Articles Posted in Employment Law

Good morning!  I was reading this article written by Gina Rikonova in the L.A. Daily Journal, and she talks about Assembly Bill 168 that was introduced earlier this year which will prohibit California employers from requesting information about a job applicant’s salary history or benefits  The spirit of the bill, according to her, is really to combat the gender disparity of pay between men and women. She also talks about how a lot of states that are moving toward this trend. Then she circles back and introduces what’s pretty much a federal court ruling for this year in April that seems to go opposite direction. That particular ruling in federal court “that federal equal pay act salary history may be considered a qualified factor other than sex so long as it effectuated some business policy and was used reasonably in light of the stated purpose as well as its other policy or practices, and the court further states that on the salary history standing alone may constitute a qualified reason for pay disparity other than sex so long as it serves a legitimate business purpose”.
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photo-CA-bathroom-bill-199x300This year the culture wars burst into public bathrooms across the country with repercussions in California. If you have a single stall bathroom at your place of business a state law passed this year mandates that it doesn’t matter your sex, that bathroom has to be a place of equal opportunity. It can’t be a men’s or a women’s room. Gender can’t matter when using single-stall public bathrooms in California, reports the San Jose Mercury News. Your bathroom is just a bathroom.

Gov. Jerry Brown signed legislation in September that requires single user restrooms be designated all-gender, a small move to bolster transgender rights as other states passed restrictions as to who could use which bathroom.

State Assemblyman Phil Ting of San Francisco stated that restricting access to single-user restrooms by gender was a burden on LGBT community, parents and caretakers of dependents of the opposite sex. It’s also seen as a way to provide greater privacy and safety in public restrooms.

photo - tip sharingCalifornia restaurants and other businesses who employees receive tips may need to change how they are compensated. The decision by the U.S. Court of Appeals for the Ninth Circuit mostly applies to states where employees are paid the minimum wage to begin with located in California, Alaska, Minnesota, Montana, Nevada, Oregon and Washington, according to the Los Angeles Times.

The appeals court decision upheld a 2011 U.S. Department of Labor rule stating it was consistent with Congress’ intent that tips stay with the employees who get them. They don’t belong to the business owners to divide up. Business owners who provide services are facing multiple issues concerning compensation including tip issues, raising minimum wages and the added costs of the Affordable Care Act in addition to a mix of federal, state and municipal laws.

Restaurant owners are trying different options to address the issues they’re facing. Due to tipping staff working in the “front of the house” could make much more than staff in the “back of the house.” Some are eliminating tipping but raising prices to pay for increased wages for the entire staff. The downside to ending tipping is better wait staff may leave to join restaurants where they can still earns tips and overall higher pay.

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photo - Pimco caseBeing one of those who starts a business, even one worth billions of dollars, is no guarantee it will be a job for life. Bond manager Bill Gross found that out in September 2014 when he left Pimco after negative reports about his management style and weak returns at Pimco Total Return, which he had built into what was at the time the world’s largest bond fund.

Pacific Investment Management Company (or Pimco), part of German insurer Allianz SE, is a global investment management firm that manages investments for institutions, financial advisors and individuals. Gross will be able to continue his lawsuit to recoup at least $200 million dollars he claims he lost when he was forced out of his job, according to Fox Business.

Pimco accepted as final a tentative decision issued in March by California Superior Court Judge Martha Gooding in Santa Ana that Gross’ breach-of-contract lawsuit had sufficient legal claims to proceed. The lawsuit was filed in October claiming Pimco executives plotted to oust him and divide his bonus amongst themselves.

Pimco’s defense is that Gross had no employment guarantee and could have been fired at any time without cause. Gross, 71, manages the Janus Global Unconstrained Bond Fund for Janus Capital Group Inc. Of the $1.3 billion in assets Gross is managing much of it is his own. Forbes magazine estimates he’s worth about $2 billion. Gross claims he’ll donate proceeds from his lawsuit to charity.

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If your company has employees driving either company owned or employee owned vehicles in the course of their duties depending on the circumstances your firm may be held liable for their negligence. Given the potential damages of a catastrophic accident it’s important that your company has sufficient insurance to cover this situation. Without proper insurance your company could be responsible for paying for your legal defense, settlement amount or damages awarded at a trial.

If you have employees driving their own vehicles for company purposes you need to review your coverage. If such a company related errand or delivery is done in a vehicle not owned by your company and an accident occurs your insurance may not cover it. Most business owners have a general liability policy. It’s a common myth this policy will cover anything and everything that could result from business related negligence but most of these policies do not cover car accidents.

There are several potential causes of action that could be filed against you.

  • The legal doctrine of ‘respondeat superior’ means that an employer can be held responsible for the negligent acts of an employee if he or she is acting within the scope of his or her employment. The reasoning is the employer is exercising some control over the employee while the employee is doing his or her job. This can include actions taken by an employee driving his or her own vehicle or one owned by the company.
  • Another legal doctrine impacting such a situation is that an employer has an obligation to defend legal claims against an employee who is acting within the scope of his or her job. If the employer fails to do so the employer can be sued by the employee to get a court order mandating the defense or to pay the employee’s legal bills.

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photo - ex-employeesThis can happen in many ways but a recent Inc. magazine article brings up the fact that statements and opinions of former employees can damage your company’s reputation and make it more difficult to attract good job candidates. Just as online reviews of products and services (even lawyers) have multiplied across the internet, so have reviews of employers.

In the article J.T. O’Donnell describes a business owner having a hard time finding candidates for job openings, with three people backing out of interviews. With openings unfilled he was having a hard time meeting his clients’ needs. O’Donnell learned his company had restructured two years earlier resulting lay offs. Some of those let go used social media to blast the company and its management.

Just as you may do online research on people you’re considering hiring, those looking for work also may do online research of possible employers. These job seekers, especially ones whose skills are in high demand, may be very picky if they read things they don’t like. The job candidate may discount one or two truly negative reviews as being written by malcontents, but if multiple, consistent negative statements about your company or management are found they may be given some weight.

photo - with friends like thisWhen you’re hiring someone for your business, especially for a position where the person can access funds, you need to find not only someone who’s competent but trustworthy as well. If you know someone for a while, maybe you’ve become good friends, you may feel a connection that makes hiring the person feel like the right choice to make. As a recent Orange County Register article shows, the hiring of a friend was a $6.8 million dollar mistake for a local business.

Russell Eugene Dunbar, formerly employed by a Santa Ana piano store, Fields Piano, was sentenced in July to 18 years in state prison for embezzling up to $6.8 million over three-year period with the company. Dunbar was found guilty last year of felony counts of forgery, falsifying records and grand theft. According to the Orange County District Attorney’s Office the charges included enhancements for aggravated white-collar crime over $500,000 and property damage over $2.5 million.

Fields Pianos hired Dunbar, a close friend of the owners, to be responsible for the company’s accounting in 2001. According to the district attorney, two years later Dunbar took steps to help himself to company funds.

  • He opened a personal bank account with a name similar to his employer’s business, Fields Piano Company, and deposited large checks from the store into this account.
  • To help hide his actions, Dunbar wrote smaller, personal checks and deposited them into his employer’s account and used deposit receipts to create false receipts.
  • Dunbar told his employer the large deposits were deposited in the company account, though there were no such deposits.
  • The store owners were unaware of the losses and paid taxes on income they never received.

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photo - PI issues for bizAs a business owner there are many possible issues that could result in a lawsuit being filed against you or your business. Here are some issues that arise in the area of personal injury law and how you can protect yourself and your business.

Premises Liability

If a customer, contractor or guest is injured on your property, you could be liable under premises liability. This legal theory holds property owners are liable for injuries and accidents that occur on their property. Different visitors have different legal statuses, such as invitee, licensee or trespasser. The status of the visitor determines how onerous the business’ duty to protect against an injury.

Most visitors to your company would be considered invitees (someone invited for business purposes) and you would have the utmost duty to repair and correct known dangers on your property and to reasonably inspect for unknown dangers.

Take efforts to make sure floors are lit, clean, dry and even with a non-slip surface. Safety equipment issued to workers should be issued to visitors. Parking lots should also be well lit and maintained. Any hazardous areas in your control, in the parking lot or in your facility, should be roped off or at least have warning signs posted.

Vicarious Liability

If an employee hurts a customer or an innocent bystander you could be held responsible. The legal theory of vicarious liability means an employer can be liable for an employee’s actions committed in the course of doing his or her job. Effective training and supervision of employees can help protect your business but accidents happen.

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photo - small bankConfronted with evidence of fraud by one of its employees, a small New York City bank did the right thing. They reported it to state banking regulators and provided prosecutors with more than 900,000 documents. Bank management later learned they were the ones being investigated and later charged with184 criminal counts. The story of Abacus Bank, as told by the New York Times, is a warning to any business where fraud is uncovered.

Abacus Bank’s six branches and 150 employees largely serve immigrant communities in New York, New Jersey and Philadelphia. Its founder Thomas Sung, is an immigrant himself. In 2009 his daughter Vera Sung, a bank director, reviewed documents at a mortgage closing and saw that extra checks were cut to pay the borrower.

She asked the loan officer, Ken Yu, about them and witnessed a heated conversation between Yu and the borrower. After talking with the two, Sung became suspicious and cancelled the mortgage. Yu was later fired and Abacus investigated all the loans Yu was involved in and tried to verify borrower information. After the investigation bank regulators were contacted.

The day of the closing started the bank’s five and half year trip through the criminal justice system. “We thought (prosecutors) were going to help us resolve a crime against the bank,” Vera Sung was quoted as saying. “We did not have an attorney early on. We cooperated with them, not realizing we were the target.”

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photo - payroll fraud by IozikikiIt must’ve made sense at some point for the business owners. Paying employees under the table and under reporting employees for workers compensation purposes must’ve been a money saver. That cost cutting strategy for two sisters owning sewing subcontractors unraveled in a big way after being arrested (with their accountant) for workers compensation fraud.

Sisters Sung Hyun Kim and Caroline Choi and their accountant, Jae Kim, 71, face charges of suspicion of workers’ compensation insurance premium fraud (which involves an employer scheming to defraud their workers’ compensation insurer by paying less for their insurance than they should). Their arrests were announced by California Insurance Commissioner Dave Jones in April, according to a story by the Associated Press.

Their alleged scheme involved underreporting the number of their employees and $78.5 million in payroll to insurers and California agencies. Kim and Choi are CEO’s of two apparel sub-contractors, Meriko, Inc., and SF Apparel, Inc. The Los Angeles County district attorney’s office is prosecuting the case. Continue reading