Susan is the supervisor for “Tony the Trouble-Maker.”  Although Tony used to be the top producer in the division, lately he has been rude to Susan, fights with his coworkers, and refuses to take responsibility when something goes wrong under his watch.  Susan is struggling to keep her unit in the black and this guy is weighing down the whole area.  She is now ready to terminate Tony’s employment.  However, Susan seems to recall Tony once boasted about how he successfully sued his former employer for “tons of dough.”  Susan is concerned if she terminates Tony, he will file a lawsuit for wrongful termination, and Susan doesn’t exactly relish the unnecessary cost or distraction.  How can Susan reduce the likelihood of post-employment litigation?

Susan should offer Tony an additional severance pay amount in exchange for a signed release and waiver.  In theory, this is a simple transaction.  Tony will receive additional money beyond his final wages so long as he signs a document in which he agrees not to sue the company for claims including wrongful termination, discrimination, harassment, retaliation, or breach of contract.

However, there are several pitfalls to this arrangement of which Susan must be aware in order to ensure the applicable state agency (such as the California Department of Fair Employment and Housing) or federal agency (Equal Employment Opportunity Commission) will honor such a waiver.  For example, if Susan’s company has at least twenty employees and Tony is age 40 or over, Susan must notify Tony that (1) he has up to 21 days to consider and sign the waiver after which time the company will withdraw the severance pay offer; and (2) he has another seven days to change his mind and rescind the agreement.

Handled correctly, we have found the great majority of departing workers will agree to such a severance package.  Indeed, most don’t bother waiting for any part of the 21 day offer period to expire, instead signing and taking the severance check upon receiving and promptly reviewing the papers.

Our severance pay forms package includes a five-page overview of exact steps to take, two separate types of severance agreements and two corresponding checklists for the departing employee to initial and sign.  By ensuring all these forms are properly understood and implemented, a company can take effective steps to prevent frivolous wrongful termination suits where the company judges it best to promote a worker’s smooth transition to other employment.

If you have any questions, please contact me or any of our other employment law attorneys.   Best, Cindy Bamforth

Maximize Ability to Manage by

Written At Will Employment Agreements

“At will” means either employer or employee can terminate or quit the relationship at any time, with or without notice and with or without a reason.  That’s usually a good thing for an employer since it maximizes the company’s ability to make employment decisions.  The law generally presumes an employee is employed at will unless he or she can prove otherwise, usually through oral statements the employer made.  So why bother with written employment agreements for at-will employees?

Here’s why.  Let’s say Company X woos job applicant Sam, a hotshot salesperson.  During the hiring process, Sales Manager Marty assures Sam that his job with Company X “will always be secure” and Sam could work with the company “as long as he wanted to.”  Sales Supervisor Susan also assures Sam that he would be fired “only if his sales record consistently tanked, which she doubted would ever happen to a superstar like Sam.”

Sam accepts the job offer.  Several years later Company X reorganizes its sales division and lays Sam off.  Having never signed an at-will employment agreement, Sam now sues Company X for breach of contract.

A well-drafted written at-will employment agreement would have avoided this lawsuit.  Thus, to protect the right to fire at will, companies should simply require employees to sign an at-will statement in the employment agreement.  At-will statements can and should ideally be repeated in the employment application and in the employee handbook acknowledgment form.

To avoid any subsequent disputes after the employee signs such statement(s), the employer should also ensure it does not act in a way that could contradict the at will nature of the employment agreement, including making any oral assurances or promises of continued employment.

If you have any questions, please contact me or any of our other employment law attorneys.   Best, Cindy Bamforth

PAID TO PLAY, BUMMER MAN

California Employer Who Sends Workers Home Early

Can Pay for the Privilege

Jim is one of the company’s three customer service representatives.   Thirty minutes into the morning shift, the supervisor sends him home for lack of incoming calls.  Later in the day, the work picks back up, the supervisor calls Jim back and Jim ends up working a total of seven hours that afternoon and evening.  While he was only on premises for 7.5 hours, he is however entitled to 11 hours of pay for that day.

True _____?  False  _____?

True.  Dude, wage law rocks.

The California Industrial Welfare Commission (IWC) wage orders require employers to pay hourly, nonexempt employees extra compensation, called “reporting time pay,” if the company sends them home prior to the end of a shift.

Section 5 of the IWC wage orders, covering nearly every worker and industry in California, provide that if an employee reports but is either not put to work or completes less than half the shift before being sent home for the day, that employer owes the worker for half of that day’s pay, up to a maximum of four hours compensation. Bummer.

That’s not all.  Under section 5(B) of the wage orders, if the company calls the employee back to work that day and furnishes less than two hours of work on the second reporting, the employer nevertheless owes that worker another two hours pay.  Double bummer.

There are a few exceptions, when: i) company operations don’t start or cease due to threats to employees or property; ii) there is a failure of public services (electricity, water, etc.); and iii) God steps in with an earthquake, etc. “not within the employer’s control.”

The employee is also not going to collect on this rule if he or she is not fit to work, if the employee has not shown for work on time and is fired or sent home as a disciplinary action.

Reporting time pay for hours in excess of the actual hours worked is not counted as hours worked for purposes of determining overtime. This of course also does not apply to exempt status workers since the company as a rule pays them on salary regardless of hours worked daily and weekly.

So, on the question above, the company owes Jim 11 hours pay for that day (at the straight rate), including the seven hours he worked in the afternoon, one-half hour for the first 30 minutes of work and another three and one-half hours reporting time pay, for his showing up in the morning but relieved before the end of that shift for lack of work. Dude.

For more, see http://www.dir.ca.gov/iwc/wageorderindustries.htm

Best wishes,  Bob Edwards

BACKGROUND CHECK FOR EMPLOYMENT

Overview of Precise Notices California Employers Must Obtain

Many employers find it prudent for various reasons to conduct appropriate background checks in the employee prescreening process.

Such background checks can and should be done through professional reporting agencies established to promptly check available databases.  However, employers must be familiar with the frequently interlocking federal and California rules for disclosure and consent before embarking on the process.   Please review our newsletter article on Pre-Employment Background Checks for an overview of the applicable federal and state laws in this area.

Per California law, background checks involve two types of consumer reports obtained from reporting agencies that provide such information: (1) consumer credit reports and (2) investigative consumer reports.  Consumer credit reports are credit checks (credit worthiness, credit standing, or credit capacity) used for establishing a consumer’s eligibility for employment.   Investigative consumer reports are consumer reports in which information on a consumer’s character, general reputation, personal characteristics, or mode of living is obtained through any means, including criminal background checks.

California employers interested in obtaining consumer investigative on job applicants or employees must abide by the following precise sequence of required notices and procedures so as not to run afoul of state or federal law.

Step One:  Pre-Request Written Notice and Applicant Consent. The California employer must provide written notice and obtain written consent from the job applicant before seeking the report.  The pre-request notice and consent form must include a box the applicant may check if he/she wishes to receive a copy of the report.

Step Two:  Written Notice to Applicant of Request of Investigative Consumer Report: Prior to obtaining an investigative consumer report, the employer must clearly and conspicuously disclose in writing to the applicant (a) that an investigative consumer report will be sought regarding his or her character, general reputation, personal characteristics and mode of living; (b) the permissible purpose of the report; (c) the name, address and telephone number of the investigative consumer reporting agency conducting the investigation; and (d) the nature and scope of the investigation requested.  The employer must also provide a written summary of the consumer’s rights as prescribed by the Federal Trade Commission (FTC) and a summary of California’s parallel Investigative Consumer Reporting Agencies Act, including the applicant’s rights to inspect the agency’s file.

Step Three:  Obligation to Provide a Copy of the Investigative Consumer Report: If the applicant wishes to receive a copy of the investigative consumer report, the employer (or professional agency conducting the background check on the employer’s behalf) must comply within three business days of obtaining the report.

Step Four:  Employer’s Certification of Compliance to Consumer Reporting Agency: As a condition of obtaining any consumer report, an employer must certify to the reporting agency that it is seeking the report for permissible purposes and that it has complied or will comply with all requirements for notice and disclosure to the applicant.

Step Five:  Notice to Applicant of Intended Adverse Action: Before an employer can deny an application based in whole or in part on any consumer report, the employer must provide the subject applicant with a copy of that report, regardless of whether or not the applicant checked the box per step one above, and a written disclosure of the applicant’s rights as prescribed by Federal and California law.

Step Six: Notice to Applicant of Adverse Action: If an employer denies employment wholly or partially on the basis of information in any consumer report – whether or not that report is “investigative” – the company must further provide “oral, written, or electronic notice” of the adverse decision as well as (a)  the name, address, and telephone number of the consumer reporting agency; (b) a statement that the reporting agency did not take the adverse action and is unable to provide the applicant the specific reasons for the adverse action; and (c) notice of the applicant’s right to obtain a free copy of the pertinent report within 60 days and to dispute with the agency the accuracy or completeness of any portion of that report.

The above rules do not apply to an investigative consumer report procured or caused to be prepared by an employer if the report is sought for employment purposes due to the employer’s suspicion of wrongdoing or misconduct by the person that is the subject of the investigation.

Not all professional background check companies follow California law when conducting investigative background checks.  Employers should consult legal counsel experienced in employment law for practical guidance and full protection of an employer’s rights to seek pertinent background information on key applicants.   Such information may well prove invaluable in the hiring decision.

If you have any questions on these or any other employment laws, please contact me or any of our other employment law attorneys.  Best, Cindy Bamforth

Reduce the Chances of Workplace Lawsuit Disaster by Proper Forms, Policy Handbook

Scenario, Not so Uncommon:   You are the newly hired head of Human Resources.  One afternoon, employee Karen reports that manager Joshua verbally insulted her with a sexual remark and then physically blocked her exit from the lunch area that day.  You interview, investigate and find that neither anyone present nor the video tape of the lunch room that day supports Karen’s story even vaguely.  Joshua was never even seen in the room, except by Karen.

You investigate further and discover that while Karen, the receptionist, is all sweetness and light with the public and management on the phones and over the counter, she has been virtually terrorizing her co-workers in the backroom with subtle, malicious gossip about managers and newcomers for as long as many can remember.  Karen, on interview, doesn’t deny this conduct. Instead, she attacks you verbally, accusing you of retaliating against her after she made the complaint about Joshua.

You, the newly hired HR head, rightfully conclude this woman is a stinker, liar and destroyer of morale and has got to go.  Thus, you, as new HR, turn to the shelves to consult the employer’s handbook and find … ah … the company has never had one, much less a policy prohibiting verbal harassment and other workplace misconduct. You turn to the files and find … ah … no-one has ever written a report on Karen’s destructive gossip.  You then find … ah … the company is in significant danger of a bogus suit from Karen for sexual harassment and illegal retaliation, even more so if you end up justifiably terminating her for her lies and other divisive conduct. The irony.

Employer Lesson One: Ounce of Prevention Can Equal Millions of Legal Fees “Cure”: This company is now facing a potentially bankrupting legal attack in large part because for years its managers did not take the time and care to ensure that : i) the company had written anti-harassment,  retaliation, discrimination and reporting policies in place (usually within personnel policy handbook for employers; and ii) the entire workforce possessed, studied and applied these policies.  Even just a written policy for “reporting of misconduct,” spelling out the employee’s duties, well-understood and followed by the workforce, could have prevented Karen’s long-destructive course of conduct from occurring or lead to her termination before she thought of making a false harassment claim.

As a continuing priority, business should thus implement, maintain and regularly update a “soup-to-nuts” employer handbook and a set of basic hire-to-fire forms and other written policy, including

a)     Employment applications, including a description of the job sought;

b)     Employment agreement (including confidentiality/non-disclosure of company trade secrets and mandatory mediation in the event and/or arbitration in the event of a dispute);

c)     Anti-discrimination, harassment, and retaliation policy;

d)     Employee job performance, compensation and benefits policies;

e)     Employee complaint, investigation and discipline policies;

f)      Employee time-off and vacation policies;

g)     Employer data access and employee privacy policies;

h)    Drug and alcohol abuse and testing policies; and

i)       Termination policy, checklist and release (to be applied with troublesome employees for greater protection against later, frivolous suits).

We provide a full set of such employer policies and procedures regularly to our clients. More detailed information is available upon request.

Best wishes,  Tim Bowles

How Employers Can Regulate Office Romance

In just about every supermarket tabloid on the shelves, there’s at least one splashy article about actors or actresses falling in love on a movie set.  In a 2009 survey by CareerBuilder.com on relationships at work, 37% of U.S. employees surveyed stated they had dated a coworker at some point during their careers, and 32% said they married the person with whom they had an office romance.  Workplace dating is a fact of life.

However, all isn’t fair when mixing love and work.  Employers are rightfully wary of how to address workplace romances and potential relationship conflicts.  Dating a coworker can potentially expose employers to allegations of sexual harassment, sexual favoritism (a form of sexual harassment) or discrimination.  However, if an employer interferes too much, it may run the risk of privacy invasion claims.

Although some employers may choose to ban all workplace dating and others may decide not to implement any official policy to address such issues, companies might want to consider implementing policy that (a) prohibits any such relationships that might present a conflict of interest, such as a supervisor dating a subordinate; and (b) defines the parameters of workplace relationships.

If a supervisor wants to date a subordinate, the company can request one of the individuals transfer to another division to avoid potential claims of quid pro quo harassment.  Where the couple is not or is no longer in a subordinate-supervisor role at work, the company may require them to enter into a consensual relationship agreement or a “love contract” which defines the parameters of such a relationship. A love contract is a written agreement in which the couple each acknowledge points such as:

• The romantic relationship is welcome and consensual by both parties;
• The parties understand they may end their relationship at any time without workplace retaliation of any form by one another;
• Neither party will request, apply for, or in any way accept a direct supervisor or reporting relationship with the other;
• Neither party will engage in conduct regarded as favoritism or that other workers may reasonably perceive as favoritism;
• The parties will behave professionally and appropriately at work and will not engage in inappropriate public displays of affection at the workplace;
• They shall comply with the company’s discrimination, harassment and other related workplace policies;
• They shall notify the company if and when their personal relationship ends; and
• If applicable, the parties shall acknowledge they remain bound by the employer’s arbitration provision for resolution of any disputes arising out of this agreement or their romantic relationship.

Additionally, an employer can and should provide the couple with anti-harassment training even if not required by law to do so.  Such training helps the couple know what standards it must comply with and it helps demonstrate management’s commitment to a harassment-free workplace.

If you have any questions, please contact me or any of our other employment law attorneys.   Best,  Cindy Bamforth

As discussed in Bowles Law Report Volume 8, Issue 3, California courts have differed on what it means to “provide” hourly, exempt-from-overtime workers their meal and rest breaks. Until the California Supreme Court clarifies labor laws on breaks, we advise employers to err on the side of caution and require workers to take all applicable meal breaks.

California Labor Code Section 226.7 requires employers to pay non-exempt employees an additional hour of pay for each meal or rest period the employer fails to provide.  In August 2007, the California Supreme Court found this additional pay fit the legal definition of “wages” and was thus subject to a three-year statute of limitations.  See  Murphy v. Kenneth Cole Productions Inc. .

For example, if a full-time non-exempt employee was misclassified as exempt-from-overtime and thus consistently did not take her uninterrupted thirty minute meal breaks, she can file a claim for one additional hour of pay for each missed meal period going back three years from the date of her claim.  Multiply this by a number of employees and the cost for employers can be exorbitant.

California employers are currently awaiting further clarity from the California Supreme Court as to what break labor laws define as “providing” meal breaks.  The issues are (a) whether they must ensure their workers’ meal breaks are taken without fail, such as by literally policing their employees and enforcing meal breaks; or (b) whether they simply need to make meal breaks available to their staff without necessarily verifying staff actually took those breaks.

The uncertainty should be resolved once the California Supreme Court rules on Brinker Restaurant Corp. v. Superior Court.    Although both sides have submitted their written arguments (briefs), as of March 12, 2010 the Court has yet to set oral argument.  The Court has 90 days to issue its ruling after that argument date.

In the interim, employers should take all reasonable measures for ensuring non-exempt workers actually take timely, uninterrupted meal periods.  Such measures include:

• Audit meal and rest period policies and practices to ensure they comply with applicable breaks labor laws;
• Ensure all non-exempt employees read and acknowledge in writing their understanding of the company’s meal and rest period policies;
• Determine if any exception applies for mandatory unpaid meal periods, such as an “on-duty” meal period and, if so, properly document such exception by written agreements in compliance with California law.  See our blog article ” On-Duty Meal Breaks .”
• Have supervisors and managers conduct and document regular monitoring to ensure employees are taking their meal and rest periods and entering their unpaid meal period start and end times on time cards or sheets;
• If a worker is not taking the required meal period, correct the matter; pay the additional hour of pay to the worker if appropriate; document agreement by the worker to take those periods in the future; and discipline the worker for any further non-compliance; and
• Ensure proper record-keeping is in place and maintained for at least a rolling four-year period, or longer if currently engaged in litigation.

If you have any questions, please contact me or any of our other employment law attorneys.   Best, Cindy Bamforth

In California, generally an employer may not have an hourly wage employee work more than five hours per day without providing that employee with at least a thirty minute meal break.  However, if that worker will complete the day’s work in six hours, the worker and employer may waive that meal period by mutual consent.

In very rare circumstances, it may not be possible to relieve an hourly employee of all duty during the entire meal period.  For example, a single worker in a coffee kiosk, a sole worker in an all-night convenience store, or a security guard stationed alone at a remote work site typically must remain on the premises at all times during their shift.

Under such limited circumstances, the meal period shall be considered “on duty,” and that eating time must be paid at the employee’s regular rate of pay.

Therefore, an on-duty meal break is only permitted when:

• The nature of the work objectively prevents an employee from being relieved of all duty;
• The on-duty meal break is agreed to in writing by the employee and his or her employer;
• The employee is paid for the meal break; and
• The employee has the right to revoke the on-duty meal break at any time in writing (except under California Wage Order 14 concerning agricultural workers).

If you have any questions, please contact me or any of our other employment law attorneys.   Best, Cindy Bamforth

Calculating overtime for weeks when a worker earns a “nondiscretionary” production bonus can be is a trap for unwary employers.  Under California and federal law, employers must calculate overtime pay based on an employee’s regular rate of pay.  “Regular rate” is not necessarily the same as an employee’s “straight hourly rate.”  The calculation for “regular rate” in each workweek is: i) all compensation earned (including all hourly pay and “nondiscretionary” production bonuses), ii) divided by the number of hours worked in that week.

Commonly, the overtime rate is 1.5 times the regular rate.  In California, there are situations where the overtime rate is double the regular rate (including hours worked after 12 hours in a given calendar day).

“Nondiscretionary bonuses” include any bonus promised to the employee which is either:

• Incentive to increase productivity, quality of work or attendance; or
• Paid under a contract, policy or promise that entitles the employee to the bonus.

A written bonus policy intended to motivate an employee to increase a defined production statistic is a nondiscretionary bonus policy.

A “discretionary” bonus would be extra pay not linked to any such incentive, contract, policy or promise. A holiday bonus is commonly considered such a discretionary and thus is not factored into regular rate calculations for the payment of overtime.

Overtime Calculation Example, with Non-Discretionary Bonus: Hourly employee “Bill Bonus” worked 52 hours last week, including 12 hours of overtime at “time and one-half.”  Bill’s hourly (straight) rate is $10.00.  Bill also earned a $138.00 production bonus attributable to last week.

Follow these steps to compute Bill’s total wages for the week:

Step 1.             Bill’s Regular Rate Calculation

52 total hours  x $10.00 hourly rate    =          $520.00

Bonus for the week                             =          $138.00

Subtotal           =          $658.00

Regular rate = $658.00/52 hours         =          $12.65/hour

Step 2.             Bill’s Overtime (1.5x) Wage for the Week

($12.65/hr regular rate ÷ 2) x 12 overtime hours = $75.92

Step 3.             Bill’s Total Wages for the Week

Subtotal from Step 1                           =          $658.00

Subtotal from Step 2                           =           $75.92

Total                =          $733.92

Please see section 49.2.4.1 of the California Division of Labor Standards Enforcement (DLSE) Enforcement Policies and Interpretations Manual for an alternative method of computing regular rate involving overtime and a bonus (available online at http://www.dir.ca.gov/dlse/DLSEManual/dlse_enfcmanual.pdf).

If you have any questions on this or any other employment laws, please contact me or any of our other employment law attorneys.

Best, Bob Edwards

Origins, 2006-2007

If ten years back, a soothsayer had projected I would shortly be neck-deep in a growing peace and conflict transformation leadership training initiative in Africa, I would have terminated that person’s employment for excessive hallucinations.   Yet, in 2010, we are in our fifth year of innovation on just such a human rights Africa campaign, in five countries and growing.  The work has become my pro bono passion.

Joseph Yarsiah, Liberian YHRI advocate, Cape Coast, Ghana, July, 2005

The first trip to Africa, in August, 2004, was as a relatively conventional American adventure tourist,  a safari with my dad for three weeks through some less-traveled preserves in Tanzania.  On this return to the developing world 30-plus years after a pre-law school trip to India and Nepal, the African spirit of hope, humanity and diversity seemed to reach in and squeeze my heart to near-bursting.

Thus touched, I volunteered in 2005 to assist Youth for Human Rights International and its founder Mary Shuttleworth on her annual world tour, helping with a regional student conference in Ghana on human rights abuses. We attracted participants from several African countries, including Liberia, Sierra Leone, Nigeria, Uganda, and host Ghana.  Among these were Liberian Jay Yarsiah and Ghanaian Sammy Jacobs Abbey.

For that July, 2005 week in Accra and Cape Coast, Jay took me through his copy of the video documentary Liberia, An Uncivil War.  This is a jaw-dropping depiction of the 14-year civil conflict in Liberia, particularly the closing events in mid-2003 when rebel forces mortared Monrovia, the main city, civilian bodies were piled like cord wood outside the U.S. embassy, and President Charles Taylor was driven to exile in Nigeria with a relative calm maintained thereafter by international peacekeeping forces.

Dancers, Cape Coast, Ghana conference, July, 2005

That week, Jay coupled the video with his recalls as a refugee.  The first incident was in 1991 at age 11, escaping with his family through child soldier checkpoints across the Mano River into Sierra Leone.  After return to Monrovia, the family fled again in 1995 aboard the packed and derelict ship Bulk Challenge, adrift on the Atlantic for weeks until Ghana’s President Jerry Rawlings allowed the refugees to land and take shelter in the 40,000 person U.N.-run camp at Buduburam.

Yet, Jay’s story did not end with declarations for retribution.  He described his determination to help create a worthwhile future in and for his country.  After all the reasons to hate and to strike back, his intention to contribute to the end of the madness was remarkable. Jay suggested I might want to come to Liberia at some point to see the human rights issues at play there.

I took him up on that invitation in May, 2006.  After a stay in Ghana to work with our colleague Sammy Jacobs Abbey (including a trip to the Buduburam Refugee Camp), I flew to Roberts Field, Liberia.  The 40-mile ride to Monrovia was through five United Nations military checkpoints. The main city had some 1.5 million inhabitants. Still, two-plus years following the August, 2003 ceasefire, the town had no electrical grid and no running water.

Entering Monrovia, Liberia, May, 2006

I wondered upon arrival what could possibly be done to improve conditions with a population traumatized by indiscriminate rape, execution-by-whim, and unspeakable cruelty. Yet, as I was to learn repeatedly through the ensuing years from my determined 20-something hosts and from thousands of other young people we have ultimately reached, any well-intentioned effort is better than inaction.

Indeed, our somewhat random experiment at human rights education on that first visit – improvising impromptu discussions at high school campuses about the United Nations Universal Declaration of Human Rights 1948 – has evolved into an expanding initiative of youth leadership training in five African countries.  Please see African Human Rights Leadership Campaign, Beginnings, 2006 – 2007, a further blog describing the first tentative steps on this journey.

For further information, please see www.africanleadershipcampaign.org.

Best wishes, Tim Bowles