I Told My Employees That I'm Giving Them Stock Options. Is That Legal?

Employee Stocks Many good and generous employers want to share with their employees.

The idea behind giving employees stock is a sound one. Employees who are owners may be more invested in the business’s success. They may feel more appreciated. It could give them a sense of pride, ownership or purpose beyond anything that they would feel from a simple salary.

These are the main reasons I hear from employers who wish to create an employee stock plan.

For a myriad of business reasons, I prefer not to share stocks with employees. I prefer an employee profit-sharing plan that does not involve equity.

But I understand that many business owners may feel like a stock plan is right for their employees.

So you may be wondering, if I tell my employees that they are entitled to stock options in a letter, memo or at a meeting, is that legal? No. Watch to learn more.

Video Transcription:

I offered stock options to my employees in a memo. Is that OK?

That is not a good idea. Employee stock plans and stock option grants are complicated.
First of all, stock grants may create taxable events that impact you as the employer.

Second, stocks and options create duties by the majority stockholders to the minority stockholders under state laws that you may not anticipate.

Third, such a memo may create earned wages and must comply with wage laws.

Fourth, federal securities regulate promises and statements regarding stocks.

In short, employee stock plans create a variety of legal issues that you must understand before you start handing out shares and options.

There are better alternatives if you wish to give your employees a profit-incentive.

For example, you can have a 401(k) set up to include profit sharing or you can set up a bonus program.

If you are considering benefits and stocks for your employees, contact us to learn about legal compliance. Get our white paper Reduce Your Per Employee Annual Legal Compliance Costs. Or contact us at 800-449-8992 or [email protected].

Do I Have To Accommodate An Employee Who Uses Medical Marijuana?

Marijuana in the Workplace Marijuana is well on its way to being legalized in the United States.

I’m going to make a prediction right now. In about a decade’s time, marijuana will be legal to use in the United States. I say that because we are nearing a tipping point in legalization.

By the end of the 2016 election cycle, more than half the states will likely have legalized marijuana in some way.

This presents a problem for employers who have a drug-free workplace. Some employers (i.e. defense contractors) are obligated by contract to have a drug-free workplace. And of course there are safety issues.

Still, I think the law on this is going to rapidly change over the next decade. What is an employers’ obligation to accommodate an employee using marijuana as medicine?

Video Transcription:

An employee of mine uses medical marijuana. Can I fire them for violating my drug-free workplace policy?

When marijuana was illegal, the answer was yes. But rapid changes in the legal status of marijuana as medicine makes the answer less clear.

Normally, you can fire an employee for being under the influence of drugs while at work.

But when the drugs are medications lawfully prescribed to them to treat a true medical condition, then such a firing may constitute disability discrimination.

For example, if someone uses insulin to control diabetes and this makes him or her act spacey, or be unsafe, you cannot fire them.

When marijuana is legally used to treat glaucoma, cancer or seizures, the employer may be required to accommodate the employee.

Employers also do not have the right to inquire about an employee’s health, medications or medical history, including at a hiring interview.

And in most cases, employers may not drug test current employees.

If you must keep a drug-free workplace by contract, you need legal advice to deal with such tricky situations.

Ask us how we can keep you safe from lawsuits with our Employer Protection Package by calling us at 800-449-8992 or emailing us at [email protected].

Can I Require My Employees To Be Nonsmokers?

Non-Smoking Employees When I first started practicing law, I was asked by a fitness-conscious employer whether he could require his employees to quit smoking.

After some research into the Americans with Disabilities Act, I concluded, “no.” Basically, I concluded that smoking interferes with a major life activity — namely, breathing.

The senior lawyers whom I worked with disagreed.

They had some good points at least politically. Being a smoker is not a sympathetic status in California.

But a decade has passed and the ADA has broadened. And I’ve become more experienced as an employment lawyer, so I have thoughts on other laws that inform this situation.

So this video has my thoughts on whether you can make your employees be non-smoking.

Video Transcription:

Sometimes employers ask, “Can I require my employees to be nonsmokers?”
Some employment lawyers will say it’s acceptable because it’s not illegal to discriminate against smokers.

But you could be risking a disability discrimination claim because smoking is a physical addiction that may impair a major life activity, such as in situations when the person develops lung or throat disease.

In addition, employers do not have the right to inquire about an employee’s health and medical history, including at a hiring interview.

In requiring your employees to be nonsmokers, you may run the risk of violating these laws.

Employers do have the right to designate the workplace as smoke free.

However, employers do not have the right to dictate how employees spend their breaks, such as unpaid lunch breaks, when employees are free to leave the premises.

If you are worried about your employees’ health, try offering access to a smoking cessation program.

If you offer employee health insurance, many such programs are offered as part of the insurance plans and can be promoted by human resources.

Ask us how we can keep you safe from lawsuits with our Employer Protection Package by calling us at 800-449-8992 or emailing us at [email protected].

Hiring

HIRING

All employers recognize the importance of taking steps to avoid inviting a wrongful termination lawsuit.  However, layoffs and firing are not the only aspects of employment law with which business owners must concern themselves.  It is just as crucial to comply with state and federal hiring laws, violations of which can result in civil penalties, litigation, and disruptions to productivity.  

If your business is preparing to hire new employees, or if you simply wish to review your current hiring policies to ensure compliance with state and federal law, the experienced employment attorneys of Bellatrix PC can assist.  We dedicate our practice to providing cost-efficient hiring solutions to corporations, limited liability companies, and partnerships at all stages of the business life cycle.  

To arrange for private consultation, call Bellatrix PC today at (800) 889-8376.

you're hired written on a chalkboard

How to Avoid Discriminatory Hiring Practices

California is an at-will employment state, which means – at least in theory – that employers are legally permitted to hire or terminate employees at any time, for any reason.  In practice, employers must avoid terminating (or selectively failing to hire) employees on a basis which constitutes discrimination.  

In other words, employers may not exclude from consideration job applicants based purely on their sex, sexual orientation, race, nationality, religion, age, or pregnancy.  If an employer discounts an otherwise qualified applicant based purely on his or her membership in a class which is protected by state or federal law, the employer may become vulnerable to a lawsuit based on sex discrimination, race discrimination, religious discrimination, or other forms of workplace discrimination.

Fortunately, by taking a few simple steps, employers can dramatically reduce the likelihood of accidentally engaging in hiring discrimination.  Regardless of the company’s size, nature, or legal structure, all employers should be sure to take the following precautions:

  • Make sure the job posting is as clear and detailed as possible.  List the skills, tasks, duties, experience levels, and education levels which will be expected of qualified hires.
  • Consider speaking to other business owners in your industry about their standards and expectations for prospective employees.  This will help you gauge the sorts of criteria and salary requirements which are reasonable for the position you are trying to fill.
  • When writing your job posting, exclude any explicit physical requirements which would automatically discount a group of people.  For example, while it is fine to note that applicants “must be able to lift at least 30 pounds” for a warehouse position, it is not acceptable to include statements like “seeking men only” or “applicants must be at least six feet tall.”
  • Take detailed notes during and immediately after the applicant’s interview.  This will facilitate an objective comparison of applicants after all interviews are complete.  
  • Do not make any statements referring to protected classes.  For example, do not bring up your company’s leave policy for pregnant employees.  If an applicant asks any questions related to a protected class, inform them it will not be a factor during the consideration of new hires.

Background Checks and Employee Screening Laws

The vast majority of employers screen prospective hires with some form of background check.  While background checks are increasingly common, employers are still required to comply with certain laws when screening job applicants.  

In October of 2013, SB 530 amended California’s labor laws to expand the legal protections afforded job applicants with criminal records.  SB 530, which took effect on January 1, 2014, prohibits both private and public employers from requiring job applicants to disclose arrests which did not lead to a criminal conviction.  Employers are also prohibited from:

  • “Utilizing [information concerning an arrest or detention that did not result in a conviction] as a factor in determining any condition of employment.”
  • Asking job applicants to disclose information pertaining to records which have been sealed, dismissed, or expunged.  

This further extends to questions about an applicant’s participation in any pre-trial or post-trial diversion programs, such as the “Back on Track” drug diversion program.

Updates to California’s Minimum Wage Requirements  

In the past, California’s minimum wage was set at $8.00 per hour.  However, California recently increased its minimum wage.  Effective July 1, 2014, California minimum wage is $9.00, $1.75 higher than the federal minimum wage of $7.25, which is established by the Fair Labor Standards Act or FLSA.  Employers should also be advised that California has already scheduled another minimum wage increase for January 1, 2016, at which point the current $9.00 rate will increase to $10.00.  

Exempt employees are typically paid on salary instead of receiving an hourly wage.  However, exempt employees – and in turn, their employers – are still affected by current and scheduled minimum wage increases.  Because exempt employees must be paid monthly compensation equivalent to at least twice the minimum wage, minimum wage increases also lead to increased monthly salary requirements for exempt employees.

Don’t expand your workforce until you consult with an experienced attorney.  Call the law offices of Bellatrix PC at (800) 449-8992 today to schedule a private consultation.  Ask about our Employer Protection.

 

If My Employee Criticized My Business On Social Media, Can I Fire Her?

Employees and Social Media

You can’t always fire an employee who badmouths you online.

It’s a common reaction. An employee bad-mouths you and your business on Facebook. So you fire her.

Before the time of social media (and the internet), I was in college. I also worked a job after school where I had a boss who was a strange, quirky person.

I did a good job, but he was not exactly someone I enjoyed being around. I wasn’t the only one: my co-workers and I would laugh about some of his idiosyncrasies on our commute home on the ferry.

I’m pretty sure he overheard one day (or someone else who mutually knew us heard) because when we returned to work the next day, he was pretty upset with us. My co-worker was fired. I wasn’t, but it was clear that I was going to hit a dead-end soon.

So I moved on a little while later. But I always felt bad about it. I am not gossipy by nature, and I upset someone unintentionally. He was weird, but I didn’t mean to hurt his feelings.

Anyway, now I’m a boss and a business owner, and I try to hire people whom I enjoy working with. I would probably see a couple of teenagers making fun of me as annoying. I certainly wouldn’t feel like paying them my hard-earned profits in wages if they were ungrateful for it.

But if an employee is critical of your business online, you have to be careful. You cannot just fire them in certain circumstances. As always, it is situation-dependent. So watch the video below to get an idea of when you have to call a lawyer before sacking a snickering ingrate.

Video Transcription:

My employee posted on Facebook criticizing my business. Can I fire her?

Not unless you want to be on the losing side of a wrongful termination suit.

Many states, like California, have laws that prevent wrongful termination in violation of public policies.

Free speech and free association online are protected activities by public policy.

Also, the National Labor Relations Act prohibits employers from retaliating against employees for communicating with each other about the terms and conditions of their employment.

These protections extend to online communications as well.

Getting sued over something so petty is expensive.

Instead, why not use those words as constructive criticism to improve your business?

Then advertise it to social media and your workforce. Voila! Good PR and good will with your employees.

Ask us how we can keep you safe from lawsuits with our Employer Protection Package by calling us at 800-449-8992 or emailing us at [email protected].

Do Employers Have to Accommodate Employees Who Object to Serving Gay Customers Based on Religious Beliefs?

Graveyard

Are Christian Religious Beliefs and Practices Dead At Employment?

So I have a heavy topic for you today: Do employers have to accommodate employees who object to serving gay customers based on religious beliefs?

Pretend that you own a bakery. You have an employee who sincerely objects against gay marriage for religious reasons. Your employee refuses to bake a cake for a wedding that will be for a gay couple. Can you fire that employee for refusing to bake the cake? Or must you force the employee to bake the cake? Or must you allow the employee to abstain from baking the cake?

As a practical matter, I think the answer to this question depends in no small part on where you live. A jury in California may think about this in a remarkably different way than a jury in Kentucky.

What is a “reasonable accommodation” for a religious belief is context (and probably culturally) dependent. The recent Abercrombie & Fitch and Hobby Lobby decisions by the U.S. Supreme Court underscore how politically driven religious discrimination decisions can be.

Here’s the law. According to the Equal Employment Opportunity Commission (EEOC), “The law requires an employer or other covered entity to reasonably accommodate an employee’s religious beliefs or practices, unless doing so would cause more than a minimal burden on the operations of the employer’s business. This means an employer may be required to make reasonable adjustments to the work environment that will allow an employee to practice his or her religion.”

Protected religious beliefs are not just for people who are part of a recognized, organized religion. Discrimination protection and accommodations also apply to anyone who has “sincerely held religious, ethical or moral beliefs.”

The anti-discrimination laws are meant to broadly protect people who have sincere religious beliefs and practices without requiring them to prove that they belong to a mainstream church.

Religious discrimination claims typically focus on an employer’s requirement to accommodate days or times for worship and modes of dress. For example, employers are more or less required to allow time off for religious holidays, barring extraordinary hardship.

Employees also cannot be forced to participate in employer-sanctioned religious ceremonies. So you can have a Christmas party, but you cannot force employees to celebrate Christmas at the party, for one common example.

Dress codes must accommodate religious dress, prohibitions and hairstyles. For example, Rastafarians must be permitted to keep their dreadlocks. And you cannot prohibit a Jew from wearing a yarmulke.

This is where Abercrombie & Fitch got into trouble recently. They were sued for not allowing female employees to wear head scarfs as that violated their dress policy. In its defense, Abercrombie & Fitch claimed that the head scarf was not stylish and did not compliment their wares, which they had their employees dress in to display. But this is not a good enough reason to prevent an employee from observing a sincere religious belief.

Title VII (and state laws that follow suit) also prevent employers from forcing employees to act in ways that are against their sincere religious, ethical or moral beliefs. So, for example, if it is against a restaurant server’s religion to dance, an employer cannot make her dance as part of her serving duties — even if it is just for a quick Happy Birthday song.

Employers do not have to accommodate religious practices when it causes “undue hardship,” however. The EEOC explains, “An accommodation may cause undue hardship if it is costly, compromises workplace safety, decreases workplace efficiency, infringes on the rights of other employees, or requires other employees to do more than their share of potentially hazardous or burdensome work.”

So this is where context, culture and a jury would come in. Most accommodations decrease workplace efficiency, so what is reasonable and what is undue hardship?

Let’s returning to our reluctant cake baker. Would it be a hardship for the employer to have a different, non-objecting employee bake the cake? Perhaps it depends on staffing and who is available. Perhaps this employee is the only employee capable of making fondant. Or perhaps there are ten other bakers who could easily do it.

If it is possible for the employer to not require the employee to do something against their sincerely held moral beliefs, it may be better to put a different worker on the task.

If the employer cannot, he may be justified in forcing the employee to comply, on pain of termination.

I am certain that a typical California jury would be unsympathetic to the employee in this situation — although I can conceive of a jury make up in some places in California where this would not be certain. I would also be less certain in Missouri, where feelings about gay marriage are more varied. So this is why I would say that the answer of what is reasonable and required, versus what is “undue hardship” somewhat depends on where you are at in the country.

An even trickier question is whether accommodating the employee’s beliefs results in an actionable discrimination against the customer, creating liability for the employer. If the employee forces the business to get sued for discrimination by a customer, that is surely an undue hardship.

For example, what happens if the objecting baker tells the customer that they refuse to bake the cake? Or worse, what if the employee begins proselytizing to the customer in a way that becomes offensive (or even considered “hate speech”)? Will the customer sue the bakery for the employee’s behavior?

In most situations where an employee creates a liability for the employer, you can expect the employee to get fired legally. For instance, here’s a true story: a big retailer was told by a customer that she did not want a black delivery driver to deliver her purchase. The manager acquiesced and went to send a white delivery driver. But unfortunately, he told both the white and black drivers why he made the change. Both employees refused to go along and complained to HR about the manager’s decision. The manager was fired and the customer’s order cancelled. Because that manager’s decision put the company at risk for a lawsuit by two employees, the firing was justified.

When it comes to what is required to accommodate religious employees, there is no concrete answer for employers. And with the Supreme Court’s decision in Obergefell, there will be a rise in “conscientious objectors” within the wedding industry.

My advice to employers is to try and accommodate your religious employees as much as possible, without putting your business at risk by inviting suits from customers or making it impossible to operate.