A Changing in the Editorial Tide

It's been a while since you've heard from us and we apologize to our readers.  Contributing attorney Meredith Williams is leaving our blog and the law firm of Miller | Williams LLP to take a full-time in-house position.  Partner Kirsten Miller will continue offering quality advice to our blog readers and offering employment litigation and advice and counseling services to California businesses through her firm, the Law Office of Kirsten Miller.  We hope you'll enjoy her insights on important everyday legal topics and emerging legal issues!

Were Your Employees Naughty or Nice? Year-End Bonuses

In one of the most fantastic Christmas movies ever made (for those of you with a sense of humor, that is...), Clark Griswold is so upset by the fact that his Christmas bonus is a one-year membership in the Jelly of the Month Club instead of the cash he was counting on to build his family a swimming pool that he loses his temper - cursing his boss, Clark adds that if anyone needs a last-minute gift idea, he should bring him his boss tied up on a bow.  Clark's Christmas wish is granted by his crazy cousin-in-law, after his crazy cousin kidnaps his boss.

Among other important holiday lessons, National Lampoon's Christmas Vacation teaches us that year-end bonuses can raise a host of problems.  Here are a couple to consider as you head into the last few weeks of the year:

Forgoing or Reducing Year-End Bonuses 
If your company usually provides year-end bonuses, but is forgoing them or reducing the amount of the bonuses to save cash this year, expect some upset employees.  Cookies, anyone?

Upset feelings aside, you are not required to give out bonuses each year, nor are you prevented from changing the amount, so long as your company does not have an established bonus plan or employee contracts that obligate you to pay year-end bonuses or pay bonuses in a specified amount.

If your company does have an established bonus plan, or is contractually required to provide them to certain employees, failure to meet the plan or contractual obligations may expose your company to liability for breach of contract and/or liability for unpaid wages.   In addition, if you customarily provide employees with bonuses every year, it's possible that your employees may be able to claim that you breached an implied contact to provide bonuses.  Because of the potential legal liability involved in straying from your company's usual bonus practices, it's a good idea to review these issues carefully before making any final decisions, especially since unhappy employees are more likely to bring a lawsuit.

Including Bonuses in Overtime Pay Calculations

If your company is providing year-end bonuses this year, remember that under certain circumstances, bonuses should be included in your non-exempt employees' regular rate of pay when calculating their overtime rates.  Generally, bonuses that are discretionary and paid purely as gifts for past services do not need to be included when calculating your employees' regular rates of pay.

Bonuses that are measured by or dependent upon an employee's hours worked, production, or efficiency, on the other hand, must generally be included his or her regular rate of pay for purposes of calculating overtime pay. Other types of bonuses that must generally be included in overtime calculations include bonuses based on duration of service, bonuses promised at the time of hire, and bonuses that are so significant that they could be construed as part of an employee's overall compensation.  Understanding your overtime pay obligations as they relate to bonuses is important since failure to do so can result in unpaid wages, exposing you to legal liability.

Concerned your employees are plotting to kidnap you? Don't worry, it's just a movie!

Important Must-See Moments from National Lampoon's Christmas Vacation
Lastly, and most importantly, in case you've somehow missed National Lampoon's Christmas Vacation, you can watch the flip-out/kidnapping scene here: http://www.youtube.com/watch?v=M55m81BWdBc; or watch a montage of some of the best scenes here: http://www.youtube.com/watch?v=Cd0wMTx-8Tk&feature=related.

For specific advice about how laws governing bonuses apply to your company, please consult a California employment law attorney.

Christmas, Hanukkah, Kwanzaa, Winter Solstice...Religious Discrimination and Holiday Celebrations

The holidays are here!! That wonderful time of year when the snow starts to fall and the lights go up on all the houses...oh wait...that's not what the holidays look like for everyone, is it?  Not in Los Angeles at least!  There's definitely no snow.  There are lights, but not just traditional Christmas lights...there are big menorahs, blue lights mixed in with white, and even the Scientology Center near Hollywood and Highland has a big Santa Clause winter wonderland exhibit!

Avoid Karaoke...
It's also the time of year for office "holiday" parties! An event that will forever remind me of that scene in Bridget Jones's Diary where Bridget is drunk and singing karaoke in reindeer antlers.  In addition to reminding us about memories of getting a little too tipsy with co-workers and bosses that we'd rather forget and that karaoke, alcohol and co-workers don't mix, office holiday parties also remind us that not everyone celebrates the holidays or "our" holiday.

Laws Prohibiting Religious Discrimination in the Workplace
I thought this would be a good time of year to remind everyone about the laws prohibiting religious discrimination and harassment based on religion in the workplace.  Religious discrimination in the workplace is prohibited by both Title VII of the Civil Rights Act and the California Fair Employment and Housing Act (FEHA).  Religion also encompasses more than just traditional religions and also includes atheism.  To be considered a "religion" or "religious creed", the beliefs and practices must hold  “a place of importance parallel to that of traditionally recognized religions.”*

Reasonable Accommodations for Religious Beliefs and Observances
Both statutes require employers to make reasonable accommodations for employees' religious beliefs, as well as their observances and practices.  Under California law, this includes observance of the Sabbath and other religious holy days or days of observance.  Reasonable accommodations allow employees time off for observance, as well as time for necessary travel before and after the religious observance.

Harassment Includes Seemingly "Harmless" Jokes about Traditional Religions
Harassment based on religion is also prohibited by law and can include severe or pervasive conduct involving conduct such as making religious jokes or forwarding emails making fun of a particular religious tradition.  Often people are less sensitive to jokes making fun of their own religion or traditional religions and religious observances that have been subject to less historical discrimination, such as Christianity and Christmas.  However, this conduct is equally prohibited under the law and employers should keep a look out for this type of behavior as well.  This is especially important because, for many of us, we are living in an increasingly secularized culture, where many people don't think twice before making a religious joke.

Office Holiday Party Tips...

As for your office holiday party, here are a few tips: (1) avoid karaoke; (2) limit the amount of alcohol; (3) keep decorations religion-neutral by focusing on secular, winter themes; (4) don't make attendance mandatory; and (5) have fun!

Happy holidays!

*Friedman v. S. Cal. Permanente Med. Group, 102 Cal. App. 4th 39, 69, (2002) (holding that veganism is not a religion).

Start-Ups that Overlook Employment Laws are in for Expensive Surprises

It's both exhilarating and exhausting to be part of a start-up. Informal, creative work environments.  Being more than just a cog in a wheel.  Long nights. Wearing too many hats.  The promise of becoming the next Google, Facebook or Twitter.

Running a start-up is also hazardous from an employment law perspective. Start-up companies often have informal work environments, young employees, no human resources professionals, and leaders with little experience running the administrative side of a business.

Misunderstanding the Law Can Cause Budgeting Problems and Lead to Lawsuits
Start-ups often involve few employees, so many start-up entrepreneurs don't bother to worry much about employment laws or workplace policies. Pretty soon, business starts moving along fast and the company needs people ASAP.  You hire an employee here, another one there, and suddenly you've got 10 people over night, including 8 computer programmers and an assistant.

Are You Properly Paying Your Computer Programmers?
With only one employee, you are subject to state and federal wage and hour laws. Now you have 10 and 8 of them are computer programmers.  Computer programmers are commonly misclassified as exempt employees, so it's important that you make sure yours are being paid correctly in order to budget properly and avoid lawsuits for back pay (which are likely to come after your start-up hits it big).

Can You Afford The Overtime? 
Let's say you were paying your computer programmers a fixed salary - $2,000 every two weeks - and thought that you didn't need to pay them overtime.  These these programmers have worked for you for 2 years (we'll pretend they didn't take any time off for vacation for the sake of simplification), each averaging a 65 hour a week.  During your third year, you finally have some extra cash and have grown bigger, so you decide it's time to get some employment law advice.

Turns out your programmers are not exempt employees and you should have been paying them each an hourly rate and overtime pay, including 1 1/2 times their regular rate for hours worked over 8 in a day and 2 times their regular rate for hours worked over 12 in a day (you know there were at least a few).  One of these programmers finds out and sues you for back pay (which he has 3 years to do).  Now you owe him at least $55,380 in back pay, plus interest!  (And I didn't even include the legal fees you paid to help you deal with this situation.)  But wait - that was 8 computer programmers you had and this is a small company.  The first guy tells the other programmers and now you owe at total of at least $443,040 ... YIKES!


Overtime Exemption Classifications are Tricky
Maybe you already knew all about this issue.  But are you sure you properly understood the overtime exemptions? Overtime exemption analysis is tricky - for example, most administrative assistants do not qualify for the "administrative exemption."  The analysis is based on nuanced case law, as well as the actual day-to-day job duties of your employees, which often differ from the duties listed in job descriptions which formed the basis for your exemption analysis.  In addition, California law is more strict that federal law and applies a slightly different test, so a job that is classified as exempt under federal law may not be exempt under California law

Many well-intentioned employers have been caught off guard and you don't want to be one of them.  On the flip side, many ill-intentioned employers who think they can fudge this issue get caught - don't be one of those either.

Stay tuned for more tips for start-ups...


Have a topic you'd like to see covered? Let us know by posting a comment...

Mario Batali Sued in NYC for Tip Pooling Violations

Workers at Mario Batali's Del Posto restaurant in New York filed suit in federal court this week alleging violations of wage and hour laws relating to tip pooling.  According to CBS news and the Associated Press, Batali and his partners are already defending similar suits filed against some of Batali's other restaurants.  Read the full story here: http://www.cbsnews.com/stories/2010/10/13/business/main6954590.shtml.

In California, gratuity and tip pooling is governed by California Labor Code section 351. Section 351 prohibits restaurant owners/employers from keeping any portion of a tip or gratuity left for a waiter/waitress by the restaurant's patrons.  In addition, if a patron leaves a tip on a credit card slip, the restaurant employer must pay the server the full amount of the tip and may not deduct credit card processing fees.

Section 351 does permit tip pooling, however, including involuntary tip pooling requiring servers to share tips with bartenders, bus staff, hosts, hostesses, or any other employee who provides "direct table service."  Employees who may not share in the pooled tips include managers, dish washers, and in most circumstances, chefs and cooks.  For more information about tip pooling in California, check out the Department of Industrial Relations website: http://www.dir.ca.gov/dlse/faq_tipsandgratutities.htm.

California Supreme Court Rules Schwarzenegger's Furloughs Legal

The California Supreme Court issued its highly awaited ruling this morning, finding that Governor Schwarzenegger's December 2008 executive order requiring unpaid furloughs for over 200,000 state workers was legal and that those workers were not entitled to back pay.  (Associated Press, Sacramento Bee)

Key to the Supreme Court's decision was the fact that the state Legislature passed a budget revision which included a reduction in appropriations for employee compensation in "an amount that reflected the savings the Governor sought to obtain through the two-day-a-month furlough program."

The furloughs were effective from February 1, 2009 through June 30, 2010 and saved California approximately $3 billion.

Read the full decision here:   http://media.sacbee.com/smedia/2010/10/04/10/furloughs.source.prod_affiliate.4.pdf

Fired Over Facebook Postings

Check out the latest Girls in Tech blog from Meredith Davis Williams:

You can never be too careful about what you post on Facebook, Twitter, and other social media networks.

A recent survey by California-based data security company Proofpoint found that 20% of the companies surveyed had investigated whether confidential company information had been exposed on a social networking site (including Facebook, MySpace and Linkedin) during the past twelve months (up from 12% over the last two years).  In addition, 20% of the companiessurveyed haddisciplined an employee for violations of company social network use policies (up from 10% in 2009) and 7% reported that they had terminated an employee for violating such policies.

It’s no secret that companies are also monitoring employees’ social network accounts and tweets more frequently than in the past to determine everything from whether employees’ online conduct might be harming the company’s public image to whether employees are lying about being out sick.

Here’s a roundup of some recent cautionary tales that have hit the news:

• A Connecticut school superintendent was fired after posting inappropriate status updates to his Facebook page during his first few days on the job.  The postings, which cost him his $150,000-a-year job, included: a comment that he slept in until 10:00 a.m. on his first day of work and that it would be “the best job ever” if that happened every day; and "counseling an administrator to retire or face termination. : )".  (Reported by several Connecticut news outlets, including: www.necn.comand www.ctnow.com)

• Five nurses were fired from a hospital in Oceanside, California after they were caught discussing patient information on Facebook (causing concerns about HIPPA violations).  They were fired despite that fact they did not post any patient names, pictures, or other identifying information. (Reported by several San Diego news outlets, including: www.nbcsandiego.com and www.signonsandiego.com)

• An employee at a European insurance company was fired after her employer discovered she was actively using Facebook after she had requested leave, saying that she felt ill and needed to rest away from her computer.   (Reported by the Economic Times)

Maybe the above examples sound like something you would never do, but people have been fired for things far less obvious.  The new Facebook group “Fired Because of Facebook” has created a forum for employees to share their woes.  These incidents may not have made the news, but they are definitely anecdotes that people should read.

Please note that we do not endorse nor state any opinions regarding the reasons for the reported terminations, nor the terminations discussed on the Facebook group "Fired Because of Facebook."  This blog posting is for informational purposes only.