December 2006 Newsletter
The Top 10 Things Employers Do to Get Sued
3. Creating a “Use-It-or-Lose-It” Vacation Policy to Save Money.
Did you know that “use-it-or-lose-it” vacation policies are illegal in California?
First let’s examine what a “use-it-or-lose-it” vacation policy is… When an employer institutes a “use-it-or-lose-it” policy it means that the employees lose their accrued vacation days if the employee doesn’t take those days by a specific deadline.
The California Supreme Court has determined that vacation is a vested benefit that can’t be taken away once it is earned.
There are acceptable alternatives to use-it-or-lose-it policies. These alternatives can include reasonable caps and cash-out policies. If you institute a reasonable cap plan, an employee that has earned a set amount of vacation but has not taken it would stop earning additional vacation until the employee uses some accrued vacation time. Employees also may be required to cash out accrued vacation they haven’t taken.
Regulations require employers pay out all accrued but unused vacation at the end of the employment relationship, even if the employee wasn’t yet eligible to take the vacation time. This is required in all separation situations – an employee quits, is terminated, or is laid off. Vacation pay is subject to the same time limits as other final pay. **
Disagreements about vacation pay are often the result of inadequately written vacation policy or ineffectively vague employee handbook language. It is not unusual for a vacation policy to include a vague statement such as, “Employees are eligible for one week of vacation after a year of employment.” How would you interpret this statement? …Probably differently than your employees. The employer may have intended this statement to convey that no vacation is earned until after a year of work but it may be interpreted differently in a legal dispute whereas it may be interpreted to mean that the employee accrues vacation during the entire first year and is eligible to take that vacation during the second year. This would mean that an employee who terminates (regardless of reason) during the first year would be entitled to a proportional amount of one week’s vacation.
** A quick reminder about final pay: Final paycheck deadlines do differ depending on whether the employee was terminated, laid-off, quit without notice, or quit with at least 72 hours notice. Remember that a terminated employee is entitled to all final wages, including all accrued but unused vacation (or all PTO if a PTO bank was used), at the time of termination. The also applies to a layoff, unless there is a return-to-work date within the same pay period. If the employee quits with 72hours notice or more they are entitled to a final paycheck on the last day of work… however, if an employee quits with fewer than 72 hours notice must receive a final paycheck no later than 72 hours after notice is given.
4. We Pay the HR Staff to Handle All Situations or Problems That May Arise… We Are Not Going to Waste Time Training Front-Line Managers and Supervisors about labor laws and regulations.
Your front-line management and supervisors are the people who interact with your employees most closely every day, they are your organization’s most immediate representation to your employees… and they are also your best defense against being sued.
Even basic training on topics such as sexual harassment, discrimination, safety, and wage and hour laws (such as exempt versus non-exempt status — Contact the ProSERVICE Human Resources Department for additional clarification and a review of your individual situation) are crucial.
These managers and supervisors need to be aware that their actions have the opportunity to both protect you from, and expose you, and your company, to litigation.
Example A: Wage and hour issues and the Bounty Hunter Law. This legislation (The Private Attorney General Act of 2004, Labor Code 2698 and 2699) has expanded the rights of individual employees to sue employers and rewards them for doing so.
This legislation imposes stiff penalties in relation to payroll records, I-9 compliance, time records including meal periods, rest breaks, and overtime. Your front-line managers and supervisors are the people within your organization who collect and approve this documentation, including approving time-sheets and overtime on your behalf.
Example B: Your Employee tells her Manager that her Co-Worker has been making unwanted and inappropriate sexual comments to her. Since her Manager has not received any training about handling sexual harassment complaints, he has the common misconception that the Employee can’t sue unless she at least tells her Co-Worker herself that she doesn’t like the comments.
Personally, her Manager doesn’t feel that the comments the Employee reported are that bad, he’s not offended, so he instructs her to try to handle the problem on her own first by telling her Co-Worker to stop… After all, he knows her Co-Worker would not intentionally want to offend anyone, so what is the harm?
The Employee sues for sexual harassment and wins a large award, as it is determined in court that she reported the harassment but the company did not take immediate and appropriate corrective action.
Currently the law (Government Code 12950.1; AB1825)** presumes that once the Employee’s Manager is aware of the harassment, the company is aware of the harassment and has a duty to correct the problem. The law also dictates that the intention of the alleged harasser is irrelevant, as is the Employee’s Manager’s determination that he is not offended by the comments made to her. Had her Manager been properly trained, he would have reported the situation to human resources immediately rather than asking the Employee to try to handle it herself.
** ProSERVICE offers comprehensive interactive Sex Harassment Training that meets the requirements set forth in Government Code 12950.1 (AB1825) for all of our clients and their employees classified under the FEHA definition of a supervisor. We can help you make the determination as to who among your staff meets this definition and therefore is required to be trained as well as provide the training, materials, and certificates of completion.
