HR4U

Effective 1/1/12, the CCRAA (Labor Code section 1024.5) limits when private and public sector employers, except for financial institutions, lawfully can use consumer credit reports in connection with hiring and personnel decisions. Specifically, employers are permitted to use consumer credit reports only if the individual is applying for, works, or will work in the following positions:

• a managerial position (as the term elsewhere is defined by California law);
• a position for which the employer is required by law to consider credit history information;
• a position that affords regular access to bank or credit card account information, Social Security numbers, or dates of birth, provided, however, that the access to this information does not merely involve routine solicitation and processing of credit card applications in a retail establishment;
• a position where the individual is or will be a named signatory on the bank or credit card account of the employer and/or authorized to transfer money or authorized to enter into financial contracts on the employer’s behalf;
• a position that affords access to confidential or proprietary information; or
• a position that affords regular access during the workday to the employer’s, a customer’s or a client’s cash totaling at least $10,000.

The new law is triggered when an employer orders a consumer credit report from a vendor (commonly known as “consumer reporting agencies”) for employment purposes. The statutes generally require: (1) advance consent from the individual to order the credit report; (2) notice to the individual of the intended use of the report; and (3) notice to the individual if the report’s contents negatively impact his or her employment opportunities (commonly known as “adverse action letters”).

The CCRAA, imposes an additional notice obligation on employers that use consumer credit reports to screen job applicants and employees. Specifically, before ordering a consumer credit report concerning a job applicant or employee, the employer must notify the individual in writing of the basis under Labor Code section 1024.5 for permissibly using the consumer credit report (for example: because the individual is applying for or holds a managerial position, etc.).

Under the new laws, an individual who suffers damages as a result of “negligent” and “willful” violations can recover actual damages, including attorney’s fees and court costs, as well as punitive damages up to a maximum amount of $5,000.

What Employers Should Do

Before January 1, 2012, employers operating in California that use consumer credit reports for employment purposes should evaluate whether they are subject to the CCRAA, and, if so, which provisions, if any, they can invoke to justify the screening. Employers also should evaluate the sufficiency of the paperwork they use in conjunction with their screening procedures (e.g., consent forms) and modify the paperwork as needed to incorporate the notice mandated by the Labor Code. Regarding consent forms, employers should be aware of a related and modest amendment to the CCRAA’s companion statute, the Investigative Consumer Reporting Agencies Act. Effective January 1, 2012, employers that order background reports other than consumer credit reports (e.g., criminal background reports, motor vehicle reports, etc.) must notify job applicants and employees of the Internet website address of the consumer reporting agency, or, if the agency has no Internet website address, the telephone number of the agency where the individual can find information about the agency’s privacy practices.

When you find the person you want for a position, you should always make a “contingent offer of employment.” Making a contingent offer of employment is a commitment to hire, subject to the candidate meeting the contingencies. Typically the offer is contingent upon successfully passing pre-employment drug testing, criminal background check and/or general reference check. There can be other reasons for making a contingent offer, as well. Whatever they are, make sure they are clearly stated. Once you make a contingent offer (and not before) you can ask the candidate for date of birth and SS#. There are the two critical pieces of information you will need to do a thorough background check. I recommend using a professional background checking organization to do this.

Note: If you do not say or write a contingent offer, it is as if you have made a firm offer with nothing else required of the candidate.

The contingent offer does not become binding until the applicant accepts it; therefore, you are free to change the terms or withdraw the offer if the applicant has not accepted the offer or detrimentally relied on it. If the applicant counters with different terms, you may consider your offer rejected and withdraw it. However, once they accept, you are bound by your employment offer.

Liability:
A situation may occur where you find a better applicant after making a conditional offer. Be very careful before you rescind that offer if you have no basis (based on the contingencies) to do so. Once the conditional offer has been made (subject to further screening or the approval of the CEO, etc.), the applicant may have relied on the offer and given notice to his/her present employer.

If you revoke an offer after that notice was given, the applicant may lose that job, seniority and benefits. If the applicant has relocated to the new job in reliance on the offer, you may be held liable for resulting damages.

The reliance on an offer that causes detriment to an applicant may subject the employer to a lawsuit. Therefore, before withdrawing an offer of employment, I recommend consulting with legal counsel.
An applicant may seek double damages in a civil action if he/she was persuaded, influenced or enticed to move his/her place of residence based on misrepresentation about either the length of time a job would last, the character of a job, compensation or the existence of a labor dispute or strike.

CA Labor Codes allow an applicant to sue any person, agent or officer for double damages for knowingly making any false representation. In addition, you may be found guilty of a misdemeanor punishable by a fine of up to $1,000 or imprisonment up to six months, or both.

The hiring process is important for both the employer and applicant. Being clear about the hiring process and what the job entails (pay, benefits and start date) are essential to forming a good working relationship. Making an offer of employment, whether it is verbal or in writing, can be binding if the applicant accepts the offer. Therefore, it is important to be clear about contingencies and the approval process before offering an applicant a job. I recommend making job offers in writing, clearly stating all contingencies in the offer letter. You should also always include a time period for which the offer is valid.

All California employers with 20 or more employees must have a written Illness & Injury Prevention Program (IIPP) (sometimes referred to SB 198). If you have less than 20 employees and are not designated as a high hazard industry, there may be lesser requirements regarding a written IIPP.

Any employer who commits any Regulatory or General violation shall be assessed a civil penalty of up to $7000 for each such violation. The proposed penalty shall be adjusted for Size, Good Faith, and History; however, an abatement credit shall not be granted.

Not having the required IIPP would likely be considered a Regulatory violation.

The Code states that: No civil penalty shall be assessed against an employer who adopts, posts, and implements in good faith an IIPP for Non-High-Hazard Employment for a first violation of the IIPP standard adopted pursuant to the Labor Code.

The Code further states that: The penalty for any Serious violation shall not be subject to adjustment (downward) other than for size of the company where the employer does not have an operative IIPP.

A new California law (AB 2774) makes it easier for the California Division of Occupational Safety and Health (“Cal/OSHA”) to classify workplace safety violations as “serious” for purposes of issuing citations and proposed penalties to employers. The bill broadens the definition of “serious violation” and establishes specific procedures for Cal/OSHA to create a rebuttable presumption that a “serious violation” exists at a worksite. An employer who receives a citation for a “serious violation” may be assessed up to $25,000 in civil penalties.

Under the new law, Cal/OSHA can create a rebuttable presumption that a “serious violation” exists if it demonstrates that “there is a realistic possibility that death or serious physical harm could result from the actual hazard created by the violation.” This “realistic possibility” standard is looser than the California Labor Code’s previous requirement of a “substantial probability” of death or serious physical harm.

“Serious Physical Harm”
“Serious physical harm” is defined as any injury or illness, specific or cumulative, occurring in the place of employment or in connection with any employment, that results in any of the following:
• Inpatient hospitalization for purposes other than medical observation.
• The loss of any member of the body.
• Any serious degree of permanent disfigurement.
• Impairment sufficient to cause a part of the body or the function of an organ to become permanently and significantly reduced in efficiency on or off the job.

Cal/OSHA Procedure
Before issuing a citation alleging that a particular violation is serious, Cal/OSHA inspectors are directed to consider the following information:
• The training employees and supervisors have had related to preventing employee exposure to the hazard or similar hazards;
• Employer procedures for uncovering and controlling the hazard or similar hazards;
• Supervision of exposed or potentially exposed employees;
• Employer procedures for communicating with employees regarding its health and safety rules; and
• Any information the employer provides regarding the circumstances surrounding the alleged violation, why the employer believes a serious violation does not exist, and why the employer’s actions were reasonable.

To Fight the “Serious” Violation Presumption
If Cal/OSHA establishes a presumably serious violation, the employer may rebut the presumption by presenting evidence that it “did not know and could not, with the exercise of reasonable diligence, have known of the presence of the violation.” This burden can be met by proving that:
• the employer took all steps a reasonable employer would take under the same circumstances, and
• the employer took effective action to eliminate employee exposure to the hazard created by the violation as soon as the hazard was discovered.
Implications for Employers

When you look at the basic requirements for an IIPP and the regulations that give most employers “credit” for having a compliant IIPP, you should see that it is a prudent business practice to comply with the regulations. Once you add in the new, enhanced penalty structure plus the fact that California is looking for enhanced revenues from Cal-OSHA, the case for compliance becomes even stronger.

All California employers should make sure they have strong safety training programs for employees and supervisors, systems to “find and fix” hazards, and understanding industry best practices to address hazards.

Human Resources 4U now has enhanced capabilities to create IIPPs and supplemental safety programs specific to all industries and turnkey safety training programs.

GINA Overview:
The Genetic Information Nondisclosure Act (GINA) makes it unlawful to refuse to hire, discharge, or otherwise discriminate against or harass an employee because of genetic information, bars employers from acquiring genetic information except in certain narrow circumstances, and requires employers to keep any genetic information they may have confidential. The new final GINA regulations took effect January 10, 2011.

Under GINA, “genetic information” generally includes:
• Information about an individual’s genetic tests and the tests of their family members;
• Family medical history (the manifestation of disease or disorder in the individual’s family members);
• Requests for or receipt of genetic services (or the participation in clinical research that includes genetic services) by the individual or a family member; and
• The genetic information of a fetus carried by the individual or a family member.

In addition, employers covered by the FMLA need to take note of the new final regulations under GINA. The new GINA regulations require employers who seek medical certifications in support of leave or accommodation requests - including FMLA leave - to provide new disclosures or risk violating GINA.

New Rules for Requesting Medical Information:
GINA’s prohibition on acquiring genetic information does not apply to “inadvertent” acquisition of such information, or to an employer’s request for family medical history in a lawful request for certification under the FMLA or the ADA. Employers might also request a medical exam for several other reasons, including workers’ compensation claims, disability inquiries, fitness-for-duty exams, and commercial driver qualification. However, under the new final rules, employers can rely upon this “safe harbor” only if they affirmatively notify employees of GINA’s limitations on requests for genetic information.

The rules state that employers can satisfy this notice requirement by using the following language in a request for medical information, such as an FMLA certification form:

“The Genetic Information Nondiscrimination Act of 2008 (GINA) prohibits employers and other entities covered by GINA Title II from requesting or requiring genetic information of an individual or family member of the individual, except as specifically allowed by this law. To comply with this law, we are asking that you not provide any genetic information when responding to this request for medical information. “Genetic Information” as defined by GINA includes an individual’s family medical history, the results of an individual’s or family member’s genetic tests, the fact that an individual or an individual’s family member sought or received genetic services, and genetic information of a fetus carried by an individual or an individual’s family member or an embryo lawfully held by an individual or family member receiving assistive reproductive services.” Note that it may be necessary to modify the language above to make it clear that “family medical history” is required, at least to the extent necessary to make the medical certification complete and sufficient under the FMLA.

Things to Do:
• Employers should update their FMLA medical certification forms to include the “safe harbor” language above.
• The disclosure language should also be included on other requests for medical information, such as requests for documentation of an employee’s need for an accommodation and/or fitness for duty certifications.

Do you have nonexempt employees that are on-call? Are you paying them for their on-call time? Should you be paying them for their on-call time? This is a complex and confusing area of wage and hour law.

The basic standard for determining compensability for on-call time has to do with the “control” the employer exerts over the employee’s time while on-call. Therefore, not all time spent on-call by employees is compensable. Rather, employees must be compensated only when they are deemed to be “working” while on-call. That, in turn, depends on how much control the employer exercises while the employee is on-call and whether employees can effectively use the time for their own purposes.

For example, if employees’ activities are so restricted that they cannot use the time to run errands, go to a restaurant, do chores, or attend a child’s event, they will be considered to be “working” or “engaged to wait” and must be paid. On the other hand, if employees are free to use their time to engage in their ordinary, daily activities, subject to reasonable restrictions, the law does not require that they be compensated.

Reasonable restrictions on the employee (for example, a no-drinking-alcohol rule) will not convert on-call time into compensable hours worked. But problems arise over the question of when on-call requirements and restrictions become so onerous as to prevent employees from using their time effectively for personal purposes.

Some Factors to Consider
• the frequency of calls during the on-call period;
• the time limit provided to respond;
• the geographic restrictions placed on the employee;
• the ability to trade or swap on-call responsibilities, and the amount of advance notice of assigned on-call time periods;
• the use of a pager or cell phone to contact on-call employee; and
• the employees’ ability to engage in personal activities during on-call time periods

These factors are a “moveable target” and no one factor is determinative.

Best Practices
To minimize the risk of liability, you should
• provide employees as much advance notice of on-call schedules as possible and, if possible,
• provide an opportunity for employees to trade or swap assignments so that on-call schedules impede on personal activities as little as possible,
• on-call employees should be issued a pager, cell phone, or personal digital assistant (e.g. Blackberry) during on-call periods to allow them to travel freely in the local area to run errands, eat meals, and attend child/family events.
• The response time should be reasonable and take into consideration the average commute time and other unique factors.
• While it is permissible to prohibit employees from drinking during on-call time, restrictions on other activities during on-call time should be minimal.

Also, controlled standby time may be compensated at a different rate than is paid for other work by the same employee, so long as the employee is paid at least minimum wage. Therefore you can have an on-call pay rate that is less than the employee’s normal base rate of pay.

Many California employers are confused about the “inside sales” exemption. If an employee can qualify for this exemption, it means they are not eligible for overtime compensation. However, this exemption is only available to employers in limited circumstances. An “inside sales representative” sells merchandise in a store or sales lot or sells products or services via a company telephone. The basic rules are:
• Total compensation must exceed 1.5 times the minimum wage for each hour worked during the pay period; and
• At least 50% of the total compensation must come from commissions.

In addition, under California law, the commissioned insides sales exemption can only apply if the business is covered by Wage Order 4 or Wage Order 7.

Wage Order 4:PROFESSIONAL, TECHNICAL, CLERICAL, MECHANICAL and SIMILAR OCCUPATIONS
This wage order covers businesses that include professional, semiprofessional, managerial, supervisory, laboratory, research, technical, clerical, office work, and mechanical occupations.

Wage Order 7:MERCANTILE INDUSTRY
This wage order covers any industry, business, or establishment operated for the purpose of purchasing, selling or distributing goods or commodities at wholesale or retail; or for the purpose of renting goods or commodities.

Does either of those descriptions cover your place of business? It is important to note that what matters is not what an employee’s job may be. What matters is the primary purpose of the business for which the employee works. For example, a person who sells parts for a retail auto parts store such as Pep Boys would likely be governed by the mercantile industry’s commissioned salesperson exemption under Wage Order 7. A person who does the same work for an automotive repair shop would not. Auto repair shops are governed by Wage Order 9. That wage order contains no commissioned salesperson exemption.
Similarly, someone paid a commission to increase sales for a graphics business would be exempt under Wage Order 4 while someone who the same for a hotel’s banquets hall which is covered by Wage Order 5 would be not entitled to overtime pay.

Keep in mind that since the compensation must exceed $12 per hour (1.5 x $8) for every hour worked, you must keep very accurate records of all time worked.

Whether the sales commission structure is comprised of a base salary plus commissions, pure sales commissions, a draw provided against future commissions or some combination of these, on average, at least 50% of compensation must come from commissions and the representative period a company chooses to establish the plus-50% commissions and minus-50% salary ratio must be at least one month and not longer than one year.

Furthermore, the employer thus must maintain adequate records that clearly indicate
• The amount paid to employees exempt under this category
• The breakdown of base salary and commission payment for each week
• The number of hours worked each week.

In order to implement the exemption, the employer must also maintain:
• A symbol, letter or other notation placed on the payroll records identifying each employee who is paid under this inside sales exemption; and
• A copy of the policy or the specific written agreements with particular employees that lay out the terms of the sales commission structure, including the chosen representative period, the date the agreement was entered and how long it remains in effect.

Do you have employees doing inside sales? Are they eligible for overtime? Do you know what wage order your business falls under? As you can see, this exemption is very complex and confusing. Getting it wrong can cause your business to incur significant costs.

When is an employee with an alcohol or drug problem protected under the Americans with Disabilities Act?  The 7th Circuit Court of Appeals recently addressed this issue. A police chief rear-ended a car on his way home after he had consumed at least four glasses of wine. His blood alcohol level was nearly three times the Illinois legal limit.

The chief was placed on administrative leave and then terminated based on a pattern of errors in judgment, his inability to perform his duties, since his driver’s license had been revoked, and for engaging in conduct below the standards expected in the job.  The chief sued and claimed that his employer had discriminated based on his alcoholism and by refusing to accommodate his alcoholism.

The Court of Appeals dismissed this case, finding that the police chief was not a qualified individual with a disability because he had failed to comply with universal workplace rules and he could not perform the essential functions of the job because he was unable to operate a motor vehicle because of the suspended driver’s license.

The court pointed out that employers can discipline employees for the violation of workplace rules, even if the violation is caused by a disability. The discipline can include termination.  The Equal Employment Opportunity Commission takes the position that the ADA protects an alcoholic if the individual can meet the definition of disability:

• If the condition is so severe that it substantially limits one or more major life activities.
• The ADA also protects a recovered drug addict if the person is no longer engaging in the illegal use of drugs.
• The ADA does not protect employees who currently use illegal drugs.

However, the EEOC expects alcoholics and illegal drug users to meet the same performance and conduct standards as all other employees.

These conditions do not excuse poor job performance or other unsatisfactory behavior, including absenteeism, tardiness, insubordination or involvement in on-the-job accidents.  The ADA allows employers to prohibit the use of alcohol and illegal drugs in the workplace. Employers also are allowed to discipline employees who come to work under the influence of drugs or alcohol.

As always, employers must be consistent in their administration of discipline. For example, an employer should not terminate someone who is known to have an alcohol problem if the individual comes in late and then allow other employees to be tardy.

Finally, employers can refer employees to employee assistance programs, but they are not required to refer employees to employee assistance programs in lieu of discipline.

California’s labor department has issued updated guidelines on whether internships should be paid or unpaid, with the new rules giving employers slightly more latitude not to pay them.
Many wage and hour regulators maintain that interns must be paid if their work is of “immediate advantage” to the employer, but the California agency’s top lawyer advised that such an advantage can be offset — and the intern not be paid — if the employer provides close supervision and lays out money for training.

The DLSE regulator stated that interns could do occasional work done by regular employees, as long as it “does not unreasonably replace or impede the education objective for the intern and effectively displace regular workers.”

Over all, the guidance from the California Division of Labor Standards Enforcement was emphatic that for internships to be unpaid, they must be educational and predominantly for the benefit of the intern, not the employer. Therefore; there still aren’t going to be many circumstances where for-profit companies can have unpaid internships and still be in compliance with the law.

The federal government has established six criteria (which are also embraced by California) to determine when internships can be unpaid.

Wage-hour laws typically apply only to “employees” or an employment relationship. Properly classified interns escape minimum wage and other requirements because they are not considered “employees.” If considered employees, interns must be paid at least the minimum wage.

Criteria for Private Sector Internships

How does one tell an employee from an intern? The U.S. Department (“DOL”) of Labor and the California Division of Labor Standards Enforcement (“DLSE”) apply the same six criteria:

• The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
• The internship experience is for the benefit of the intern;
• The intern does not displace regular employees, but works under close supervision of existing staff;
• The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
• The intern is not necessarily entitled to a job at the conclusion of the internship; and
• The employer and the intern understand the intern is not entitled to wages for the time spent in the internship.

Consequences of Misclassification

In this time of enhanced regulatory enforcement, particularly at the federal level, it pays to get it right when it comes to unpaid internships. The price of misclassifying workers as interns rather than employees is very high. In addition to minimum wage and overtime for all hours worked, a host of penalties may apply under California law. These include a special penalty equivalent to the wages for failure to pay minimum wage, as well as assorted penalties for improper recordkeeping, late payment, missed meal periods or rest breaks, etc. Then there are the claims for improper exclusion from benefit plans and other contractual employee benefits such as vacation.

Human Resources 4U can help with interns or other wage classification issues.

Human Resources 4U is a full service Human Resources consulting company specializing in small and midsize businesses. Note: This article is presented with the understanding that we are not engaged in rendering legal advice. If legal advice is required, the services of a competent attorney should be sought.

I continually get questions regarding Pregnancy Disability Leave (PDL) in California so here is a general overview of the regulations.

Any employer with 5 or more employees must offer PDL. There is no length of service requirement so employees become eligible at their date of hire. The maximum amount of time for PDL is 4 months (or 88 working days or 704 hours). Part-time employees are entitled to a pro-rated amount and the PDL may be taken on an intermittent basis.

The specific types of absences covered are:
• Pregnancy
     o Severe morning sickness
     o Prenatal care
• Childbirth
• Related medical conditions
     o Such as a miscarriage

The employer may require a medical certification as long as it requires medical certifications for other types of disabilities. The employer should provide a written job description for the medical provider and ask that the medical certification state whether the employee can continue doing their job and/or the anticipated begin and return to work disability dates.

PDL is generally unpaid unless the employer provides pay for other types of disability leave. The employer can require that employees use their paid sick leave to cover PDL and employees can elect to use their vacation and/or PTO paid leave, as well. The employer doesn’t have to continue to provide health benefits unless it continues health benefits for other types of disabilities. Employees who take PDL are eligible for State Disability Leave.

Employees are entitled to be returned to the position they left upon their return to work.

Keep in mind that if your employees are also eligible for FMLA/CFRA leave (generally 50 or more employees), PDL becomes more complicated and you have to comply with all the laws.

Human Resources 4U can help with your leave policies.

Human Resources 4U is a full service Human Resources consulting company specializing in small and midsize businesses. Note: This article is presented with the understanding that we are not engaged in rendering legal advice. If legal advice is required, the services of a competent attorney should be sought.

The EDD does not question the employer’s right to discharge an employee, or the employee’s right to quit. The EDD is looking beyond that question to whether or not the circumstances of the separation fit the requirements of the UI code. The wording of separation documents is critical. There is a great distinction in the UI code as to whether the reason for separation can be defined as the claimant’s inability to perform the work or a “willful and wanton disregard of the employer’s interests.” Here are some things to keep in mind.

UI Guidelines
Never give false or inaccurate information to the EDD. Claimant’s can get False Statement Penalties, but employer’s can get False Statement penalties up to 10 times the claimant’s weekly benefit amount. If the claimant makes a false statement to the EDD, make the EDD aware of it. If you get a Notice of Potential False Statement Liability, appeal it.

Don’t misclassify employees as independent contractors, the penalties involved here will go way beyond paying UI claims.

Always respond to the initial claim form even if you agree with the claimant’s reasons. If you don’t respond to the claim on a timely basis, you are not considered “an interested party.” Therefore, if you later disagree with any charges from that person’s claim, you have no rights to object to the charges.

Complete all EDD forms if there is money involved and you feel you have a right to relief of charges. You will not get relief if you don’t. Make sure to include all supporting documentation including the DE 1545 along with your protest.

The EDD will send such forms as DE 4614, DE 428, DE 2088, Notice of Potential False Statement, Notice of Potential Tax Liability, and Notice of Denial of Petition. Failure to appeal any of them within the time limit is costly. You can appeal any ruling against you and the effort can result in substantial savings to your account.

There are several reasons where an employer may be relieved of charges even if the claimant is collecting UI benefits.
• Did the claimant leave to accompany a spouse or domestic partner?
• Was it because of domestic violence?
• Was the use alcohol or drugs involved?
• Did the employee leave your company for another job?
• Was the claimant a student returning to school or on a work/study program?
• Have you offered work to a past employee currently collecting UI benefits?
• Is the past employee caring for children or some other individual that precludes them from accepting work?

Do not assume that short-term employees don’t cost you any money for unemployment insurance. Every dollar someone earns in wages contributes to potential liability on your reserve account. It’s just as important to do the documentation on a short-term employee as it is for an employee who has worked for you longer.

If an employee quits, but you want the person off your property prior to the effective day of the resignation, give serious thought to paying the employee through the time of notice. If not, the separation is considered a discharge, and the employee would be eligible for unemployment insurance benefits.

Hearings
• Read the instructions on all forms, including the Notice of Hearing.
• Have your facts in order and available for when the EDD adjudicator calls for more information about a past employee.
• Ask the EDD representative for the EDD their fax number or email. That’s where you should send supporting documentation, so you know the decision maker will see it.
• Go to the hearing.
• Go with witnesses and documentation. You are not going to win if you don’t show up.

Remember, every dollar on a DE 1545 could mean the difference between paying the next higher rate or the next lower rate.

Human Resources 4U can help in responding to UI claims.

Human Resources 4U is a full service Human Resources consulting company specializing in small and midsize businesses. Note: This article is presented with the understanding that we are not engaged in rendering legal advice. If legal advice is required, the services of a competent attorney should be sought.