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Employee Arbitration Agreements May Be Disaffirmed If Signed By A Minor

June 8, 2015 By Israel Samuels LLP Leave a Comment

California employers should be aware that employees under 18 years old may disaffirm agreements that they sign.

In Lopez v. Kmart, the United States District Court for the Northern District of California held an employee who, as a minor, signs an employment arbitration agreement as part of his or her employment may later disaffirm the agreement and, thus, avoid mandatory arbitration of employment-related claims. The basis for permitting disaffirmation of an agreement signed by a minor is contained in California Family Code Section 6710, which states: “…a contract of a minor may be disaffirmed by the minor before majority or within a reasonable time afterwards.”

California employers that hire minors and require them to sign an agreement where they surrender certain rights to litigate complaints should consult with legal counsel on strategies to enforce these agreements as a result of the Lopez decision.

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.

Tort Damages May Be Available For Wrongful Foreclosure

June 4, 2015 By Israel Samuels LLP Leave a Comment

California’s Fourth District Court of Appeal recently ruled in Miles v. Deutsche Bank National Trust Co. that a plaintiff who prevails in a wrongful foreclosure suit may recover tort damages from the defendant.

In the Miles case, the Court found that it was irrelevant at the time of the wrongful foreclosure whether the property owner had any equity in the property. Rather, it held wrongful foreclosure is a tort, and thus, plaintiff may recover any damages proximately caused by defendants’wrongdoing. To obtain such tort damages the Court concluded that the necessary elements of a wrongful foreclosure action are:

That the defendants caused an “illegal, fraudulent, or willfully oppressive sale of real property” pursuant to a power of sale in a mortgage or deed of trust;
That the plaintiff was “prejudiced or harmed”; and
That the plaintiff “tendered the amount of the secured indebtedness or was excused from tendering.”

If you are facing this type of issue, you should see an attorney, let us know if you would like a consultation. Israel & Samuels LLP provides high quality, cost-effective legal services and advice for clients in the areas of business, real property, employment and general civil law and litigation.

Senate Passes Proposed Changes To Homestead Exemption

June 1, 2015 By Israel Samuels LLP Leave a Comment

Changes appear to be in the offing for the California Homestead Exemption Law. On May 22, 2015, the Senate passed Senate Bill 308 that may result in extensive modification of the Homestead Exemption. The bill is now in the Assembly awaiting action. Pundits expect it to pass, be signed by the Governor and become law.

Under the current law the Homestead Exemption exempts from levy by creditors $75,000, $100,000, or $175,000 in equity in the principal place of residence of a homeowner, depending on whether the homeowner is single, married, has dependent children, has a disability or is over the age of 65. Proceeds from the voluntary sale of a declared homestead are also exempt from levy for six months. In addition, under the law aggregate equity in motor vehicles exempt from attachment and sale is $2,900; and all amounts in private retirement plans, including self-employed retirement plans and individual retirement annuities or accounts qualified under Federal Internal Revenue Code of 1986 under existing law are protected from levy.

Senate Bill 308 would impose a $300,000 equity exemption for all, rather than the existing scale based on status; would make proceeds from the voluntary sale of a declared homestead indefinitely exempt from levy; raise the exemption from levy to $3,000 for motor vehicles; and expand the Individual Retirement Account Exemption to include individual retirement accounts that do not qualify under existing law on the basis of a technical defect.

The anticipated new law provisions will provide individuals with greater protection from creditors, especially for homeowners who record declared homesteads.

We economically prepare and record declared Homestead documents so you can take advantage of the protections afforded by existing law and the greater protections that will be provided by Senate Bill 308 should it become law.

Support for Your Business

May 29, 2015 By Israel Samuels LLP Leave a Comment

Coming soon to Business Briefs (June 2015) we will feature a business or professional that can help you and your business be successful. Each month we will highlight a local professional that can support your business. We believe this will be a valuable resource for your business. As always, your feedback is appreciated, so please let us know how this works for you and your business.

Mandatory Employment Notices

May 28, 2015 By Israel Samuels LLP Leave a Comment

How many? At last count, there were 17 mandatory state and federal employment notices required of every California employer, even if you have only one employee in California.

The most recent one is the new Paid Sick Leave notice, required to be posted as of January 1, 2015. If you didn’t take care of it, tend to it now. There were also mandatory updates to the DFEH Discrimination and Harassment notice.

Coming up soon: you must post the revised CFRA notice on July 1 if you are a private sector employer with 50 or more employees in the current or preceding calendar year.

Remember: not posting these notices to inform your employees of their rights in the workplace can result in lawsuits and fines.

Terminating an Employee Who Gives Notice

May 26, 2015 By Israel Samuels LLP Leave a Comment

It happens all the time: an employee gives two week notice. You’re happy: the employee was a trouble-maker, or was not performing at an acceptable level, was absent too much, and you were struggling to figure out how you would handle the situation.

But there is another step that many employers will take in that situation which can lead to another set of problems. That “other step” is simply to terminate the employee immediately without any severance pay.

Watch out! That can lead to another set of problems.

The government will no longer treat this as a “voluntary quit,” and instead it will be treated as an involuntary termination without cause. Result: the employee will have continued eligibility for UI.
The employee may have a valid claim to be paid for the two weeks following your action in terminating the employee.
Other employees who hear about this may later give you zero notice if they decide to resign themselves. That kind of action could be damaging to your business.

But allowing the employee to stay around for two weeks may also be unacceptable, depending on the particular employee’s position.

What can be done about this dilemma, where either of the two indicated actions is far less than 100% satisfactory?

Usually, the best course of action is to pay the employee for the full period of notice, but tell them that they are not to come into the office during that period of time except if scheduled for some essential action such as picking up their final paycheck.

While that may sound costly, it won’t in fact be costly at all if it avoids other problems that can in the long haul cost you considerably more.

Do You Have to Pay Minimum Wage to a Non-Exempt Employee Making $100,000/Year?

May 18, 2015 By Israel Samuels LLP Leave a Comment

No, that is not a trick question. Here’s what happened to a Beverly Hills salon.

A stylist at the salon was paid on a piece-work basis, at the rate of 30% of the fees paid by the client, and consistently averaged over $50 per hour.

The stylist was not paid for her “down time” between treatments, and was required to stay at the shop between appointments in case a “walk-in” wanted a treatment.

After a few years of this highly remunerative employment, the stylist complained that she wasn’t being paid for her down time.

Here is what the law says: an employer, if he chooses, may hire a person to do nothing or to do nothing but wait for something to happen. Employers who pay their employees on a piece-rate basis must pay them a separate hourly minimum wage for time spent on tasks unrelated to their primary work, even if the employee’s total compensation for a pay period does not fall below the minimum wage.

Even sleeping employees may be entitled to compensation.

This can be a tricky area for employees to deal with. So, if you have any employees who are ever “on-call” and are required to be available for some part of the workday, they must be paid at least minimum wage for their waiting-time.

If you are in that position, we recommend that you consult your attorney or a qualified human resources consultant to determine what can be done to address this type of situation and avoid future problems.

Liability for Another Company’s Employees???

May 11, 2015 By Israel Samuels LLP Leave a Comment

Yes, that heading is true. Here’s an example of how this can happen.

Suppose you hire a janitorial service firm to come in after hours, empty the wastebaskets, dust the bookshelves, clean the employee kitchen area, and do the other things that janitorial service firms typically do.

You do not have a written contract with the janitorial service firm, and the relationship has been in place for years without there being any problem.

But unknown to you, the guy who owns the janitorial service firm runs into personal problems, and he fails to pay his employees everything they are owed, even though you have paid that service firm every penny you owe them.

Many of you readers are probably muttering to yourself at this point: “I paid them everything I owed, and don’t owe them a cent.”

Here is what California Labor Code §2810(a) has to say about that:

2810 (a) A person or entity shall not enter into a contract or agreement for labor or services with a construction, farm labor, garment, janitorial, security guard, or warehouse contractor, where the person or entity knows or should know that the contract or agreement does not include funds sufficient to allow the contractor to comply with all applicable local, state, and federal laws or regulations governing the labor or services to be provided.

The bottom-line consequences of this law are that your business may automatically share liability with a “labor contractor” such as those listed in the law, if that contractor fails to pay wages or workers’ compensation insurance to its employees who were assigned to work at your business.

Is there any reasonable low-cost way to protect yourself against this type of exposure? Your best defense is probably to take pains to deal only with reputable well-established relatively-large contracting firms which in most circumstances are far more likely to know about and conform with their own legal requirements, so that those requirements don’t at some later date cause problems for your firm.

Independent Contractor or Employee: It Makes a Big Difference!

May 4, 2015 By Israel Samuels LLP Leave a Comment

Someone who “does work for you” of any kind, and is paid for it, is either an employee or an independent contractor.

For many types of work performed in a small firm, the owner would prefer to have the “worker” be treated as an independent contractor.

Why? Because it’s cheaper and easier to manage, with less governmentally-imposed laws, rules and regulations which dictate what kind of relationship can exist between you and your workers.

If a worker is an “employee”, he/she is subject to California’s wage and hour laws, which include dozens of requirements, including overtime pay for anyone who works more than 8 hours in a day or 40 hours in a week. An independent contractor can work 24 hours straight, without even taking time to sleep or rest, and the employer is not required to pay overtime, or to conform to any other wage and hours laws.

Many business owners mistakenly think that if they pay a worker a “salary” instead of an hourly rate, or pay “by the job,” the worker is deemed an independent contractor.

Not so! The bottom line is that your state (or sometimes the feds) will make the decision for you, and decide whether a particular employee (or all employees in a particular job classification) are employees or independent contractors. And if you and the government disagree, whose opinion takes precedence? Obviously, the state.

Of course, you may be one of the “lucky employers” who improperly treats some employees as independent contractors, but operates for years with it never coming to the attention of a government regulatory body. Then the shoe drops: a disgruntled independent contractor is told to get out and never come back … with plenty of justification, or so you think.

Next thing you know, a form comes in the mail from the California Division of Labor Standards Enforcement, advising you that the disgruntled “independent contractor” who formerly worked at your firm has filed a claim against your company, asserting that the worker should have been classified as an employee. The worker now seeks back pay, overtime pay for some of that back pay, and waiting time penalties. The amount you are asked to pay to settle the matter can easily range into the tens of thousands of dollars.

So, the message is clear: don’t classify any workers as “independent contractors” unless you’re 100% sure that’s a legally-correct classification (well, maybe 99% would be okay too, since the risk to you is still very small). If you have any doubt, contact your attorney promptly to learn what information you need make a correct classification.

Even the State of California Can’t Decide!

April 27, 2015 By Israel Samuels LLP Leave a Comment

Wait a minute: before you sit back and relax, hear this tale of woe. The company involved in this extended and complex matter tried to do it right, but has been embroiled in a legal battle with the state for more than a decade.

Happy Nails operates a chain of nail salons. Fourteen years ago, a consultant helped them set up their business so that the cosmetologists working for them would be treated as independent contractors, rather than as employees. Three years later, California’s Employment Development Department charged Happy Nails for unemployment contributions the company had failed to make (which would not be owed if they were treated as independent contractors).

Happy Nails disputed the assessment. After many years, plus a large chunk of attorney fees, the firm obtained a ruling that the cosmetologists were indeed independent contractors. Happy Nails was “off the hook,” or so they thought.

But those happy feelings didn’t last too long. In 2008, the DLSE entered the scene and assessed penalties against the firm for not giving its employee itemized wage statements. “Wait a minute,” Happy Nails attorney said, referring to the ruling described above. “The state has already determined that the people in question are properly classified as independent contractors.”

DLSE’s response? “We don’t care what that other state agency ruled, we think they are employees.”

Happy Nails requested a hearing, at which it presented the same evidence that years earlier had persuaded the EDD that the workers were contractors. But this time the hearing officer ruled the workers were employees. What did the hearing officer say about the prior contrary ruling from the EDD? Nothing at all.

So it was “off to court.” California Superior Court reviewed the decision and sided with the DLSE. Happy Nails then appealed to the California Courts of Appeal and finally got a favorable ruling. The appellate court told the state that it can’t have it both ways. The appeals court pointed out that “…the same issue had already been litigated between essentially the same parties and that, based on the legal doctrine of collateral estoppel, there was no reason to re-litigate it.”

Overall, good news for businesses. But, it’s still important to understand and comply with the rules for determining when your relationship with Mr. X is truly as an independent contractor, and not as an employee. You should consult with your attorney before making these types of decisions.