Employment Law

The most effective way for a business to avoid employment lawsuits, is start with proper planning and counsel before problems arise. McFarlin & Geurts LLP can assist California business owners avoid legal challenges by creating an affordable planning approach to hiring and growing your business. We offer a variety of services which can be purchased individually, or on a monthly flat fee plan for employers covering all employment related issues. Our monthly programs can turn an unknown variable cost into a fixed cost for your business therefore providing greater visibility and cash flow predictability.

Wouldn’t it be easier to “stay out of trouble” if your business could just pick up the phone and consult with one of our experienced employment law attorneys anytime regarding any issue. Well that’s what our flat fee program can offer. We provide your business with general employment law and labor law information on your schedule, and on your terms. Our flat fee does not include matters outside the scope of employment law, and does not include litigation.

McFarlin & Geurts LLP represents clients in a wide variety of matters related to employment law in California workplaces and in employment litigation in California and federal courts. Employee rights and employer responsibilities have been changed by a series of often overlapping and frequently inconsistent California and federal statutes and regulations and an overwhelming volume of state and federal case law.

Labor and Employment law is governed mainly by statutes and case law establishing continuously expanding individual employee rights and employer responsibilities, enforceable in both traditional private civil actions and class actions before state or federal juries.

McFarlin & Geurts LLP provides a starting point for understanding how California Employment Law may relate to businesses and employees:

At Will Employment: Employment has historically been terminable anytime at the discretion of either the employer or the employee. As a result, employers traditionally exercised virtually unfettered discretion with respect to termination or modification of the employment relationship. If an employee was not meeting expectations, they could traditionally simply be fired under California Employment Law.

“At will” employment means either the employee or the employer can end the employment relationship at any time, for any reason, and without any advance notice, however there are many, many “exceptions” you must be aware of. There are certain steps a business can take to maintain and preserve the “at will” relationship, McFarlin & Geurts can guide you through these issues.

Employee Handbooks: One easy way to help a business to avoid employment law problems is to have all employees sign and retain an employee handbook. The creation of an employee handbook should be done on an individualized basis, no one handbook is right for all businesses. An employee handbook can help a business avoid all types of California employment law issues and is essential for most businesses. Please contact us for a free Employment Handbook evaluation and price quote.

Independent Contractors: One very current and dangerous issues for employers, especially in California, is “reclassification” of employees who had been listed as independent contractors to employees. The implications of a reclassification are severe and can have harmful and destructive results for a business. Obviously an employee must be treated very differently than an independent contractor such as providing workers’ compensation insurance, withholding federal and state taxes, and paying payroll taxes. Additionally, “employees” are entitled to all the protections of California and Federal employment laws such as wage and hour laws, discrimination laws, and wrongful termination laws. Independent contractors are not generally subject to most such laws.

The real difference between an independent contractor and an employee comes down to control. An employee can be directed specifically by an employer on how, when and where to perform the work. For independent contractors, work is paid for differently. If an employer is providing tools and equipment, a workspace, and telling the person how and when to do the work, they are probably an employee, no matter how the business classifies them, and treating that person as an independent contractor opens up many civil, and potentially even criminal, problems for an employer in California. McFarlin & Geurts can help business owners avoid these problems.

Employee Leave of Absence: Leave of Absence issues often arise with employees, and are often misunderstood by employers. The general rule in California related to leave of absence is an employer does not have to allow for such leave unless a state or federal law specifically requires it. Even if required to provide leave, an employer does not have to provide paid leave. However, there are many, many exceptions. Generally, the larger a business is, the more exceptions apply here, such as time to certain child care related activities, or even court appearances. Of course pregnancy leave is required in California for most businesses and for some “family medical leave.” Generally, an employee returning to work must be reinstated to the same position they had previously as the exercise of leave rights is a “protected activity.”

Administering mandatory leave programs are tricky, and there are many pitfalls. Employers face a number of burdens and responsibilities which our team of California employment law attorneys can help your business navigate.

Employment Litigation Defense: Of course the objective of any client relationship is to help them avoid any type of adverse litigation, but McFarlin & Geurts certainly can help after problems have already arisen and work to resolve lawsuits as efficiently and effectively as possible for your business. The usual objective is to just resolve litigation issues as quickly and cost-effectively as possible. Often this may mean an out-of-court settlement or arrangement with Plaintiffs, if their claims are valid. If we do end up going to trial, we tell you just what to expect so there are no negative surprises.

Unemployment Insurance: Unemployment insurance is a federally mandated program administered through the Employment Development Department (EDD). California employers pay an unemployment tax which goes to fund the program and ultimately is paid to the unemployed. Generally, a former employee can apply for unemployment benefits so long as they were on the job for an appropriate amount of time. Employees become ineligible if they voluntarily quit the job or were terminated for “misconduct.” Determining “misconduct” is sometimes difficult and requires consideration of employer work rules, standards, and degree of carelessness or negligence on the job.

Generally, once the employee applies for California unemployment benefits through EDD, a cursory investigation is conducted including requiring the employee to complete a few forms, and possibly a telephone call to the employer for verification. Once EDD reaches a decision on benefits, either the employee or the employer can appeal or challenge it. For California Unemployment Benefit or EDD questions, please contact McFarlin & Geurts at (949) 544-2640.

Wrongful Termination: One would think an “at will” employee could simply be terminated at will, but that is not always the case. Employers can cause themselves serious damage by not having proper hiring procedures, and a clear termination policy and procedure. The termination of an employee can result in a wrongful termination lawsuit if not done properly, and disrupt business operations. It is important to document any employee misconduct, poor morale, lack of productivity, etc. so that termination of that employee carries a clear paper trail and is established as a reasonable action for the employer to take. As in most employment related matters, proper planning and preparation can make the difference between a lawsuit and continuing smooth business operations. McFarlin & Geurts can help businesses find the right balance.

Collectively-Bargained Employment: The employer's discretion regarding employment terms and conditions was chiefly moderated by the Railway Labor Act of 1926 (45 USC § 151 et seq.) and the National Labor Relations Act of 1935 as amended by the Taft–Hartley Act of 1947 (29 USC § 141 et seq.). These statutes protect employees’ freedom of choice regarding union membership and representation and encourage collective bargaining between employers and labor unions over terms and conditions of employment.

Role of National Labor Relations Board: The NLRB's federal authority includes determining whether labor unions are freely selected by a majority of the employees in units appropriate for collective bargaining. The NLRB is further authorized to enforce minimum standards and prevent “unfair labor practices” by employers. These minimum standards require, among other things, collective bargaining in good faith with an attempt to reach agreement as well as clear grievance procedures and arbitration of employment disputes.

Where collective bargaining agreements are in place, the merits of most workplace disputes are typically determined in the first instance outside the judicial system. On the other hand, disputes involving labor-management issues are resolved in administrative proceedings by the NLRB, reviewable by the federal circuit courts.

The scope of these collectively-bargained grievance and arbitration procedures is limited today as most employees are not covered by collective bargaining agreements and therefore the procedures do not extend to the majority of the private sector workforce.

“Statutory Minimum Standards” Employer discretion has traditionally been limited by certain federal and state statutes establishing minimum standards for many aspects of the employment relationship. Examples include, but are not limited to, the following:

Federal Laws Regulating Employers

Fair Labor Standards Act (“FLSA”) (29 USC § 201 et seq.), enacted in 1938, restricting employment of children and requiring minimum wages and overtime pay at one-and-one-half times the regular rate of pay for hours over 40 in one week worked by covered employees in covered industries.

Family and Medical Leave Act (“FMLA”) (29 USC § 2601 et seq.), enacted in 1993, requiring covered employers to provide a maximum of 12 weeks of unpaid leave, for qualified medical and family purposes, to employees who have worked at least one year and 1,250 hours within the prior 12–month period at a workplace where the employer employs 50 or more employees within a 75 mile radius of that worksite.

Worker Adjustment and Retraining Notification Act (“WARN”) (29 USC § 2101 et seq.), requiring that 60 days' advance notice be provided by covered employers of “mass layoffs” and “plant closures” affecting 50 or more employees during any 30–day period.

Immigration Reform and Control Act of 1986 (“IRCA”), supplemented by the Immigration Act of 1990, restricting employers from hiring, recruiting or referring “unauthorized aliens” or employing persons without proper employment eligibility verification, and also restricting employers from discriminating against applicants or employees based on national origin or citizenship.

Occupational Safety and Health Act (“OSHA”) (29 USC § 651 et seq.), requiring covered employers to undertake extensive responsibilities to assure a safe workplace and authorizing the Occupational Safety and Health Administration of the U.S. Department of Labor to issue comprehensive regulations over workplace safety. The California Department of Labor defers enforcement of OSHA to the California Department of Industrial Relations, acting through the Occupational Safety and Health Standards Board and the Occupational Safety and Health Appeals Board.

Employee Retirement Income Security Act of 1974 (“ERISA”) (29 USC § 1001 et seq.), creating a preemptive federal law strictly governing employer obligations related to pension and welfare benefit retirement plans.

Employee Polygraph Protection Act (29 USC § 2001 et seq.), enacted in 1988, generally prohibiting private employers from using lie detector tests for pre-employment screening except in very narrow security and pharmaceutical business circumstances, or during employment except in limited instances involving an ongoing theft/fraud investigation.

Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) (PL 104–191), requiring certain appropriate protection of electronic and other protected private health information.

Fair Credit Reporting Act (15 USC § 1681 et seq.), regulating the collection and requiring notice to consumers of information from consumer reporting agencies as well as personal interviews bearing on such matters as credit, character, reputation and personal characteristics.

California Laws Regulating Employers

California Labor Code § 1173, authorizes the Industrial Welfare Commission to issue “Wage Orders” establishing minimum conditions of employment in many industries, including regulation of overtime pay and the standards for determining whether individuals are exempt from overtime entitlement because of their professional, administrative or executive employment.

California Labor Code § 201 et seq., requires prompt payment of wages when due and upon termination of employment.

California Labor Code § 227.3, requires payment of accrued vacation pay upon termination of employment.

California Labor Code § 512, requires unpaid lunch or meal periods for nonexempt employees and can be strictly enforced.

California Labor Code §§ 1050, 1052, 1054, prohibits employer misrepresentations related to former employees obtaining employment.

California Labor Code § 970, prohibits employer misrepresentations in order to induce an employee to change locations to accept employment.

California Labor Code § 1285 et seq., prohibits child labor, limiting hours and types of work in which minors may be employed.

California Civil Code § 56.10 et seq. (Confidentiality of Medical Information Act), restricts disclosure of confidential medical information without the individual's written consent in a statutorily-specified form.

California Family Rights Act (“CFRA”) (Gov.C. § 12945.2), entitles eligible employees to up to 12 weeks leave in 12 months to care for child, spouse or parent, or for medical leave.

California Labor Code Private Attorneys General Act (Lab.C. § 2698 et seq.), permits employees to sue employers for civil penalties for Labor Code violations.

California Consumer Credit Reporting Agencies Act (Civ.C. § 1785.1), regulates the collection and notice required of consumer information from consumer credit reporting agencies related to credit, or obtained through any means, related to character, reputation and personal characteristics.

Equal Employment Statutes: Another major limit on employer discretion resulted from statutes enacted to provide equal employment opportunities to all by prohibiting discrimination or classification based on specified factors. The California Fair Employment Practices Act prohibits discrimination based on race, color, national origin, gender and religious preference. The Act is enforceable by administrative action, including injunctions and a limited backpay remedy following an administrative hearing. Administrative determinations were subject only to limited judicial review.

California's statutory protection for equal employment opportunity has been expanded over the years and now appears in the California Fair Employment and Housing Act (“FEHA”) (Gov.C. § 12900 et seq.). The FEHA has been amended continually and the protected characteristics have been greatly expanded to encompass age, disability and numerous other factors, including sexual orientation and marital status. Enforcement is typically done through private lawsuits, with remedies including compensatory and punitive damages.

The California statute supplements various federal laws providing equal employment opportunity, including:

Civil Rights Act of 1866 (42 USC § 1981), provides all persons of different race, ancestry or ethnic background the same rights as white citizens to enforce contracts and to equal access of the law, enforceable by civil actions, including jury trials.

Civil Rights Act of 1871 (42 USC § 1983), a compliment to 42 USC § 1981, applicable to public entity employers or persons acting under “color of law.”

Equal Pay Act of 1963 (29 USC § 206 et seq.), provides for equal pay for men and women performing the same job.

Title VII of the 1964 Civil Rights Act (42 USC § 2000e et seq.), prohibits classifications of employees, or adverse employment actions, based on race, color, national origin, sex or religious beliefs.

Age Discrimination in Employment Act of 1967 (“ADEA”) (29 USC §§ 621–634), prohibits age discrimination against all those over 40, with limited exceptions, and requires that settlements of federal age discrimination claims comply with specified statutory standards provided in the Older Workers Benefit Protection Act (“OWBPA”), enacted in 1990.

Americans with Disabilities Act (“ADA”) (42 USC § 12111 et seq.), enacted in 1990, prohibits discrimination against employees who are mentally or physically disabled, or who are perceived to be disabled, or who have a record of a disability, and requires “reasonable accommodation” where this would be necessary for such persons to perform the essential functions of their jobs.

Federal vs. California State Employment Law: The federal equal employment statutes discussed above are not preemptive and do not affect enforcement of the California statutes covering the same ground and, in some instances, California law provides equal or broader coverage and greater remedies for employees. Generally, plaintiffs' counsel typically prefer to proceed under the California equal employment statutes in California state courts, instead of under the federal statutes as California is a relatively plaintiff friendly state for a variety of reasons.

Federal and state courts have always struggled with the absence of a clear statutory definition as to what specifically is required, and how unlawful employment discrimination is to be determined at trial. The law in this area is still developing but certain features are particularly significant for employers in California:

Discrimination: Obviously, in most employment law cases, the plaintiff-employee has no clear, direct evidence that the employer intended to discriminate unlawfully, and the defendant-employer typically has better access to the true reasons that prompted its decision to fire, reject, discipline or refuse to promote the plaintiff. For plaintiffs, the problem is usually how to prove defendant's intent through admissible evidence in Court. For the defendant-employer, on the other hand, the problem is generally how to demonstrate that actions or personnel practices or changes were motivated by factors other than discrimination.

Most discrimination claims can be avoided with proper planning and counseling. The problem businesses face is that they must distinguish between top performing employees and everyone else. The distinction between good and bad employees must be set up clearly and concisely to avoid a poorly performing employee alleging their lack of advancement was based anything but poor performance. McFarlin & Geurts can guide businesses through this process.

Class actions: Class actions may be appropriate to enforce the anti-discrimination provisions of Employment laws if the employee-plaintiffs can satisfy the requirements for maintaining a class action under the Federal Rules of Civil Procedure. Class actions “up the ante” in employment litigation because they expand the number of individuals eligible for monetary relief, and may lead to injunctive relief or consent decrees imposing across-the-board changes in personnel policies. Class actions are usually much more costly for both plaintiffs attorneys and defendants, especially in California.

Class actions are especially dangerous for employers in California because they involve multiple employees and multiple claims in one big case. The last thing a small business needs is to have to defend such a case. Certain types of legal issues lend themselves more to potential class actions than others such as independent contractor status, “exempt” vs. “non-exempt” treatment of employees, overtime errors, wage and hour claims, and discrimination. McFarlin & Geurts can help your business avoid these types of problems.

Attorney fees: Employment claims and wage and hour claims routinely include claims for plaintiff's reasonable attorney fees and costs. Attorney fee claims greatly increase the defendant-employer's potential liability and may thus affect settlement decisions.
Fee claims may also create other issues including whether plaintiff has truly “prevailed” (especially where plaintiff prevails on some claims and not others), and also whether the attorney fees sought by plaintiff are “reasonable.”

“Reasonable accommodation” Requirements: In addition to their anti-discrimination provisions, both Federal and California employment laws require employers to make “reasonable accommodation” for an employee's religious preferences. This “reasonable accommodation” requirement is incorporated into the federal Rehabilitation Act of 1973 and into the Americans with Disabilities Act of 1990 (prohibiting “discrimination” against “qualified individuals with a disability” who can “perform the essential functions of the job with or without reasonable accommodation”).

The “reasonable accommodation” mandate carries over to the federal Family and Medical Leave Act (FMLA) and California Family Rights Act (CFRA), each require a covered employer to provide leaves of absence to employees when requested because of pregnancy or other specified medical related conditions.

This mandate for “reasonable accommodation” of individualized conditions has a significant impact on employer discretion in addressing employees with medical related issues.

The Unique Challenge of Conducting Business in California: California employers face many unique challenges. The following are some of the most significant areas in which California and federal law differ. California employers must be aware of these stringent requirements:

“Daily” overtime: The California Legislature has instituted the “eight hour day”—and corresponding daily overtime pay requirements—in virtually all California industries in the private sector. Hourly employees working more than eight hours in any one day must be paid overtime.

Disability discrimination protection: Effective 2002, the California Legislature has made California disability discrimination law dramatically different from the federal Americans with Disabilities Act (ADA), and applicable to many more workers. All employers must be aware of these requirements.

Sexual orientation protection: Effective 2000, the California Legislature has added actual or perceived sexual orientation to the list of protected characteristics. There is no corresponding federal protection for actual or perceived sexual orientation.

Expanded protection for older, higher-paid workers: Effective 2000, in California, it is presumptively unlawful for an employer to use salary as the basis for selecting employees for layoff . This is in staggering contrast to the Age Discrimination in Employment Act (ADEA), which permits employers to take action based on “reasonable factors other than age.”

Overtime pay exemption for computer software professionals: The California Legislature has enacted an overtime pay exemption for computer software and design professionals earning at least $41 per hour, subject to annual cost of living increases, federal law exempts such professionals making $28 per hour.

Meal and rest periods: Effective 2001, the California Labor Code has been amended to require employers who fail to provide a meal or rest period required by an applicable IWC Wage Order to pay each affected employee one hour's pay for each day an employee is not provided the appropriate meal or rest period. No such federal law exists.

Paid family leave: In 2002, the California Legislature established the nation's first paid family leave program. Employees in the private sector are eligible to apply for paid family leave benefits. There is no corresponding federal paid family leave program.

Layoffs on plant closing: Effective 2003, the California Legislature has adopted a version of the federal Workers Adjustment and Retraining Notification Act (WARN). The California version covers more employers, and therefore more employees, than the federal version and is different in several other meaningful respects.

Background checks and investigative consumer reports: Effective 2002, the California Legislature amended the California Civil Code regulating employer use of investigative consumer reports. These background check reports are frequently used by employers prior to hiring employees. No corresponding federal statute regulates such use of background check reports.

Damage remedies for undocumented workers: Effective 2003, the California Labor Code was amended to maintain damage remedies under California law for undocumented workers. This was designed to negate any impact in California of Hoffman Plastic Compounds, Inc. v. NLRB (2002) 535 US 137, 122 S.Ct. 1275, in which the U.S. Supreme Court held federal immigration policy precludes an award of backpay or monetary damages under the National Labor Relations Act to persons not lawfully in the country. The constitutionality of the California statute has not yet been tested, but may be at some point.

Wage and hour class actions: Class actions may be utilized to enforce California's wage and hour laws on behalf of all affected employees unless they affirmatively request exclusion from the class, federal law does not provide for such class actions.

Expanded whistleblower protection: The California Legislature has expanded protection for whistleblowers, and also now requires employers to post notices of the Attorney General's whistleblower “hotline” to enable employees to report violations of law by their employer or fellow employees.

Domestic partner benefits: In 2004, the California Legislature expanded protections for registered domestic partners. As of January 1, 2005, registered domestic partners have the same rights and obligations under California law as spouses in California. There is no corresponding federal law.

Proliferation of wage/hour class actions: An alarming number of wage/hour class actions have been filed in California courts to enforce rights under various provisions of the Labor Code and/or wage orders established by the California Industrial Welfare Commission. Initially, most of the class actions focused on misclassification of nonexempt employees as exempt. Recently, however, an increasing number of claims have been brought for claims such as alleged meal and rest period violations, wage statement violations, improper vacation pay practices, failure to indemnify employees for various types of business expenses and other violations.

Due to California’s “opt-out” method of class action adjudication as opposed to the “opt-in” method required under the federal Fair Labor Standard Act (FLSA), the number of wage/hour class actions filed in California courts under state law dwarfs those filed in federal courts under the FLSA.

Hopefully our overview of common employment law issues discussed above was helpful, if you would like to speak with one of our qualified representatives, please call a California Employment Law Attorney now at (949) 544-2640 or contact us online.