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Handling employee complaints or claims on top of managing a business can be complex. However, employers often have the opportunity to mitigate the risk of employment disputes – and litigation – as long as they respond to employee complaints efficiently. Failure to do so can be devastating to the business, and the prevailing trend appears to be that businesses are falling short. EMPLOYEES REPORT INAPPROPRIATE RESPONSES TO COMPLAINTS It seems that a large percentage of employees believe that their supervisors do not handle complaints or workplace conflicts properly. The study from the Chartered Institute of Personnel and Development (CIPD) found that: 24% of employees report that supervisors ignored complaints of bullying or incidents of harassment in the workplace 31% of workers said that their supervisors did not even take their complaints seriously California employers must take complaints seriously; otherwise, employees often feel their only resort is to take greater legal action that could pose a larger risk to businesses. In some cases, this could even involve employees filing charges with the Equal Employment Opportunity Commission (EEOC). WHAT IF EMPLOYERS FACE CHARGES FROM THE EEOC? Complaints with the EEOC can build up into a long train of issues for employers. They often lead to investigations, significant legal expenses and penalties and harmful press reports. Employers and business owners should be sure to take proactive action to protect their business. First, it is critical to understand what to expect and the steps they might have to take in response to these charges. Understanding the steps required when facing a lawsuit from the EEOC can help employers immensely in these situations, but it is also critical to consult an experienced attorney before moving forward. A CAREFUL RESPONSE TO ALL EMPLOYEE MATTERS IS ESSENTIAL Even if some complaints might seem trivial, employers must ensure they treat all complaints equally and seriously. Taking steps to respond effectively to employee concerns the first time can help employers avoid a greater risk of litigation in the future.

By now, employers and business owners are very familiar with California’s Assembly Bill 5 and the new – and highly controversial – rules for classifying whether workers are employees or independent contractors. Regardless of what an employer’s feelings are about these new guidelines, they are a reality for California employers. Challenges and disputes over this new law continue to arise. September 2020 brought a new bill that added even more exemptions to this rule in response to these challenges. However, many businesses face yet another concern regarding this law. FRANCHISEES CONCERNED ABOUT EFFECTS OF AB5 Several franchise organizations have filed a lawsuit challenging AB5’s effects. These organizations do not necessarily oppose AB5’s guidelines or the ABC test in general, but they are concerned that the law: Conflicts directly with federal franchise laws and organizational structure Affects the franchisee’s place in the business world Impacts the business relationship between franchisees and franchisors The organization of franchises is unique in the business world, and owners are concerned that the language of AB5 would jeopardize the franchisee’s place – essentially defining them as the franchisor’s employee. SHOULD BUSINESS OWNERS BE CONCERNED? Franchisees are small business owners in their own right. After all, a franchise is generally considered a joint venture. These business owners simply have the license to operate under a larger company’s trademark and with their business model. While they do have to protect the brand and adhere to specific rules of the larger company, they are independent. However, that does not classify them as an employee or independent contractor. State lawmakers have been quite responsive to the concerns over AB5. Additionally, federal law already clearly defines franchise regulations and rules. Therefore, business owners involved with franchises should not worry, but they should monitor this lawsuit and take measures to protect their business.

Most employers know that wage and hour claims are some of the most common legal issues they will face. Even though they are common, they can lead to serious issues and risks for companies. A recent case involving Apple showcases only one example of the effect these cases can have – even when it boils down to one seemingly unrelated policy. APPLE ORDERED TO PAY EMPLOYEES FOR MISSED WAGES In 2013, two employees of Apple retail stores filed lawsuits to recover lost pay due to off-the-clock-bag checks. The policy was to ensure employees did not carry any company products or trade secrets out of the store, but these bag checks could take up to 20 minutes each day. This totaled up to over an hour of unpaid work each week. In February 2020, the California Supreme Court ruled that Apple would have to reimburse employees for this time. After all, the employees were still under the employer’s control during the checks. Apple appealed the ruling. But in September, the U.S. Court of Appeals for the Ninth Circuit maintained that Apple had to give back-pay to employees for the time spent checking their bags. According to Observer, this ruling will require Apple to repay a total of $60 million in missed wages. TWO CRITICAL ISSUES EMPLOYERS MUST NOTE The execution of this policy led to significant legal and financial consequences for Apple, and finding a resolution took a considerable amount of time and money away from business matters. However, there are two primary subjects that are especially important for employers to understand from this case: Know the law: Employers must review federal and California wage and hour laws, as well as keep up to date with any relevant changes that could impact their business. It is an employer’s responsibility to ensure that their policies and pay practices comply with these rules to avoid wage and hour lawsuits. Review policies at all levels: Additionally, employers must also make sure they are fully aware of the policies enforced at every level of their company. Observer reported that Apple’s CEO, Tim Cook, was not aware of the bag-check policy until employees filed complaints with him directly. Employers should take measures to avoid this mistake and ensure policies are enforced fairly and identically throughout every level of the business. Mitigating the risk of wage and hour lawsuits is possible, but employers must be vigilant when it comes to creating and enforcing policies that comply with the law.

There are several laws protecting groups of employees. And, in turn, there are many requirements and responsibilities that employers must understand so they do not violate these laws and jeopardize their business. Pregnant workers are one of these protected classes. WHAT DO THE CURRENT LAWS SAY? Both federal and California laws prohibit pregnancy discrimination. State law specifically bans employers from letting a worker’s pregnancy impact any employment decisions, including: Hiring Layoffs Job assignments Promotions Paid leave Accommodations If California employers disregard their obligations under the law, they could face serious penalties. Pregnancy discrimination is becoming a prominent issue in the business world as of late. In just the last few years, courts have ruled companies to pay out significant sums in pregnancy discrimination lawsuits. SEVERAL EMPLOYERS VOICE THEIR SUPPORT FOR UPDATED PROTECTIONS Federal lawmakers have introduced the Pregnant Workers Fairness Act several times over the years in the United States Congress. This law would establish federal regulations for employers to: Offer appropriate accommodations for pregnant workers Prevent retaliation against pregnant workers It has failed to pass and become law each time. Last September, however, Forbes reported that 28 companies declared their support of passing this law and increasing protections for pregnant workers in an open letter. Several companies signed their support for this law, including Microsoft, MasterCard and the California-based Patagonia. California is one of several states that already provide these protections under state law. Even so, employers still want federal guidelines on this topic. This would ensure that: Employers have a clear understanding of their responsibilities under the law; They can safeguard their employees; They can proactively prevent legal risks at all levels of the company; and They can reduce the risk of litigation they face. After all, if employers have a better understanding of their legal obligations, it is much easier to comply with the law and protect the company as a whole.

The legal issues against rideshare companies Uber and Lyft keep mounting in California, as we have discussed before on this blog. Although Baker & Associates is not involved in these cases, the developments highlight critical issues of which employers must be aware. Many of the legal concerns began when California lawmakers passed Assembly Bill 5, which established new requirements for the classification of employees versus independent contractors. However, new lawsuits have posed trouble for these companies as well. NEW LAWSUIT ADDED TO OTHERS AGAINST LARGE RIDESHARE COMPANIES Both Uber and Lyft are now facing a new lawsuit. Recently, the California Labor Commissioner filed a lawsuit claiming these companies engaged in wage theft. These allegations of wage theft may relate to the legal matters over AB5 compliance, but the companies could face even more consequences. The Labor Commissioner aims to recover payment for misclassified drivers. The risk of repaying lost wages, as well as the legal penalties for wage theft, could be steep for these companies. EMPLOYERS BEWARE: WAGE THEFT CLAIMS CAST A WIDE NET Most employers make sure they take great care when it comes to the financial aspects of their business – especially their income and wages. They know that even the smallest mistakes in finances can lead to serious legal issues. However, employers must be especially careful to avoid wage theft claims. And according to the California Department of Industrial Relations, wage theft can encompass many actions, including but not limited to: Failing to reimburse employees for business costs; Not providing or allowing meal breaks or other required breaks; Failing to pay bonuses or promised vacation time; Deducting pay or paying workers less than minimum wage; and Taking employee tips. It is even more important for employers to be conscious of these matters now, in the complex circumstances created by the COVID-19 pandemic. For example, employers must still reimburse employees for business expenses even if they are working remotely. Failing to do so could result in considerable financial penalties for the employer. MAINTAIN FINANCIAL DOCUMENTATION The best way employers can proactively protect themselves in these cases is to keep a detailed record of all financial matters. Many accounting and pay systems are automated nowadays, but employers should still ensure they keep track of all payments through these systems to mitigate the risks of potential legal claims.

Finances are often a priority for both employees and employers. That is why one of the most common issues employers face often involve wage and hour claims. Whether employees claim they did not receive proper pay for their overtime work, or that they experienced pay discrimination, these complaints can be complicated for employers. Employers could face even more scrutiny – and legal penalties – if a new bill becomes law. NEW WAGE AND HOUR REPORTING PROPOSED FOR EMPLOYERS In an effort to reduce the rate of wage discrimination, Senate Bill 973 would alter California employers’ obligations when reporting pay data. The bill would require private employers with more than 100 employees under them to report wage and compensation data to the California Department of Fair Employment and Housing (DFEH). Employers will be required to report this data annually by March 31 starting in 2021. And each year, this report must include information regarding: Specific job categories Employees’ race or sex The employee’s earnings The total hours they worked The DFEH would have the authorization to conduct an investigation and submit employers to legal consequences if they find discrepancies in these reports. As of September, the bill is likely to become law, as it passed the state legislature. Now it only needs Gov. Newsom’s signature. PRECISE PAY-EQUITY AUDITS ARE ESSENTIAL Laws like SB 973 tend to increase the risk of employers facing considerable fines or even litigation – especially if they are not careful to comply with new and current laws. Therefore, all employers should take care to: Review the new requirements of the bill; Reassess their recordkeeping policies; and Conduct proactive and thorough pay-equity audits. Pay audits are essential, but employers must take them seriously. They must ensure they have valid, legal reasons if there are any differences in an employee’s wage. Wage and hour disputes might be some of the most common sources of employment litigation, but employers can reduce the risks they face if they take care to analyze their pay practices and policies closely and ensure they comply with state and federal laws and requirements.

When the #MeToo movement expanded in 2017, employers faced a sharp increase in sexual harassment complaints and cases. The trends of this movement demonstrated a common risk for employers: if one person comes forward with a complaint, many more will likely come forward as well. This risk not only manifests with similar claims, but any sort of legal dispute can open the door to other lawsuits or serious issues. Essentially, if one complaint develops into a lawsuit, it can cause a ripple effect that employers could face. MCDONALD’S IS A PRIME EXAMPLE OF THE RIPPLE EFFECT The recent legal issues stacked against McDonald’s are a clear example of the lawsuit ripple effect employers are especially prone to face. The company has faced compounded legal issues, including: Several McDonald’s employees joined the #MeToo movement and went on strike in 2018. They claimed they experienced persisting sexual harassment at work. As we briefly discussed in a recent blog post, McDonald’s also took legal action against the former CEO for having inappropriate relationships with subordinate employees. Now, most recently, CNBC reports that 50 franchisees are suing the company for racial discrimination. These cases might not seem inherently related. However, the discovery of one infraction can quickly lead to other issues. Soon, other employees feel they can come forward. If even one complaint gets out of hand, employers suddenly face increased scrutiny. And this can quickly lead to legal disputes having a considerable ripple effect for the company. EMPLOYERS MUST BE AWARE OF THIS RISK This prospect of a ripple effect is one of the most critical reasons why employers must take action immediately if they face complaints from employees. California employers must respond to complaints effectively so they can: Prevent complaints from developing into something bigger; Mitigate the risk of a ripple effect; and Minimize the impact ripple effect litigation could have on the business’s finances. Identifying and mitigating risks is critical, especially if employers face complaints from employees. To protect the business’s reputation and future, they must ensure they respond properly to prevent a ripple effect of legal issues.

Running all of the aspects of a trucking company requires great attention to detail. Employers must organize timetables, shipments as well as drivers to ensure they fulfill their contracts and maintain success. On a larger scale, they must also pay close attention to state and federal laws to avoid complex legal matters. A recent case only emphasizes the importance of understanding the nuances of the law. TRUCKING COMPANY ORDERED TO COMPENSATE EMPLOYEE Baker & Associates is not involved in this case, but it is critical that all business owners understand and learn from the details of this recent case. Earlier this year, California company JHOS Logistics and Transportation Inc. terminated an employee when he would not drive a truck he believed exceeded weight restrictions. This situation might seem rather simple and straightforward; however, it was anything but. Terminating an employee always requires care to make sure they do not violate the law. In the JHOS Trucking case, terminating this employee was in direct violation of the Surface Transportation Assistance Act (STAA). The STAA states that employers cannot discharge an employee if they: File a complaint regarding a violation; or Refuse to drive a vehicle if it violates safety standards. Therefore, the Occupational Safety and Health Administration (OSHA) determined that the company violated the law and ordered the company to: Rehire the employee; Repay $190,000 in lost wages; Pay $25,000 in punitive damages; and Cover $5,000 in compensation and attorney fees. OSHA’s order also required the company to train supervisors and managers regarding employee protections to prevent situations like this from occurring in the future. EMPLOYERS MUST TAKE TIME TO UNDERSTAND THE LAW This case illustrates only one of the reasons companies must be consciously aware of employment laws. Additionally, maintaining a thorough understanding of these laws allows business owners and employers to: Prevent risks related to terminating an employee; Protect the business from litigation; and Avoid significant financial consequences. Unfortunately, employers face a high risk of liability under the law in cases like this. They can reduce that risk if they take time to understand the law, but it might be helpful to consult a knowledgeable business attorney before moving forward.

Most business owners take great care to prevent legal disputes. However, it is almost impossible to totally eliminate all their risk; it’s simply the reality of running a business. Even so, there are ways that business owners can protect themselves while resolving legal disputes. For example, one critical factor to protect the business is to secure a confidential settlement agreement. WHO IS SUBJECT TO CONFIDENTIALITY IN THESE CASES? There are often many parties involved in the process of resolving a business dispute. This can make it challenging to keep certain matters confidential from the public – including their consumer base and other business affiliates. So, business owners often wonder how they can protect their business when settling damaging disputes or claims. In many cases, making a settlement agreement confidential can help. The confidentiality clause applies to all parties involved in the case, including: Plaintiffs; Defendants; and Attorneys or counsel. With such a clause in place, none of the parties listed above can discuss either the dispute or the settlement of the matter. This not only keeps the details of this case between the relevant parties, but it can also protect businesses from landslide of similar claims. CONFIDENTIALITY IS NOT ALWAYS A POSSIBILITY In 2018, California lawmakers and Gov. Jerry Brown passed a law that bans the use of such agreements in employment disputes involving: Sexual harassment or assault; Discrimination based on sex; or Retaliation for reporting sexual harassment. This ban applies in all these cases, regardless of whether the parties resolved the dispute in or outside of court. Understanding the benefits – as well as the limitations – of a confidential settlement agreement is critical, especially when business owners face the risk of a legal dispute.

All employers know their responsibilities and obligations when it comes to their workers’ personal protective equipment (PPE). Fulfilling these obligations is necessary to keep workers safe and employers in line with state and federal regulations. However, in the middle of this global pandemic, the nuances of these obligations have recently led some employers to face serious disagreements with their workers and a high risk of litigation. EMPLOYERS MUST PROVIDE PPE TO EMPLOYEES According to the Occupational Safety and Health Administration (OSHA), federal law requires employers to take several steps to ensure workplace safety, including: Assessing hazards in the work environment; Determining the proper PPE to mitigate these hazards; Providing their employees with PPE at no charge; and Maintaining the PPE and updating PPE policies if necessary. Violating these requirements could result in employers facing significant fines and even legal disputes. It seems some employers are currently facing complex issues regarding PPE, though not for the same reasons many might think. COULD CONTROVERSY BE BREWING REGARDING PPE AND WORKER CLASSIFICATION? In July, CNN reported on a protest conducted by Lyft drivers in California who stated their employer did not provide them with the proper PPE to stay safe during the pandemic. They have safety kits available for purchase, but they are not providing PPE free of charge. And many drivers claim Lyft will not provide them with PPE because they still do not want to recognize them as employees under Assembly Bill 5. California employers are familiar with AB 5 by now, as it went into effect on January 1, 2020. However, CNN reported that Lyft and Uber still have not complied with the new law. Therefore, they still classify their drivers as gig workers instead of employees. WHY IS THIS IMPORTANT FOR EMPLOYERS TO KNOW? Several businesses across California employ both employees and independent contractors. These employers must always be consciously aware of: Keeping workers safe; but also Complying with AB 5. This is critical to avoid serious penalties – and litigation. Business owners should monitor the developments in this case. However, they should also proactively review their practices and PPE policies. This is especially important to avoid complex disputes with employees and future legal issues.

When employees spend roughly 40 hours a week together, it is common to establish important connections, friendships and in some cases, romantic relationships. Most employers might not think this is significant. However, romantic relationships in the workplace could quickly turn sour and have considerable effects on the business that could lead to serious disputes. RELATIONSHIPS AT WORK CAN CAUSE MAJOR ISSUES FOR BUSINESSES An employee’s relationship is an aspect of their private life, right? Many employers believe it is not their concern, but workplace relationships are another matter entirely. Take the events in the ongoing lawsuit between McDonald’s and its former CEO, for example. The former CEO had relationships with several subordinate employees. He is now facing charges of misconduct and a lawsuit from the restaurant chain. This is an extreme case, but it still illustrates the risk these relationships can pose. Relationships between supervisors and subordinate employees create the most risk for employers, as they can often lead to: Hostile work environments: In 2005, the California Supreme Court determined that favoritism resulting from a workplace relationship could create a hostile work environment for other employees. The Court also ruled that employers could be held liable in these cases. Harassment: The risk of workplace relationships can increase exponentially if the relationship ends. If workers retaliate, or one continues to pursue the other, it could lead to sexual harassment complaints or claims of misconduct. These complaints could directly impact the employer and lead them to face serious legal issues. These issues might not exist in a relationship between two employees at the same level, but any personal relationship could lead to a conflict of interest and significant risk for businesses. HOW SHOULD EMPLOYERS ADDRESS THIS MATTER? Although employers cannot exactly enforce a company policy that forbids dating or relationships, they can discuss an employee dating policy in the employee handbook. For example, employers can: Implement policies restricting fraternization between employees and superiors; Establish expectations for employees’ behavior in the workplace; Ensure employees understand the sexual harassment policies at work; and Have the two employees inform Human Resources about the relationship. Workplace relationships are more common than many employers might think, and they are not something employers should overlook. Remember, protecting the business must come first. That means employers must address these risks proactively.

Business owners work hard for what their company has achieved. Everything from the purpose of the business to the carefully cultivated clients is a valued and protected asset for entrepreneurs. Even the logo or branding represents a hard-fought victory full of symbolism, dedication, pride – and perhaps most importantly crucial brand identity and value. Consequently, when another company or individual misappropriates these important assets, either intentionally or not, it can seem like a direct attack on the livelihood of the business. Upon learning of such a misappropriation, the business owner should retain an attorney to write an impactful cease-and-desist letter to the offending party identifying the unlawful conduct and demanding that they immediately stop. CEASE-AND-DESIST LETTER BASICS There is an art to writing a cease-and-desist letter. Too strong, and it may incite resistance which may result in having to file a lawsuit to enforce your rights. Too weak and it will likely be ignored. Firmly encouraging compliance and cooperation rather than seeking punitive remediation if often preferred. For example, in 2012, the popular whiskey brand Jack Daniel’s sent a cease-and-desist letter to an author who used a likeness of their whiskey label as a cover for his book. Instead of immediately threatening legal action, the liquor mogul politely asked him to change the cover for the next printing. They even offered to help pay for a redesign. The author immediately acquiesced, declining the extra funds and making the changes. LEGAL COUNSEL PROVIDES A PROFESSIONAL EYE The Jack Daniel’s approach may not work for every company. Those looking for a more professional voice can hire a local lawyer familiar with intellectual property law. An attorney can draft a professional letter that lays out legal claims clearly and concisely.