labor law

Labor Law in California

Despite a positive economic outlook, California employers continue to find their footing in this slippery and unpredictable economy. Labor law in California differs greatly, and is significantly more complex, than most federal regulations, thereby placing California employers at an even greater risk of being sued for employment violations.

Despite the desire to cut costs – and perhaps cut corners – businesses shouldn’t lose sight of the importance of solid HR practices. Well managed human resources policies are critical in protecting employers against tricky California employment and labor laws, and in weathering California’s economic storm. Ask yourself: how does your HR bottom line look?

1. Is your employee handbook up-to-date?
2. Do your managers understand and comply with progressive discipline practices?
3. Do you have detailed job descriptions to hold employees to objective standards?
4. Do your Human Resources practices reduce your liabilities as an employer?
5. Are you prepared to adapt to changes in Human Resources/Benefits regulations?

If you answered No, or I’m Not Sure, to any of the questions above, you may be placing your company in jeopardy. Recent reports support the tale that during recessionary economic periods, employment lawsuits rise. Particularly in economically hard-hit states, such as California, labor law litigation is on the rise.

A recent overview of the legal landscape by The Legal 500, a 20-year old publication providing comprehensive worldwide coverage on legal services providers, confirmed this fact:

“The onslaught of wage and hour litigation continues unabated, although the focus has now turned to cases of greater complexity or those relating to specific industries such as pharmaceuticals or construction. The other main development in this area is the increase in litigation resulting from widespread reductions in force. As the hostile economic climate of 2009 forced workers to scrutinize the reasons for their termination in more detail it made them more likely to pursue claims of wrongful termination when they couldn’t secure employment elsewhere. Along with these trends, new legislation continues to fuel changes in the employment landscape.”

Proactive Steps Can Help Reduce Risks

To reduce the risk of a lawsuit, it is imperative to be proactive in managing the risks related to California labor law and employment regulations, and to review all policies and human resource practices BEFORE you are faced with a lawsuit. There are dozens of policies to review, so we will provide one example of proactive measures that can be taken to help reduce the risk of violations in the area of Wage and Hour compliance.

To prepare for Wage and Hour compliance, employers should focus their initial compliance efforts on four main areas:

1. Review record-keeping practices and make sure you are maintaining the appropriate documentation regarding the number of hours employees work each day, and week.

2. Ensure your employees are properly classified in regards to hourly or salary. Proper classification is essential to compliance in this, and many other areas of the law.

3. Review all hours worked, in regards to on-call time, travel time, waiting time, setup time and any other job-related obligations that relate to time required.

4. Verify your overtime calculations are correct, based on the state and federal obligations. Remember – California tracks hours worked based on 8-hours per day, not 40 hours per week. This is one of the most common mistakes employers make.

While these four steps won’t guarantee that you’ll be free from wage and hour claims, they will help to minimize the risk and can assist in your defense should you find yourself in litigation. Similarly, all other areas of Human Resources practices should be reviewed and analyzed for compliance.