Forums For Adjudicating Employment Disputes
Most employment related claims are adjudicated through California’s civil court system or the federal court system. However, employment-related disputes may also be resolved by binding arbitration if such claims are subject to an enforceable arbitration provision. Moreover, there are specialized forums for on-the-job injuries under the workers’ compensation system. Workers’ compensation provides the “exclusive remedy” for job-related injuries unless those injuries are the result of particular intentional conduct or negligence far outside of the scope of employment, or the injuries are the result of acts that are made unlawful by anti-discrimination/harassment/retaliation laws. In addition, challenges to awards of statutory benefits, such as unemployment insurance and state disability insurance, must be adjudicated before the California Employment Development Department. Finally, there are specialized administrative agencies, like the Department of Industrial Relations, for wage and working conditions disputes. These agencies have the power to order payment of back wages and penalties. Employees may choose to file claims before the administrative agency or may file claims directly with the courts. Employees claiming violations of California or federal anti-discrimination/harassment/retaliation laws must first file those claims with the California Department of Fair Employment and Housing or federal Equal Employment Opportunity Commission before commencing a court action.
The Main Sources Of Employment Law
The main sources of employment law in California are codified in the California Labor Code, California Government Code, California Civil Code, and California Unemployment Insurance Code. However, there are often statutes contained in other codes that impact California employers. Laws governing wages, working conditions, and workplace injuries are generally codified in the California Labor Code. Laws governing anti-discrimination/harassment/retaliation are generally codified in the California Government Code. In addition to the statutes, administrative agencies are charged with creating regulations to provide guidance regarding the implementation and interpretation of the statutes. Often the administrative agencies also provide opinion letters and other interpretive guidance regarding various employment laws. While the guidance is not binding, it provides employers with useful insight into how a statute or regulation may be interpreted when challenged.
California employers must also comply with all applicable federal laws governing the employer-employee relationship. The employer-employee relationship may also be governed by non-codified laws, collective bargaining agreements and individual contracts.
National Law And Employees Working For Foreign Companies
As noted above, in addition to California law, there are several federal statutes and regulations governing the employer-employee relationship for workers in the United States. Both California and federal law apply to workers who work within California regardless of the employee or the employer’s nationality.
National Law And Employees Of National Companies Working In Another Jurisdiction
If a national employee is providing services outside of California, federal law and the law of the state in which the employee is working will apply.
The California Consumer Privacy Act (“CCPA”) imposes various requirements on certain employers related to the collection and processing of personal data of California employees. If an employer is covered by the CCPA, the employer must disclose to employees, before or at the point of collection, the categories of personal information to be collected and the purposes for which the information will be used. Additionally, under the California Civil Code, employers that own or license computerized data must disclose data breaches involving certain personal information. Further, California employees enjoy an inalienable right to privacy under the California Constitution, including informational privacy and medical privacy. Various other state laws govern the types of information that can be collected from employees, how such information must be maintained, and whether and how such information may or must be disclosed to employees or third parties.
Legal Requirements As To The Form Of Agreement
Under California law, a written employment agreement is not required, nor are there any requirements as to the form of any employment agreement.
There is no legal obligation to provide an employee with a trial period, often called “probationary” or “introductory” period. Employment in California is presumed to be “at-will” meaning that the employer or the employee can terminate the employment relationship at any time, with or without notice, and with or without cause. However, the “at-will” status can be altered by agreement, employer policies or practices and representations by the employer. The use of a trial period may impact the “at-will” status of employees.
Hours Of Work
There are no mandatory requirements regarding when employees may be required to work. Employees working under California Wage Orders 4, 8, and 13 cannot be required to work more than 72 hours per “workweek”. Employees are to receive at least one (1) day of rest per “workweek.” The laws governing hours of work and compensation for those hours depend heavily on whether the employee is an exempt or non-exempt employee. Both California and federal laws contain complex and detailed standards for determining whether an employee is an exempt employee.
Generally, if an employee is “exempt,” he or she is exempt from overtime payments and is paid a salary, regardless of the number of hours worked each day. If an employee is “non-exempt” he or she may only work more than eight (8) hours in any workday, more than 40 hours in a workweek or more than six (6) days in any workweek if the non-exempt employee is paid overtime. Unlike federal law, which only requires employers to pay overtime for those hours worked in excess of 40 hours in one work week, California law requires employers pay overtime for all hours worked in excess of 40 in one workweek and in excess of eight (8) hours in a single workday. Another unique aspect of California law is that the amount of overtime depends on how many hours the employee works in a workday and/or in a workweek, and whether the employee works a seventh consecutive day in a given workweek. For example, a non-exempt employee is entitled to a rate of one and one-half times his or her regular rate of pay for those hours worked in excess of eight (8) hours in any workday and a rate of two-times his or her regular rate of pay for those hours worked in excess of 12 hours in a workday. An employer must pay one and a-half times the employee’s regular rate of pay for the first eight (8) hours worked on the seventh consecutive day of work in a workweek, and double the regular rate of pay for hours worked in excess of eight (8). “Workday” is a consecutive 24 hour period, and “workweek” is a consecutive seven-day period, although employers may define “workday” and “workweek.”
Certain local ordinances impose additional scheduling restrictions for employees in certain industries.
Special Rules For Part-time Work
There are no special rules that apply to part-time workers. However, employers may limit eligibility for certain discretionary benefits based on part-time status. Certain local ordinances impose working obligations related to the retention and staffing of part-time workers.
Non-exempt employees must be paid at least minimum wage for all hours worked. Employers are not permitted to apply a “tip credit” or similar offsets to wages. There are rare circumstances in which an employee may be paid less than the minimum wage, which are inapplicable to most California employers. Exempt employees must be paid the amount required to meet the minimum compensation requirements contained in the exemption standards. Employers must also be aware of obligations to pay non-exempt employees split shift premiums, call-in pay, and on-call/stand-by pay.
Employers are not required to provide paid days off for holiday. If employers choose to offer paid vacation or paid time off, the employees must accrue the amount incrementally and must be paid for all time accrued but unused at the time the employment ends. In addition employers may not have a “use-it-or-lose-it” policy with regard to accrued vacation or paid time off, but may institute a “reasonable cap” on accrual. Floating holidays and sabbaticals may be treated as vacation if the time off can be used for any purpose and is not tied to a specific event.
Employers must authorize and permit non-exempt employees to take a paid 10-minute rest period near the middle of each work period of four (4) hours or major fraction thereof (two (2) or more hours). However, employers do not need to provide a rest period if the employee works less than three and one-half hours in a workday.
Employees must also provide employees with an unpaid 30-minute meal period if the employee works more than five (5) hours in a workday. The meal period must be provided no later than the end of the fifth hour of work, and an employee must be relieved of all duty during the meal period. However, if the employee does not work more than six (6) hours, the employee and employer may mutually consent to waive the meal period. Employees working more than 10 hours in a workday are entitled to a second unpaid 30-minute meal period before the end of the 10th hour of work. However, if the employee does not work more than 12 hours, the employee may choose to waive the second meal period if the employee has not waived the first meal period.
Any employers employing children under the age of 18 must comply with California’s child labor laws and obtain all necessary work permits. In many circumstances employers may not employ workers younger than 16. California does not have a maximum working age.
California employers are required to provide employees paid sick leave at a minimum rate of one (1) hour for every 30 hours worked, subject to certain eligibility, use and accrual limitations. Instead of using an accrual basis, employers may also front-load a lump sum award of at least 24 hours or three (3) days (whichever is greater). All employees, including full-time, part-time, temporary and seasonal, are entitled to paid sick leave if they work in California for the same employer for at least 30 days.. Although employees begin to accrue sick leave from their date of hire, employers can require 90 days of employment before an employee may use accrued sick leave. Employers must display a poster on paid sick leave, provide new employees written notice of their right to paid sick leave at the time of hire, show how many days of sick leave an employee has available on the employee’s pay stub, and keep records of how many hours have been earned and used for a period of three (3) years. Certain cities and counties in California have enacted local ordinances that provide for even greater paid sick leave benefits. Employers in these local jurisdictions are required to comply with their local ordinance, as applicable, and California law.
Both California and federal law prohibit discriminating against an employee on the basis of a disability and there are several laws which apply to these types of issues. Notably, an employer must engage in an interactive process and provide reasonable accommodation to an employee with a known mental or physical disability who needs an accommodation to perform the essential functions of their job.
In addition, employees who are unable to work because they are disabled by pregnancy or pregnancy-related conditions may be entitled to up to four (4) months (17.33 weeks) of unpaid leave under California’s Pregnancy Disability Leave Law (“PDL”). In such circumstances, the employer is obligated to hold open the employees’ job unless the employer can show that the job would have been eliminated or that holding it open is a significant hardship (often difficult to establish). PDL further requires that an employer provide accommodations, including temporary transfers, for conditions related to pregnancy, childbirth, or related medical conditions.
Employees qualified to take leave under the California Family Rights Act (“CFRA”) may take up to 12 weeks of unpaid leave in a 12-month period for reasons of the birth, adoption, or foster-care placement of a child; the serious health condition of the employee or the employee’s child, parent, spouse, domestic partner, grandparent, grandchild or sibling; or a qualifying exigency related to the military service of certain family members of the employee. CFRA covers employers with 5 or more employees, whereas the federal Family and Medical Leave Act (“FMLA”) only applies to employers with at least 50 employees. An employee that takes up to four (4) months of PDL may take an additional 12 weeks of bonding leave under CFRA.
Location Of Work/Mobility
Employees are not required to have a specified location of work, although most do. For employees who do not have a regular work location, employers may be obligated to pay for certain travel time and travel expenses related to the employee’s commute. For remote employees, employers may be obligated to reimburse certain business expenses.
Employers are not obligated to provide pension or retirement plans. In addition, if an employer chooses to provide such a plan, the employer is not obligated to make contributions to the plan. However, if a retirement plan is offered, the employer must fully disclose the plan and offer it to all employees. Pension and retirement plans are governed by federal law. Specifically, the plans are governed by the United States Employee Retirement Income Security Act (ERISA).
Parental Rights (Pregnancy/ Maternity/ Paternity/ Adoption)
Employees who work for employers with five (5) or more employees and who are unable to work because they are disabled by pregnancy or a pregnancy-related condition are entitled to take up to four (4) months (17.33 weeks) of unpaid leave per pregnancy. All employees, male and female, who work for employers with 5 or more employees and who meet all eligibility requirements are entitled to take leave under CFRA for “baby bonding” within one (1) year of the birth or placement of the child. Employees taking leave are generally entitled to take 12 weeks of leave in a 12-month period. The eligibility requirements for such leave, and their interaction with federal leave under FMLA, are complicated and should be carefully navigated by California employers. If an employee is not entitled to take statutory leave, California employers may choose to provide time off for the birth or placement of a child. Employers cannot discriminate against an employee who takes statutorily protected leave. In addition, California has several leave rights impacting parents’ ability to take time off for family-related matters.
California does not require that employers provide employees with an employment agreement.
The employer and employee are free to agree to any terms and conditions of employment, so long as the terms are not less favourable than the terms and conditions guaranteed by California and federal law.
Types Of Agreement
The employment relationship in California is heavily regulated, and even the presumption that employment is “at-will” has been codified by statute. However, as discussed above, employers are free to contract more precise terms and conditions of employment with the employees that can modify the “at-will” nature of employment. For example, employers and employees may enter into agreements for a fixed time period, and/or employment that can only be terminated “for cause” (as defined in the agreement), or termination with a set notice period. In addition, employers may contract with employees regarding maintaining confidentiality of information, utilizing arbitration to resolve employment disputes, and ownership of employee property. Finally, an employer’s policies or oral representations to the employees can create contractual obligations between the parties. For example, representations that the employee will be given notice of dismissal prior to dismissal can create an obligation to provide notice.
Broadly, the California Uniform Trade Secrets Act (“UTSA”) prohibits individuals, including employees, from using or disclosing another’s trade secrets, which are defined by statute. Employers may use agreements to mirror and reinforce the employee’s obligations under the UTSA, and protect information that may not rise to the level of trade secrets. California’s trade secret law is unique insofar as employers own trade secrets created by their employees, so long as the trade secrets were not created on the employee’s own time and without the use of employee materials. California generally prohibits non-competition and non-solicitation agreements. Agreements restricting competition are governed by California’s Business and Professions Code and are prohibited, except in rare circumstances expressly provided for in the code and to the extent necessary to protect trade secrets.
Ownership of Inventions/Other Intellectual Property (IP) Rights
Much like anything else that an employee acquires by virtue of his or her employment, inventions and intellectual property, which are developed by the employee during — and sometimes after the term of — employment, using the employer’s tools and work time, will belong to the employer.
Both California and federal law require employers to provide certain notices to employers before requesting a background check,and set forth specific procedures and requirements regarding the timing of such inquiries, the information that can be considered, and the rights of applicants to review and correct inaccuracies. The California Consumer Credit Report Agencies Act (“CCRAA”) further governs when employers may solicit credit reports for applicants. Certain local laws impose even stricter requirements.
State and federal law also limit the qualification standards, employment tests and other selection criteria employers may use to screen employees. Specifically, California law only permits employers to require a medical or psychological examination after an employment offer has been made but prior to the commencement of work if the inquiry is job-related and consistent with business necessity, and all employees in the same job classification are subject to the same examination.
State and federal law also prohibit employers from discriminating against applicants on a protected base.
Rules and regulations regarding hiring non-nationals are very strict and are governed by federal law. However, an employer may not discriminate in the hiring process against a person based on their right to work credentials, and may only ask for the credentials after a job has been offered. Employers may be subjected to penalties for employing an individual who is not entitled to work in the United States. Employers must also conduct the federally required I-9 verifications.
Hiring Specified Categories Of Individuals
Generally for private employers, there is no quota system that requires that an employer hire a certain number of ethnic minorities, disabled persons or other persons included in protected classes. There are restrictions on whether certain employees (e.g., children) can perform certain job duties. The restrictions are designed to protect the health and welfare of more vulnerable members of a workforce.
Outsourcing And/Or Sub-Contracting
California’s law on classifying workers as employees or independent contractors is set forth in the California Labor Code and requires that a very restrictive test – the “ABC” test – be used to determine whether many California workers are employees or independent contractors for purposes of various California employment laws including those relating to minimum wage, overtime pay, meal/rest period compliance, unemployment insurance, workers’ compensation insurance and paid family leave. Under the ABC test, there is a presumption that a worker is an employee, not an independent contractor, unless the hiring entity can establish all three prongs of the test. Under the Labor Code, certain professions and types of relationships are exempt from the ABC test, such that worker status is instead analysed under a less rigid test that focuses on the hiring entity’s right to control.
In addition to the California state-specific tests discussed here, for federal tax purposes, the IRS takes a holistic approach to the independent contractor classification and looks at various aspects of the worker’s control or independence.
In addition to liability for the wage, taxes or insurance payments that were avoided through the misclassification, significant penalties can be assessed against an employer who incorrectly classifies individuals as independent contractors instead of employees.
Note, however, that even when workers are properly classified as independent contractors in California, certain employers may be held jointly liable for wage and hour violations committed by labor contractors under provisions of the California Labor Code.