• The rate(s) of pay and basis (hourly, by a shift, day, week, salary, piece, commission or otherwise), including applicable overtime rates
• Allowances, if any, claimed as part of minimum wage
• The regular payday designated by the employer
• The name of the employer, including any “doing business as” names used
• The physical address of the employer’s main office or principal place of business, and, if different, a mailing address
• The employer’s phone number
• The name, address and phone number of the employer’s workers’ compensation carrier

If you use officer letters, at a minimum, they should contain the following information:

• Job title
• Exempt or nonexempt status
•  Starting salary (by pay period or month) or hourly rate
• Work schedule
• Full-time or part-time classification for benefits
• Reporting date
• Any conditions to which the offer is subject, such as:
• Post-offer medical exam
• Post-offer drug test
• A statement of the at-will basis of employment
• A deadline by which you expect an acceptance of the position by returning a signed copy of the offer letter

Take care to prepare an accurate offer letter. You may be responsible for promises made about the scope, compensation, security and working conditions even though the employment relationship is on an at-will basis.

In  a recent case, Dore v. Arnold Worldwide, Inc., an incomplete description of at-will status in an offer letter resulted in litigation all the way to the California Supreme Court. The offer letter stated “As with all our company employees, your employment is at-will. This means that the company has the right to terminate your employment at any time just as you have the right to terminate your employment with the company at any time.” The employee tried to convince the court that because the employer’s definition failed to say he could be terminated for any reason, the employer had to prove just cause.   Even thoughthe employer ultimately prevailed in the litigation, it was an expensive error.

You may want to prepare a separate letter for employees hired on a temporary basis that clearly describes the limited duration of their employment in terms of either a specific time or a specific assignment. Do not fail to include at-will language in this letter, or your description of the temporary assignment can be misunderstood to be a contract for a specified period of time or until the completion of the assignment.

Though not a requirement, you may want to send a letter to candidates who were not hired so they know they are no longer under consideration. It’s a good idea not to state a reason for passing them over or describe the qualities of the person selected. A basic letter thanking them for their interest and wishing them well in their future employment is sufficient.

• The rate(s) of pay and basis (hourly, by a shift, day, week, salary, piece, commission or otherwise), including applicable overtime rates
• Allowances, if any, claimed as part of minimum wage
• The regular payday designated by the employer
• The name of the employer, including any “doing business as” names used
• The physical address of the employer’s main office or principal place of business, and, if different, a mailing address
• The employer’s phone number
• The name, address and phone number of the employer’s workers’ compensation carrier

The prohibition does not apply to “managerial positions,” defined as those who qualify for the executive exemption from overtime. This exception reinforces the need to make the correct exempt/nonexempt classification at the time you decide to recruit for an open position.

The prohibition against obtaining and using credit reports also does not apply to the following:

• Law enforcement positions and positions for which the information is required by law;
• Positions that involve regular access (other than in connection with routine solicitation and processing of credit card applications in a retail establishment) to bank or credit card information, Social Security numbers, and date of birth;
• Positions in which the person is, or would be, a named signatory on the employer’s bank or credit card account, or authorized to transfer money or enter into financial contracts on behalf of the employer;
• Positions that involve access to confidential or proprietary information, as defined;
• Positions that involve regular access to cash totaling $10,000 or more of the employer, a customer, or client during the workday.

• May I fire someone for failing to follow policy without a warning?
• May I say “no” to someone’s request for personal leave?
• May I refuse to give a reference?
• May I transfer a poor performer to another department?
• If an employee is out of vacation time, may I let them use sick time?
• If an employee is out of sick time, may I pay them anyway?
• As a supervisor, may I have access to an employee’s locked desk?
• May I send an employee home who is dressed inappropriately?
• May I require an employee to use accrued time while on medical leave?
• May I prohibit smoking outside the premises?
• May I offer different benefits to certain groups of employees?

The answer to every question is “generally, yes” but “it depends.”  “Generally, yes” because there is no law prohibiting it.

“It depends” because it is contingent on 1) your company’s policy; and more importantly, 2) your company’s practices.

It may sound obvious but makesure you never violate your policy.  Managers have asked me, “Can I give a reference for this employee?”  My answer is always, “What does your policy say?”  If the policy is not to give
references, then you should not make an exception simply because you want to help or reward the employee.  If the policy allows you to give references, my next questions is, “What has been your standard practice?”   “Do you provide references for all employees?  All employees who ask?  Only the employee you like?”

Again, it may sound obvious but make sure your practices are consistent.  You can find yourself in as much trouble by applying practices inconsistently as you can by violating your own policies.

It is also the company’s responsible to keep accurate records.  Let’s say that you maintain vacation balances
on a spreadsheet that is formatted into a report.  Let’s further say that you have been distributing the report to all managers for the last six months.  The managers, of course, share their department information with their subordinates.   Subsequently, an employee separates from the company.  A final paycheck is prepared which includes the  vacation accrual balance.  The manager then tells the payroll person that the vacation accrual is too high.  Now there is a dispute about the correct number of vacation hours.

What should you do?

a) Change the vacation accrual amount based on the manager’s recollection.

b)  Pay the employee for vacation hours that have been maintained by the payroll staff based on an official company document that was never corrected or challenged by the manager even though he had six months to do so.

c) Put off paying the employee her vacation hours until the dispute has been resolved.

d) Cancel the vacation policy and, possibly Christmas, as well.

Note:  Answer will appear in a subsequent post.

Language in employee handbooks and policy statements has been an issue in numerous cases concerning the nature of the employment relationship and whether “cause” is required for employee termination. Case law indicates that you may create detrimental ambiguities in the employment-at-will relationship by promising fairness or equity in termination decisions, or by setting forth discipline or termination policies or procedures that conflict with at-will employment. Explicit promises in a handbook can create contractual liabilities for you if you fail to follow your policies.

Conversely, appropriate language in a handbook can help protect and preserve the employment-at-will relationship. Without an employee handbook, you create significant vulnerability to a variety of wrongful termination lawsuits.
To the extent that statements of at-will employment in the employee handbook are consistent with other policies and statements in employment applications, employment contracts and other materials, the nature of the employment relationship will not be based upon the handbook language alone. Collect and review all such materials during the preparation phase of the handbook to ensure consistency in preserving the at-will relationship.

Contact The HR Agency to write or rewrite your handbook to assure the preservation of the at-will relationship.

• Stopping misconduct;
• Protecting employers from liability;
• Allowing employers to eliminate the tension caused by allegations of workplace misconduct;
• Creating a hostile-free environment;
• Resolve issue so management can concentrate on business.

Various events trigger the need for an investigation. For instance, a complaint of sexual harassment, no matter how frivolous the complaint may seem, requires an employer to conduct an investigation.

But not every situation requires a full-blown formal investigation. In some situations, a quick, informal investigation or resolution is the best option.

Making the Decision

Employers should consider the following questions when deciding whether a formal investigation is necessary:

Q: Is the behavior at issue minor or major in significance? Or somewhere in the middle?
A: A formal investigation is necessary if the behavior would create potential liability if it remained unaddressed or if the behavior is unlawful. Similarly, when the behavior involves conduct that could potentially harm other employees or significantly impact business operations, a formal investigation is necessary.

Q: Does the complaint involve a single incident that can be easily addressed and remedied? Or is the conduct part of a pattern of similar behavior?
A: For example, you see sexually explicit pictures posted in the break room. Do you need a formal investigation? Most likely, you can simply remove the pictures and discipline the employee who posted it. On the other hand, if someone complains that the calendar is part of a pattern of sexual harassment, a formal investigation is necessary.

Q: Does the complaint involve simple or complicated issues?
A: The employer should consider the scope of the investigation and whether the issue at hand lends itself to easy and quick resolution. An informal investigation will not suffice if more than one employee complained about the issue or if more than one employee is involved in the alleged misconduct. Also, consider whether you need outside expertise to fully analyze the matter.

Q: Do you know all the facts necessary to resolve the issue?
A: Using the earlier pictures example, you probably do not need a formal investigation if you see the pictures in the break room and you know who posted it. However, if you don’t know who posted the pictures and another employee complains that the pictures are offensive, a formal investigation is necessary. If you need to gather and review documentation and other evidence, consider hiring a professional investigator.

Q: Do your company policies require a formal investigation?
A: Many businesses adhere to complaint policies which specify that they will conduct a formal investigation of certain types of complaints, such as sexual harassment. Make certain that you follow through with your company’s complaint resolution policies and practices.

Q: Is a formal agency charge involved?
A: If an agency, such as the EEOC, has made a formal charge, a formal investigation is necessary.

When hiring an outside investigator, the investigator must be licensed.  Only licensed attorneys and licensed private investigators may conduct the investigation.  (See Business and Professions Code, 7521-7523.)

The HR Agency’s investigators are human resource professionals and are licensed private investigators with decades of experience.

Oracle is a California-based software company. Oracle employed the three plaintiffs in the case as software training instructors. None of the employees lived in California, but they performed work as training instructors in California and other states. Two of the employees lived in Colorado, and one lived in Arizona. During the three-year time period at issue in the lawsuit, one employee worked 74 days in California, another employee worked 110 days and the third employee worked 20 days.

The employees’ lawsuit claimed that the employees were not paid overtime for days that they worked in California. Oracle chose to apply the wage-hour laws of Colorado and Arizona to the employees’ work.

The employees filed their lawsuit in a federal court. However, the federal court sent three key questions to the California Supreme Court, noting strong state interest in deciding how state labor code laws are applied. The California Supreme Court ruled on the following three questions:

Question No. 1: Does the California Labor Code apply to overtime work performed in California for a California-based employer by out-of-state workers, such that overtime pay is required for work in excess of eight hours per day or in excess of 40 hours per week?

Answer: Yes. The court clearly said that California’s overtime provisions apply to any employee who works in California for a California based employer. The court found that California “unambiguously asserted a strong interest in applying its overtime law to all nonexempt workers and all work performed within its borders.”

The court noted the strong public policy interest in protecting the health and safety of workers and protecting against the “evils associated with overwork.” The court’s opinion emphasized that the statutory language relating to overtime did not omit non-resident employees and that the Legislature’s decision to not exclude non-residents must have been deliberate given that other provisions of the Labor Code specifically excluded non-residents.

Since daily overtime is rare in other states, this decision has a tremendous impact on the probable thousands of workers who come from out-of-state to work on assignments for California employers.

Question No. 2: Does California’s Unfair Competition Law (UCL), found in Business and Professions Code section 17200, apply to the overtime work described above?

Answer: Yes. The court concluded that UCL applies to the overtime worked performed in California by out-of-state employees. The effect of this ruling is to allow plaintiffs to use the UCL’s longer four-year statute of limitations for bringing actions, instead of the three-year limitations period that would normally apply.

Question No. 3: Does California’s UCL apply to overtime work performed outside California for a California-based employer by non-resident workers if the employer failed to comply with the overtime provisions of the federal Fair Labor Standards Act (FLSA)?

Answer: No. The plaintiffs argued that California’s UCL should also apply to FLSA violations that occurred when they worked in other states beside California. The court disagreed, ruling that nothing in the UCL’s language or legislative history indicated that it was meant to apply outside the state.

Unresolved Questions

Because the court’s decision was limited specifically to the facts of this particular case, the ruling does not resolve many related questions, and those questions will likely be the subject of future litigation. The court limited the decision’s application in these crucial respects, and left these issues unresolved:

• Limited to full days or weeks of work: The facts of the case involved only full days or weeks of work, not partial days. The court indicated that California overtime laws would apply when the non-resident employee entered the state for “entire” or “full” days or weeks of work. The court distinguished this case from the circumstances of a non-resident worker who enters California “temporarily during the course of the workday.”

  It can be expected that employees in future cases will take the position that the reasoning of the decision should apply to both partial and full days of work in California.

• Limited to overtime claims: The court indicated that its ruling is limited only to the question of whether these non-resident workers could receive overtime. It specifically declined to address whether other wage-and-hour laws, such as meal and rest periods, pay stubs or vacation time, would also apply to non-resident workers who perform work in California.

  Again, it is likely that we will see future litigation arguing that these other wage-and-hour rules also apply to out-of-state employees working in California. Where other wage-and-hour rules also involve issues of worker health and safety, we may see a similar result from the court.

• Limited to California-based employers: The court limited its ruling only to California-based employers because those were the facts before the court.

  In all probability, out-of state employees who come to work in California for non-California employers will also argue that our state overtime laws should apply. Although it did not decide the issue, the court signaled it was inclined to agree with that position: “a company that conducts business in numerous states ordinarily is required to make itself aware of and comply with the laws of the state in which it chooses to do business.”

This case will now go back to the federal court for a ruling on the remaining issues and factual disputes, including whether the workers were improperly classified as exempt.

What should you do?

• Closely track hours worked for all employees
• Abide by state overtime laws for nonresidents working in the state
• Seek legal advice on how this decision could impact the employer’s other pay practices, if at all

In 2001,  a landmark decision under the Federal Arbitration Act (FAA), the U.S. Supreme Court held that an employer can enforce arbitration agreements that require the employee to take all employment-related disputes to arbitration rather than to court.¹

The California Supreme Court confirmed that employers have the right to require employees to sign take-it-or-leave-it arbitration agreements as a condition of employment. The court, however, placed certain restrictions on those agreements, without which the agreements may be unenforceable. The court said it would refuse to enforce an arbitration agreement that is procedurally and substantively “unconscionable.” An arbitration agreement is procedurally unconscionable if one party insists on it, and has such bargaining power over the other that the other party can’t refuse to accept it. An arbitration agreement is substantively unconscionable if, by its terms, it is so one-sided that it is unfair.²

Both federal and California courts have provided important guidance for employers on the underlying question of exactly what terms must be included in an arbitration agreement for it to be enforceable.  A California Appeals Court has said that an employer may terminate or refuse to hire an employee who refuses to sign a pre-dispute arbitration agreement as a condition of employment.³ In that case the employer required all employees to sign an agreement requiring all work-related disputes be resolved through binding arbitration. An employee was terminated for refusing to sign the agreement and sued for wrongful termination. He alleged it was a violation of public policy to terminate an employee for refusing to give up one’s constitutional rights to a jury trial and a judicial forum for resolution of disputes. The court disagreed, finding that public policy favors resolution of disputes through arbitration.

The 9th Circuit Court of Appeals has said that an employer did not unlawfully discriminate against an employee in violation of Title VII of the Civil Rights Act of 1964 when it fired him for refusing to sign an agreement to arbitrate all claims arising from his employment, including those arising under Title VII. However, while the court ruled out discrimination, it left open the related question for employers, that being whether they can enforce agreement to mandatory arbitration without being accused of unlawful retaliation.

 For example, one of your employees could be on a social media Web site right now, and what that employee says or does could impact your business. Alternatively, your organization could be using social media in the hiring process, which might adversely impact your business depending on how the information gathered from social media Web sites is used. Because social media is still relatively new and always changing, it’s difficult to point to definitive answers to questions surrounding the use of social media in the workplace. Employers should take the time to educate themselves on social media and how it relates to the workplace; especially in the areas of discrimination, privacy and harassment. Despite the unsettled legal questions connected to social media, employers can take certain steps to protect themselves.

 Social Media Defined

In plain language, social media allows a person to broadcast information to another person or to lots and lots of other people through the Web and cell phones using tools such as Facebook or Twitter. These other people can be complete strangers, a group of “friends” or members of an Internet “community.”

 Facebook and Twitter rank among the most widely used social media tools. A person can use either tool to send out information—a link to a news story about a particular issue or a blog entry to an audience of the person’s choice. Members of the audience make comments; the comments spur other comments or other links; audience members send the comments and links to their friends; and the information reaches a potentially limitless number of people. Social media is technology that capitalizes on the connections between people, and allows those connections to be used to share information. Just about anybody can use social media to instantly share almost anything with another person, or with millions of other people.

 Social Media Trouble Spots

 Hiring and Discrimination

More and more employers make hiring decisions based on what they find online. The problem is that employers must make hiring decisions without regard to age, race, gender, religion, etc.  Employers can’t ask a potential employee certain questions, such as questions concerning pregnancy or religious affiliation. But it’s easy to find much of this type of information online — a quick look at an applicant’s Facebook page may reveal that she’s pregnant. Now, despite your efforts to limit the in-person interview to legally neutral questions, you suddenly know that the applicant belongs to a protected class. You now face the risk of a discrimination lawsuit if you don’t offer her the job because she is pregnant. Making employment-related decisions on the basis of a protected class, pregnancy in this case, is prohibited by law and can result in expensive discrimination lawsuits. If a lawsuit is filed, the job applicant’s attorney will likely require you to disclose computer logs in an effort to show that you investigated an applicant online by visiting the applicant’s Facebook page or LinkedIn page.

 To avoid problems, make sure that your notes and files demonstrate that your hiring decision is based on legitimate business reasons. If you can show that your hiring decision was based on a neutral and objective evaluation of the applicant, he/she will have a more difficult time proving that your hiring decision was based on discriminatory reasons. For example, your notes and files should show that you didn’t hire the person because he/she lacked specific training or skills that the job demands. Such notes alone may not fully protect you from a costly judgment, but they will likely help you in court.

 Termination

Employees often like to talk shop after hours. Usually it’s with fellow employees at after-work gatherings or with their significant others at the end of the workday. But employees can now talk shop with the world at any time via social networking sites. This can create problems for an employer, especially if an employee discloses a trade secret, posts negative messages about his/her employer or identifies him or herself as an employee of a company when posting a potentially controversial statement.

 Employers need to exercise caution if considering firing an employee for comments on a social media Web site. Making the wrong move can give the employee the opportunity to file a wrongful termination lawsuit. An employer needs to conduct a thorough, impartial investigation before making the decision to terminate an employee in a situation like this. The U.S. and California Constitutions create freedom of speech and privacy rights for individuals. In addition, employers must remember that whistle-blower protection laws shield certain statements that employees make. For example, California Labor Code section 1102.5 prohibits employers from retaliating against any employee who discloses information to a government or law enforcement agency about what he or she reasonably believes to be a violation of state or federal statute, rule or regulation. Employers can’t simply terminate an employee for a post that the employer doesn’t like. They must balance an individual’s rights to expression and privacy against the employer’s legitimate business needs, and this balancing act depends on the specific facts of each situation. Employers should consult with counsel or an experienced HR professional when considering taking adverse action against an employee due to comments he or she made on any Internet or social media forum. Employers should create clear policies about social media use as it relates to the company, and include these policies in an employee handbook.

 Privacy

California law broadly prevents employers from intruding into employees’ legal off-duty conduct. Employers may discipline employees only if the off-duty conduct is illegal, if it presents a clear conflict of interest to the business or if it adversely affects the employee’s ability to do his/her job. Even though risqué photos from drunken parties posted on a person’s Facebook page may reflect on an applicant’s judgment, in many instances they’ll be irrelevant to the employee’s performance at work.

 Federal and state laws limit the type of information employers may obtain about employees through any means, including online searches. The Fair Credit Reporting Act, the California Consumer Credit Reporting Agencies Act and the California Investigative Consumer Reporting Agencies Act all restrict an employer’s ability to use credit reports and investigative consumer reports on employees. It’s important to make sure that all background checks, regardless of how conducted, comply with state and federal laws.

Employers should limit the amount of information they collect on employees. Don’t visit an employee’s Facebook page. If you can show a legitimate business purpose for investigating an employee, make sure your investigation doesn’t unlawfully invade that person’s privacy and complies with state and federal laws. Use an experienced, HR investigator to conduct any such investigation.

 Harassment

Unfortunately, social media gives employees another way to harass co-workers. Not only can an employee harass a co-worker in person, the employee can post harassing messages to a co-worker’s Facebook page during off duty hours.  An example is that a male and a female co-worker become “Facebook friends.” Everything is fine at first. But after a while, the male begins to post sexually suggestive messages on the female’s Facebook page (or visa-versa). She complains to management that the co-worker is harassing her online and during off-work hours.

 Is the employer obligated to conduct an investigation? If something like this happens, consult with legal counsel. If your employee handbook doesn’t contain an anti-harassment policy, create one, and make sure that it clearly states that unlawful harassment of any type will not be tolerated. Also, add a social media policy to your employee handbook. This policy should address how social media can be used during the course of business. In addition, this policy can contain instructions on how you expect your employees to use electronic media, such as computers and smart phones, in the workplace. For example, your policy might prohibit employees from visiting or posting to social media sites at work with company equipment, such as computers or handheld devices, unless doing so is part of their job. Your policy should also explain your right to conduct searches of company computers and handheld devices. Your social media policy should supplement policies regarding use of computers and other electronic devices in the workplace.

 Protective Measures

To protect yourself from problems associated with social media, create and adopt a social media policy for your workplace. This policy should discuss the use of electronic devices, such as computers, laptops and cell phones in the workplace, ownership of computer files and any disciplinary measures for misuse of your company’s technology. Adopting a policy can prevent employees from misusing your computers and cell phones — and their own devices— in the workplace. The policy can also help avoid claims that you committed an invasion of privacy by searching an employee’s files. Also, consider revising your harassment policy to cover the use of social media Web sites or services to harass co-workers.