February 2007 Newsletter
The Top 10 Things Employers Do to Get Sued
7. Hang On to That Final Paycheck Until Your Employee Returns His Pager, Uniform, or Laptop, etc… In Any Case, He Signed a Written Agreement Promising That He Would Return Them... So it is Only Fair.
A final paycheck is exactly that, final. This may be why so many employers see it as their last chance… A last chance to get their property back from the terminating employee and a last chance to get required termination paperwork completed… Seems very logical and perfectly fair right?
Employers beware! Failing to provide that final paycheck, in its entirety, within the legal time limit, regardless of what property the employee may still possess, or what agreement the employee may have signed, can be a lingering mistake with some costly consequences. It is a violation of California law to withhold a final paycheck for the purpose of inducing a former employee to: pay back money that may be owed to the employer via a previous advance or loan, return items that are the employer’s property including keys, tools, cell phones, computers and laptops, or uniforms… to turn in a final expense reimbursement form, or to sign any separation documents.
Employers should keep these rules in mind when creating policies regarding lending money to employees because they prohibit the employer from collecting the total balance of the loan still due from the terminating employee’s final paycheck. If the employer and employee have entered into a written agreement authorizing the employer to make periodic payroll deductions in set or specific amounts as payments on the loan – then the employer may take the next regular deduction on the final paycheck. However, the employer may not arbitrarily deduct the entire remaining balance like a balloon payment from the employee’s final paycheck unless the employee has voluntarily agreed to this in writing at the time of the final paycheck. Employers are cautioned to make sure that the employee is not coerced into any agreement, and that the employee understands the voluntary nature of any such agreement.
Employers may have recourse to withhold final pay wages only in the event that the employee owes the employer money due to willful misconduct or dishonesty, or verifiable gross negligence. The burden of proof is always the employer’s and these circumstances are almost always complex, problematical, and expensive to prove. The ProSERVICE Human Resources Department is available to assist you with this difficult analysis before a costly mistake can be made.
The type of separation your employee experiences will determine the applicable final paycheck deadline. Different circumstances have different rules… Did your employee quit without notice or quit with a minimum of 72 hours notice? Did you terminate your employee, or was your employee laid off?
When an employee quits with less than 72 hours notice, that employee must receive their final paycheck no later than 72 hours after notice was given. However, when an employee quits with more than 72 hours notice, that employee is entitled to a final paycheck on the last day of work.
When an employer terminates an employee, that employee is entitled to all final wages, including unused vacation, at the time of termination. Employers are required to pay out all accrued yet unused vacation. Employers are not required to pay out any unused sick time, however if the company has one accrual bank, known as ‘Paid Time Off’ (PTO), then the entire PTO bank must be paid out on the final paycheck. These same rules apply to a layoff, unless there is a return-to-work date within the same pay-period.Employers who fail to meet deadlines for final paychecks expose themselves to waiting time penalties. Waiting time penalties are the continuation of the terminated employee’s wages in daily increments until payment of final wages are made to the employee, up to a maximum of 30 days.
8. Make Your Employees Sign Non-Compete Agreements to Protect Business Secrets and Prevent Turnover.
Non-compete agreements are a violation of California law. While such agreements that stipulate an employee is consenting not to work for one of your competitors for a specific period of time once their employment relationship has ended with your company are legal in other states, they are not in California. They are not enforceable and retaliating against an employee who refuses to sign is illegal.
In 2001, a California Court up-held a $1.26 million jury award for an employee who was terminated by Aetna U.S. Healthcare following her refusal sign a non-compete agreement. In their decision, the court determined the termination for refusing to sign an illegal agreement was a willful and oppressive violation of California law, entitling the manager to punitive damages.
EMPLOYER POSTERS
Please contact the ProSERVICE Human Resources Department if you did not receive your 2007 Employer Poster. This all in one poster meets all required notice posting requirements for California employers and is provided as a courtesy to all ProSERVICE clients. Posters were ordered in both English & Spanish, and were mailed out in January.
**The Cal/OSHA Form 300A – Summary of Work-Related Injuries and Illnesses, must be posted starting February 1st, 2007 through April 30th, 2007. Employers are required to post only the Summary (300A) and not the Log itself (300).
Even Employers with no recordable injuries or illnesses in 2006 must post the form with zeros in the ‘total’ line. All summaries must be certified by a company officer or executive.
Just like the Employer Poster that ProSERVICE sent out last month, this form must also be posted in a common area accessible to all employees. We recommend placing it next to the Poster. A copy must be made available for employees who move from worksite to worksite, like construction, and employees that do not report to a particular establishment on a regular basis.
Employers with 10 or less employees, and companies that are classified in a low-hazard standard industry classification (SIC) are usually exempt from injury and illness recordkeeping and posting. Please contact the ProSERVICE Human Resource Department for assistance in determining your company’s exempt status.
