Do employers have to ensure that their employees take meal and rest breaks?

employee in suit taking breakMany employers in California know that certain employees are entitled to meal and rest breaks. But several years ago, there were multiple large class actions on the question of whether employers must “ensure” or merely “provide” breaks.

In practice, what this question means is that sometimes employees choose to not take their breaks, for whatever reason. Sometimes employees prefer to stay at their desks for lunch, for example. Or they find break time boring and would rather keep working.

In those scenarios, the employees are allowed to take breaks but are choosing not to.  In other words, the employers provide them but are not ensuring that they occur.

Is this a violation of California law? Are employer required to pay penalties when their employees do not take breaks? Are employers required to discipline or fire employees who fail to take breaks? Would an employee file a claim with the California Division Of Labor Standards Enforcement (DSLE)?

Unfortunately, the answer is not entirely clear. It is certain that employers must provide breaks. They must not prevent employees from taking breaks either expressly or with work policies that discourage breaks in a practical sense. Employers who do not have a compliant break policy in their handbooks may violate this law, simply by failing to have a policy.

The California Supreme Court has stated that employers are not required to “ensure” breaks. Employers are not required to police employees.

But here’s the rub: the argument is going to come in when employees say that work culture or work loads prevent them from taking breaks. So while employers are not required to police employees, they really should to some degree.

The best way to do this is by establishing a timekeeping system that is manageable, easy and efficient, so it becomes a force of habit and not a chore for your managers and employees. You should also train staff on appropriate break policies and encourage them to take breaks, ensuring that policies in your employee handbook, if you have one, are followed. Supervisors should be trained to encourage staff to take breaks.

These habits will keep your company from getting sued and will make lawsuits defensible if they come. Not only that, but breaks are genuinely good for your workforce’s productivity. You may find that encouraging your staff to get up from their desks to walk around, get water, stretch and socialize actually increases their alertness and camaraderie.

If you need guidance about an employment issue, please contact the employment law attorneys of Bellatrix PC at (800) 449-8992 for a consultation.

California Prepares Its Workforce for Zombie Apocalypse

zombie handsThe California Legislature must watch too much of The Walking Dead.

They are really worried about disease.

In the first part of July 2015, they passed two bills aimed at controlling Californians’ health.

There was a bill limiting parents’ ability to decline vaccinations for their school aged children.

And there was a bill requiring employers to give all their employees a minimum amount of sick time every year.

Sadly, due to scarcity, California is unable to mandate that all schoolchildren and employees take the vaccine to prevent Zombism. But if you get bitten, you will definitely have some paid time off to go through the change.

I’m writing to talk about the California sick time law. (It must be about Zombism because it is an answer to a problem that nobody had.)

If you are neither an employer or employee in California, you may still find it interesting. California is trying to lead the country towards more “European” employment policies.

Starting July 1, 2015, all employers were required to meet new sick time accruing laws for all employees.

  • It applies even if you have only one employee.
  • It applies even if you have only seasonal employees.
  • It applies even if you have only salaried exempt employees.

So if you are a small California employer who did not have benefits before because you couldn’t afford them — guess what? California just gave all your employees a raise.

As I’ve said before, I think it is a good business decision to give your employees time at home to be sick. But it should be your decision, not California’s.

(Aside: you should read my blog post on why sick time is a good idea. It is one of my most popular. And it features a picture of my cat.)

California did not just say that you have to provide sick time. They say how much and how you are to accrue it and account for it.

All those forward-thinking “unlimited paid time off” plans that Millennial-type companies have been implementing are now illegal.

Of course, the accrual rules developed by California Legislators were confusing and unworkable. So they passed amendments just a couple weeks later, to try to make the rules clearer.

Fail.

The rules are not clear at all. I’m an employment lawyer with more than a decade’s experience in California wage law, and I had to read the bills several times.

So what do you need to know? This is my most simplified summary:

  • Employers need a written sick time policy.
  • Employers need to provide current employees with written notice that sick time benefits have changed (in addition to the policy).
  • There’s another mandatory poster to spruce up the break room.
  • Employees get at least 8 days of accrual in a year.
  • Employees must accrue at the minimum rate of at least one hour sick time per 30 hours worked.
  • There are several options for how an employer may do the accrual for their particular workforce’s scheduling.
  • Even though they are entitled to 8 days on the books, an employer only has to let the employee take 24 hours of sick time in a year (that’s hours, not 3 days)
  • Unlike vacation time, sick time does not have to carry over or be paid out when an employee leaves.
  • This applies to virtually all employees with very few exemptions.
  • Part time employees do not have to accrue, but seasonal employees do.
  • A reinstated employee gets their old accruals back.
  • Some payroll companies may not be adequately set up to handle this.

If you need help with this, please click on the button below to set up a consultation.

Bellatrix PC offers the Employer Protection Package, which allows employers to outsource employee compliance functions for less problems and less hassle.

Medical Leave and Disability Laws Still a Source of Confusion

sick dogThrough our blog, we always want to keep you up to date on new laws and/or cases that will affect the way you do business.  Today’s post is on an old topic that still creates huge liability problems for employers every day. If I were to make a Greatest Hits List of the top employment law mistakes that businesses make, Medical Leave/Disability Accommodation mistakes would top my list.

Here’s a common scenario: you have a California employee on a medical leave for some type of illness or disability.  The leave can be for any condition, ranging from depression to cancer to a bank injury to pregnancy complications. Generally, the employee begins taking leave for a serious medical condition under the Family Medical Leave Act (“FMLA”) or California Family Rights Act (“CFRA”).  In this common scenario, the employee has taken and exhausted their allowable leave under these acts.  The employee is unable to return to work at the end of that leave and needs to remain on medical leave.

WHAT NOT TO DO: Do NOT summarily send the employee a letter from Human Resources, stating something to the effect of, “You have exhausted your FMLA/CFRA leave and are unable to return to work.  Therefore, we are terminating your employment.”  This is a common mistake that even large companies make.  Let’s refresh your disability laws savvy.

Why is this letter so devastating for your business?  Because the leave laws are different than the disability accommodation laws. Sometimes the disability laws require longer leaves, even if the leave laws have been satisfied. If your Human Resources personnel misses doing a disability accommodation analysis, that letter is going to be answered with a lawsuit for disability discrimination.

In my practice I have seen this occur an astounding number of times. The worst part of this scenario is that the best evidence the plaintiff employee will have against you will be the letter from your HR Department that basically admits you terminated that employee because of a medical leave of absence or because of their disability.

Writing letters such as these is like putting a bulls-eye target on your business.  You might as well just send out a flyer to Plaintiff’s lawyers that says, “Please sue me and use the smoking gun document that I just sent out to my former employee to prove your case.”  Plaintiffs’ lawyers salivate when a disabled potential client brings in such a letter from their former employer. And disability discrimination claims are the largest category of discrimination claims brought by both the EEOC and plaintiffs.

WHAT TO DO: Instead of sending such a letter, what you should and must do, if an employee is unable to return to work after exhausting their FMLA/CFRA leave, or even if they do not qualify for FMLA/CFRA leave in the first place, is to turn to an ADA analysis.  A disability is generally defined as any condition that interferes with a major life activity, which includes interfering with working and sleeping.  This definition is very broad and encompasses most health conditions.  The law was expanded in recent legislation and is constantly growing to include new conditions and facts. A disabled employee can ask their employer for an accommodation for their disability, and they are entitled to a reasonable accommodation, as long as it does not create undue hardship for your business.

If your employee requests an accommodation for their disability, such as a leave of absence, you MUST engage in the interactive process with them. This means, simply, having a dialogue with the employee (and potentially their physician) on how you may be able to accommodate their disability.  Then, it’s your duty to provide a reasonable accommodation for their disability. A leave of absence of reasonable length (which is sometimes well beyond a few months) has been held by courts to be a reasonable accommodation.

And even if your employee does not request accommodation, but simply states that they cannot work, the onus is on the employer to begin the interactive process. Once you are on notice of a potential issue, you must act to comply with the law.

This is only a snapshot of these rules, and there are other intricacies.  As you can see, this is clearly not a simple analysis to perform and having lawyers involved who are well-versed in the application of these laws is extremely helpful in your attempt to insulate yourself as much as possible from liability.

SUMMARY: The lesson to be learned here is to make sure that your HR personnel and business managers are knowledgeable that there are numerous laws that apply to disabled employees who are on medical leaves of absence.  Employees on medical leave have a great many rights, and to take steps toward terminating an employee who is on medical leave, you must jump through all the hoops under Americans with Disabilities Act (ADA) and you should document this process well.  Protect yourself by preparing yourself with evidence to defend a disability discrimination case that may be brought later.  Do this by documenting the interactive process and your attempts to accommodate the employee.  When you find yourself in this situation, involve a lawyer and go through these steps meticulously.  Disability discrimination cases, if successful, can have a lot of jury appeal and be very costly to your business.

Insurance Policyholder Coverage

INSURANCE POLICY HOLDER COVERAGE

An insurance policy may come into existence as a contract, but insurance coverage issues fall under their own body of law. In many instances, lawyers that practice general business law assume that they can handle the problems and questions presented by insurance coverage issues, but what they may not realize is that insurance issues are far from intuitive in nature. Whether the issue is a disputed claim, a coverage issue, or a “duty to defend”, coverage issues are typically grounded in state law.

insurance contract

If you are wondering if your insurer should be held liable for a specific claim or if you hold certain rights or benefits under your policy, the experienced insurance coverage attorneys of Bellatrix PC can assist you or your business. To schedule a confidential consultation, call us at 800-449-8992 or contact us online.

How Can An Insurance Coverage Attorney Help?

Our insurance coverage practice handles insurance issues ranging from relatively straightforward matters to extremely complex and multifaceted disputes. We handle first-party claims where the insured, himself or herself, files a lawsuit against the insurer for refusing to assume liability for a covered event. Our practice also handles third-party claims that typically arise due to a failure to defend or a failure to pay a claim submitted on the behalf of a covered policyholder. Our insurance coverage practice can also handle an array of other insurance related claims including:

  • The interpretation and assessment of existing or proposed insurance policies
  • Provide guidance in selecting a policy and level of coverage that is appropriate for anticipated risks.
  • Provide clear advice regarding the potential consequences of an insurance decision.
  • Understand the business, industry and the common risks faced by similarly situated businesses.
  • Anticipate actions by the insurer.

In short, attorneys who regularly handle insurance coverage issues for policyholders are aware of all the laws and regulations governing insurance carriers, policies, and what the policyholder is entitled to.

Who can Use an Insurance Liability Lawyer?

A lawyer who handles insurance coverage provides value to a broad array of individuals and businesses. Any policyholder who contacts a lawyer will receive a contract review and guidance on coverage issues, indemnity issues, and failure to defend issues, among other things. Others who would be well-served by establishing a relationship with an experienced insurance coverage attorney include:

  • Corporate lawyers – Lawyers working in a corporate firm are often the first place a potential client will go. Corporate lawyers who simply refer matters out to a general practitioner without first checking for insurance policy coverage may be doing their clients a disservice. Remember, failure to raise a timely coverage claim can be a grounds to oppose coverage. At Bellatrix PC, one of the first steps we take in any litigation is to analyze and seek insurance coverage.
  • Homeowners and renters – If you own a home, you almost assuredly have a home owner’s insurance policy. Likewise, many renters insure their goods and possessions. There is nothing worse than finding out after the fact that your coverage was insufficient or did not cover the things you thought it did.
  • Business owners and employers – Owners of a company know that their business faces certain common risks and certain risks that are unique to the industry. We can review insurance policies already in effect or suggest other types of policies to consider for your business.

Because insurance liability issues are determined by a particularized body of law, any individual or business whose interests are affected by a policy can find value in meeting with an insurance coverage attorney. While people most commonly seek an attorney after the fact, it is prudent to review your policy, the duties it creates, and its levels of coverage with an experienced professional before disaster strikes

Rely on our Experience handling Insurance Coverage Issues for Policyholders

The insurance coverages attorneys of Bellatrix PC are dedicated to assisting individuals and businesses with coverage issues. We can provide on-point advice to guide your purchase of an appropriate policy. Moreover, if your insurer has declined to defend or declined to provide coverage following a covered event, our attorneys can negotiate with the insurance company and advocate on your behalf. To schedule a confidential insurance coverage consultation, contact Bellatrix PC by calling (800) 449-8992 or contact us online.

Background checks and skill tests for new hires

bear cub and skunkI have had my fair share of bad hires over the years; let me tell you. It has cost my law firm well into the six figures in wasted payrolls, management problems, lost opportunities, correction of problems, etc.  I do not spend a lot of time dwelling on it because I do not want to waste time thinking about lost investments on people.

For most businesses, the largest investment you make is in people. The biggest line item on your expenses is payroll. And your best chance at growing and making more money is through leveraging the time and labor of others.

So who you hire matters, and you should probably ask yourself a few questions before hiring a new employee and truly figure out if a potential employee can do the job you need them to do.

I admit, I do not always check references. Although I should. Probably half a dozen of my former employees had new employers call me on a reference check. Of those, more than half had lied to their prospective employers. This put me in an awkward position, because I am not willing to lie for people. But I wonder if there are other bosses who might do it just to be nice, to avoid conflict, because they want to get that ex-employee off of their unemployment account, or because the employer is afraid that telling the truth about their employees in a reference check will get them sued.  It is awfully tempting with some employees to be nicer about them than they deserve when responding to a reference.  (Of course, employers, be careful giving a positive reference about an employee whom you know is a serious liability just to get rid of them, because that could also come back to bite you.)

So that got me thinking.  Can you really trust references?  Probably not by themselves.  So I am trying something new: background checks and skill testing.

Background checks are a good idea, and I should have been doing them all along.  You need to know whether your new hire is lying about her college degree. California has some strict rules about background checks for potential hires, however.  For example, the potential employee must be given notice of the background search (with what will be looked at, in writing) whenever a background search agency is used. Also, the potential employee must consent to such a search, and he or she must have an opportunity to get a copy of the public records the employer gathers. If the employer gathers public records itself by way of doing a cheap background search, it must allow new hires to decide whether they want a copy of the public records gathered, or whether they want to waive receiving a copy (this is usually an option found on employment applications as a small box or initial line).

Most potential employees, of course, will not have any criminal records.  A bankruptcy may not indicate anything really bad, either.  Our own government cannot keep itself out of debt; can you really blame John Smith the Office Assistant for buying too many TVs? I’ve had employees with bankruptcies, criminal histories, arrests, alcoholism and other personal problems in their past and all have turned out to be great employees.

My bad employees tend to fall into two categories: (1) drama queens/anti-social or (2) incapable of doing the job, no matter how hard they try, but also incapable of seeing that.

So I am experimenting with skill, aptitude and personality testing now. I have had several former employees straight-up lie to me about what they could do.  After they were hired, they spent a lot of wasted time trying to figure out how to do things they stated that they could do already, or trying to hide their ineptitude. This not only wastes my time and money, it aggravates me because I cannot trust the person.

So far, every employee whom I have given a skills or aptitude test to has turned out well. I do not have a lot of advice regarding testing yet, because I am new at experimenting with it. But I am hopeful.

I will say this: make sure you use reputable testing agencies or batteries, especially if you are a big employer.  You do not want to get sued for discrimination because only white males from Princeton pass your tests.  I am very hopeful, however, that testing will help me identify the Dunning-Kruger Effect sooner.

By the way, I still advocate strict adherence to probationary periods, with formal reviews after 90 days!  Some people are just not good fits and will slip through the preliminary hiring cracks, only to fail abjectly once they enter your organization.  Weed them out!  Remember, there are reasons why big businesses do some of the things that they do… and it isn’t because they are just evil, Kafkaesque machines with too much money.  Sometimes they have things in place that small businesses should adopt for their own protection and success.

Sale of Business

SALE OF BUSINESS

In certain circumstances, selling a business can prove to be a lucrative and beneficial exit strategy. It can also be a lengthy and complicated procedure. Before you embark on this challenging process, it is critical to consult with an experienced business attorney, like the attorneys of Bellatrix PC.

handshake detail

Our legal team routinely works with partnerships, corporations, and limited liability companies across a broad spectrum of industries. We are prepared to advise and represent you on every aspect of selling your business, including preparing your entity for sale, performing due diligence, negotiating with potential buyers, and drafting and reviewing covenants not to compete, non-disclosure agreements, business sale agreements, security agreements, and other documents necessary to complete the process smoothly.

Even if you aren’t entirely sure whether it’s the right time in your entity’s life cycle to consider selling the company, our business attorneys can offer counsel on your legal options and their potential financial outcomes and ramifications. We pride ourselves on our in-depth understanding of the intricacies of the state and federal laws, and will work closely with you to identify a strategic approach toward achieving your desired outcome.

To discuss whether a sale of business is right for you, or other ways we can help you succeed, call the law offices of Bellatrix PC at (800) 449-8992.

Asset Sale vs. Stock Sale: Which is Right for Your Business?

Business sales are not one-size-fits-all. For instance, the distinction between selling stocks and selling assets should not be understated. The type of sale you enter will have a significant impact upon your tax liabilities, and in turn, your ability to benefit financially. Our attorneys will evaluate you specific situation and counsel you on the decision that is the most advantageous to you.

When you sell a company’s assets, it means that the buyer purchases your assets while you retain possession of limited liability company membership interests or corporate stocks, depending on how your entity is structured. Examples of company assets include industrial equipment, furniture and appliances, trade names, trade secrets such as software or algorithms, items included in inventory, accounts receivable, real estate, and other items. While you continue to own the company from a technical standpoint, the entity’s assets are no longer in your possession or control.

Business buyers tend to favor this type of sale. In addition to benefiting from a tax standpoint, by purchasing only the entity’s assets and not the entity itself, the buyer avoids the danger of assuming the company’s outstanding liabilities, including the company’s debts and civil liabilities like like breach of contract or sex discrimination lawsuits.

While sellers have the power to exclude from the sale any assets which they decide they would like to keep, the so-called “tax bite” generally make asset sales unfavorable to sellers. This is particularly true of C-Corporations due to their susceptibility to double-taxation. As a business seller, it is typically more favorable to make a stock sale.

Stock sales are effectively the inverse of asset sales. In other words, instead of selling the assets and keeping the corporate stock or LLC membership interests, the company continues to own the entity’s assets and you sell your stocks or LLC membership. Likewise, the pros and cons for buyers and sellers are also inverse: prospective buyers may resist accepting stock sale proposals because they are hesitant to assume the entity’s liabilities, while sellers benefit from a taxation and liability standpoint.

For all of these reasons, it is crucial to enter buyer-seller negotiations with an experienced and aggressive business sale lawyer on your side. Your attorney will protect you from inadvertently accepting unfavorable terms, and will keep you informed of the potential advantages and drawbacks throughout the negotiations process.

Due Diligence Checklist for Selling Your Company: Preparing for Buyers

Due diligence is generally associated with business buyers who must carefully appraise and evaluate a potential purchase before committing to the transaction. However, it is equally important for business sellers to prepare for the inevitable due diligence phase of the purchase and sales process. Advance preparation can make the business appear more attractive to potential buyers, and in turn, can allow you to complete the sale more rapidly and with an enhanced financial benefit. Needless to say, a seller’s failure to disclose information to a potential buyer can make even the most promising transactions turn sour. That’s why preparation is for a sale is as critical to a seller as it is to a buyer.

In order to keep the transaction as smooth and efficient as possible, sellers should gather and prepare the following documents and records:

  • LLC records or corporate books, including but not limited to, where applicable:
    • Business Ownership Certificates
    • Certificates of Good Standing
    • Corporate Meeting Minutes
    • Corporate Resolutions
  • Contracts with vendors, distributors, suppliers, customers/clients, and other businesses.
  • Trade secrets and intellectual property.  Trade secrets can potentially include any of the following:
    • Algorithms
    • Blueprints/Inventions
    • Databases
    • Marketing Strategies
    • Recipes
    • Software/Computer Programs
    • Supplier Lists
  • Tax and other financial documents, including but not limited to:
    • Balance Sheets
    • Profit and Loss Statements (“P&Ls”)
    • Tax Returns
  • Any special permits and/or licenses your business may hold, such as a liquor license or an outdoor entertainment license.
  • A breakdown of your business’ inventory.
  • Documents pertaining to real estate and property, including but not limited to:
    • Commercial Leases
    • Deeds of Trust
    • Mortgages
    • Property Liens
    • Zoning Permits

The forgoing is not a complete list, and should be evaluated on a case by case basis. If you’re ready to sell your entity, or are still thinking about whether the sale of the business could be right for you and your company, the business lawyers of Bellatrix PC can help. To start discussing your goals in a private consultation, call our law offices at (800) 449-8992 today. If a sale is not desired or appropriate for your entity, we may be able to assist with business dissolution or other alternatives.