April 2007 Newsletter
The Top 10 Things Employers Do to Get Sued
9. After Completing Her Probationary Period, Let Your Employee Know She’s Now Eligible for “Permanent Employee” Status.
Remember that the employment relationship is presumed to be at-will under California law, meaning either party can terminate the employment relationship with or without cause or prior notice.
Using the term “permanent” may imply the employer no longer has a right to terminate the employee without just cause. It’s better to use the term “regular employee”.
Just a reminder that an employer can do more to ensure at-will employment relationships. The at-will language should be stated on employment applications and in employee handbooks. Managers should be trained so that they do not imply or state that an employee is “permanent”, thus creating an oral contract.
An example of an oral contract is a manager who reassures an employee that “as long as she does a good job, she’ll have a job.” That sets up the employer to be sued for breach of an oral contract if the company has to lay off employees for economic reasons.
10. Making Everyone an Independent Contractor Will Help You Avoid Employment Law and Tax Liabilities.
Many employers try to classify a worker as an independent contractor if he/she:
requests to be treated as an independent contractor;
signs a written contract;
performs assignments periodically or inconsistently, or is on call;
is paid by commission rather than salary;
does not work under supervision; or
performs work for more than one company.The independent contractor status is determined mostly by the amount of control the worker has over the way and means of performing the work. Other important factors include:
Who supplies the tools and place of work. A worker who inputs sales data into the hiring firm’s computer at the hiring firm’s office is most likely an employee.
Whether the person performing services is engaged in a distinct occupational business. A bookkeeper who works from her home office running payroll for several local businesses is more likely to be an independent contractor than a college student who runs the payroll for a single business working two afternoons a week.
You may be faced with consequences such as significant taxes and wage and benefits liabilities, as well as possible fines for misclassifying an employee as an independent contractor
