| ber 12, 2008 | | | | recall that prior to 2006 when the Reynolds case was |
| RE: EMPLOYMENT UPDATE FOR 2009 | | | | decided, officers and directors were held liable. |
| Dear Friends, Clients and Colleagues: | | | | What the court gives with one hand, it takes away |
| Each year brings a new set of laws, regulations and | | | | with the other. This new case also opened the door |
| scams. The number of new statutes, ordinances, | | | | for personal liability of the officers and directors. If the |
| regulations and case law continue to grow and impose | | | | plaintiff/employee can pierce the corporate veil, the |
| an ever greater burden on businesses, especially small | | | | officers and directors may, in fact, be liable for unpaid |
| businesses and professional practices. Below is a brief | | | | wages. |
| review of some of the more important new laws that | | | | What to do? Make certain you are following all |
| may impact your business or profession. | | | | mandatory corporate formalities so that your |
| E-Verify | | | | corporation cannot be pierced. This includes holding |
| You may have heard about E-Verify, the | | | | regular annual and special meetings, adhering to |
| computerized system by which an employer can | | | | corporate bookkeeping requirements and otherwise |
| match an employee’s identification with the | | | | following typical corporate formalities. If you |
| federal government’s database of workers | | | | haven’t held a corporate meeting in the last 12 |
| eligible for employment based on citizenship status. | | | | months, it’s time to call my office. |
| E-Verify is free to employers and, in the future, will be | | | | In Lonicki vs. Sutter Health the court held that an |
| mandatory for all new hires. The system is reported to | | | | employer cannot interfere with an employees outside |
| have about a 10% mistake factor. Because of the | | | | employment, including employment with a competitor. |
| likelihood of mistake, you may want to delay signing-up | | | | In Edwards vs. Arthur Anderson the court held that |
| for the E-Verify system. | | | | any non-compete signed by an employee is void as a |
| Beginning summer of 2008, the Department of | | | | matter of law. The court threw out the old defense of |
| Homeland Security and Department of State are | | | | “narrow restriction”. However, trade |
| issuing “passport cards” which may be | | | | secret agreements and confidentiality agreements |
| used to verify employment status. | | | | remain enforceable provided they do not contain a |
| Minimum Wage | | | | non-compete component. |
| California State minimum wage is not scheduled to rise | | | | If your company provides computers, PDA’s, |
| in 2009 and will remain at $8.00. The Governator is | | | | cell phones or other communication devises, check the |
| also encouraging the introduction of other new laws to | | | | company’s written privacy policy. If your |
| reduce the amount of wage and hour litigation, including | | | | company doesn’t have a privacy policy, now is |
| litigation concerning meal and rest breaks violations that | | | | the time to create one. In Quon v Arch Wireless |
| have plagued businesses. For the last eight years the | | | | Operating Company the court directed employers to |
| courts have been terribly inconsistent on questions | | | | be explicit regarding the scope of privacy extended to |
| concerning an employer obligations to provide meal | | | | employees. |
| and rest breaks and how they may be implemented. | | | | In the Quon case the court reversed a long line of |
| San Francisco minimum wage will go up to $9.79 per | | | | cases that held that employees have no reasonable |
| hour beginning January 1, 2009. Even if your office is | | | | expectation of privacy with regard to the computers, |
| located outside San Francisco, employees working | | | | cell phones and other electronic devises furnished by |
| within City limits must be paid this City specific minimum | | | | the employer. This is likely to be an area the court will |
| wage. | | | | explore again in the company years since more and |
| Computer Professionals: Labor Code Section 515.5 has | | | | more of our lives are spent using a variety of |
| been amended. If you employ professional computer | | | | electronic devises that store conversations, text |
| oriented employees, effective 2009, the hourly amount | | | | messages, emails and other forms of communication. |
| they must be paid to be exempt from overtime is | | | | What to do? Make certain you have an explicit and |
| $36.00 per hour or an annual salary of $75,000.00. This | | | | comprehensive privacy policy signed by every |
| amount will increase with the CPI January 2009. It is | | | | employee. |
| important to keep in mind that not all computer related | | | | The Americans With Disabilities Act or ADA has been |
| employees qualify for the exemption under the duties | | | | revised and those revisions become effective January |
| test. | | | | 1, 2009. The new law is titled the ADA Amendments |
| Meal and rest break compliance requirements remain | | | | Act. The provisions of the ADA have been greatly |
| unsettled in California since the Brinker case was | | | | expanded in a variety of ways including a new more |
| granted review by the Supreme Court. To be safe, | | | | extensive list of covered disabilities. The new law |
| meal and rest breaks should be enforced and | | | | excludes consideration of mitigating measures and |
| non-exempt employees must confirm, in writing, each | | | | expands the definition of “major life |
| day they take or don’t their breaks. It is | | | | activity”. |
| essential that employees sign off on a notice | | | | What to do? Employers should be cautious of every |
| confirming the company’s meal and rest break | | | | decision to terminate, demote or taking any other |
| policy. It is the employer’s legal obligation to | | | | adverse employment action against a covered |
| keep records on meal and rest breaks taken and | | | | employee. Most court watchers expect this newly |
| these records should be kept in storage for a minimum | | | | expand law to generate a great deal of litigation in the |
| of four years. Effective 2008, the statute of limitations | | | | coming years as the courts try to make sense of the |
| concerning meal and rest break violations is four years. | | | | greatly expanded provisions. |
| Not only are employers penalized for violating this | | | | Family Leave has been expanded so that an eligible |
| component of the Labor Code, additional penalties can | | | | employee or spouse, son daughter, parent or next of |
| be added under Labor Code Section 203 which equal | | | | kin of a covered service member is entitled to a total |
| thirty days of wages for each affected employee. | | | | of 26 weeks of Family Medical Leave to care for the |
| Duty free meal breaks must be at least 30 minutes | | | | service member. |
| long and must be provided during the 5th hour of work, | | | | Scams: |
| or before. Ten minute rest breaks should be made | | | | Many of you continue to report the receipt of |
| mandatory during the mid-morning and mid-afternoon. | | | | correspondence from companies offering to sell |
| Though there is an exception to this rule for | | | | annual board of director meeting minutes to your |
| construction companies under very limited | | | | company. The charges typically range from |
| circumstances, the exception is so narrow it is best to | | | | $100-200.00 for which you receive a fill in the blanks |
| follow the general rule. | | | | form, nothing more. These solicitations arrive in official |
| The Brinker case also held that employers are liable | | | | looking envelopes that appear to come from the |
| for wages if they know or should know that | | | | Secretary of State. Don’t fall for this expensive |
| employees are working off the clock. If you have | | | | scam. |
| employees who arrive at work early to avoid peak | | | | Because of the decision in Bradstreet vs. Wong |
| rush hour traffic and begin working before the regular | | | | referred to above, it is even more critical that your |
| workday or, if you have employees that run errands | | | | annual and special meeting minutes be done properly |
| for the business before arriving at the office or after | | | | and that efforts be made to prevent anyone from |
| the official workday, this is compensable time. | | | | piercing the corporate veil to attack you personally in |
| The Starbucks case made it abundantly clear that | | | | litigation. |
| business owners and employees holding a supervisory | | | | The above isn’t an exhaustive review of all the |
| or management position may not take any portion of | | | | changes in the law that are of significance to your |
| pooled tips even if they provide direct service to the | | | | business and you can expect that as we wind through |
| patron. | | | | 2009, new cases will be decided and new laws |
| Bradstreet vs. Wong confirmed the decision in | | | | passed by the state legislature and Congress that are |
| Reynolds vs. Bement which held that officers and | | | | of significance to your business or professional |
| directors are not personally liable for corporate debts | | | | practice. |
| to employees for unpaid wages. Some of you might | | | | Best wishes for a healthy and happy new year. |