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A look at the lay of the law

Local experts discuss changing regulations for the California workplace that impact business owners

Posted: February 20, 2011 1:55 a.m.
Updated: February 20, 2011 1:55 a.m.

Attorneys Brian Koegle, left, and David Poole advise Valley Industry Association members on how they can better protect their businesses at the association’s monthly luncheon meeting Tuesday. The main topic of discussion was how to prevent problems for business owners by staying aware of changing employment law.

Running a business in California can feel like an obstacle course sometimes.

On top of maintaining daily operations, a business owner must keep track of numerous laws, licenses and regulations.

Payrolls must be met, customer needs have to be anticipated and strategies should to be developed to keep the business thriving.

But despite the best intentions, it can take only one claim, from one employee, to shutter a business’s doors.

Employment law
The Valley Industry Association hosted an employment-law overview at its monthly membership luncheon Tuesday.

The review, presented by attorneys David Poole and Brian Koegle of the Poole and Shaffery law firm, covered a number of topics facing employers today.

“Twenty-three of the nation’s 30 largest employment-related jury verdicts and settlements were in California,” Koegle said.

The median award for California discrimination and harassment claims was $106,500, Koegle added. The average wage and hour award per claimant in the state was $155,780.

Exempt status
One common situation, with a lesser-known applicable law, is that minimum pay for an information technology manager must be $79,050 to qualify this position for exempt status. If the salary is less, the company must pay overtime for all hours worked over a standard workweek.

“We’re seeing a lot of computer techs putting in overtime claims,” Poole said.

Exempt employee status and overtime laws are quite clear. But some employers try to get around overtime rules by using independent contractors. California law and IRS rules differ on the number of points used to evaluate independent status.

The federal government is cracking down on employers incorrectly classifying people as independent contractors, and has hired 170 new wage and hour investigators, Poole said. Five of those new positions will be stationed in the Los Angeles area.

Off the clock
One area that has attracted a significant amount of attention in recent years is rest periods; defined as requiring a 10-minute break period for every four hours of work, and meal periods of at least 30 minutes for shifts lasting longer than five hours.

Previously employers were required by law to ensure their employees took breaks appropriately, but it was difficult to manage, particularly for employees who preferred to take a break and conduct personal business at their desk or work station.

In an appeal of a court order in the case of Brinker Restaurant Corp. vs. Superior Court, the appeal reversed the stricter order, ruling that rest and meal breaks need only be made available, and not ensured.

As this is an issue that affects so many people and produced so many lawsuits, the California Supreme Court granted a review of Brinker decision. A final ruling is expected this year.

“We recommend counseling employees to get off the clock and take their break,” Poole said.

There should also be wording describing the break periods the employee is required to take, at the bottom of every time sheet or card an employee signs, Koegle said.

Repeatedly signing a time card with the advisory would be one means of acknowledging the law by employer and employee alike.

Adding to the complexity of off-the-clock rules are the number of employees who respond to e-mails, text messages or phone calls after their shift is finished. Workers often do so by choice, but the employer could be held liable for overtime should the employees file a later claim.

“Time spent on these activities will likely be deemed compensable,” Koegle said.

Employers should include strong written policy in their company employee handbook that nonexempt employees are not expected to work after-hours, and advise their employees of the policy.

Last, companies requiring employees to change in and out of uniforms at the workplace must compensate the employees for the time spent doing so.

Minimum wage
While local residents are familiar with micro weather climates and forecasts in Southern California, now there is the equivalent of micro-minimum wage standards.

California has a higher minimum wage than the one set by the federal government. But San Francisco created its own minimum-wage standard, which took effect Jan. 1.

Employers need to know that if they send a local employee to perform work in San Francisco, they must pay their employee the minimum wage of $9.92 per hour while working in that city.

Companies are also required to pay an additional sum above the minimum wage to comply with the city’s Health Care Security Ordinance.

Privacy expectations
The recent technology explosion brings a whole new set of complications for employers.

The U.S. Supreme Court rules that an employee with a company-issued device such as a cell phone, smart phone or computer has a reasonable right to privacy while using the equipment.

First Amendment rights protect employee messages, even those a company deems objectionable. A company must have a reasonable cause to search text, e-mails or Internet browsing by an employee.

It is expected however that in the next few months the courts will rule in a company’s favor, granting a company the right to prohibit activity such as surfing the Internet for pornography. Employee use of social media, whether performing duties on the job or for personal use, is also a hot topic.

Companies will need to craft well-written employee policies outlining actions that are subject to discipline or termination.

The next question will be how policies can be enforced if an employee violates policy after-hours when they are off-duty.

Paid-leave act
Protected family and disability leaves aside, the state has introduced another required paid leave act for organ and bone marrow donors.

Effective Jan. 1, employers with 15 or more employees are required to pay up to 30 days of paid leave for organ donors, and up to 5 days for bone marrow donors.

Employees are guaranteed full reinstatement rights, and benefits must remain intact.

Employees do not have to take consecutive days off, Koegle said, adding to the administrative burden for employers of tracking the days for benefit and payroll purposes.

Debit cards, HIRE Act
Employers who issue debit cards loaded with earned wage dollars need to be careful. If the employee loses the card, the employer is not protected and must pay the employee a second time.

One piece of good news for employers is that the HIRE tax credit may be extended to June 30.

Companies should perform an audit of the employee practices, policies and performances, Poole said. When in trouble, many pull out old handbooks that fail to address many of the issues at the center of legal claims filed today.

Companies can also obtain employment practices liability insurance to protect the business in the event of an employment claim filed against the company.  The insurance will save business owners a lot of grief in the event of an action taken against the company, Poole said.

A single lawsuit can put the company out of business, according to Lindahl Lewis of Lucas Insurance Services. The insurance covers a number of employee related claims.

“Every employer must defend themselves against a claim, whether they’re responsible for a violation or not,” Lewis said.


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