As an employer, you might assume the company is immune from any wrongful termination claim if an employee quits on his or her own accord. However, a worker may still prove a business is responsible for wrongful “constructive discharge” even when he or she has deliberately resigned the employment.

Wrongful constructive discharge occurs when an employee is “forced“ to quit because the employer has unlawfully made working conditions unbearable. For example, an employee may complain about a possibly unsafe or improper working condition. The employee might even be mistaken about the issue, based on faulty information. If, as a result of the complaint, that worker experienced management’s continued harassment, discrimination or other unfair treatment to the degree that a reasonable person in that worker’s position would have found no alternative but to quit, the company may be liable.

A business is also prohibited from constructively discharging a worker due to that employee’s race, national origin, gender or any other classification protected from discrimination by federal and/or state law. A worker constructively discharged for such reasons has the right to claim and collect damages under workplace anti-discrimination laws, including the federal Civil Rights Act of 1964 (also known as “Title VII”) and/or the California Fair Employment and Housing Act (FEHA).

While an employee who resigns is usually not qualified to receive unemployment benefits, a worker who can show he or she was constructively discharged is an exception.

However, the applicable laws do not grant a blank check to every worker who has quit because he or she considers the employer was harsh or unfair. First, the harshness or unfairness has to stem from the worker’s exercise of protected rights or from his or her membership in a classification protected by law (race, disability, sexual preference, religion, etc.). Second, the employee has a corresponding duty to seek all reasonable resolution of such perceived harassment or discrimination that is internally available in the company. Wrongful constructive discharge occurs only where there is no reasonable alternative to solve the retaliation except to resign. This of course makes clearly written complaint policies and a personnel department skilled in handling such complaints essential.

There is a great deal more to the subject. See, for instance, our article, “Forced to Quit? A California Employment Lawyer’s Perspective on Constructive Discharge.” For help on handling or responding to specific potential or actual wrongful constructive discharge claims, contact an attorney who specializes in employer defense.

The California Supreme Court has ruled that the state’s overtime requirements apply to work performed in California by non-residents. In Sullivan v. Oracle Corp., three non-resident Oracle employees worked in California as instructors and trained Oracle’s customers in the use of the company’s products. They sued the California-based company for underpayment of compensation under this state’s overtime rules (employers must pay premium rates after more than eight hours of work in a day or 40 hours in a week). Oracle asserted California’s laws did not apply as these employees worked primarily in their home states (Colorado and Arizona), traveling to California only on occasion.

The California Supreme Court sided with the plaintiff-workers. Due to California’s strong policy on protecting employee compensation, this state’s overtime rules apply to anyone performing substantial work within the state, regardless of his or her state of residency. (In this case, the employees performed labor in California for days or weeks at a time. The court noted it was not addressing the situation where an out-of-state employee, say from Las Vegas, enters and leaves California as part of a single workday.)

The court’s decision is also limited to overtime laws and does not address whether employers must also take care to ensure they comply with California’s other labor laws for non-resident employees, including time card or pay stub requirements and many others.

Whether an employee’s visible tattoo or body piercing stems from a claimed sense of aesthetics, rebellion or “it seemed like a good idea at the time,” business has discretion to regulate appearance and thus may usually decline to hire, fail to promote or terminate that person on that basis alone.

As long as the policy is based on reasonable grounds of acceptable appearance for the particular industry or business involved, an employer may impose different standards for men and women. For instance, a professional law or accounting office would likely be able to prohibit earrings for men when permitted such jewelry for women.

However, companies must take care to seek reasonable accommodation of visible tattoos (“body art”) or piercings arising from religious belief and practice. Employers must also apply such policies consistently to prevent other possible claims of unlawful discrimination. For example, a company prohibiting visible tattoos on just lighter skinned employees is probably setting itself up for a racial or national origin discrimination suit.

Contact a labor and employment attorney for assistance creating a “uniform” appearance policy (pun intended) and for applying that policy where an employee has raised a religious or other seemingly legitimate objection.

Hiring outside vendors to conduct pre-employment background checks into any criminal record, bad credit history and/or other matters is a common tool for an employer’s informed hiring decisions.

Federal and California laws cover the procedures for such checks, designed to balance a company’s right to research and obtain relevant information about job applicants and applicants’ rights of privacy on information unrelated to a hiring decision. By applying for work, a person in effect consents to some degree of scrutiny. The required forms and written notices are to make sure the process is fair. Among key points:

1. Conduct background checks even-handedly – While it is usually not sensible to have to run checks on every single applicant off the street, an employer should establish a definite point in the process at which any and all applicants would be checked. It is up to the employer to set that point and to make it known, perhaps checking on those in the final group of candidates or only on the person tentatively chosen for the job. Arbitrarily deciding who should be checked and when unnecessarily exposes the company to possible discrimination allegations;
2. Notify candidates of background checks in advance – Under the federal and California laws, an employer must let a candidate know ahead of time if the company is going to conduct a check. An employer must also provide the candidate a written summary of the applicable procedures, including the prospect’s right to see the resulting report and to challenge any aspect of the report he/she contends are inaccurate. The California law requires an employer to supply a candidate a form with “yes” and “no” boxes on whether that prospect chooses to obtain a copy of the report; and
3. Understand the limitations of background checks – It is important to be able identify personal information not considered relevant to the hiring process and thus protected from disclosure. (For a related topic, see “Pre-Employment Testing: Inquiries are Limited to Job-Related Skills and Qualities”)

The legally required procedures, notifications and forms only apply when a company utilizes an outside vendor in the business of conducting such checks. Most reputable vendors are able to supply the necessary forms and notifications although it is the employer’s ultimate responsibility to ensure compliance.

Thus, an employer’s direct check of a candidate’s references is not covered by these laws. However, it is a good idea to include on a company’s standard job application a statement that the applicant should expect the employer to contact references to obtain job-related information.

For more extensive discussion, see Pre-Employment Background Checks, Bowles Law Report, Vol. 9, Issue 3

For a business to determine or confirm whether its particular use of pre-employment background checks and other hiring practices are in compliance, management should utilize an experienced labor law attorney for the applicable state jurisdiction.

Federal law requires every employer hiring any individual in the United States to verify the prospect’s identity and employment authorization through completion of Form I-9, Employment Eligibility Verification.

An employer must complete an I-9 form for every person hired, even if there’s just one employee in the business. It is improper for a company to only require forms for those whose ethnicity management might assume indicates a higher possibility of unauthorized status. An employer also cannot base a hiring decision (or any employment decision) on a person’s ethnicity. See, “National Origin Discrimination.”

I-9 forms can be obtained from the US Citizenship and Immigration Services website. Employers can also use the website’s free e-verify system.
A company need not complete an I-9 form for an independent contractor. However, managers must take care not to mislabel or mistake a true employee as an independent.

Complaints about employing illegal workers may prompt an investigation from the U.S. Department of Labor or U.S. Immigration and Customs Enforcement (ICE). An employer can be fined and otherwise sanctioned for: i) knowingly hiring an undocumented worker; or ii) unknowingly hiring an undocumented worker if a reasonable person would believe the employee was illegally employed.

Thus, if an applicant provides information and documents which, on their face, appear valid and consistent, an employer has no obligation to investigate further. On the other hand, an employer must probe further if the documentation or other information supplied appears suspect, for example, obvious forgery or contradictory statements from the prospect.

For assistance complying with U.S. immigration laws for your business, contact an attorney experienced in immigration and employment.

Halloween looms. An office party for the occasion may be a great way to boost employee morale. However, as with holiday parties, a killer get-together can have frightening results if not planned properly.

Here are some guidelines to ensure your Halloween party doesn’t come back to haunt you:

• Suggest “work-appropriate” costumes: Surely more than a few sexual harassment lawsuits have hinged on inappropriate costumes for an office Halloween party. Be sure to remind employees that fun and invitations for disaster are two different things. Specify what management considers inappropriate attire, including costumes that show a lot of skin, those carrying sexual innuendo, costumes glorifying alcohol usage, those with an overt religious or political message, or costumes paired with realistic weapons. Enforce these rules at the party, even if it means sending someone home.
• Distribute a notice to employee covering acceptable behavior: A day or two before the festivities send out an email and/or other notice reminding employees that while the party is a social occasion, it is among co-workers. Employees will be expected to act professionally and appropriately.
• Ban or keep alcohol consumption under control: Your business can be held liable for physical injuries caused or sexual harassment committed by a person served alcohol at a company-sponsored party. For more ideas on how to avoid any horror stories, see “A Risky Cocktail: Alcohol and an Employee Party.”

For assistance in understanding and enforcing the boundaries to avoid a Halloween party nightmare, contact an experienced employment law attorney.

For possible cost savings and ease in administration, businesses are sometimes tempted to classify people working regularly as “independent contractors” instead of “employee.” In California, as in other states, independent contractors are usually not entitled to most of the benefits that employer must provide employees, including minimum wage, overtime pay, workers’ compensation coverage, social security credits, and unemployment insurance.However, whether inadvertent or otherwise, a company’s misclassification of one or more hired persons as independent contractors instead of employees can become a very expensive error. The California Employment Development Department (EDD), Franchise Tax Board (FTB), Division of Labor Standards Enforcement (DLSE), and Department of Industrial Relations (DIR), as well as the federal Internal Revenue Service are all agencies with the power to investigate, audit and impose expensive penalties on businesses for incorrect employee or independent contractor designations.Such errors also can also create liabilities for back wages, overtime compensation, and payments to the government for retroactive unemployment, workers’ compensation and social security coverage.Analysis must always be on a case-by-case basis. Agencies commonly judge classification decisions on the greater weight of factors favoring employment or independent contractor status. For example, the DLSE publishes a list of pertinent qualities for validly classified independent contractors:

• An independent contractor’s occupation is distinctly different from the product of the hiring company (e.g., a manufacturing company hires an outside lawyer to write represent the business in court);
• An independent contractor’s work is not part of the regular business of the hiring entity (an auto dealer retains a marketing consultant to analyze purchasing trends);
• An independent contractor commonly provides his or her own tools and workspace and covers his/her overhead expenses;
• An independent contractor usually provides a specialized service or skill (e.g,., a professional accountant delivering financial services under his/her distinct license);
• An independent contractor’s work is usually unsupervised and the hiring company lacks the right to control (i.e., micro-manage or supervise) the course of that contractor’s labors;
• The length of time for an independent contractor’s services are classically short-term, project by project; and
• The method of payment for an independent contractor’s services is usually by the job, not by the hour or other period of time.

There are always exceptions to these factors. Lawyers commonly charge by the hour. A business might provide the contractor a workspace on company’s premises to carry out the project. Again, proper classification depends on a thorough and accurate assessment of all independent vs. employment factors. An experienced labor lawyer can be a significant help in the process, including the appropriate contract documentation.

Our 2010 blog “Office Holiday Survival Guide” provides a roadmap for handling alcohol at holiday office parties. By its off-the-clock and put-work-aside nature, the annual company-wide gathering may also be a prime setting for unwelcome sexual advances by employees, worse yet by managers. Such harassment is not an experience anyone would want to go through. It can also lead to serious legal liability no business wants to experience.

Examples of inappropriate, unwelcome party behavior are:

• Bringing risqué joke gifts;
• Wearing suggestive “party” attire;
• Complimenting a co-worker’s body after one too many drinks;
• Frat house antics, e.g., “competition” for predatory sexual liaisons; or
• Dancing romantically or suggestively with a subordinate or co-worker.

The employer must be proactive to prevent and, where it occurs, to deal fairly and effectively with incidents of unwelcome advances at the holiday retailer party. For example:

• Re-publish, re-distribute the company’s sexual harassment policy before event takes place;
• Remind employees in advance that while holiday festivities are to be enjoyed, they do not offer an excuse for violating policy;
• Issue a business attire or other appropriate “dress code” in advance;
• Limit the availability of free alcoholic drinks and take other measures suggested in our “Office Holiday Survival Guide I, A Risky Cocktail: Alcohol and an Employee Party;”
• Hold the party during the day, with work to continue afterwards;
• Reduce the opportunities for unwelcome situations by avoiding inappropriately suggestive music or party games like “Twister” or “Truth or Dare” (strip poker is also out); and
• Avoid decorating with mistletoe.

It goes without saying – but we will say it anyway – that if your business does not have a written sexual harassment policy, the time to establish one is yesterday, if not sooner. Please let us know if we can advise you on such matters.

California Employers Must Pay Wages and Mileage for “Off-Hours” Work-Related Tasks

In response to our article “Travel Pay in California,” a California employer has asked how he should pay his employees for time spent and for their personal vehicle mileage incurred while shopping for company supplies.

Compensation for All Hours Worked: Of course, an employer must compensate an employee for time worked, even hours after that worker has clocked out for the day. For instance, an employee who stops off on the way home to shop for and buy office items for the employer performing compensable work during that time. However, as commuting time is not compensable, only the time required to stop, shop and get back on the road for home would count as time worked. See also, our article “Travel Pay Revisited.”

Calculating Mileage for a Work-Related Task: California employers must also reimburse workers for mileage incurred in personal vehicles on employment-related tasks. A company should issue and supply appropriate forms or logs to enable such payments. The IRS’s published mileage rates for 2013 are:

• 56.5 cents per mile for business miles driven
• 24 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organization

Employers should issue and maintain clear and consistent written policies on such matters. See “Promoting Workplace Productivity with a Sound Policy Handbook and Forms.”

For workplace policy matters, including employee manuals and forms, please contact our firm’s attorneys Tim Bowles or Cindy Bamforth.