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It’s the Eve of Election 2016 – Can Employers Communicate to its Employees Support of a Candidate or Measure?

October 17, 2016 By Israel Samuels LLP Leave a Comment

By the time that the next issue of Business Briefs come out, we will have a new President elect and many local and state measures will have been decided, some to the benefit of, and some to the detriment of, others. Can employers communicate to their employees what candidate and/or measure will be most beneficial to the business?

A brochure available online from the California Chamber of Commerce offers employers a concise overview of the do’s and don’ts of communicating with employees about ballot measures. The brochure, “Guidelines for Political Communications to Employees,” points out that informing employees and stockholders about the impact of ballot measures (as well as proposed state legislation and regulations) is within the employer’s rights as a business owner – if the communication is done the right way.

The brochure emphasizes there should be NO PAYCHECK STUFFERS — employers cannot put any political messages in or on employees’ payroll envelopes. Moreover, there should be no coercion, no rewarding or punishing employees for their political activities or beliefs (or threatening to do so).

Employers can communicate with their employees, stockholders and their families about the company’s support of or opposition to state legislation, regulations or ballot measures. Also permissible is encouraging employees, stockholders and their families to support or oppose state legislation, regulations or ballot measures.

Political messages can be communicated to the business’s own employees and their families through such means as: internal mail systems (separate from payroll distribution), email systems, regular mail, bulletin boards, phone bank messages or employee meetings.

Please note that there is a distinction between the handling of internal communications (to employees, stockholders and their families) and external audiences (such as non-stockholder retirees, outside vendors, customers and passersby).

So, make sure you use caution before communicating with your employees or stockholders your support of a candidate or measure.

The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.

Limits on Document Requests to Prove Immigration Status of An Employee

October 10, 2016 By Israel Samuels LLP Leave a Comment

At the end of September 2016, the Governor signed into law Senate Bill No. 1001 that added Section 1019.1 to the California Labor Code.

The new statute makes it unlawful for an employer to request more or different documents than are required under federal law, to refuse to honor documents tendered that on their face reasonably appear to be genuine, to refuse to honor documents or work authorization based
upon the specific status or term of status that accompanies the authorization to work, or to reinvestigate or reverify an incumbent employee’s authorization to work, as specified.

The bill also authorizes an applicant for employment or an employee who is subject to an unlawful, prohibited act as set forth in the new statute to file a complaint with the California Division of Labor Standards Enforcement. Any person who violates the statute is subject
to a penalty imposed by the Labor Commissioner not exceeding $10,000, and can be liable for equitable relief.

To assure you do not violate Labor Code section 1019.1 do not require an employee or prospective employee to provide you with immigration status documentation beyond what is permitted and required by federal law, especially do not ask existing employees for any additional documentation. If you are in doubt about what you can and cannot request, consult with qualified legal counsel.

Monetary Amount of Accrued Vacation Not Required to Be Disclosed in Employee Wage Statements

October 6, 2016 By Israel Samuels LLP Leave a Comment

The rules regarding the information employers must provide to employees in wage statements is a jumbled mess. However, at least one thing is now for certain – Employers are not required to include the monetary value of accrued paid vacation time in employee wage statements unless and until a payment is due at the termination of the employment relationship.

In Soto v. Motel 6 Operating, L.P. (October 20, 2016) the First Appellate District of the California Court of Appeals decided that the Labor Code does not require detailed information on accrued paid vacation time on employee wage statements, except at termination of employment. The Court of Appeals reasoned,
If an employer is not required to compensate an employee for unused vacation in a particular paycheck, there is no statutory duty to identify the monetary amount of the accrued vacation balance.

The Soto case provides another example of how essential qualified legal counsel is should you be an employer.

Even the Department of Labor Doesn’t Understand Its Own Regulations

October 3, 2016 By Israel Samuels LLP Leave a Comment

The regulations applicable to employment are so difficult to understand even the United States Department of Labor does not understand them – and they made them!

In August, the Department of Labor (DOL) employee union announced that the Department of Labor had agreed to pay $7 million to settle a ten-year-old worker grievance that DOL workers allegedly were not paid for off-the-clock work from 2003 through 2013. Two to three thousand workers will split the settlement.

Imagine that – the DOL violated the law it established. If the Department of Labor cannot properly implement its own rules, what chance is there for private businesses? It is imperative that you do not try to figure out the employment rules alone. You are likely not qualified.

Consult with your attorney to obtain his or her best guess as to how the DOL is likely to interpret and enforce laws applicable to employees.

Is The Arbitration Provision of Your Employee Manual Unenforceable?

September 26, 2016 By Israel Samuels LLP Leave a Comment

Many Employee Handbooks contain provisions that attempt to require employees to arbitrate any disputes they may have with their employer. Another rather standard provision in many employee manuals states that “nothing in the handbook is intended to create a binding agreement between the employee and the employer”. A recent case out of California Court of Appeals found that this provision actually negated the binding effect of an arbitration provision found in the Employee Handbook.
The Court in Esparza v. Sand & Sea, Inc. observed:

“The employee handbook containing the arbitration provision included a welcome letter as the first page, which stated, “[T]his handbook is not intended to be a contract (express or implied), nor is it intended to otherwise create any legally enforceable obligations on the part of the Company or its employees.” The employee signed a form acknowledging she had received the handbook, which mentioned the arbitration provision as one of the “policies, practices, and procedures” of the company. The acknowledgement form did not state that the employee agreed to the arbitration provision, and expressly recognized that the employee had not read the handbook at the time she signed the form. Under these circumstances, we find that the arbitration provision in the employee handbook did not create an enforceable agreement to arbitrate. We therefore affirm the trial court’s denial of the employer’s petition to compel arbitration.”

If your company’s Employee Handbook contains similar provisions you should promptly contact your legal counsel to create a binding arbitration agreement in light of the decision in Esparza.

Employers Potentially Liable for Associational Disability Claims

September 21, 2016 By Israel Samuels LLP Leave a Comment

On August 26, 2016, the California Second Court of Appeal issued its published opinion in Castro-Ramirez v. Dependable Highway Express, Inc. The Court found that an employer’s denial of accommodation to a nondisabled employee may be evidence of associational disability discrimination under the Fair Employment and Housing Act (“FEHA”).

The Court determined that the FEHA creates an associational disability discrimination claim. The Court ruled the FEHA makes it unlawful to discharge a person from employment based on physical disabilities or other characteristics, which include “a perception that the person. . .is associated with a person who has, or is perceived to have, any of those characteristics.” It also determined that requests for accommodation based on association disability that go unheeded, or that result in employer disregard of opposition to an accommodation, can form the basis for a claim of retaliation against the employer.

As a result of this decision we suggest employers review with their attorneys their policies and practices regarding responding to associational disability accommodation requests.

New Employer Required Disclosures Regarding Leave Protections for Victims of Domestic Violence

September 19, 2016 By Israel Samuels LLP Leave a Comment

On September 14, 2016, Governor Brown signed into law Assembly Bill 2337 thus amending California Labor Code section 230.1. The amendments make it illegal for an employer with 25 or more employees to discharge, or in any manner discriminate or retaliate against, an employee who is a victim of domestic violence, sexual assault, or stalking for taking time off from work for any of the following purposes:

To seek medical attention for injuries caused by domestic violence, sexual assault, or stalking;
To obtain services from a domestic violence shelter, program, or rape crisis center as a result of domestic violence, sexual assault, or stalking;
To obtain psychological counseling related to an experience of domestic violence, sexual assault, or stalking; or
To participate in safety planning and take other actions to increase safety from future domestic violence, sexual assault, or stalking, including temporary or permanent relocation.

The employer cannot take any action against an employee with an unscheduled absence if, within a reasonable time after the absence, provides a certification to the employer in the form set forth in Labor Code section 230(d). The new law requires employers to inform each new employee, and upon request of an existing employee, of their rights under the Section 230.1. The Labor Commissioner is required to develop a form that an employer may use to comply with the notice requirements. Until the Labor Commissioner posts the form on the Commissioner’s Internet Web site, employers will not be required to comply with the notice requirements set forth in Section 230.1.

We do not know the Labor Commissioner’s time schedule for completion of the form. In the interim we suggest you seek legal help to amend Employee Handbooks and put in place procedures to comply with Section 230.1.

Equity Compensation Plans for “Tweener” Corporations

September 12, 2016 By Israel Samuels LLP Leave a Comment

Keith Paul Bishop defines a “tweener” corporation as “not quite private and not quite publicly traded.” These are corporations that are not subject to reporting requirements of the Securities Exchange Act and, thus, entitle them to keep financial and other information confidential from competitors and others. Care must be taken to protect those abilities if such a corporation adopts an equity compensation plan for employees or others.

Since such corporations are not subject to the Exchange Act’s reporting requirements, they cannot register on securities offered under their compensation plans. Many “tweeners” rely on SEC Rule 701 to avoid registration. Rule 701 only imposes specific financial disclosure requirements if the aggregate sales price or amount of securities sold during any consecutive 12-month period exceeds $5 million. If a “tweener” company exceeds this limit it must provide financial statements on Part F/S of Form 1-A (Regulation A Offering Statement) and, thereby, is required to make public its financial information.

To avoid such disclosures “tweener” companies have two choices according to the SEC:

They can require confidentiality agreements to protect information that could be used by their competitors; and/or
Elect to stay below $5 million in sales during any consecutive 12-month period.

If you believe that your corporation falls within this “tweener” corporation category and, therefore, are a private issuer of stock, and want to adopt an equity compensation plan for the corporation’s employees or others, consult legal counsel to assure you posit the corporation so as to avoid disclosures that could help your competitors.

Fee Shifting Permitted in Consumer Arbitration Provisions

September 6, 2016 By Israel Samuels LLP Leave a Comment

The Ninth Circuit Court of Appeals in Tompkins v. 23andMe, Inc. (August 23, 2016) upheld an arbitration provision in a consumer action that provided that the losing party would bear the costs of the arbitration and pay the prevailing parties’ attorneys’ fees. The Plaintiffs in the class action claimed 23andMe, Inc., a company that markets a home DNA test that can be purchased online, misrepresented the health advantages of the DNA test. To purchase the test consumers clicked through an arbitration provision and
Terms of Service that contained various provisions that required the losing party in any arbitration to pay the costs of the arbitration and the prevailing parties’ attorneys’ fees. The Plaintiffs claimed these provisions were unconscionable and, therefore, unenforceable. The Ninth Circuit concluded that the provisions were not substantively or procedurally unconscionable under California law and upheld the arbitration fee shifting provisions. Several California Appellate Courts had held that similar provisions were unconscionable.

However, the Ninth Circuit distinguished those cases on the basis that the feeshifting was unilateral and oppressive to one side of the agreement. It determined that the provisions in the 23andMe, Inc. agreements were bilateral and did not oppress either side. As a result, it found that the provisions did not place an unaffordable burden on the losing party.

In a final blow to Plaintiffs, the Ninth Circuit also concluded that a contractually shortened statute of limitations in the agreement was also enforceable and thereby required Plaintiffs to bring their action again 23andMe, Inc. within one year. The Ninth Circuit determined that the shortened statute of limitations also did not render the agreement unconscionable.

If you recall, prior California law had drawn into question whether a company could bind consumers to mandatory arbitration, shift costs and attorneys’ fees to the losing party and shorten the statute of limitations. The Ninth Circuit has now been heard on these issues. If your business deals directly to consumer products and services it is time to evaluate your contract provisions. A properly drafted arbitration provision can now keep you out of Court and permit you to recover the costs and attorneys’ fees expended to defend the action should your company prevail in arbitration. Bring your consumer contracts to your attorney and take advantage of this holding which will certainly substantially deter questionable consumer litigation against you and your company.

Using Volunteers in Non-Profit Organizations to Avoid New Overtime Rules

August 22, 2016 By Israel Samuels LLP Leave a Comment

New Federal Labor Standards Act rules that go into effect December 1, 2016, will add 4.2 million employees to the roles of non-exempt employees thereby making them eligible for overtime. The new rules also address use of volunteers by non-profit organizations.

Generally, a volunteer will not be considered an employee for purposes of the FLSA if the individual volunteers freely for public service, religious, or humanitarian objectives, and without contemplation or receipt of compensation. In other words, the person who works in a
volunteer role must be a bona fide volunteer.

However, the analysis under the new rules does not end there. The Department of Labor has suggested that a volunteer should only work on a part-time basis. In fact, it has decided that a volunteer “should not displace employees or perform work that would otherwise typically be performed by employees.” In addition, paid employees, under the Department of Labor’s interpretation, may not volunteer to provide the same type of services to the non-profit organization that they are otherwise typically employed to provide.

Volunteers can be part of a solution to managing overtime costs at a non-profit, however, it now calls for vetting with legal counsel to establish rules that can potentially withstand governmental scrutiny.