Surviving the Economic Crisis of 2009 and Successfully Running Your Business
The Goldstein Law Firm
January 2009 Newsletter
“Surviving the Economic Crisis of 2009 and Successfully Running Your Business”
By: Charles H. Goldstein, Esq.
The Goldstein Law Firm
A. TOUGH CHOICES FACING CALIFORNIA EMPLOYERS
Every day, I speak to California and National Employers about the current economic crisis and how the crisis is affecting their businesses. The current economic crisis has prompted questions that I have never heard before from any Employer in almost 44 years practicing law. The following are excerpts of these questions:
1. “I have reduced my employees to working four (4), eight (8) hour shifts – can employees volunteer to work without pay on the fifth day?”
2. “My manager’s wife wants to help her husband out by volunteering for no pay to work as his secretary so the company doesn’t need to hire someone – can we do this?”
3. “I am planning to reduce pay for all employees by 25% - can I do this; and will employees be able to collect unemployment benefits if they quit because of the reduction?”
4. “Can I have everyone take off work one day per month?”
The Answers to Questions 1 and 2 is that California law does not allow employers to accept “free labor”. However, all California Wage Orders exempt, from this rule, any individual who is the parent, spouse, child, or legally adopted child of the Employer.
The Answer to Question 3 is that unless an employee is covered by an Employment Contract or Union Contract, you can reduce wages by 25% or by any amount provided that the employee receives at least the minimum wage; however any employee whose wages are reduced 10% or more will be entitled to resign and collect unemployment benefits. The Answer to Question 4 is that you can have employees take one (1) day a month off, without pay, provided they are hourly employees. If you require your salaried exempt employees to take this action, you could lose the exemption from overtime for the exempt employee.
2. COMPLIANCE WITH CALIFORNIA LABOR CODE §1400
California Labor Code §1400 et. seq. means that your company must provide written notification to affected employees, their representatives (if they are represented by a Union), and certain governmental agencies, if your company employs 75 or more employees at a facility in California, and either: (a) lays off 50 or more employees in a 30 day period; (b) terminates all employees at the company’s California facility; or (c) removes all or substantially all of the industrial or commercial operations at the company’s California facility to a different location 100 miles or more away. In addition, the written notification must also include the elements required by the Federal Worker Adjustment and Retraining Notification Act (29 U.S.C. Sec. 2101 et seq.). A California Employer who fails to give these notices is liable to each employee entitled to notice, who lost his or her employment for: (1) Back pay at the average regular rate of compensation received by the employee during the last three years of his or her employment, or the employee’s final rate of compensation, whichever is higher; and (2) The value of the cost of any benefits to which the employee would have been entitled to had his or her employment not been lost, including the cost of any medical expenses incurred by the employee that would have been covered under an employee benefit plan. Liability under California Labor Code §1400 is calculated for the period of the employer’s violation, up to a maximum of 60 days, or one-half the number of days that the employee was employed by the employer, whichever period is smaller. A final and important word on layoffs: Most employers believe that they can demonstrate that layoffs were economically necessary because of the economic downturn’s effect on their business. However, the real “issue” that is often litigated before courts and/or administrative bodies is not whether the decision to have a company-wide layoff was justified; but whether the decision to layoff a particular employee was “justified” or was motivated by another factor such as age, race, gender, and/or sexual orientation, which is unlawful.
Therefore, one of the best ways to maximize your company’s protection against claims stemming from employee layoffs is to have a legal review of these layoff decisions done prior to the layoff.
3. THE BEST DEFENSE IS A STRONG OFFENSE – USING AN UPDATED EMPLOYEE HANDBOOK AND LEGALLY ENFORCEABLE ARBITRATION AGREEMENTS
Plaintiff lawyers are not going out of business simply because the economy is rough. Instead, these marauding bands of employee attorneys look for “soft targets” of opportunity – weak employers who are unlikely to have any updated Employee Handbook or enforceable Arbitration Agreements signed by employees; as well as disgruntled employees who believed they are “victims” of some form of discrimination or harassment.
You can’t control whether an employee is disgruntled or “feels” that he or she is a “victim” and has been treated unfairly, even when you take actions against them that are legally justifiable and reasonable under the circumstances. However, you can place your company in the best possible position to defend against future employee lawsuits filed against your company. The cornerstones of a strong defense against future employee lawsuits are an updated Employee Handbook and utilizing legally enforceable Arbitration Agreements for all new employees and existing employees who receive a promotion or increase in salary.
As a California employer, you should regularly have your current Employee Handbook updated to reflect recent and important changes in California and/or federal law. If you do not do this, you run the risk of potentially enforcing personnel policies that may be illegal and/or otherwise unenforceable because the law has changed. In addition, you will want to have Arbitration Agreements included as a significant and valuable component of your new hire packet for new employees. While Arbitration Agreements do not prevent an employee from suing you, these agreements can, if legally enforced, remove the employment dispute to an Arbitration forum in which the passions and prejudices of a jury are not present.
4. CONDUCTING SEXUAL HARASSMENT TRAINING REQUIRED BY CALIFORNIA LAW
Several years ago, the California Legislature enacted AB 1825, now California Government Code section 12950.1. This law requires that every California employer with 50 or more employees provide 2 hours of interactive training to their supervisors, concerning the prohibition against, and the prevention and correction of, sexual harassment and the remedies available to victims of sexual harassment in employment. This training must be conducted once every two (2) years.
The most serious consequence of either not complying with this state law, or with providing inadequate and/or substandard training is this: if an employee files any Complaint for Discrimination against his or her Employer, regardless of whether the Complaint for Discrimination alleges sexual harassment conduct, the California Department of Fair Employment and Housing will request the following information from the Employer if the Employer has more than 50 Employees:
v The number of supervisory employees employed in the last year.
v The dates training regarding sexual harassment was provided to supervisory employees in the last year. You will be asked to submit copies of sign-in sheets or other verification of attendance.
v The names(s) and qualifications of trainers. You will be given the option of attaching the resume or curriculum vitae of the trainer(s)).
v Copies of the training materials provided to supervisors, including, but not limited to, workbooks, flyers, memoranda, PowerPoint or other muti-media presentations, etc.
It goes without saying that in my opinion, DFEH investigators are more likely to find that a Complaint for Discrimination has legal merit, regardless of whether it involves sexual harassment if credibility is involved, and the Employer has failed to comply with state law and has not provided, or has provided inadequate bi-annual sexual harassment training.
Since 2006, The Goldstein Law Firm’s Sexual Harassment Training Program has been used by Employers to train over 6,000 managers and supervisors. I personally conduct and tailor each training program to the individual needs of the Employer and/or industry. My Training Materials are written by me and based on several decades’ worth of experience successfully litigating sexual harassment and gender based discrimination cases. At the conclusion of each training program, each program attendee receives a Certificate of Attendance personally signed by me.
The Goldstein Law Firm
8912 Burton Way
Beverly Hills, California 90211
Telephone: (310) 553-4746
Facsimile: (310) 282-8070