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Creating the Sustainable Workplace:
Reducing Your Risk of Liability in 2013
2012 brought important changes and clarifications for managing your workplace.  We have described some of the most important changes below, and outlined some resolutions you might consider to make 2013 a productive and protected year for your Company.
In this Newsletter, you will find: 
     •     How Can We Help?
In our next issue, we will outline how to create commission and bonus plans to set clear expectations, increase productivity, comply with the law and reduce the risk of liability. 
Would you like to attend our 2013 Year End Breakfast Briefing on January 15, 2013?  We'd love for you to join us.  Click here for more details.   

Changes You Can Make Today To Reduce Your Risk: What Did We Learn From The Courts in 2012?
Take heed: a handful of 2012 court decisions provide important guidance on how to protect your workplace from costly mistakes.  Here are a few key rulings: 
1.    If You Want to Reconcile Overpayment of Commission, You Need to Say So in Writing.  In  DeLeon v. Verizon Wireless, Inc.,  the Court of Appeal held that an employer may recover "advances" on commission where (a) the employee has not met the conditions for earning a commission, and (b) the Company's ability to recover these "advanced" commissions is clear in a written commission plan (which, effective January 1, 2013, also must be signed by the Company and acknowledged in writing by the employee).  This ruling reinforces that employers should have carefully written commission plans that define when a commission actually is "earned" and how overpayments of unearned but advanced commission may be reconciled.  
2.     Be Sure Not to Interfere with Meal and Rest Periods, but You Do Not Need to Police Them.  In Brinker Restaurant Corp. v Superior Court the California Supreme Court held that an employer must relieve an employee of all duty for a designated meal or rest period, but does not need to ensure that the employee does no work. The employer still is prohibited from exerting coercion against the taking of breaks, from creating incentives to forego legally required breaks, or from otherwise encouraging the skipping of legally protected breaks.  Stated differently, an employer needs to provide a compliant rest and meal period to non-exempt employees and may not interfere with or thwart the employee's ability to take that rest or meal period; but if the employee, of his or her own volition, elects not to take the meal period, the employer is not subject to the penalty.   Remember, time spent working during the lunch period nonetheless must be compensated.   
3.     Exercise Caution in Selecting the Most Qualified Employees for Promotion and Retention, or Risk Discrimination Claims.  The initial burden of providing age discrimination lies with the plaintiff.  If the employer shows a legitimate, non-discriminatory reason for a termination (or other employment decision), the plaintiff must demonstrate that the proffered reason was a pretext for age discrimination.  In Shelley v. Geren, the Ninth Circuit ruled that the plaintiff's superior qualifications in comparison to retained or newly hired replacement employees, per se, may be sufficient to prove a pretext for age discrimination. 
4.     Regular Attendance Can Be An Essential Function of a Job, Making Unpredictable Attendance an Undue Hardship.  In Samper v. Providence St. Vincent Medical Center, the plaintiff (a neo-natal nurse) suffered from fibromyalgia.  St. Vincent allowed employees to take up to 5 unplanned absences in a 12-month period.  The plaintiff nurse requested as an accommodation relief from the attendance policy.  When the hospital denied her request, she sued for its failure to accommodate.  The Ninth Circuit rejected her claim, holding that regular attendance constituted an essential function of her position.  This ruling, while helpful, should be applied carefully and on a case by case basis.  To constitute an "essential function" the job duty not only should be the reality of the position, but also should be contained in the job description
5.     Employers May Have "Rounding Off" Time Keeping Policies if Employees, on Balance, Are Not Penalized.  The court in See's Candy Shops, Inc. v. Superior Court held that an employer's time keeping system that rounded employees' time to the nearest tenth of an hour increment was lawful, so long as the net effect of the policy did not penalize employees.   The court determined that the policy in that case was neutral, both facially and as applied, and on that grounds the practice was lawful.  Employers who use a rounding off system periodically should audit the practice to confirm that on a net basis the policy is not penalizing employees.
Changes To Make Today Based on New Laws
Changes in federal and California laws will affect every stage of the employment relationship in 2013.  Below are the most important changes:
1.     Are Your Commission Agreements in Compliance with the Law?   Beginning January 1, 2013, all employment relationships that provide for payment of commissions as a component of compensation must be in writing and must include the method by which commissions are computed and paid.  Employers must sign the summary, and employees must receive a copy of the signed document and confirm receipt in writing.  The commission plan contained in that agreement will be presumed to remain in full force until the agreement is superseded by a separate written document or the employment relationship terminates.
2.     Does Your Social Media Policy Comply with the Law?  California law now prohibits employers from requiring that employees or applicants provide usernames or passwords for their social media accounts.  Additionally, employers may not terminate, discipline or threaten to retaliate against employees who do not comply with employer requests for passwords. 
        On the federal level, the National Labor Relations Board took aim at the social media policies of several employers, on the theory that the limits on communication in these policies infringed on the employees' right to engage in "concerted activity."   Further, the NLRB issued a "model policy" for employers to consider. Click here to see the NLRB's approved policy.  Please note, this is not necessarily the policy we would recommend you use.  Let us know if you want our thoughts on the NLRB model.
3.     Remember, You Must Provide Compliant Wage Statements, and There Now Are More Clear Penalties if You Do Not.   As we told you last year, with every payroll, every employer must provide the employee with a wage statement including: (1) the employees gross wages earned, (2) total hours worked by the employee (unless the employee is "exempt" as defined by relevant law); (3) the number of piece-rate units earned and any applicable piece rate; (4) all deductions; (5) net wages earned; (6) the inclusive dates of the period for which the employee is paid; (7) the name of the employee and the last four digits of his or her social security number or an employee identification number; and (8) the name and address of the legal entity that is the employer.
        The damages for violating this law have been clarified: an employee who "suffers an injury" as a result of the Company's failure to include the above information is entitled to actual damages or statutory penalties, whichever is greater.   "Injury" now is defined to exist if the employee cannot promptly and easily determine from the wage statement alone the amount of the gross or net wages paid during the pay period, the deductions, the name and address of employer, and employee's name and last 4 digits of their social security number.  
4.     If You are a Temporary Services Employer . . .   Effective January 1, 2013 you must include the rate of pay and the total hours worked for each temporary services assignment on the employee's wage statements.

5.    You Must Provide Employees with Access to their Personnel Files.  If an employee (or his representative) requests in writing the opportunity to review and make copies of his personnel file, the Company must respond within 30 days of the request.  The pendency of a lawsuit will suspend the employee's right to inspect or copy.  A Company's failure to comply can result in $750 penalty, injunctive relief, and attorneys' fees. Remember, a current or former employee is entitled to review his personnel file, and may copy any item in that file that he signed.  Employers must retain personnel files for three years after an employee's termination.  In addition to the above, if requested by an employee, an employer now also must provide copies of wage statements that contain the detail described in Paragraph (3). 
6.     Beware of the Risks and Obligations if You Pay Your Non-Exempt Employees on a Salary Basis.  For a variety of reasons, we recommend strongly that employers not do so (primarily because you still must provide itemized wage statements and overtime, both of which necessarily will change and need to accurately be reflected on a pay period basis).  If you do, the law now clarifies that the salary an employee receives may only be considered to be regular, non-overtime hours. 
7.     Laws Against Religious Discrimination and Requiring Accommodation Are Clarified.  California employers are required to reasonably accommodate the religious belief or observance of an individual unless the accommodation would be an undue hardship on the conduct of the business of the employer.  Effective January 1, 2013, this will include a religious dress practice or a religious grooming practice as a belief or observance.
"Religious dress practice" includes:
     •     Wearing or carrying of religious clothing
     •     Head or face coverings
     •     Jewelry
     •     Artifacts
     •     Any other item that is part of religious observance.
"Religious Grooming Practice" includes all forms of head, facial, and body hair that are part of the religious observance.
        The law on accommodation is now more clear: a request that the employee be segregated from the public or other employees in order to accommodate the individual's religious dress practice or religious grooming practice is not a reasonable accommodation. Also, no accommodation is required if an accommodation would result in the violation of specified laws protecting civil rights.
8.     Sex Discrimination Now Includes Breast Feeding.  Under the California Fair Employment and Housing Act, it is unlawful to engage in specified discriminatory practices in employment or housing accommodations on the basis of sex. "Sex," for purposes of FEHA, now includes not only gender, pregnancy, childbirth, and medical conditions related to pregnancy or childbirth, but also breast feeding or medical conditions related to breastfeeding.
9.   Notice is Required When Taking Adverse Actions Against Applicants or Employees Based on DOJ Criminal History Reports.  Agencies, organizations, and individuals, such as certain healthcare institutions, that received criminal history information from the California Department of Justice must give notice to an applicant or employee who is the subject of an adverse employment, licensing, or certification decision. This new reporting requirement models those already found in the Fair Credit Reporting Act and the California Investigative Consumer Reporting Agencies Act. 
New Year's Resolutions: Decrease Your Risk of Liability and Increase Productivity Potential in 2013
In light of the changes in the law this year, we had an easy time deciding what to recommend for your New Years Resolutions.  Simple changes can make a significant difference in the productivity and protection of your workplace. Consider these ideas for protecting and enhancing your workplace:
Take Time to Audit Your Wage and Hour Practices. 
Do your time keeping and pay practices create a risk for liability? 
Are you providing employees with the information the law requires? 
Are your policies accurate under the law, and are they correctly applied?

Make Sure Your Commission Plans Accomplish What You Think They Accomplish.
Do your plans meet the minimum obligations under the law?
Do the plans create clear and shared expectations for when commission will, and will not, be paid?
Are you adequately protecting your Company from overpaying commissions? 
Is This the Year Your Managers Will Learn How and Why to Have Better Conversations With Employees?
Do your managers have the tools necessary to protect the Company and to encourage the best performance of their staff?  
Do your managers have the skills needed to have difficult and critical conversations on performance? 
Remember, a company acts or fails to act when its managers act or fail to act. Are you providing your managers with the training they need to protect you from claims of discrimination and harassment?
How Can We Help? 
Our mission and vision is to work with our clients to create Sustainable Workplaces.  We would love to partner with you to make your workplace thrive.  Here are some ideas for how we might work together to make 2013 your best year yet:
1.     Review of Your Compensation Practices.  We know this is an area of susceptibility for many well-intentioned companies. We are happy to review your practices to ensure they are legally compliant.
2.     Review of Your Incentive Plans. Your commission and bonus plans should motivate behaviors you want, and not create unexpected results.  We would be delighted to review your plans to make sure you legally are capturing clear and shared expectations. 
3.     Review of Your Policies.  We are happy to review your employee handbook to make sure you have captured the changes to the law described above.
4.     Management Training to Reduce Risk and Increase Productivity.  If you would like to start your new year by providing your managers with the tools they need to have difficult conversations about performance, please let us know. 
5.     Join us for breakfast on January 15, 2013 to learn more about the recent developments you need to know in 2013.  We will be hosting a Year End Breakfast Briefing,
from 7:30 a.m. to 9:30 a.m. at 401 West A Street, Suite 750, San Diego, CA 92101.  We would love to see you there!  Click here to rsvp, or give us a call at 619-906-2400.  
It is our pleasure to partner with you in creating your sustainable workplace.  If we can help, give us a call at 619 906 2400 or send us an e-mail.  
Keep an eye out for next month's newsletter, where we will provide guidance on creating lawful and meaningful commission and bonus agreements. 
Our best wishes to you for a happy, healthy and sustainable new year!  And thanks for all your support, it is our pleasure to work with you. 

Schor Vogelzang & Chung LLP

Partnering to create your great workplace!

2170 Fourth Avenue, San Diego, CA 92101
P: 619.906.2400 F: 619.906.2401


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