Do You Have To Pay Your Employee’s Cell Phone Bill?

Cell Phone UsageI recently opened up a new mobile phone account for my business. The wireless company gave me the ability to buy an insane number of phone lines (like 50) without a deposit, for very little per month.

I’m thinking about whether I should provide cell phones to my staff to sidestep a common issue: does the business owner have to pay for an employee’s cell phone when she uses it for business purposes.

You may be surprised to learn that the employer may be required to pay for it, even if the use of the personal cell phone for business is not expressly at the employer’s request.

As always, the law is most restrictive in California, where reimbursements for gas, mileage, phones and other expenses is required and hard for employers to control.

For me, if I decide to get cell phones for my employees, I am going to tell them it is a benefit. Employees like benefits and they don’t need to know that I am hedging against other legal risks at the same time.

Watch this video to learn a little more about cell phone reimbursement requirements for employers.

Video Transcription:

Say your employee is “out in the field” a lot and uses her cell phone.

Do you have to pay her cell phone bill?

If she is using her cell phone for business, then you likely have to pay a portion of it.

You can give her a business cell phone to use and make a policy that prohibits the use of personal cell phones for business.

Or you can determine a monthly reimbursement amount up front.

Coming up with a flat amount that approximates the split of business versus personal use of a cell phone is a good way to go.

However, incidental or minimal use of a personal cell phone for work does not have to be reimbursed by the employer.

Failing to reimburse employee expenses properly is a good way to get audited by the labor department or sued in a class action lawsuit for penalties.

It’s a small mistake with big consequences.

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

I’ve Filed an LLC. I’m Personally Protected from Lawsuits, Right?

Filed LLCHow useful is a condom that is never taken out of its box and wrapper?

If you were the kind of person with enough forethought to buy a condom, you would probably want it to protect you from several things.

But it would not be very useful to go through the trouble of buying the condom and not taking the additional necessary steps to get its benefit.

Lawyers call certain legal services “prophylactic.” That’s because their purpose is to prevent problems and unwanted consequences.

Completing your necessary corporate compliance and regulatory paperwork is prophylactic. Buying an LLC and not taking it out of the box will not give you the desired results.

Video Transcript:

Say you filed an LLC using Legal Zoom. Are you personally protected from lawsuits?

Maybe a few, but mostly, no.

Because they don’t give legal advice, budget legal sites don’t tell you there are numerous things to do after you file the LLC to legitimately and legally set up your business.

After years of starting businesses, we have developed a list that is several pages long made up of single spaced bullet points.

If you don’t do all the things on this list for your LLC, then the “corporate veil” can be pierced.

But more likely, if you don’t do all of the things you are supposed to do to start up your business legally, you will violate one of several laws that carry personal liability even if you are incorporated.

There are legal traps in the areas of taxes, wage laws and even corporate laws and torts.

You may also be liable for some contracts and debts.

There are ways to limit your liabilities and protect your assets. While nothing is foolproof, a business-minded lawyer can help you significantly.

Do you know where your legal land mines are? To find out, call us for a Business Risk Review at 800-449-8992 or email us at [email protected].

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 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.

Disgruntled Workforce Means Problems

If you have a morale problem with your workforce, you better do something about it… fast.

When you have a disgruntled worker, it always leads to problems.

As a business owner, here are the problems I see when a person turns bad apple:

  • They “poison the well” and create negativity amongst your other staff
  • People lose their drive and initiative, so work quality suffers
  • People start scrutinizing the employer or developing “grievances”
  • The bad person (or several) have to be replaced, costing money

In addition to the practical aspect of having to spend more money replacing employees (not a small consideration in itself), leaving employees always carry risk. People tend to treat a break in an employment relationship with the same emotions as leaving a personal relationship.matches burning

In other words, unhappy ex-employees sue. Even when you are squeaky clean, unhappy ex-employees will threaten it.

Sometimes they will sue frivolously, and you end up with a problem, regardless. There will always be a percentage of litigious ex-employees, which means that if more employees are leaving, then there will be a proportionate increase in the number of lawsuits.

Here’s another legal issue: demoralized employees take more stress-related medical leaves. This actually happens a lot and is the leading cause for medical leaves. It’s really easy to violate the leave and disability laws (thus inviting lawsuits). It’s also disruptive to your workforce. And an unhappy, stressed employee doesn’t always recover and return to employment smoothly.

Finally, whenever employees leave, employers must immediately pay all earned compensation (including vacation pay, non-discretionary bonuses and earned commissions). If you do not have a bunch of cash on hand to deal with terminating and replacing employees, you may find yourself in the middle of a wage and labor crisis.

What can an employer do to avoid employee morale problems bankrupting them?  Here are four strategies that could save you thousands of dollars.

  1. Focus on improving employee morale and retaining skilled workers. Take some time to improve relationships with those employees and foster loyalty and contentedness. This is not just a hippie-dippy people idea. Research shows that people work based on “purpose” (which includes a strong sense of community, being valued, loyalty and other social factors), not based on money. Yes, people need money. But an employer who fosters the right social conditions can get away with lower pay or other hardships without loss of morale. And definitely get rid of the bad apples because their drama is unfair to the rest of your team.
  2. Clean up your HR act by reviewing employees. Employees actually want to be reviewed if they care about their jobs (see point above regarding purpose). You can use reviews to praise (important) and address frustrations and failures that cause low morale. You should also use this as an opportunity to document issues with problem employees so that you can defend yourself later.
  3. Audit your wage and pay practices with the help of your employment lawyer.  Wage and pay class actions are the most common type of class action litigation filed in California, constituting roughly two-thirds of all new class actions being filed and hundreds of new cases each year.  You are vulnerable to these types of lawsuits if your pay practices aren’t pretty close to perfect (and there are many laws out there that are traps for the unwary employer, so do not trust an HR service or a do-it-yourself). Not only do audits give you an opportunity to find and fix liabilities before they become lawsuits, but you can use it as an opportunity to show your workforce positive change and encourage their loyalty.
  4. Encourage — or even require — your employees to take their accumulated vacation during slow times.  This is a good way to get vacation time off the books of an employee who has thousands of dollars worth stocked up, which will have to be paid in total at the time of quitting. Plus, employees who take regular vacations are less stressed and happier.

If you have any business or workforce concerns, spend 30 minutes with us on a free Business and Employment Planning Session or schedule a consultation with one of our business law attorneys or our real estate attorneys at (800) 449-8992.

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.