Here are the most significant legislative changes applicable to California employers:
A. FMLA (included in the 2010 National Defense Authorization Act):
1. Military Caregiver Leave –Time off to care for injured or ill or active service members has been expanded to include injured or ill veterans (honorably discharged former members of the armed services) if they were discharged within the past 5 years.
2. Qualifying Exigency Leave – provides time off to care for a parent, child or spouse, including registered domestic partners (“Close Relative”) of a member of the military reserve force or National Guard called to service or on active duty has been expanded to include time off to care for a Close Relative of a member of the armed services deployed to a foreign country.
Applies to employers with 50 or more employees.
Recommended Action: Change FLMA policy in handbook to comply.
Reference: 29 USC 2601, 29 CFR 825.100
B. Civil Air Patrol Leaves –the employer must provide up to 10 days a year of leave to employees who are members of the California Wing of the Civil Air Patrol if;
– they are called away in response to an emergency, and
– have completed at least 90 days of employment.
The employee may use accrued leave benefits but cannot be made to do so.
Applies to employers with 15 or more employees.
Recommended Action: Change leave policies and handbook to include.
Reference: AB 485, Labor Code Sections 1500 – 1507)
C. Alternative Work Week
Under existing California law, an employer is required to conduct a secret vote with at least 2/3rds of the affected employees voting in favor of adopting an alternative work week (other than 8 hrs/day – 40 hrs/wk). The vote was difficult to achieve because it would have eliminated every employees’ ability to continue working the standard shift. A recently adopted amendment to the law allows for the standard shift to be included in a menu of work schedule options that is voted on, increasing the likelihood that the 2/3rd vote will be achieved. Employees may, with the employer’s consent, shift between different work schedules from week to week, providing even greater flexibility to both employees and the employer.
Reference: CA Labor Code Section 511, AB 5.
After Jason Lhotka died while on a Mt. Kilimanjaro hiking expedition, his heirs sued the San Francisco-based company that arranged the trip, Geographic Expeditions (GE). GE thought it had a “bullet-proof” release form limiting its liability to the cost of the trip and requiring participants to arbitrate claims in San Francisco. When Lhotka’s legal representative filed suit in court, GE moved to compel arbitration.
On January 29, 2010, the California Court of Appeal decided in Lhotka v. Geographic Expeditions, Inc. (2010 DJDAR 1689) that the arbitration provision was unenforceable because the entire contract was too one-sided (“unconscionable”). The decision gave the plaintiffs the right to bring their claims in court and have a jury determine liability and damages. It also means that the liability limit will not be enforced, greatly exposing GE to a potentially large damage award.
The factors that led to the finding of unconcionability were; (i) the limited amount plaintiffs could recover under the contract (the cost of the expedition was $16,831), (ii) the arbitration was to be held in San Francisco regardless of the location of the plaintiffs, who lived in Colorado, (iii) the only choice Lhotka had was to sign the release or not go on the trip (GE’s President wrote a letter stating that the release was mandatory), and (iv) the contract required the plaintiffs to indemnify GE for any lawsuit raising claims waived or released under the contract.
Clients who provide products or services to consumers often seek highly restrictive contracts. It is not uncommon for a business owner to adapt a competitor’s contract form to his own use, believing it is a solid, well drafted document. Given the lesson of this case, that could be a big mistake.
The use of the internet for social media purposes has made pundits and commentators out of anyone who wants to be one. What risks do employers have from their employees’ blogging, and facebooking?
An article in the Los Angeles Daily Journal on January 1, 2010 provides answers. It cites a Federal Trade Commission guide that establishes when an employee’s internet postings about his or her company’s products might be improper public endorsements or testimonials, which could create liability for the company.
The article recommends that, to reduce the risk, the company’s computer and internet use policy should include a statement that employees who post internet statements about the company’s products or services must (i) “clearly and conspicuously disclose” their employment; and (ii) state that what they’ve written is their own personal opinion and has not been endorsed by or made on behalf of the company.
If your company’s Employee Handbook doesn’t address these issues, we can help you revise it.
Today’s edition of The Wall Street Journal includes yet another great article (most of it subscription protected) about companies continuing their efforts to push big law firms to abandon the billable hour fee structure in lieu of flat or fixed fees based upon the value added of the law firm. TGC has been using flat fees since we started our part-time general counsel services over four years ago and our clients have found this fee structure to be very cost effective and productive for them. The transition to flat fees for legal services is well underway and very soon will be a tide that the big law firms will be unable to stop.
Can I prohibit my employees from discussing any and all information regarding the company, its business plans, its partners, its policies, new business efforts etc?
By Karen Ward. The surprising answer is no. A Federal District Court ruled that employees could reasonably interpret the rules unqualified prohibition of the release of “any information” regarding “its partners” to unlawfully restrict employees’ discussion of wages and other terms and conditions of employment with fellow employees. A permissible limitation is that employees may limit discussion of working conditions, including pay issues, in areas where there might be customers but an employer cannot limit such discussion completely without violating the National Labor Relations Act.
Any policy whether in writing or not, can violate the NLRA, if it prohibits employees from discussing their working conditions. Please note that these laws apply to you even if you do not have any unionized employees.
A recently published article explains why the billable hour business model used by law firms is so dysfunctional and why firms are so addicted to it. The article is not available on-line but I will send a copy on request, email email@example.com.
It underscores a central theme of The General Counsel, LLC’s mission to provide high-quality, reasonably priced legal services to clients, which is that companies must seek out alternatives so that they can survive a very difficult economic environment.
In my white paper posted on CFO.com
Cerius Interim Executive Solutions has a great white paper called ” Top 8 Reasons Why Leadership On-Demand Makes Economic Sense Today” which makes outstanding points (eight of them) of the economic benefits of using interim executives. Let me know what you think!
Every industry has its own unique array of risks and no advice can cover all situations; however, given general economic conditions, and particularly the problems in the financial and credit markets, directors and senior officers should begin by regularly and carefully monitoring risks that might impact the ability of the company to maintain liquidity and access to capital needed for the business to survive and hopefully expand in the future. Directors and senior officers should anticipate that is highly likely, even for the best companies, that cash flow will be slowing down and that for the foreseeable future debt and equity capital will be unavailable or available only on terms that are prohibitively expensive. As such, it is recommended that directors and officers should review and update the company’s operating and business plans, establish performance monitoring procedures, analyze the availability of short- and long-term capital, evaluate the condition and prospects of key business partners, analyze and upgrade disclosure and communications practices and procedures and evaluate and improve corporate governance practices. The experienced attorneys working with The General Counsel have the legal skills and management savvy to provide strong support for each of these activities. To learn a little more about Corporate Governance Practices in Troubled Times, please click on this link to view a more detailed article.
Many employers are looking for ways to cut expenses. Some employers are considering reducing pay with a corresponding reduction in the work schedule.
This can be problematical, as an article in the Los Angeles Daily Journal on April 10, 2009 by Lonny Zilberman and Lisa A. Hill points out.
Exempt employees must be paid a salary of at least $33,280, which is two times the minimum wage for a 40 hour week. If an exempt employee’s salary is reduced below that amount, that employee will become non-exempt, entitled to all of the protections afforded such employees (overtime, meals and rest breaks, etc.).
The same result may follow a reduction in the salaries of exempt employees even if the reduced salary is above the $33,280 minimum salary. The risk of a change in status to non-exempt is heightened if the reduction in pay is directly related to a reduction in time or number of days worked.
This is based on a federal regulation (29 CFR §541.118(a)(1)), which states that an employee will not be considered to be on a salary basis [and thus exempt] … if deductions from his predetermined compensation are made for absences occasioned by the employer or by the operating requirements of the business. Accordingly, if the employee is ready, willing and able to work, deductions may not be made for time when work is not available.”
If, for instance, an employer were to cut pay by 20% and simultaneously provide the employees with one day off per week, there would be a heightened risk that the employees would be considered non-exempt.
The less risky approach would be to cut pay for exempt employees without any corresponding formal reduction in the work schedule. The employees should be left to decide for themselves the schedule they need to work to get their jobs done, which may be less than a full time. Any abuses can be dealt with on a case by case basis.
The risk is also heightened if employees are told that the reduction is temporary. Employees should not be told that the reduction will be in effect for a limited period of time.
These issues may make it more difficult to gain the employees’ acceptance to reduction-in-pay programs but there could be problems down the road if they are not properly addressed.