard or Reserves.
Only employees who work an average of 20 or more hours per week are eligible.
Which employers are affected?
This new law applies to private and public employers with 25 or more employees.
What does an employee have to do?
In order to take the leave, the employee must give notice to the employer no later than two business days after receiving an “official notice” that the military spouse will be on deployment leave. The employee must also notify the employer of an intent to take the time off work during the spouse’s deployment. In addition, the employee must provide written documentation certifying that the spouse will be on leave from deployment during that time.
Employers should proceed carefully
The law creates some potential hazards for employers. First, the law does not address whether employers have flexibility in demanding that the ten-day leave be taken in such a way that will best facilitate the business’ needs. Therefore, employers should be as flexible as possible when employees request this leave. Second, taking such leave does not affect the employee’s right to any other leave or benefit. Third, it does not appear that there are circumstances under which an employer would be allowed to deny an employee’s request for leave - all the more reason for employers to be flexible and careful. Finally, this law prohibits any sort of retaliation against an employee who requests or takes such leave.
Rest Breaks in the Workplace
Employers must provide non-exempt employees (employees eligible to receive overtime) rest breaks of at least 10 minutes for each four hours worked. An employer must also provide a meal break of at least one half-hour for every work period more than five hours. During the meal break the employee must be relieved of all duty and must be free to leave the premises. A second meal break is required if the employee’s work day is longer than 10 hours. Yet if an employee’s shift is six hours or less, the employee can choose to not take the meal break.
California Labor Code section 226.7 provides that if an employer fails to provide employees with these meal and rest breaks, the employee is owed “one hour of pay” for each missed break.
With respect to the penalty, rest breaks and meal breaks are different. With rest breaks, the employer is required to authorize and permit all employees to take the rest periods. An employer is not required to pay for the missed rest break if the employee, who was truly allowed and authorized to take the rest break, freely chooses to forgo it.
Meal breaks are different, however. According to the Labor Commissioner: “The employer has an affirmative obligation to ensure that workers are actually relieved of all duty, not performing any work, and free to leave the worksite.” In sum, it is the employer’s duty to allow employees to take rest breaks, and to ensure that employees take meal breaks.
A recent California case, Murphy v. Kenneth Cole Productions, has expanded liability for employers in this respect. In recent years, unpaid breaks were considered a “penalty,” meaning that employees could only go back one year to recover missed breaks. However, the California Supreme Court held that missed breaks are actually a form of “wages,” meaning that employees can now go back three years.
California Labor Code section 226.7 provides that if an employer fails to provide employees with these meal and rest breaks, the employee is owed “one hour of pay” for each missed break.
With respect to the penalty, rest breaks and meal breaks are different. With rest breaks, the employer is required to authorize and permit all employees to take the rest periods. An employer is not required to pay for the missed rest break if the employee, who was truly allowed and authorized to take the rest break, freely chooses to forgo it.
Meal breaks are different, however. According to the Labor Commissioner: “The employer has an affirmative obligation to ensure that workers are actually relieved of all duty, not performing any work, and free to leave the worksite.” In sum, it is the employer’s duty to allow employees to take rest breaks, and to ensure that employees take meal breaks.
A recent California case, Murphy v. Kenneth Cole Productions, has expanded liability for employers in this respect. In recent years, unpaid breaks were considered a “penalty,” meaning that employees could only go back one year to recover missed breaks. However, the California Supreme Court held that missed breaks are actually a form of “wages,” meaning that employees can now go back three years.
Tuesday, March 11, 2008
Family Medical Leave Act - Can You Take Time Off to Care for a Sick Family Member?
To be eligible for leave under the Family Medical Leave Act (FMLA), an employee must 1) have worked for the employer for at least 12 months – the time need not be consecutive; 2) have worked for the employer for at least 1,250 hours in the past 12 months; and 3) work for an employer that employs 50 or more employees at the worksite or within 75 miles of the worksite. FMLA leave is most often taken to care for a newborn child, to care for a family member (child, parent, or spouse) with a serious health condition, or in situations where an employee has a serious health condition. A “serious health condition” is an illness, injury or condition that involves either inpatient care or continuing treatment by a healthcare provider. An employee may take up to 12 workweeks of family leave in a 12-month period either all at once, or in small increments.
So if you were to seek FMLA leave, you would be eligible if the family member is a child, parent, or spouse, and your employer meets the above requirements.
FMLA leave is generally unpaid, although you may be able to substitute sick or vacation leave. Some employers require employees to use vacation or paid time off for family leave. An employer may require employees to use accrued sick pay during family leave, but only if the leave is for the employee’s own serious health condition. However, your employer may have a provision providing compensation during FMLA leave; check your Employee Handbook.
Yet you may have other avenues. California recognizes “kin care,” in which an employee can use sick leave to care for a sick child, parent, spouse, or domestic partner. It applies to small employers and does not require a serious illness. Here an employee may use one half of his or her annual sick leave allotment, once it is actually accrued. Finally, some companies offer short-term disability programs to care for a family member, where an employee can earn all or part of his or her salary. In conclusion, while each employer may offer varying benefits, there are many options available to California employees who need to care for sick family members and may need wages as well.
So if you were to seek FMLA leave, you would be eligible if the family member is a child, parent, or spouse, and your employer meets the above requirements.
FMLA leave is generally unpaid, although you may be able to substitute sick or vacation leave. Some employers require employees to use vacation or paid time off for family leave. An employer may require employees to use accrued sick pay during family leave, but only if the leave is for the employee’s own serious health condition. However, your employer may have a provision providing compensation during FMLA leave; check your Employee Handbook.
Yet you may have other avenues. California recognizes “kin care,” in which an employee can use sick leave to care for a sick child, parent, spouse, or domestic partner. It applies to small employers and does not require a serious illness. Here an employee may use one half of his or her annual sick leave allotment, once it is actually accrued. Finally, some companies offer short-term disability programs to care for a family member, where an employee can earn all or part of his or her salary. In conclusion, while each employer may offer varying benefits, there are many options available to California employees who need to care for sick family members and may need wages as well.
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