Employment Law For Employers

Surveillance Cameras - Security

Questions and Answers for Employers


The following is intended to provide basic general information on employment from an employer’s perspective.  For more specific information, please contact us.


In the hiring of new employees, legal issues may arise with respect to the following:

Procedures used in recruiting and hiring.
The criteria the employer uses to select employees;
Inquires the employer may have of the job applicant; and,
Tests and medical examinations the employer may conduct.

Both Federal and California laws against discrimination and the invasion of privacy protect prospective employees.  Job prerequisites therefore should be clearly job-related and be consistent with the principles of business necessity.  Employers should be cautious about representations made during the interview process in order to preserve the “at – will” presumption, as well as generally avoid misrepresentations that might detrimentally induce an applicant to relocate.

Affirmative Action

Federal and California laws prohibit employers from discriminating against employees and applicants for employment on the basis of characteristics such as race, religious creed, color, national origin, ancestry, physical or mental disability, medical condition, marital status, sex, sexual orientation, pregnancy, or age.

In addition to being subject to these prohibitions against discrimination, most employers who choose to contract with the federal government or State of California for construction work or to provide goods or services must agree to engage in affirmative efforts to eliminate discrimination in the workplace.  With some limited exceptions, employers that contract with the government must develop and maintain written  affirmative action programs and comply with record keeping requirements.  However, such “affirmative efforts” must be carefully undertaken to avoid claims of “reverse discrimination.”

Immigration Laws

The Immigration Reform and Control Act of 1986 (IRCA) was enacted, in part, to ensure that employers do not knowingly employ unauthorized aliens.  To control the unlawful employment of aliens in the US, it imposes civil, and in some instances criminal, penalties on those persons or entities that hire, or that recruit, or refer for a fee, unauthorized aliens.  IRCA requires that employers keep records showing the eligibility to work in the US for each employee hired after November 6, 1986.

Additionally, IRCA contains provisions designed to ensure that implementation of the new hiring requirements does not result in discrimination against qualified applicants because of the national origin or citizenship. 

Independent Contractors

The use of independent contractors initially appears attractive because the business may enjoy substantially lower personnel costs due to savings from mandated contributions (e.g., social security, unemployment tax) and discretionary fringe benefits (e.g. medical insurance, vacation leave), as well as greater flexibility.

However, there are disadvantages to employing independent contractors including loss of control, loss of continuity and the fact that the employer bears the risk of misclassification.  If the employer misclassifies a service provider as an independent contractor, and a government agency determines that the service provider is an employee, the employer may be responsible for fines, penalties, and unpaid taxes and the “responsible person” for the employer may be subject to personal liability and criminal penalties.

Wage and Hour Laws

The federal Fair Labor Standards Act (FLSA) and the California Industrial Welfare Commission (IWC) regulates the payment of minimum wages, premium pay for overtime and restricts child labor.

The FLSA exempts from its overtime rule any employee employed in a “bona fide” executive, administrative, or professional capacity or an outside salesman.  The FLSA specifically defines the requirements for each exemption.

Most employees must be paid twice per month.  Nonexempt employees must, with certain exceptions, be paid for time worked in excess of 40 hours per workweek at a rate at least one and one-half times their base pay.  Generally, an employee cannot be required to work more than six days in seven.

Minors under the age of 18 and 16 are restricted in the hours they can work and, in some instances, the industries where they can be employed.

Vacations, Family and Medical Leave, and Other Time Off

An employee has no right to take paid vacation unless the employer has agreed to provide vacation time.  Once offered, in California, vacation pay vests as it is earned, and vacation earned cannot be taken away.  An employer may cap accrual of additional vacation time after a specific amount has been accrued.  Generally, upon termination, employees must be paid for accrued vacation time.

Like vacation leave, paid sick leave is available to employees at the discretion of the employer.  It need not be paid upon termination because its availability is contingent on the employee being sick.  Once offered, an employer must allow employees to use sick leave for the purposes allowed by statute including to attend for an ill child, spouse or parent.

Private employers are not required to permit their employees to be absent from work (with or without pay) on holidays.

Employers must give each female employee up to four months of pregnancy disability leave whenever she becomes disabled by pregnancy, childbirth or a related medical condition.

Federal and California family and medical leave law requires employers to permit employees to take up to 12 weeks leave during a 12-month period for certain specified purposes including newborn child care, to care for a newly adopted child, to care for a child, spouse or parent, and due to the employee’s own illness or incapacity.  Thus, the California Family Rights Act (CFRA) also grants up to 12 weeks for leave to care for a newborn child, which may be in addition to pregnancy disability leave.

Generally, employers must reasonably accommodate requests for time off for religious beliefs, due to a disability, for substance abuse rehabilitation programs, for school visits, to vote and to crime victims.  Employers are prohibited from discriminating against employees who take time off for military duty, to serve as jurors or witness, or as volunteer firefighters or emergency response workers.

Disability in the Work Place

The Americans with Disabilities Act (ADA) strictly limits employers from making any employment decision that adversely affects those individuals because of their disability, unless that decision:

Is job related,
Is a business necessity, and
Cannot be remedied by reasonably accommodating the individual’s disability.

With limited exceptions, the ADA covers all employers with 15 or more employees.

Posting Notices and Record Keeping Requirements

Numerous federal and California statutes and regulations impose posting and record keeping requirements on California employers.  Mandatory postings require many square feet of bulletin board space.  Likewise, the various records that employers must create and retain can consume a significant amount of employer time, resources and storage space.  Nonetheless, compliance with these often-burdensome requirements is essential because violations can result in civil and criminals penalties, loss of government contracts, adverse findings in litigation and administrative proceedings, and other serious consequences.

Employee Handbooks

As companies grow, the need for uniformity in the application of policies and procedures becomes sufficiently important to warrant the time and effort required to create a handbook.

Confusion about unstated policies and benefits can lead to employee morale problems, unwanted union organizing, and lawsuits.

The publication of written policies enhances the credibility of decisions based on those policies and deters discrimination claims of arbitrary or inconsistent treatment in similar circumstances.  Furthermore, a well-crafted handbook reserves for the employer the right to deviate from the stated policy in the appropriate circumstances.

Handbooks are often useful resources for new employees in understanding the company’s policies and procedures.  They also serve to educate supervisors and managers and are a ready resource to use in resolving complaints about policies and conflicts over procedures.  

The biggest concern for employers who adopt employee handbooks is to ensure that the policies it sets forth are followed.  A major cause of employers failing to follow policies is the employer’s belief that the policy is outdated, either because the law has changed or the employer’s business has changed.  Since the failure to follow its stated policies increases the likelihood of liability to an aggrieved employee, periodic review and revision is necessary as circumstances warrant.

Employee Contracts

Traditionally, employers have viewed employment contracts as providing more protection to employees than employers, but the recent erosion in the employment-at-will doctrine may favor increasing use of employment contracts for the protection of the employers.  The execution of a carefully drawn employment contract may increase an employer’s control over an employee, at least when the contract specifies the term of employment, the standards for employee’s performance, and the conditions under which termination will be permitted.  Another reason employers may favor employment contracts is the importance of preventing valuable employees with special skills or knowledge from being lured away by other opportunities.

Trade Secret Protection

California law generally does not permit an employer to contractually prevent a former employee from resigning and going to work for a competitor.   However, an employer may take steps to prevent the misappropriation of trade secrets.  Furthermore, employers (including officers, directors and investors) who knowingly participate or ratify the misappropriation of trade secrets through the hire of a competitor’s employee may be liable for damages.

The party claiming a trade secret must establish that it undertook “reasonable” efforts to maintain secrecy.  At a minimum, the employer should require all employees, consultants, suppliers, licensees, customers, governmental agencies and anyone who will be exposed to trade secrets to sign a written nondisclosure, confidentiality, anti-solicitation agreement at the beginning of the employee relationship, if possible.  An employee’s non-disclosure agreement often includes an assignment of an invention.

Workplace Privacy

Although employers may consider testing, surveillance, and methods of employee investigation an aid to efficient operations, from the employee’s perspective these activities may be seen as invasion of privacy.  As voicemail, e-mails, modems, and integrated computer networks have become fixtures in the workplace, new concerns about the right to privacy have come to the forefront.  Areas for concern with respect to privacy include:

Credit and background checks during the hiring process;
The confidentiality of information in personnel files;
Medical examinations;
Drug and alcohol issues;
The security of desks, lockers, and other personal workspace; and
Attempts to regulate employee lifestyles.

Workplace Safety

The federal Occupation Safety and Health Act (OSHA) and the California Occupational Safety and Health Act (Cal-OSHA) govern work place safety.  Cal – OSHA mandates that “every employer shall furnish employment and a place of employment (including practices, means, methods, operations, and processes) that are safe and healthful for the employees therein.  Cal – OSHA establishes standards for regulation of various hazards and provides procedures for inspections, citations, penalties and reporting of injuries and illness.

In 1989, California promulgated a progressive new approach to workplace safety.  Rather than issue a set of specific rules, the new approach provides that every employer develop and maintain written workplace injury and illness prevention program (IIPP) that identifies the particular workplace hazards  of that particular business and addresses those risks in a “common sense” fashion.  It is important that all California employers familiarize themselves with the specific requirements for establishing, implementing, and maintaining an effective IIPP because the law provides for criminal as well as civil penalties for failure to do so.

Workers’ Compensation

Prior to workers’ compensation laws, for an employee injured on the job to recover he had to prove fault, then he could recover tort damages, including pain and suffering.  The purpose of workers’ compensation laws is to provide swift and timely benefits to offset the potentially disastrous economic consequences of a disabling injury.  In return the employer is freed from costly and time-consuming litigation or tort liability.  However, employers are liable regardless of fault.  The recovery is predetermined by formula.

All employers must secure payment of compensation for workers’ compensation liability and comply with reporting requirements.  Employers are prohibited from retaliating against employees who file workers’ compensation claims. An employer who discriminates against a disabled employee due a job-related injury may be subject to tort damages including punitive damages.

Employer Liability for Acts of Employees

An employer can be held liable for the tort of its employees under two theories:

1.  The injuries caused by its employees can be attributed to the acts or omissions of the employer.  This includes instances in which the employer has directed, authorized or ratified the employee’s action; or where the employer was negligent in hiring, retaining, training or supervising an employee.

2.   An employer can be held vicariously liable under doctrine of respondeat superior. The justification for employer liability without direct fault rests on the sentiment that it would be unjust for an employer to avoid responsibility for injuries occurring in the course of its business when the employer is in the best position to insure against the risk as a cost of doing business.  The employee must be acting within the “scope of employment" for liability to attach.

An employer may be liable for the contracts entered into by employees if the employee has actual authority (conferred by the employer or implied by the employee’s position), implied authority or the contract is subsequently ratified by the employer (e.g., accepts benefits).

Discrimination and Harassment

Age Discrimination

The Federal Age Discrimination in Employment Act (ADEA) and the California Fair Employment Act (FEHA) prohibit discrimination due to age in employment.  People over forty are protected.  Employers need to be careful during downsizing.  It is illegal to replace a person over 40 with a person under 40, if age is the reason.

Disability Discrimination 

Disabled individuals are protected from discrimination by the Federal Americans With Disabilities Act (ADA) and the California Fair Employment and Housing Act (FEHA).  These laws make it illegal for an employer to discriminate against a qualified individual with a disability in “terms or conditions of employment.”

Generally, an employer has an obligation to make a “reasonable accommodation” if a disabled person can otherwise perform the duties on the job.

If an employer retaliates against an employee for filing a worker’s compensation claim, the employee can also file a claim for additional compensation to punish the employer under California law.  If the employee is fired when the employee can do the job, the employee can also file a claim for discrimination.

Racial Discrimination

It is illegal under both Federal and State Law to discriminate in the “terms or conditions of employment” on the basis of a person’s race or color.  Race is generally defined as a person’s ancestry, ethnic characteristics or color.

Discrimination may be based on treating a person differently because of a “protected class” (disparate treatment) or due to some policy that excludes certain individuals (“disparate impact”).

Gender, Sex, and Sexual Orientation Discrimination

Federal Title VII of the Civil Rights Act of 1964 and the FEHA prohibit sex discrimination based on the “terms or conditions of employment.”  It is illegal in California for an employer to discriminate against an employee because of that employee’s sexual orientation.

It is also illegal to make employment decisions based on “stereotypes” regarding gender, such as caring for children.

Nation Origin Discrimination

The Immigration Reform and Control Act, (IRCA) prohibits employment discrimination because of national origin against U.S. citizens, U.S. nationals, and authorized aliens.  (Also Title VII)

Pregnancy Discrimination

Discrimination against pregnancy is illegal under both the California Fair Employment and Housing Act (FEHA) and the Federal Title VII laws.  Even the discrimination based on the potential for pregnancy is illegal.

FEHA specifically gives pregnant employees the right to take a leave of absence for a reasonable period of time, not to exceed four months.  The employer does not have to pay his employee during this time.  In addition, as pregnant employee may also be eligible for up to 12 weeks of medical leave under the Federal Family and Medical Leave Act (FMLA).  Employers generally cannot force a pregnant employee to go on pregnancy leave unless the woman absolutely cannot do the job and there is no “reasonable accommodation.”

Sexual Harassment

There are two types of sexual harassment, “quid-pro-quo” (this for that) and “hostile environment.”

“Quid-pro-quo” harassment arises when the employer makes a sex prerequisite to getting something in the workplace.

“Hostile environment” sexual harassment is a situation in which the employer, supervisor, or co-worker does or says things that make the victim feel uncomfortable because of his or her sex.  Hostile environment sexual harassment does not need to include a demand for an exchange of sex for a job benefit.  It is the creation of an “uncomfortable environment.”

Hostile workplace environment harassment also may involve racial, national origin or ethnic discrimination.

Discipline and Termination

Employment in California is presumed to be terminable “at will.”  Three basic sources of exceptions to the employer’s unrestricted right to terminate at will have evolved over time.

1.       Statutory limits.

2.       Public policy limitations, and

3.       Contractual limitations

Numerous federal and state statutes limit an employer’s right to terminate or discipline an employee.  For example, employers are prohibited from discharging an employee because of their race, color, national origin, sex, age, disability, marital status, medical condition and religion.  Whistleblower statues prevent employers from retaliating against employees for reporting wrongful conduct.

An employer’s right to terminate an employee is limited by public policy considerations because the threat of termination could be used to coerce the employee into committing fraud or other crimes, concealing wrongdoing or taking action harmful to the public good.

Express oral and written contracts may limit the employer’s right to terminate at will.  Written contracts may include executive contracts, offer letters, employment applications, handbooks and policies, stock option agreements and collective bargaining agreements.  Express oral agreements take the form of promises of “permanent” employment.

In the absence of an express contract, an employee may be able to establish from company policies and practices an implied-in-fact contract not to terminate for “good cause”.

An employer need not actually terminate an employee to incur liability for wrongful termination.  An employer can be liable under theory of constructive termination if the employer compels the employee to resign due “intolerable working conditions.”

Employers can minimize the risk of exposure to wrongful termination by adopting policies that enunciate the employment-at-will presumption, drafting well crafted offer letters, employment agreements and handbooks, and otherwise adopting practices, policies and checklists that ensure the uniform, fair and consistent treatment of all employees.

Finally, reduction in force and plant closings can give rise to a host of legal issues.  For example, a reduction in force often brings in its wake claims of discrimination.  In addition, there may be notification requirements under the Worker Adjustment and Retraining Notification Act (WARN) and a duty to bargain if unionized under National Labor Relations Act (NLRA).


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