Essential Employment Law Practices: How to Avoid Getting Sued


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Breakout Presentation at the Nonprofit Human Resources Management Symposium in San Diego, June 16, 2010

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  • Document Number: 77801
  • Use DLSE opinion letters as examples
  • Use DLSE opinion letters as examples
  • Document Number: 77801
  • As of January 1, 2008, $33,280 per year $2,773.33 per month
  • Document Number: 77801
  • Regulation Clearly Places Burden On Employer To Insure Meal Period. The language of Section 11(A) (patterned on Labor Code § 512) provides that “No employer shall employ any person fo r a work period of more than five (5) hours without a meal period of not less than thirty (30) minutes...” The clear intent of the IWC is that the burden of insuring that em ployees take a meal period within the specified time is on the emp loyer; it is the employer’s duty not to “employ any person for a work period o f more than...” It is the employer’s bu rden to compel the worker to cease work during the meal period. The burden is similar to that imposed upon the employer that he or she “shall pay to each employee wages not less than six dollars and seventy-five cents ($6.75) per hour...” The employer must pay the employee the minimum wage and may not defend his or her failure to do so on the fact that the employee chose to accept less than the minimum wage. As with the minimum wage obligation, the employer is not entitled to excuse the fact that he or she employed an employee for a period of more than five hours without a meal period on the failure of the employee to take the meal period. Relationship Between Record-Keeping Requirement And Meal Period. Inasmuch as the employer has an obligation under the record-keeping requirements to track meal periods unless “all work ceases”, the em ployer should know whether or not its employees have tak en the req uired off-duty meal period . Therefore, it gen erally would not be a defense for an employer to assert that it had no knowledge that its employees were working during a meal period. MEAL PERIODS * same under both laws unpaid if relieved of all duties, 30 min * Must record the break for each employee, unless operations cease (e.g. manufacturing plant lunch hour), then can rely on a posted schedule and deduct time for the meal period. * DLSE says EE must be free to leave premises, case law differs * exception - on duty MP * More on meal periods in Part 2
  • Same issues as meal periods – so could double the figures in previous slides Problem of accounting for rest periods b/c not recorded
  • RECORDED INFO: * personal info * hour and day workweek starts * total daily hours worked * total daily or weekly straight time earnings * regularly hourly rate when OT * total OT paid * deductions/additions to wages * total wages per pay period * date paid and period covered * basis upon whcih wages are paid (salary, hrly, comsn) RETENTION * at least three years at the place of employment or at a central location within the state * payroll records with above info * employment agreements * sale and purchase records showing total volume * certificates for apprentices, students, minors All other records retained for only 2 years
  • Unauthorized overtime--employer must pay but can discipline employee
  • General rules: determine “work day” (presumed midnight to midnight) no pyramiding of hours pay OT pay for greater of daily maximum or weekly maximum each workday separate (e.g., 4 pm-8am=16 hour=no OT) HOLIDAYS, SATURDAYS, OR SUNDAYS treated like hours worked on any other day of the week Regular Rate of Pay issues * FLSA - divide weekly salary by number of hours worked - pay EE salary plus OT @ one-half regular rate - rate will vary based on hours * state - divide salary by fixed number of hours in week - pay EE OT rates (1.5 or 2x) - rate will not vary include all compensation in calculating rate * Exclusion of stock options: Wage and Hour Div. feels that include profits which would be the difference between value when bought and exercised. TOO HARD! therefore enacted Worker Economic Opportunity Act: which permits exclusion of options from computing regular rate under specified circumstances Requires: terms of plan disclosed minimum six months vesting period stock cost employee no more than 15% disc voluntary participation Non-monetary compensation board--include fair market value
  • Document Number: 77801
  • Document Number: 77801
  • There are mandatory contents. See handout at page ___. Sample Notice is provided at Addendum __.
  • Essential Employment Law Practices: How to Avoid Getting Sued

    1. 1. Essential Employment Law Practices: How to Avoid Getting Sued Christopher W. Olmsted, Esq.
    2. 2. Introduction <ul><li>Volunteers, students, independent contractors </li></ul><ul><li>Exempt employees </li></ul><ul><li>Meal and rest periods </li></ul><ul><li>Overtime </li></ul><ul><li>Travel time </li></ul><ul><li>Other wage and hour laws </li></ul><ul><li>Leaves of absences </li></ul><ul><li>Q & A </li></ul>Today’s Topics
    3. 3. Who Is NOT Your Employee?
    4. 4. Volunteers <ul><li>Volunteers are not employees . </li></ul><ul><li>Volunteers intend to donate their services to religious, charitable, or similar nonprofit corporations without contemplation of pay and for public service, religious, or humanitarian objectives </li></ul><ul><li>Work “without contemplation of pay” </li></ul><ul><ul><li>In-Kind Compensation might count as contemplation. (e.g. food, shelter, transportation, medical benefits) </li></ul></ul><ul><ul><li>“ Work therapy”? </li></ul></ul>
    5. 5. Volunteers <ul><li>Volunteers are not employees . </li></ul><ul><li>Exception : nonprofit providing commercial services to general public (restaurants, thrift stores) or contract to provide personal services to businesses </li></ul><ul><li>Problem : Employee who is also a volunteer </li></ul><ul><ul><li>No volunteering to do regular work in same workweek (job description?) </li></ul></ul><ul><ul><li>Different work likely ok </li></ul></ul>
    6. 6. Student Interns – Federal Rules <ul><li>1) Like School. The training, though it may include actual operation of the employer’s facilities, is similar to training that would be given in a vocational school. </li></ul><ul><li>2) Student Benefit. The training is for the benefit of the student. </li></ul><ul><li>3) No Displacement. The student does not displace regular employees, but works under close observation of a regular employee. </li></ul>
    7. 7. Student Interns – Federal Rules <ul><li>4) No Advantage. The employer that provides the training receives no immediate advantage from the activities of the trainees or students and, on occasion, his operations may even be impeded. </li></ul><ul><li>5) No Job Entitlement. The student is not necessarily entitled to a job at the conclusion of the training period. </li></ul><ul><li>6) Agreement. The employer and the student understand that the student is not entitled to wages for the time spent training. </li></ul>
    8. 8. Student Interns – California Rules <ul><li>7) Curriculum. Any clinical training is part of an educational curriculum. </li></ul><ul><li>8) No Benefits. The trainees or students do not receive employee benefits. </li></ul><ul><li>9) Generic. The training is general, so as to qualify the trainees or students for work in any similar business, rather than designated specifically for a job with the employer offering the program. In other words, on completion of the program, the trainees or students must not be fully trained to work specifically for only the employer offering the program. </li></ul>
    9. 9. Student Interns – California Rules <ul><li>10) Separate Hiring Criteria. The screening process for the program is not the same as for employment, and does not appear to be for that purpose, but involves only criteria relevant for admission to an independent educational program. </li></ul><ul><li>11) Clear Ads. Advertisements for the program are couched clearly in terms of education or training, rather than employment, although the employer may indicate that qualified graduates will be considered for employment. </li></ul>
    10. 10. Student Intern Tips <ul><li>Keep It Real. Don’t try to create or fill a “free labor” position. </li></ul><ul><li>School Program. In California, the internship should be arranged through a school program that includes internship as part of the curriculum. </li></ul><ul><li>Pay. If in doubt, pay minimum wage. </li></ul>
    11. 11. Independent Contractors <ul><li>California EDD </li></ul><ul><ul><li>Payroll Taxes </li></ul></ul><ul><li>Labor Commissioner / DLSE </li></ul><ul><ul><li>Workers’ Compensation </li></ul></ul><ul><li>District Attorney </li></ul><ul><ul><li>Criminal Sanctions </li></ul></ul><ul><li>Private Litigants </li></ul><ul><ul><li>Your Employees </li></ul></ul>
    12. 12. Employee vs. Independent Contractor <ul><li>Primary Factor : </li></ul><ul><li>Control over work done and manner of performance </li></ul><ul><li>Secondary Factors : </li></ul><ul><li>Separate business </li></ul><ul><li>No supervision </li></ul><ul><li>Skill </li></ul><ul><li>Tools, place of work </li></ul><ul><li>Paid by job/piece </li></ul><ul><li>Risk of loss </li></ul><ul><li>Belief </li></ul><ul><li>Length of time </li></ul><ul><li>Training </li></ul><ul><li>Integration </li></ul>
    13. 13. Recent Trends <ul><li>Federal Legislation </li></ul><ul><ul><li>Safe Harbor Under Attack </li></ul></ul><ul><li>California Legislation </li></ul><ul><ul><li>More Penalties </li></ul></ul><ul><li>California Case Law </li></ul><ul><ul><li>Independence A Rarity </li></ul></ul>
    14. 14. Exempt Employees
    15. 15. Who is Exempt? <ul><li>Common Categories </li></ul><ul><ul><li>Executive </li></ul></ul><ul><ul><li>Administrative </li></ul></ul><ul><ul><li>Professional </li></ul></ul><ul><ul><li>Computer Tech </li></ul></ul><ul><ul><li>Sales </li></ul></ul>
    16. 16. Who is Exempt in California? <ul><li>Salary Test </li></ul><ul><ul><li>Salary must be no less than 2x minimum wage </li></ul></ul><ul><ul><li>Minimum salary for executive, professional and administrative exemption $2,600/month or $31,200/year </li></ul></ul><ul><li>Duties Test </li></ul><ul><ul><li>Engaged primarily in exempt duties which require exercise of discretion and independent judgment. </li></ul></ul>
    17. 17. Nonprofits <ul><li>Executive Director </li></ul><ul><li>Administrative Exemption – HR, accounting </li></ul><ul><li>Professional – licensed practitioners </li></ul>
    18. 18. Pop Quiz <ul><li>TRUE OR FALSE ? </li></ul><ul><li>Salary = Exempt </li></ul><ul><li>Job Title = Exempt </li></ul><ul><li>Employee Preference = Exempt </li></ul><ul><li>Got Away With It Before = Exempt </li></ul><ul><li>Industry practice = Exempt </li></ul><ul><li>FALSE </li></ul><ul><li>FALSE </li></ul><ul><li>FALSE </li></ul><ul><li>FALSE </li></ul><ul><li>FALSE </li></ul>
    19. 19. Practical Solutions <ul><li>Assume Non-exempt </li></ul><ul><li>Use Job Descriptions + Actual Duties </li></ul><ul><ul><ul><li>Be accurate! (Actual duties and time spent/duty.) </li></ul></ul></ul><ul><li>Audit/monitoring </li></ul><ul><li>Get Legal Advice </li></ul>
    20. 20. Wage and Hour Issues
    21. 21. Wage and Hour Laws <ul><li>California Labor Code </li></ul><ul><ul><li>Wage Orders (regulations) </li></ul></ul><ul><ul><li>DLSE opinions and enforcement manual </li></ul></ul><ul><ul><li>State court cases </li></ul></ul><ul><li>Federal Fair Labor Standards Act (FLSA) </li></ul><ul><ul><li>DOL regulations </li></ul></ul><ul><ul><li>Wage and Hour Division opinions </li></ul></ul><ul><ul><li>Federal court cases </li></ul></ul>
    22. 22. Meal Periods (In General) <ul><li>When Required? </li></ul><ul><ul><li>0-5 hours: no meal period required </li></ul></ul><ul><ul><li>5:01-6 hours: must “provide” one 30 minute meal period, but can be waived by mutual agreement </li></ul></ul><ul><ul><li>6:01-10 hours: must “provide” one 30 minute meal period </li></ul></ul><ul><ul><li>10:01-12 hours: second 30 minute meal period, can be waived by mutual agreement if first not waived </li></ul></ul><ul><ul><li>Must keep accurate time records </li></ul></ul>
    23. 23. Meal Periods <ul><ul><li>Unpaid if: </li></ul></ul><ul><ul><li>Completely relieved of all duties </li></ul></ul><ul><ul><li>Free to leave work station </li></ul></ul><ul><ul><li>At least 30-minutes </li></ul></ul><ul><ul><li>On-duty meal period </li></ul></ul><ul><ul><li>Voluntary written agreement, expressly revocable </li></ul></ul><ul><ul><li>Paid (counts as hours worked) </li></ul></ul><ul><ul><li>Permitted only when the nature of the work prevents the employee from being relieved of all duty (narrowly interpreted) </li></ul></ul>
    24. 24. Meal Periods <ul><li>Employer Burden To Ensure Meal Period </li></ul><ul><li>Employer Obligation To Record Meal Periods </li></ul><ul><li>Meal Period Premium (1 hr pay) for Missed Breaks or Insufficient Breaks </li></ul>
    25. 25. Enforcement <ul><li>Federal Department of Labor (DOL) </li></ul><ul><li>State Department of Industrial Relations (DIR), Division of Labor Standards Enforcement (DLSE) </li></ul><ul><li>Employee lawsuits and class actions </li></ul>
    26. 26. How to avoid being sued <ul><li>Force employees to take meal and rest periods as required by law </li></ul><ul><li>Consider IT solution to track hours worked </li></ul><ul><li>Have a written policy </li></ul><ul><ul><li>Acknowledgment form on time cards </li></ul></ul><ul><li>Consider using written waivers </li></ul><ul><ul><li>Combine with 6 hour shifts </li></ul></ul><ul><li>Pay Meal/Rest Period Premium when incurred. </li></ul>
    27. 27. Rest Periods <ul><li>10-minutes per 4 hours (or major fraction thereof). </li></ul><ul><li>As close to the middle of the 4 hour period as practical </li></ul><ul><li>Not needed if less than 3.5 hours worked </li></ul><ul><li>Rest period counted as time worked = paid </li></ul><ul><li>Missed rest period: “Premium” of one hour pay at regular rate. </li></ul>
    28. 28. Record Keeping Requirements <ul><li>Required to keep accurate records of all hours worked </li></ul><ul><li>For non-exempt employee, times required daily: </li></ul><ul><ul><li>start of work day </li></ul></ul><ul><ul><li>start of meal period </li></ul></ul><ul><ul><li>end of meal period </li></ul></ul><ul><ul><li>end of work day </li></ul></ul>
    29. 29. Overtime Premiums <ul><ul><li>More than 40 hours in one work week (1.5x pay) </li></ul></ul><ul><ul><li>More than 8 hours a day (1.5x pay) </li></ul></ul><ul><ul><li>More than 12 hours in one work day (2x pay) </li></ul></ul><ul><ul><li>First 8 hours of seventh consecutive day of work in any work week (1.5x pay) </li></ul></ul><ul><ul><li>More than 8 hours on the seventh consecutive day of any work week (2x pay) </li></ul></ul><ul><li>Unauthorized overtime </li></ul><ul><li>Nonprofits: unrecorded overtime </li></ul>
    30. 30. Overtime (Cont’d) <ul><li>General rules: </li></ul><ul><ul><li>determine “work day” </li></ul></ul><ul><ul><li>no pyramiding of hours </li></ul></ul><ul><ul><li>each workday separate </li></ul></ul><ul><ul><li>Holidays, Saturdays, or Sundays </li></ul></ul><ul><li>“ Regular Rate of Pay” issues </li></ul><ul><li>Avoid Compensatory Time Off </li></ul>
    31. 31. Make Up Time: Overtime Exception <ul><li>Make up in the same workweek in which the time is missed; </li></ul><ul><li>Written request each time (up to 4 weeks in advance); </li></ul><ul><li>The time missed must be due to personal reasons of employee; </li></ul><ul><li>The time made up must not cause the employee’s work to exceed 11 hours in day or 40 hours in week; </li></ul><ul><li>The employer must approve the request; </li></ul><ul><li>The employer must not encourage or solicit the request. </li></ul>
    32. 32. Furlough For Exempt Workers <ul><li>General rule: fixed salary, no reductions. </li></ul><ul><li>Temporary furlough: Reduction in salary plus reduction in pay acceptable </li></ul><ul><li>Other exceptions: </li></ul><ul><li>Full week absence </li></ul><ul><li>Pro rata first/last week </li></ul><ul><li>Full day absence, exhausted sick plan </li></ul>
    33. 33. Travel Time – Rutti v. LoJack <ul><li>General Rule: Regular commutes not compensable. </li></ul><ul><li>Company Vehicles: Commuting in company vehicle not compensable if: </li></ul><ul><li>Federal : Pursuant to employer/employee agreement. </li></ul><ul><li>State : control/discretion over commute (route, timing, hauling tools or workers, etc.) </li></ul><ul><li>“ Incidental restrictions” OK. </li></ul>
    34. 34. Travel Time Tips <ul><li>Don’t Control. Avoid controlling when an employee leaves for work, the route he takes, or the activities he must engage in on the way (such as picking up materials, equipment, personnel). </li></ul><ul><li>Write It. Create written policies or agreements regarding the use of the vehicles, with care towards avoiding too much control such that commute times are compensable. </li></ul>
    35. 35. Travel Expenses <ul><li>Federal court class action Lewis v. Starbucks </li></ul><ul><li>Store manager drove to bank, picked up supplies from vendors, attended meetings. </li></ul><ul><li>Mileage not reimbursed. </li></ul><ul><li>Labor Code 2802 requires reimbursement for all expenses. </li></ul><ul><li>6,000 managers. $3,000,000 settlement. </li></ul>
    36. 36. Travel Expenses <ul><li>Handbook. E nsure handbook provides that all workers are reimbursed for travel expenses. </li></ul><ul><li>Procedures. Implement procedures for employees to claim and receive reimbursement for travel. (e.g. expense form to all workers expected to drive their cars for business reasons). Instruct them to sign and turn in the form each month (regardless of whether actual expenses were incurred). </li></ul><ul><li>Training. Train managers and supervisors to collect expense reports or receipts from all employees running errands or otherwise using personal vehicles for company purposes. </li></ul>
    37. 37. After Hours Work – Rutti v. LoJack <ul><li>General Rule: Pre- and post-shift activities compensable if “integral and indispensable part of the principal activities for which covered workmen are employed.” </li></ul><ul><li>Exception: “ De minimus ” time/work. </li></ul><ul><li>Examples: </li></ul><ul><li>No: Planning the daily route. </li></ul><ul><li>Yes: Uploading data from home. </li></ul>
    38. 38. Pre- and Post Shift: Cervantes v. Celestica <ul><li>Facts: waiting in a security line to enter facility before clocking in or out. </li></ul><ul><li>Issue: Is time in line compensable? </li></ul><ul><li>Decision: Maybe . </li></ul><ul><ul><li>Employer “controls” employees because they have no choice but to wait in line. </li></ul></ul><ul><ul><li>But the de minimus rule might apply (meaning no pay). </li></ul></ul><ul><li>Side Issue: Employer liable for temp workers’ pay. </li></ul>
    39. 39. Pre and Post Shift Tips <ul><li>Monitor. Carefully monitor pre- and post- shift activity to ensure that employees are not engaging in off the clock activities without pay (or pay if they are). </li></ul><ul><li>Consult with legal counsel to determine whether certain activities may fall under the “ de minimus ” exclusion. </li></ul>
    40. 40. Training Classes <ul><li>Criteria: </li></ul><ul><li>Attendance is outside of the employee’s regular working hours ; </li></ul><ul><li>Attendance is in fact voluntary (attendance is not voluntary if the employee is led to believe that present working conditions or the continuation of employment would be adversely affected by nonattendance); </li></ul>
    41. 41. Training Classes <ul><li>Criteria: </li></ul><ul><li>The course, lecture, or meeting is not directly related to the employee’s job (training is directly related to an employee’s job if it is designed to make the employee handle his job more effectively as distinguished from training him for another job or to a new or additional skill); </li></ul><ul><li>Exception to third criteria : Even if the training is clearly related to an employee’s job, voluntary participation outside of working hours need not be compensated if the course corresponds to courses offered by independent bona fide institutions of learning. </li></ul><ul><li>The employee does not perform any productive work during such attendance. </li></ul>
    42. 42. Employee Contracts
    43. 43. Contract Law <ul><li>California presumption: At will employment </li></ul><ul><li>Express contracts </li></ul><ul><ul><li>Contracts for a stated term </li></ul></ul><ul><ul><li>Good cause for termination </li></ul></ul><ul><ul><li>Dispute resolution (arbitration) </li></ul></ul><ul><ul><li>Executive /professional / sales </li></ul></ul><ul><li>“Implied” contracts </li></ul>
    44. 44. Types of Agreements <ul><li>Trade Secret Agreements / Confidentiality Agreements </li></ul><ul><li>Non-Compete and Non-solicitation Agreements </li></ul><ul><li>Email/internet waiver of privacy agreements (see above) </li></ul><ul><li>Employee inventions / proprietary rights </li></ul><ul><li>Who has authority to sign? </li></ul>
    45. 45. Leaves of Absence
    46. 46. Leaves of Absence <ul><li>California Family Rights Act (CFRA) </li></ul><ul><li>Family Medical Leave Act (FMLA) </li></ul><ul><li>California Pregnancy Disability Leave (PDL) </li></ul><ul><li>Others </li></ul><ul><li>Basic rights: </li></ul><ul><li>Protected leave </li></ul><ul><li>Reinstatement </li></ul>
    47. 47. FMLA/CFRA Overview <ul><li>Who is a covered employer? </li></ul><ul><li>50 or more employees (located anywhere) </li></ul><ul><li>Employed on each of 20 or more workweeks in current or preceding calendar year </li></ul><ul><li>20 workweeks need not be consecutive weeks </li></ul><ul><li>Count part-time and temporary employees </li></ul>
    48. 48. FMLA/CFRA Overview <ul><li>Who is an eligible employee? </li></ul><ul><li>Employed by employer for at least 12 months (consecutive or not) </li></ul><ul><li>Worked at least 1250 hours during 12-month period preceding the first day of leave </li></ul><ul><li>Worked at a worksite where 50 or more employees are employed by the employer within 75 miles </li></ul>
    49. 49. Leave Issues <ul><li>Did the employer/employee follow proper notice procedures? </li></ul><ul><li>Did the employee provide proper medical certification in a timely manner? </li></ul><ul><li>Did the employer properly reinstate the employee? </li></ul><ul><li>Did the employer properly terminate the employee? </li></ul><ul><li>Did the company follow its internal leave policies? </li></ul><ul><li>Did the employer consider reasonable accommodations under the ADA/FEHA? </li></ul>
    50. 50. Other Issues <ul><li>Workplace Safety – OSHA </li></ul><ul><li>Immigration </li></ul><ul><li>Workers’ Compensation </li></ul><ul><li>Unemployment/Disability </li></ul><ul><li>Sexual harassment </li></ul><ul><li>Discrimination </li></ul><ul><li>Privacy </li></ul><ul><li>Defamation </li></ul>
    51. 51. Questions? Christopher W. Olmsted Barker Olmsted & Barnier, APLC [email_address]