Whether they work in the fields, at a construction site, or out on the local streets, many Visalia employees work outdoors. Employers may not be aware that there are certain rules that apply to outdoor employees. If you have employees that work outside, then your business is covered by the California Heat Illness Prevention Regulations.
The law defines “outdoor work” broadly. Open areas like agricultural fields, storage yards, and constructions sites clearly constitute outdoor workplaces. Yet outdoor areas adjacent to buildings, e.g., loading docks, are also considered “outdoors” if an employee spends a significant amount of time working in them.
So assuming your business is covered by these regulations, what are you required to do? Employers must have an effective Injury and Illness Prevention Program (IIPP) which provides first aid and emergency response. All IIPPs must include effective procedures for hazard identification, correction, investigation of employee injuries, and communication with employees about health and safety matters.
Employers must also ensure that employees have adequate drinking water. For employees working in the heat, a minimum of one quart of drinking water per hour must be available to each employee to replace water lost by exertion in the heat.
In addition, the heat illness prevention standard requires employers to provide employees access to an area with shade. Employers must always have the capability to provide shade promptly if it is requested by an employee. The Division of Occupational Safety and Health has mandated that “adequate access to shade includes having shade actually present when the presence of shade is necessary to protect employees from heat illness.”
Non-agricultural employers may provide cooling measures other than shade, if they can demonstrate that the alternative is at least as effective as shade. Such cooling measures include other options such as fans and misting devices where the employer can demonstrate that they are at least as effective as shade at allowing the body to cool.
While these regulations are somewhat technical, and do not apply to all businesses, many Visalia businesses are required to comply with these rules because their employees must work outdoors. Following these guidelines will ensure a safe, productive workplace for outdoor employees, and will eliminate problems down the road.
Thursday, September 24, 2009
Thursday, July 30, 2009
What you need to know about reimbursing employee expenses
From time to time, virtually all employees are asked to dip into their own pockets for legitimate business needs. This may take form of filling up the employee’s car with gas after a long drive to meet with a client, or buying office supplies at Staples. How many of you reading this article have asked an employee to pick up a birthday cake or flowers for another employee? So when employees do use their own funds for business needs, what is the obligation of the employer?
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 discharge of his or her duties, or of his or her obedience to the directions of the employer …” As alluded to above, this usually takes the form of mileage, travel, and dining expenses.
How do I reimburse for mileage?
A year ago gas prices were through the roof. Eight months ago gas prices were lower than they had been in years. Fortunately, employers have a guide when reimbursing employers for their mileage. The Internal Revenue Service (IRS) issues a standard mileage rate that fluctuates based on gas and other travel prices. The current IRS standard mileage rate is 55 cents per mile for business miles driven, 24 cents per mile driven for medical or moving purposes, and 14 cents per mile driven in service of charitable organizations. Here’s how the IRS has recently taken gas prices into account when setting the standard rate: the rate was 50.5 cents at the start of 2008, then climbed to 58.5 cents in the second half of 2008, and then came down again to the current rate of 55 cents per mile.
While the rate usually adjusts each January – as evidenced by the multiple changes in 2008 – employers need to be on the lookout for changes in the IRS mileage rate to ensure that employees are being properly reimbursed.
When do I have to reimburse my employees?
Expense reimbursements are not considered wages. As such, wage laws, such as those regulating the time and place of payment, do not apply to expense reimbursements. Therefore, employers are free to make expense reimbursements on any reasonable schedule. Many employers choose to reimburse employees once a month.
Are expenses due immediately on termination?
There are specific time frames in which employers are required to pay employee wages when the employment relationship is terminated. When an employee is terminated, all wages (including vacation) are due immediately. When an employee quits and gives more than 72 hours notice, all wages are due on the last day of work. When an employee quits and gives fewer than 72 hours notice, all wages are due within 72 hours after notice is given.
Expenses work differently, however. The deadlines described above that apply to final wages do not apply to reimbursement of expenses. Reimbursements can be made at the normal time for payment – and as outlined above, employers are free to create a reasonable schedule for reimbursement of expenses.
In conclusion, the rules regarding expenses are straightforward, and few problems arise in this regard. Nevertheless, employers can save themselves problems down the road by making sure employee expenses are handled properly.
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 discharge of his or her duties, or of his or her obedience to the directions of the employer …” As alluded to above, this usually takes the form of mileage, travel, and dining expenses.
How do I reimburse for mileage?
A year ago gas prices were through the roof. Eight months ago gas prices were lower than they had been in years. Fortunately, employers have a guide when reimbursing employers for their mileage. The Internal Revenue Service (IRS) issues a standard mileage rate that fluctuates based on gas and other travel prices. The current IRS standard mileage rate is 55 cents per mile for business miles driven, 24 cents per mile driven for medical or moving purposes, and 14 cents per mile driven in service of charitable organizations. Here’s how the IRS has recently taken gas prices into account when setting the standard rate: the rate was 50.5 cents at the start of 2008, then climbed to 58.5 cents in the second half of 2008, and then came down again to the current rate of 55 cents per mile.
While the rate usually adjusts each January – as evidenced by the multiple changes in 2008 – employers need to be on the lookout for changes in the IRS mileage rate to ensure that employees are being properly reimbursed.
When do I have to reimburse my employees?
Expense reimbursements are not considered wages. As such, wage laws, such as those regulating the time and place of payment, do not apply to expense reimbursements. Therefore, employers are free to make expense reimbursements on any reasonable schedule. Many employers choose to reimburse employees once a month.
Are expenses due immediately on termination?
There are specific time frames in which employers are required to pay employee wages when the employment relationship is terminated. When an employee is terminated, all wages (including vacation) are due immediately. When an employee quits and gives more than 72 hours notice, all wages are due on the last day of work. When an employee quits and gives fewer than 72 hours notice, all wages are due within 72 hours after notice is given.
Expenses work differently, however. The deadlines described above that apply to final wages do not apply to reimbursement of expenses. Reimbursements can be made at the normal time for payment – and as outlined above, employers are free to create a reasonable schedule for reimbursement of expenses.
In conclusion, the rules regarding expenses are straightforward, and few problems arise in this regard. Nevertheless, employers can save themselves problems down the road by making sure employee expenses are handled properly.
Wednesday, July 1, 2009
A Casual Problem? Implementing an appropriate dress and grooming policy
As far as dress goes, the modern workplace is becoming more and more casual. Suits, ties, and other formal apparel are often the exception at work, rather than the rule. Yet virtually all businesses, especially those where face-to-face customer/client interaction is required, want employees to look their best. As such, California law allows for reasonable requirements concerning employee dress and grooming. There are, however, restrictions.
For one, in California, it is generally unlawful to prohibit women from wearing pants. Moreover, requiring women to wear sexually provocative uniforms can violate FEHA. Other grooming policies may be discriminatory if they create an unusual burden on one gender in terms of expense, time to get ready for work, etc. (Jespersen v Harrah's Operating Co. (9th Cir 2006) 444 F3d 1104).
Yet a grooming policy that differentiates in some respects between men and women does not, by itself and without any further showing of disparate treatment, constitute sex discrimination. In Jespersen v Harrah's Operating Co., the employer terminated a female casino bartender for refusing to comply with the employer's grooming policy, which (1) required women to wear makeup, (2) allowed women to have long hair, while men had to have short hair, and (3) prohibited men from having painted fingernails. The court held that the grooming policy did not impose an unequal burden on women. While the employer's policy contained sex-differentiated requirements regarding each employee's hair, hands, and face, and while those individual requirements differed according to gender, none on its face placed a greater burden on one gender than the other.
Employers must also reasonably accommodate employees in implementing grooming standards that conflict with an employee's religious beliefs and practices (Bhatia v Chevron U.S.A., Inc. (9th Cir 1984) 734 F2d 1382, 1383). In Bhatia v. Chevron U.S.A., Inc., the employer required employees to shave any facial hair that prevented them from achieving a gas-tight face seal when wearing a respirator. Mr. Bhatia, a machinist, informed his employer he could not comply with the requirement because he was a devout Sikh, and his religion proscribed the cutting or shaving of any body hair. Mr. Bhatia was suspended, and eventually accepted a transfer to a janitorial position at reduced wages. The employer refused to promise it would return Mr. Bhatia to a machinist position if equipment were developed that could be used safely with a beard. The court found that while Mr. Bhatia had established a case of religious discrimination, the employer showed that it made good faith efforts to accommodate his religious beliefs, and that further accommodation would have caused it undue hardship.
In conclusion, employers must ensure that supervisors correctly administer dress and grooming policies, and that the policies themselves do not violate the rules discussed above. It is also important to make sure that such policies do not disproportionately impact one group or gender more than another.
For one, in California, it is generally unlawful to prohibit women from wearing pants. Moreover, requiring women to wear sexually provocative uniforms can violate FEHA. Other grooming policies may be discriminatory if they create an unusual burden on one gender in terms of expense, time to get ready for work, etc. (Jespersen v Harrah's Operating Co. (9th Cir 2006) 444 F3d 1104).
Yet a grooming policy that differentiates in some respects between men and women does not, by itself and without any further showing of disparate treatment, constitute sex discrimination. In Jespersen v Harrah's Operating Co., the employer terminated a female casino bartender for refusing to comply with the employer's grooming policy, which (1) required women to wear makeup, (2) allowed women to have long hair, while men had to have short hair, and (3) prohibited men from having painted fingernails. The court held that the grooming policy did not impose an unequal burden on women. While the employer's policy contained sex-differentiated requirements regarding each employee's hair, hands, and face, and while those individual requirements differed according to gender, none on its face placed a greater burden on one gender than the other.
Employers must also reasonably accommodate employees in implementing grooming standards that conflict with an employee's religious beliefs and practices (Bhatia v Chevron U.S.A., Inc. (9th Cir 1984) 734 F2d 1382, 1383). In Bhatia v. Chevron U.S.A., Inc., the employer required employees to shave any facial hair that prevented them from achieving a gas-tight face seal when wearing a respirator. Mr. Bhatia, a machinist, informed his employer he could not comply with the requirement because he was a devout Sikh, and his religion proscribed the cutting or shaving of any body hair. Mr. Bhatia was suspended, and eventually accepted a transfer to a janitorial position at reduced wages. The employer refused to promise it would return Mr. Bhatia to a machinist position if equipment were developed that could be used safely with a beard. The court found that while Mr. Bhatia had established a case of religious discrimination, the employer showed that it made good faith efforts to accommodate his religious beliefs, and that further accommodation would have caused it undue hardship.
In conclusion, employers must ensure that supervisors correctly administer dress and grooming policies, and that the policies themselves do not violate the rules discussed above. It is also important to make sure that such policies do not disproportionately impact one group or gender more than another.
Friday, June 5, 2009
The pros and cons of Progressive Discipline
Employers walk a fine line when it comes to disciplining their employees. On the one hand, employers want to give their employees the opportunity to improve performance problems. On the other, employers want to make sure that they don’t alter the “at-will” employment relationship and create problems if the employee is unable to improve. And straddling this line is the “progressive discipline” policy.
What is a progressive discipline policy?
A progressive disciplinary policy is one based on incremental levels of discipline, which usually includes: (1) oral warnings for the first infraction; (2) written warnings if the misconduct persists; and eventually (3) suspension or termination for subsequent infractions.
When and how should it be used?
Progressive discipline is typically used to correct less serious forms of performance deficiencies or misconduct – e.g., absenteeism, performance deficiencies, tardiness, abusive language, horseplay, sleeping or loafing on the job, personal use of company equipment, and other less severe forms of performance deficiencies or misconduct. Progressive discipline should not be used in instances of severe misconduct – assault, theft, falsification of work records, willful damage to property, or divulging confidential information.
Documentation is a key part of any progressive discipline policy. Supervisors should be required to document each step of the process. The employee's immediate supervisor should discuss each disciplinary step with the employee to assure that the employee understands the basis for discipline and the consequences of subsequent infractions.
What risks does a progressive discipline policy create?
While strict progressive-discipline policies encourage "fairness," many employers believe that a progressive discipline policy should be avoided, because (1) it is inconsistent with a truly "at-will" employment relationship, and (2) it creates too many litigation risks.
In essence, the employer that adopts such a policy establishes a standard for its own conduct. Consequently, any failure to observe the policy could be viewed by a judge or jury as improper.
The more detailed a policy is, the greater the risk that a mistake will be made in the course of dealing with a disciplinary problem. One approach for handling disciplinary matters is to include an at-will disclaimer at the end of the progressive discipline policy, permitting the employer to skip any step in the discipline process.
Eventually, each employer must decide for itself if the risks of a progressive discipline policy outweigh the rewards.
What is a progressive discipline policy?
A progressive disciplinary policy is one based on incremental levels of discipline, which usually includes: (1) oral warnings for the first infraction; (2) written warnings if the misconduct persists; and eventually (3) suspension or termination for subsequent infractions.
When and how should it be used?
Progressive discipline is typically used to correct less serious forms of performance deficiencies or misconduct – e.g., absenteeism, performance deficiencies, tardiness, abusive language, horseplay, sleeping or loafing on the job, personal use of company equipment, and other less severe forms of performance deficiencies or misconduct. Progressive discipline should not be used in instances of severe misconduct – assault, theft, falsification of work records, willful damage to property, or divulging confidential information.
Documentation is a key part of any progressive discipline policy. Supervisors should be required to document each step of the process. The employee's immediate supervisor should discuss each disciplinary step with the employee to assure that the employee understands the basis for discipline and the consequences of subsequent infractions.
What risks does a progressive discipline policy create?
While strict progressive-discipline policies encourage "fairness," many employers believe that a progressive discipline policy should be avoided, because (1) it is inconsistent with a truly "at-will" employment relationship, and (2) it creates too many litigation risks.
In essence, the employer that adopts such a policy establishes a standard for its own conduct. Consequently, any failure to observe the policy could be viewed by a judge or jury as improper.
The more detailed a policy is, the greater the risk that a mistake will be made in the course of dealing with a disciplinary problem. One approach for handling disciplinary matters is to include an at-will disclaimer at the end of the progressive discipline policy, permitting the employer to skip any step in the discipline process.
Eventually, each employer must decide for itself if the risks of a progressive discipline policy outweigh the rewards.
Wednesday, April 29, 2009
Conducting an effective termination meeting
An unfortunate part of doing business is occasionally having to terminate employees. Regardless of the reason for the termination, employers must be careful in how terminations are carried out. A substantial number of lawsuits filed by former employees arise because of how the termination took place, not why it took place. One good practice to ensure that terminations are handled properly is to conduct a termination meeting.
Employers may wish to consider the following steps in planning and carrying out a termination meeting. First, arrange for the meeting with the employee as soon as possible after the termination decision has been made. Waiting too long can allow rumors to spread and misinformation to get out which can make the process more difficult. Second, arrange the meeting at a time and place that will ensure privacy and minimize interruptions. Third, to minimize conflict between the employee and supervisor, consider having someone other than the employee's immediate supervisor conduct the termination meeting, such as the Human Resources manager or the employee's department manager. Fourth, it is a good idea to have a second manager or supervisor attend the termination meeting and serve as a witness to what was said or done at the meeting, but not otherwise actively participate.
The person conducting the termination meeting should briefly state the issues that precipitated the meeting, taking time to review previous discipline that supports the termination. Be sure to give the employee accurate and true reasons for the termination – reasons given to the employee that are later proved incorrect will substantially undermine the employer's defense if the employee sues the employer.
Be matter of fact, yet respectful to the employee. Do not allow the meeting to become argumentative. If the employee becomes argumentative or threatening, terminate the meeting and leave the room. Perhaps most importantly, be brief. Try to finish the meeting in less than 15 minutes. At the conclusion of the meeting, hand the employee a letter of termination, and briefly explain its contents. Be sure to provide the employee with a copy of the Employment Development Department (EDD) "DE 2320" pamphlet entitled "For Your Benefit," which informs employees of unemployment benefit rights.
Finally, unless there is a real fear of theft or destruction of company property, the employee should be allowed to privately gather personal items and leave the premises. Employers who require that the terminated employee be "escorted" from the building or monitored while cleaning out his or her desk could increase their risk of a lawsuit. Remember, it’s often “how” a termination is carried out that causes problems, not “why.”
This article is for education and information purposes only; it should not be construed as legal advice. If you have an employment law question for inclusion in a future article, contact Brett T. Abbott at Gubler, Koch, Degn & Gomez LLP (bta@thecalifornialawyers.com). For specific employment law advice or other legal assistance, contact Gubler, Koch, Degn & Gomez LLP , (559) 625-9600, 1110 N. Chinowith St., Visalia, CA 93291 (www.thecalifornialawyers.com). Read Mr. Abbott’s blog on employment law issues at http://work-law.blogspot.com.
Employers may wish to consider the following steps in planning and carrying out a termination meeting. First, arrange for the meeting with the employee as soon as possible after the termination decision has been made. Waiting too long can allow rumors to spread and misinformation to get out which can make the process more difficult. Second, arrange the meeting at a time and place that will ensure privacy and minimize interruptions. Third, to minimize conflict between the employee and supervisor, consider having someone other than the employee's immediate supervisor conduct the termination meeting, such as the Human Resources manager or the employee's department manager. Fourth, it is a good idea to have a second manager or supervisor attend the termination meeting and serve as a witness to what was said or done at the meeting, but not otherwise actively participate.
The person conducting the termination meeting should briefly state the issues that precipitated the meeting, taking time to review previous discipline that supports the termination. Be sure to give the employee accurate and true reasons for the termination – reasons given to the employee that are later proved incorrect will substantially undermine the employer's defense if the employee sues the employer.
Be matter of fact, yet respectful to the employee. Do not allow the meeting to become argumentative. If the employee becomes argumentative or threatening, terminate the meeting and leave the room. Perhaps most importantly, be brief. Try to finish the meeting in less than 15 minutes. At the conclusion of the meeting, hand the employee a letter of termination, and briefly explain its contents. Be sure to provide the employee with a copy of the Employment Development Department (EDD) "DE 2320" pamphlet entitled "For Your Benefit," which informs employees of unemployment benefit rights.
Finally, unless there is a real fear of theft or destruction of company property, the employee should be allowed to privately gather personal items and leave the premises. Employers who require that the terminated employee be "escorted" from the building or monitored while cleaning out his or her desk could increase their risk of a lawsuit. Remember, it’s often “how” a termination is carried out that causes problems, not “why.”
This article is for education and information purposes only; it should not be construed as legal advice. If you have an employment law question for inclusion in a future article, contact Brett T. Abbott at Gubler, Koch, Degn & Gomez LLP (bta@thecalifornialawyers.com). For specific employment law advice or other legal assistance, contact Gubler, Koch, Degn & Gomez LLP , (559) 625-9600, 1110 N. Chinowith St., Visalia, CA 93291 (www.thecalifornialawyers.com). Read Mr. Abbott’s blog on employment law issues at http://work-law.blogspot.com.
Tuesday, April 28, 2009
Avoiding problems when giving references to prospective employers
In today’s economic climate many employers are left with no option but to let employees go. A natural consequence of severing ties with an employee is having to later provide references to prospective employers. In order to avoid potential liability for defamation or slander, employers should follow certain guidelines in giving references.
First, an employer should give advance notice of the reference. When terminating the employment, the employer should inform the employee in advance of what facts with be given in future references. Avoid simply saying that the reference will be “good” or “favorable.”
Second, be careful to avoid conclusions. Calling a former employee “insubordinate” or “incompetent” can create a potential lawsuit for defamation. Instead, state that the employee refused to follow directions, or did not meet specific standards. Remember that not all questions have to be answered, especially those that call for conclusions – such as “Would you rehire this person?”
Third, disclose only truthful information and make sure that personnel file information is factually correct. Supervisors should be trained to place only accurate, verifiable information in personnel files – a reference is only as truthful as the underlying information on which it is based.
Fourth, it’s almost always a good idea to obtain a signed release from employees regarding specific information that may be disclosed to prospective employers. The release should provide the employee with as much information as possible about information to be disclosed, including dates of employment, job titles held, a statement about the employee’s work performance, and the reason for termination of employment.
Fifth, designate only a limited number of people within the organization to give references. It is wise to notify employees, preferably in the Employee Handbook, that references will be provided by only one or two designated people. This practice will minimize the risk of contradictory references on behalf of the company, and ensure that reference standards are kept.
Sixth, avoid responding to oral references requests. Require all employees asking for references to request the reference in writing, and to provide a signed statement from the employee authorizing the prospective employer to obtain a reference. Also, reply only in writing to reference requests and keep a copy of all documentation.
While most references given to prospective employers will not result in problems down the road, taking some minimal precautions, as outlined above, can save companies substantial amounts of time, money, and stress. Termination of employees is part of doing business, and so is giving references. Make sure you do it right.
First, an employer should give advance notice of the reference. When terminating the employment, the employer should inform the employee in advance of what facts with be given in future references. Avoid simply saying that the reference will be “good” or “favorable.”
Second, be careful to avoid conclusions. Calling a former employee “insubordinate” or “incompetent” can create a potential lawsuit for defamation. Instead, state that the employee refused to follow directions, or did not meet specific standards. Remember that not all questions have to be answered, especially those that call for conclusions – such as “Would you rehire this person?”
Third, disclose only truthful information and make sure that personnel file information is factually correct. Supervisors should be trained to place only accurate, verifiable information in personnel files – a reference is only as truthful as the underlying information on which it is based.
Fourth, it’s almost always a good idea to obtain a signed release from employees regarding specific information that may be disclosed to prospective employers. The release should provide the employee with as much information as possible about information to be disclosed, including dates of employment, job titles held, a statement about the employee’s work performance, and the reason for termination of employment.
Fifth, designate only a limited number of people within the organization to give references. It is wise to notify employees, preferably in the Employee Handbook, that references will be provided by only one or two designated people. This practice will minimize the risk of contradictory references on behalf of the company, and ensure that reference standards are kept.
Sixth, avoid responding to oral references requests. Require all employees asking for references to request the reference in writing, and to provide a signed statement from the employee authorizing the prospective employer to obtain a reference. Also, reply only in writing to reference requests and keep a copy of all documentation.
While most references given to prospective employers will not result in problems down the road, taking some minimal precautions, as outlined above, can save companies substantial amounts of time, money, and stress. Termination of employees is part of doing business, and so is giving references. Make sure you do it right.
Tuesday, March 10, 2009
Drafting an enforceable arbitration agreement
No matter how careful employers are, it is all but certain that at some point disputes will arise between employer and employee. When such situations occur, it is usually in the best interest of the employer to have these disputes resolved in arbitration, rather than in open court.
Arbitration brings numerous advantages to employers. First, arbitration awards are generally confidential. Also, arbitration can resolve disputes quicker than litigation. Arbitration decisions also tend to have more finality than a judge or jury’s decision, as appeals following an arbitrator’s decision rarely occur. Given these benefits, employers often want to require employees to submit employment disputes to arbitration. To do this, employers need an arbitration agreement. Yet to be enforceable, an arbitration agreement must satisfy numerous requirements.
First, an arbitration agreement must provide a mechanism for the selection of a neutral arbitrator. Some arbitration agreements include language that permits the parties to attempt to agree on a neutral arbitrator. Instead of such provisions, the arbitration agreement may provide for an established arbitration service to select the arbitrator, with each party entitled to a veto on disclosure of the arbitrator's past decisions.
Second, the agreement must allow the employee to conduct adequate discovery. At the very least, employees are entitled access to “essential documents and witnesses, as determined by the arbitrator.”
Third, the agreement must allow the employee to recover as much as would be available in a civil trial, such as punitive damages and attorney fees.
Fourth, the agreement must call for a written decision by the arbitrator, which permits a limited form of judicial review.
Fifth, the agreement must limit the share of arbitration costs borne by the employee. If arbitration is offered as a condition of employment, the employer must be prepared to pay all costs "unique" to arbitration, including the arbitrators' fees, meeting room charges, and any other costs that would not have been involved if the case were in court.
Finally, an arbitration agreement must provide “mutuality” between the parties. An arbitration agreement must not be one-sided. For example, an agreement is unfairly one-sided where an employer requires an employee to submit any claims to arbitration, yet the employer is not required to arbitrate when it seeks to prosecute a claim against the employee.
As the previous paragraphs illustrate, arbitration agreements cannot be drafted without some attention to detail. If the above-described requirements are not followed, an employee can have the arbitration agreement invalidated – and the resulting benefits of arbitration are lost. As such, to ensure that employers reap the benefits of their arbitration agreements, it is in their best interest to review them and make sure they comply with the requirements above.
Arbitration brings numerous advantages to employers. First, arbitration awards are generally confidential. Also, arbitration can resolve disputes quicker than litigation. Arbitration decisions also tend to have more finality than a judge or jury’s decision, as appeals following an arbitrator’s decision rarely occur. Given these benefits, employers often want to require employees to submit employment disputes to arbitration. To do this, employers need an arbitration agreement. Yet to be enforceable, an arbitration agreement must satisfy numerous requirements.
First, an arbitration agreement must provide a mechanism for the selection of a neutral arbitrator. Some arbitration agreements include language that permits the parties to attempt to agree on a neutral arbitrator. Instead of such provisions, the arbitration agreement may provide for an established arbitration service to select the arbitrator, with each party entitled to a veto on disclosure of the arbitrator's past decisions.
Second, the agreement must allow the employee to conduct adequate discovery. At the very least, employees are entitled access to “essential documents and witnesses, as determined by the arbitrator.”
Third, the agreement must allow the employee to recover as much as would be available in a civil trial, such as punitive damages and attorney fees.
Fourth, the agreement must call for a written decision by the arbitrator, which permits a limited form of judicial review.
Fifth, the agreement must limit the share of arbitration costs borne by the employee. If arbitration is offered as a condition of employment, the employer must be prepared to pay all costs "unique" to arbitration, including the arbitrators' fees, meeting room charges, and any other costs that would not have been involved if the case were in court.
Finally, an arbitration agreement must provide “mutuality” between the parties. An arbitration agreement must not be one-sided. For example, an agreement is unfairly one-sided where an employer requires an employee to submit any claims to arbitration, yet the employer is not required to arbitrate when it seeks to prosecute a claim against the employee.
As the previous paragraphs illustrate, arbitration agreements cannot be drafted without some attention to detail. If the above-described requirements are not followed, an employee can have the arbitration agreement invalidated – and the resulting benefits of arbitration are lost. As such, to ensure that employers reap the benefits of their arbitration agreements, it is in their best interest to review them and make sure they comply with the requirements above.
Friday, February 13, 2009
The importance of Employee Handbooks
It is not easy being an employer in California. Employment law is always changing. New employees come and go. It is a challenge keeping employees informed of relevant laws and a company’s culture, policies, and procedures. However, a good employee handbook can be invaluable in helping to resolve these problems.
What is an employee handbook?
An employee handbook is a written compilation of a company's policies, procedures, and other important information that is distributed to employees. An employee handbook is different from a personnel policy manual, which is usually addressed to managers and supervisors and provides a more detailed statement of policies and procedures. Typically, smaller companies use only employee handbooks, while larger companies use both employee handbooks and personnel policy manuals.
Companies often find that handbooks become helpful as the number of employees approaches 20. Many companies first implement “informal” handbooks (collections of policies) before publishing an “official handbook.”
Advantages of using an employee handbook
There are numerous benefits to using an employee handbook. Handbooks commit employers to deal with situations in specific ways. They provide for consistency of treatment and reduce the risk of unlawful discrimination claims. Employee handbooks reduce confusion about unstated policies and benefits – less confusion results in fewer lawsuits and morale problems. Handbooks can help eliminate arguments of “arbitrary termination” and can assist in resolving complaints. Perhaps most importantly, employee handbooks aid new employees in understanding a company’s policies and culture.
Concerns regarding the use of employee handbooks
Despite the numerous benefits of implementing an employee handbook, there are some concerns for employers. If an employer fails to abide by its handbook, it may be more likely to be found liable to an aggrieved employee. Employee handbooks are fodder for employee rights attorneys who look for progressive discipline policies that have not been followed or for other deviations from the handbook. There can also be some significant time and expense involved in creating an accurate, thorough employee handbook. Handbooks also require updating as employment laws and the company change.
Preserving the at-will relationship
The biggest concern with employee handbooks is that the handbook will alter the “at-will” nature of employment. California courts have held that policies contained in employee handbooks can create contractual obligations (Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 681).
To avoid this unwanted change in the “at-will” status of employees, many employers include disclaimers stating that the handbook does not create a legally enforceable agreement. At-will disclaimers should be prominent – on the cover or first page of the handbook. The language should state clearly that the handbook is not a contract with employees and it expresses only “guidelines” regarding the company's “policies.” Any disclaimer should also expressly state that, with the exception of the at-will policy, all other the policies in the handbook can be modified by the employer at any time without a written revision of the handbook.
Conclusion
This article is not meant to provide an exhaustive analysis of employee handbooks. Rather, the goal of this article is to illustrate the benefits, and potential dangers, associated with them. While a thorough, accurate employee handbook does take time to create and modify, employers will find the benefits far exceed the effort involved.
What is an employee handbook?
An employee handbook is a written compilation of a company's policies, procedures, and other important information that is distributed to employees. An employee handbook is different from a personnel policy manual, which is usually addressed to managers and supervisors and provides a more detailed statement of policies and procedures. Typically, smaller companies use only employee handbooks, while larger companies use both employee handbooks and personnel policy manuals.
Companies often find that handbooks become helpful as the number of employees approaches 20. Many companies first implement “informal” handbooks (collections of policies) before publishing an “official handbook.”
Advantages of using an employee handbook
There are numerous benefits to using an employee handbook. Handbooks commit employers to deal with situations in specific ways. They provide for consistency of treatment and reduce the risk of unlawful discrimination claims. Employee handbooks reduce confusion about unstated policies and benefits – less confusion results in fewer lawsuits and morale problems. Handbooks can help eliminate arguments of “arbitrary termination” and can assist in resolving complaints. Perhaps most importantly, employee handbooks aid new employees in understanding a company’s policies and culture.
Concerns regarding the use of employee handbooks
Despite the numerous benefits of implementing an employee handbook, there are some concerns for employers. If an employer fails to abide by its handbook, it may be more likely to be found liable to an aggrieved employee. Employee handbooks are fodder for employee rights attorneys who look for progressive discipline policies that have not been followed or for other deviations from the handbook. There can also be some significant time and expense involved in creating an accurate, thorough employee handbook. Handbooks also require updating as employment laws and the company change.
Preserving the at-will relationship
The biggest concern with employee handbooks is that the handbook will alter the “at-will” nature of employment. California courts have held that policies contained in employee handbooks can create contractual obligations (Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 681).
To avoid this unwanted change in the “at-will” status of employees, many employers include disclaimers stating that the handbook does not create a legally enforceable agreement. At-will disclaimers should be prominent – on the cover or first page of the handbook. The language should state clearly that the handbook is not a contract with employees and it expresses only “guidelines” regarding the company's “policies.” Any disclaimer should also expressly state that, with the exception of the at-will policy, all other the policies in the handbook can be modified by the employer at any time without a written revision of the handbook.
Conclusion
This article is not meant to provide an exhaustive analysis of employee handbooks. Rather, the goal of this article is to illustrate the benefits, and potential dangers, associated with them. While a thorough, accurate employee handbook does take time to create and modify, employers will find the benefits far exceed the effort involved.
Thursday, January 8, 2009
Protecting “trade secrets”
In my previous article, I discussed the unenforceability of non-compete agreements as applied to employees. This article relates to a similar issue – trade secrets.
A trade secret is information, which includes formulas, patterns, programs, customer lists in certain situations, devices, techniques or processes that “(1) Derives independent economic value...from not being generally known to the public or to persons who can obtain economic value from its disclosure or use; and (2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy” (Civil Code section 3426.1)
It is not enough to simply show that the information has value. In order for information to be classified as a trade secret, other businesses must be unaware of the information and must be able to put that information, if it were known to them, to beneficial use (Abba Rubber Co. v. Sequist (1991) 235 Cal.App.3d 1). Courts have outlined additional requirements for information to be considered a trade secret. The information must be (1) closely guarded, (2) an investment of a considerable amount of time and expense by the employer, and (3) not readily available to the public (State Farm v. Dempster (1959) 174 Cal.App.2d 418).
The following are some examples of valid trade secrets:
• Customer lists that have been compiled with significant time and/or money. Such a list would be a trade secret if the employer has refined a general customer list by noting particular products or other preferences for each customer
• Methods or sequences of manufacturing
• A product formula that is closely guarded (i.e. Coca-Cola recipe)
• The identity of a source of raw material not generally known in the industry
• Compensation and other financial data
• Marketing strategies
• Labor relations strategies
• Research into new materials or processes, and
• Pending projects
Trade secrets are of course different from general knowledge and skills. As long as an employee does not use any of the previous employer’s trade secrets, the employee is free to use the general knowledge, skill, and experience acquired from prior employment, and even solicit some of the same clients, in order to better succeed when working for later employers (American Alloy Steel Corp. v. Ross (1957) 149 Cal.App.2d 215). As outlined in last month’s article, non-compete agreements are only enforceable if they relate to the sale of a business or partnership.
As outlined above, the legal standard for properly classifying information as a trade secret is high. Not every “secret” is legally a “trade secret.” Yet given the importance of protecting valuable company information, becoming conversant with the rules regarding trade secrets can reap large rewards.
A trade secret is information, which includes formulas, patterns, programs, customer lists in certain situations, devices, techniques or processes that “(1) Derives independent economic value...from not being generally known to the public or to persons who can obtain economic value from its disclosure or use; and (2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy” (Civil Code section 3426.1)
It is not enough to simply show that the information has value. In order for information to be classified as a trade secret, other businesses must be unaware of the information and must be able to put that information, if it were known to them, to beneficial use (Abba Rubber Co. v. Sequist (1991) 235 Cal.App.3d 1). Courts have outlined additional requirements for information to be considered a trade secret. The information must be (1) closely guarded, (2) an investment of a considerable amount of time and expense by the employer, and (3) not readily available to the public (State Farm v. Dempster (1959) 174 Cal.App.2d 418).
The following are some examples of valid trade secrets:
• Customer lists that have been compiled with significant time and/or money. Such a list would be a trade secret if the employer has refined a general customer list by noting particular products or other preferences for each customer
• Methods or sequences of manufacturing
• A product formula that is closely guarded (i.e. Coca-Cola recipe)
• The identity of a source of raw material not generally known in the industry
• Compensation and other financial data
• Marketing strategies
• Labor relations strategies
• Research into new materials or processes, and
• Pending projects
Trade secrets are of course different from general knowledge and skills. As long as an employee does not use any of the previous employer’s trade secrets, the employee is free to use the general knowledge, skill, and experience acquired from prior employment, and even solicit some of the same clients, in order to better succeed when working for later employers (American Alloy Steel Corp. v. Ross (1957) 149 Cal.App.2d 215). As outlined in last month’s article, non-compete agreements are only enforceable if they relate to the sale of a business or partnership.
As outlined above, the legal standard for properly classifying information as a trade secret is high. Not every “secret” is legally a “trade secret.” Yet given the importance of protecting valuable company information, becoming conversant with the rules regarding trade secrets can reap large rewards.
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