Blog

Employers know that terminating employment requires a delicate process. Whether an employee resigned, retired or was let go, employers must ensure they continue to uphold the employee’s rights. However, they must also take steps to protect their business as well. One step that employers may not think necessary is the exit interview. But this often-overlooked step can be critical. WHY ARE EXIT INTERVIEWS SO ESSENTIAL? In an exit interview, managers, supervisors or Human Resources representatives meet with the employee leaving the company. These interviews are important for many reasons, including: Maintaining open lines of communication between employers and employees Preserving the company and employer’s brand Helping businesses continue to improve and grow from employee feedback However, another reason that exit interviews are so important is the protection of trade secrets. An unfortunate amount of cases involve current and former employees taking a company’s confidential information. The case involving the alleged theft and sale of Apple’s trade secrets is one of the more recent examples. According to reports, the employee in question announced their resignation, but then continued to attend meetings and saved trade secrets to a personal drive on their last day of work. HOW CAN EMPLOYERS SECURE TRADE SECRETS IN THE EXIT INTERVIEW? Whoever conducts the exit interview should make sure they: Remind employees about their legal obligations and terms of agreements that are still in effect Verify what confidential information the employee had access to throughout their employment Ensure they return all company property, including documents, devices and other company information Of course, employers must establish security measures for trade secrets long before an exit interview occurs. But exit interviews still play an important role in protecting them. CONDUCT THE INTERVIEWS WITH CARE California employers must prepare for the exit interview. These interviews require great care and strategy. Employers should not make employees feel overwhelmed or threatened, and they must ensure the questions they ask do not violate employee rights. Employers should develop best practices for managing these interviews and the termination of employees.

In a world dominated by technology, everything often boils down to data. Business owners must make sure they manage and protect everything from company data to consumer data. However, this wide range of categories that require employer attention also includes employee data. Employers should make sure they secure their employees’ data as well, so they can reduce the risk of facing a lawsuit. ARE DISPUTES OVER EMPLOYEE DATA ON THE RISE? According to Forbes, disputes regarding employee data could become a primary issue for businesses. The article highlights two cases involving claims that: In one case, employers did not warn employees about the use of biometric data or inform them how they would store and protect the data In the other, employers did not take the proper steps to protect employee data Neither of these cases took place in California. However, the issues they address still pose problems to which all employers should pay attention. This is a growing concern for employees. And the focus on protecting consumer data only stoked the fire more. That is why employers must ensure they prioritize employee data security and comply with the protections under relevant laws. EMPLOYEE DATA IS ALREADY A CRITICAL TOPIC IN CALIFORNIA Of course, concerns about data are nothing new for California employers. The California Consumer Privacy Act (CCPA) as well as the California Privacy Rights Act (CPRA) both include protections for employees as well. The employee protections under CPRA will not go into full effect until 2023. However, employers should still: Review all legal requirements Prepare to comply with these laws by their respective deadlines Protecting data is a priority nowadays – in both the business world and in our personal lives. However, employers could face serious penalties if they do not take steps to secure employee information or comply with these laws. It is important to strategize and put policies into effect now, so businesses are ready for when these deadlines arrive.

Disputes with employees often stem from two concerns – their financial interests and their workplace rights. Wage and hour claims cover both of those categories. That is one of the reasons wage and hour lawsuits have become so dominant in recent years, particularly in California. Employers frequently conduct wage and salary reviews, usually when they review the employee’s annual performance. But there are generally two critical reasons employers should carry out these reviews routinely. 1 REVIEWS CAN HELP PREVENT WAGE AND HOUR DISPUTES The purpose of performance and salary reviews is not only to evaluate and reward employees. They also help employers maintain their records and proactively prevent disputes. In these reviews, employers should work with experienced business counsel to assess: Job descriptions and employee classifications Payroll, overtime and benefits policies Compliance with California’s wage laws Timekeeping records and policies Recent lawsuits or changes to the law can significantly impact these matters. For example, both employee classifications and timekeeping policies recently fell under the spotlight in California. Reviewing wage policies regularly can help employers stay up to date and on top of these issues. 2 THEY ALLOW EMPLOYERS TO BE PREPARED IN THE EVENT OF AN AUDIT In the business world, it pays to be prepared. Both the U.S. Department of Labor and California Department of Industrial Relations can conduct audits in your workplace – typically following complaints from employees. Reports indicate that the rate of audits is increasing. Following an audit, if officials discover that employers violated wage and hour laws during an audit, employers could: Be required to pay back wages Pay considerable civil penalties Make that employer be more susceptible for a future audit If employers complete their own audits, they have documentation of their compliance. Regular reviews allow employers to protect their business from an audit or a complaint from an employee that could jeopardize their reputation with both employees and consumers.

Creating and enforcing effective company policies is a key responsibility of any employer. After all, they are the rules that inform the operation and conduct of the business and its employees. It can be a challenge to make new policies and adjust its rules, but change is inevitable, so evolving your business solutions to such change is critical for the continuing success of the business. The circumstances of the last couple Covid years have forced many employers to rethink and create new policies, with the increasing trend of remote work, the emphasis on safety and health in the workplace and responses to changes in state and federal laws. Some employers may have to adjust their policies due to recent disputes or lawsuits they faced as well. Regardless of the reason for creating new policies – or changing current ones – there are a few key issues that employers must consider. WHAT SHOULD EMPLOYERS CONSIDER WHEN DEVELOPING POLICIES? Policy change/creation requires a strategic approach. During that process, employers should: Consider the necessity: Many circumstances demand a new policy – especially legal precedents or changes. Even so, employers should still carefully evaluate how a new policy will help. Too many policies or stringent policies can be counterproductive. Scrutinize every step: Employers must analyze the policy’s goals and potential effects. They should evaluate the language of the policy, as well as their plan for implementing it. Obtaining several perspectives on the policy can be beneficial. It could also be helpful to have a knowledgeable business attorney review the policy as well. Make sure it is legal: Unfair policies are a common reason why employers face lawsuits. This is clear with the passing of the CROWN Act, which bans hair discrimination in dress codes and company policies. Therefore, employers must also take care to review California and federal laws to confirm that all new policies comply with the law. Establishing new policies also requires employers to implement them effectively. Employers must also make sure they create the proper communications and training to enforce the new policy effectively. REMEMBER: REGULAR POLICY REVIEWS ARE ESSENTIAL In addition to making new policies, employers must review their policies regularly to ensure they are still legal and effective.

Compliance is an essential part of any employer’s job. It is their responsibility to ensure they adhere to all labor laws and practices. And one practice that employers cannot overlook is timekeeping. Proper timekeeping is critical to avoid the common wage and hour lawsuits that employees bring against employers. However, it has become even more significant under a new ruling. CALIFORNIA SUPREME COURT: NO ROUNDING MEAL PERIODS This case – Donohue v. AMN Services, LLC – is one of the most significant employment rulings so far in 2021. In this case, the California Supreme Court determined that employers cannot round their employees’ meal breaks. California law is very specific regarding meal periods. It states that employers must offer a 30-minute meal period after five hours of working. However, it is common for employers to use automated systems for time-keeping that often round to the nearest quarter-hour or even ten-minute period. Yet the Court ruled that this automation is a violation of employees’ rights. There is no doubt that this ruling will have a considerable impact on employers throughout the state. These types of violations can leave employers facing serious penalties, so they must strategize to reduce the risk they face. EMPLOYERS HAVE TO ENSURE ACCURACY Employers know they must pay close attention to detail to make sure they are in compliance with the many laws that govern the workplace. And this ruling means that an employer’s focus on detail is more important than ever. In light of this case, employers should make sure they: Examine their employees’ time records closely Evaluate their practices for recording work time and meal periods Adjust their policies and employee trainings as necessary Minor discrepancies could lead to a number of legal issues for employers. So, all employers must take care to ensure their timekeeping systems and policies are accurate.

Reputation is critical in the business world, and this essentially has two components. One is the reputation it has with consumers, and the other is the reputation with past, present and potential employees. Many business owners tend to focus on building the reputation they have with consumers, but do not tend to prioritize their reputation as an employer. WHY IS EMPLOYER BRANDING SO CRUCIAL? Employer branding has become an increasingly important tool in recruiting and retaining employees. There are many reasons it is important to maintain a positive employer brand, but there are two in particular that you must note: It is a preventative measure: On one hand, cultivating a positive employer brand with words and actions can help mitigate significant issues with employees. For example, a positive brand and culture can encourage employees to seek resolutions internally and prevent issues from escalating into legal claims. It is also a risk factor: On the other hand, your brand as an employer is yet another thing you must address and strategically protect if you face legal issues – particularly if you face employment litigation. Accusations from employees could put the employer brand, as well as the consumer brand, in jeopardy. Employment disputes are not always avoidable. However, employers must approach them with the utmost care so they can manage legal risks while securing all the components of their brand for the future. CONDUCT A BRANDING AUDIT Many sources, including the Harvard Business Review, agree that it is critical for employers to conduct a brand audit. This can help employers scrutinize their brand’s current standing and determine how they can improve their brand. A thorough audit generally requires employers to: Monitor their reputation online and externally Review all internal documents, including applications and job descriptions Organize surveys with current employees to gauge their perspectives Regularly evaluating the brand can help demonstrate employers’ commitment to their business and employees, and protect their business in the long run.

Disability discrimination claims are on the rise according to the Equal Employment Opportunity Commission (EEOC). They have steadily increased over the last decade, making up nearly 36% of all cases filed with the EEOC in 2020. That is why employers must be consciously aware of the steps they can take to reduce those claims, especially when it comes to the hiring process. REMEMBER, THE ADA APPLIES TO HIRING PROCESSES California employers know that the Americans with Disabilities Act (ADA) prevents discrimination against those with disabilities in the workplace. However, it does not only protect employees. The ADA applies whenever an employment decision or action is made – including the applying, hiring and training process. That means it also covers qualified applicants and candidates for a position. Therefore, employers must ensure they understand and apply the technical elements of the ADA in these situations. They must also take great care to: Make sure their applications do not include questions regarding medical history or disability information Be careful about the questions they ask applicants during the interview Provide reasonable accommodations to applicants when requested Adjust training practices and processes as necessary Individuals do not have to be employees in order to file a discrimination claim. This is critical for employers to remember. BE VIGILANT DURING SCREENING PROCESSES TOO All employers must also keep the rules of the ADA in mind as well during the screening process of employees. NBC reports that it is becoming a popular practice for employers to have applicants complete aptitude and personality tests during the screening process. These tests and the assistance of automation can help make the hiring process more efficient. Yet, this report states that these tests and many other automated tools often unfairly discriminate against individuals with disabilities. This is all not to say that employers should not use these efficient practices, but they must be aware of the potential issues they could face. They must have a strategy in place when using these tools, so they can avoid the legal risks.

California employers should know that retaliation charges can pose a serious risk their business. It is not only illegal, but it can cause significant harm. EMPLOYER RETALIATION STILL ON THE RISE The Equal Employment Opportunity Commission (EEOC) reports that cases of retaliation are still increasing at a significant rate over the years. In 2020, retaliation claims made up 55.8% of all the charges filed with the EEOC – more than half of all the claims. The reasons behind this increase vary widely. However, one reason for the high numbers is likely that employees are more willing to speak out about discrimination and harassment in the workplace. Many social and workplace movements have contributed to this, but it is up to employers to stop retaliation. ACTIVE STEPS ARE NECESSARY TO STOP RETALIATION When dealing with employee complaints, employers should play an active roles in preventing retaliation. We have discussed the importance of this in previous blog posts. Unfortunately, creating and implementing an anti-retaliation policy is not enough to stop it from occurring. Employers must make sure both employees and leadership understand the business’ policy towards retaliation, and in addition should: Regularly review the reporting process and make sure it is employee-friendly Include practices against retaliation in leadership training efforts Carefully evaluate employment decisions for any risk factors of retaliation

Employers are well aware that wage and hour claims are one of the most common legal issues they could face throughout their careers. These claims pose a risk particularly because employers must ensure they comply with federal, state and even local laws, all while monitoring pay practices carefully. This risk is on employers’ radar, but a recent report indicates that these claims could become an even larger problem for employers in the future. WAGE AND HOUR CASES ARE AN INCREASING RISK According to the Society for Human Resource Management (SHRM), employers should be particularly conscious of their wage policies as they move forward. The report found that wage and hour class action cases were more common than any other employment claims in 2020. The rate of these cases was also the highest it has been in the last 20 years, and that this litigation trend will continue for the next few years. EMPLOYERS MUST TAKE MITIGATING ACTION To protect their businesses, business owners should ensure they minimize the potential causes of wage and hour lawsuits by: Staying on top of minimum wage laws to avoid claims of violations Updating the best practices to which managers must adhere Reviewing and auditing pay records to avoid different pay issues Affirming employees are classified correctly under California law Even minor mistakes in this area can lead to serious issues for employers – as well as financial and legal penalties. Additionally, these cases, and the ensuing investigations, can be invasive and disruptive. Most business owners strive to avoid these legal claims, especially after this past year when businesses of all sizes have faced complex financial challenges. That is why it is even more critical for employers to be diligent about their best practices regarding employee wages.

We have discussed the widespread impacts of Assembly Bill 5 in previous blog posts. This law is at the center of many employers’ concerns for the future of their companies. However, a recent decision regarding AB 5 will also have employers looking into the past. THE ABC TEST IS RETROACTIVE By now, most California employers are very familiar with the ABC test established by the Dynamex decision. Employers must apply the terms of the ABC test to workers to determine whether they qualify as employees or independent contractors. The decision creating the ABC test was in 2018, but it took until the beginning of 2021 for the California Supreme Court to answer one of the biggest questions employers had: does the test apply retroactively? In short, the answer is yes. The Court stated that the statute of limitations on employees’ claims still stand. Even so, this recent ruling could increase challenges – and risks – for employers across the state. WHAT DOES THIS MEAN FOR EMPLOYERS? Establishing retroactivity of the ABC test could significantly increase the liability employers could face from former or even current employees. This means that there are several steps employers must take, including: Auditing their employment records carefully Carefully considering the worker relationships in the past Completing the necessary payroll and employment taxes It is critical that employers are proactive in determining their employees’ statuses, even if it is retroactive. Taking these steps could make all the difference in helping employers avoid complex labor claims in the future, as well as the severe penalties for violating the law.

Keeping certain matters confidential – such as trade secrets and business plans – is critical to navigate the business world. It allows companies to differentiate their products and services and compete successfully. Confidentiality is important, as most employers know. Even so, they must approach this matter with great care. RECENT CASE SHOWS DANGERS OF GENERALIZED AGREEMENTS Employers often use non-disclosure agreements to protect their intellectual property and company overall. However, a recent case illustrates that overly broad terms in an agreement can create significant legal issues for employers. Although Baker & Associates was not involved in the recent case of Brown v. TGS Management Co., LLC, employers should take note of the details of this case. Essentially, the employer defined confidential information so broadly that: The former employee claimed the terms prevented them from working in the same field again; and The too-broad terms ultimately led the agreement to have the same effect as a non-compete agreement. Non-compete agreements are both unlawful and unenforceable under California Code. Employers often try to include broader terms to ensure greater protection for their trade secrets and other critical information, but language that is too general can work against the business in the long run. REEXAMINE THE AGREEMENTS Non-disclosure agreements are allowed under state law. However, employers must take great care when creating them. A proper non-disclosure agreement must be specific in its terms. This means employers must be precise in explaining: Which parties are involved and their obligations; How long it is enforceable; and What information is confidential. Employers must be explicitly clear about what employees cannot discuss. They should review the terms of their non-disclosure agreements or confidentiality clauses to ensure they are specific – and not leaning too close to a non-compete. Additionally, it is important to note that the more specific employers are in these agreements, the more likely it is that the courts will enforce it if the company faces legal issues in this area.

The concept of monitoring employees is nothing new in the workplace. It is a common practice to ensure employees meet production goals efficiently. Even though it is common, California employers must make sure they comply with the law to avoid complex legal issues and disputes with their employees. MONITORING IS OFTEN ESSENTIAL TO ENSURE SECURITY The primary goal of monitoring employees at work is to protect the company as a whole. It allows employers to ensure their records are accurate, their employees are safe and their property is secure. Common methods that employers use for monitoring often include: Timecards to track the hours employees work Security cameras in the workplace to increase efficiency and safety GPS tracking, especially for commercial drivers Even so, employers must consider privacy. This is especially critical in the new reality of working remotely. WHAT SHOULD EMPLOYERS DO WHEN MONITORING REMOTE WORK? Working from home full time is a whole new territory for many. It is forcing employers to change how their business operates. And it is also requiring them to adjust their methods of monitoring employee productivity. While monitoring employees may be legal, virtual work can pose many challenges to employers. So, what must employers consider as they move forward? When it comes to monitoring practices, all employers should: Inform their employees: The Harvard Business Review recommends that employers be transparent and respectful with their employees in their monitoring practices. Tell them the purpose of monitoring, as well as how the company will supervise them on the job. It is common to provide this information in the employee handbook or the employment contract. Consider the legal impacts: California law states that employers can monitor employees’ communication and activity on company devices. Therefore, employers can monitor workers remotely. However, they must take note of the recent amendments to the California Consumer Privacy Act (CCPA) that cover employees’ private information as well. Working remotely might change the landscape of employee monitoring needs and practices. But employers must make sure they approach this issue with great care. It may be helpful for employers to consult an experienced business attorney to make sure they understand the laws protecting employees’ privacy, so they do not violate their rights.