Are You at Risk? The Top 10 Reasons Employers May Get Sued This Year!

Earlier this year Cal Chamber came out with a lengthy white paper on the Top Ten Lawsuit Risks of 2015. To save you some time, we’ve got the list here for you, and we promise to keep it brief!
Here are the Top 10 Reasons Employers May Get Sued in 2015:

1. Salary for everyone! Classifying your entire workforce as exempt could put you in some serious hot water with both State and Federal Law! It may make payroll easier and make your employees happy to know they’re getting paid the same amount each pay period, but it’s not that simple. You must consider their job responsibilities, not just title, in classifying employees.

2. Take lunch anytime! It’s nice to be flexible with employees as to when they take their break, but if the employee is non-exempt, California has specific rules about breaks. A 30-minute unpaid, uninterrupted meal break must be provided before the employee enters their fifth hour of work. Penalties for taking breaks too late will result in penalty pay and can add up quite quickly!

3. You’re an Independent Contractor! Sure, making everyone an independent contractor is easier and at times cheaper, but in recent years there have been a number of rulings on worker classifications. Remember a good rule of thumb is control of work: who determines the manner in which work is performed, how the work is done, where the work is performed and the supplier of equipment and tools.

4. No Sexual Harassment Training. This training can be uncomfortable and employees often leave the training feeling like they cannot make a joke about anything. If, however, your business is ever facing a claim of harassment, you will need to prove that your team has received proper training! Remember, in California, if you have over 50 employees, sexual harassment training for supervisors is required every two years. Investing in training supervisors and managers on harassment and other topics may cost a few dollars, but it’s a lot less costly than the fees of defending even one claim and potentially having to pay a settlement.

5. Being overly flexible with work hours. By letting employees work longer, but fewer days, you could put yourself at risk of owing back pay for overtime hours. California does allow for an alternative workweek schedule, but the parameters around it are stringent. If you want to have flexible scheduling, be sure you have a policy around it and ensure it’s compliant with state laws.

6. Terminating Employees who take Leaves of Absence. When taking time off work, employees have a number of protections depending on the reason for the leave. These can include: Workers’ Compensation, Family and Medical leave, Military Leave, Jury Duty, sick time and others. There are also protections against retaliation for taking leave. If it becomes necessary to terminate an employee after a leave, make sure it is for a legitimate reason that is not connected to the leave.

7. Refusing a final check. It’s always important to recover company property, but refusing to give an employee their final paycheck until property is recovered is unlawful. Remember if an employee is terminated or quits and gives more than 72 hours notice, final paychecks for all due compensation must be provided on the last day of work. If you are not given 72 hours notice, then you have 72 hours to get the check prepared.

8. Providing loans to employees and securing repayment through payroll deductions. There are a number of deductions made from employee paychecks under state and federal law, and there are some voluntary deductions that employees can opt into for benefits such as health insurance. No other deductions are permitted. If a loan is made to an employee, you should involve legal counsel in the agreement and repayment can only be scheduled outside of payroll deductions.

9. Using non-compete agreements to protect confidential information. California is pretty cut and dry on this matter, with very few exceptions. It’s important to protect customer lists and pricing information, but this cannot be done through a non-compete agreement. Also, California is very clear about preventing employees from leaving your company and from their ability to work and earn a living.

10. Use it or lose it Vacation Policies. California considers earned vacation/time off as a part of wages for an employee. Accrued time off can be capped within reason, but taking away vacation that is earned, or refusing to pay it at the time of separation, could put your company in hot water, even if you advised employees that this would be the case.

Are you panicking? Did you read one or more of these and think that you may need some expert guidance? Peoplescape is here to guide you through the steps involved in all of these issues! From sexual harassment training to review of employee classifications, we’re here to support you and your business. Contact us anytime. It’s free!