Business legal services in Silicon Valley

Can California Employers Still Have Mandatory Arbitration Agreements with Employees?

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Business owners and employers in Fremont and throughout Northern California should know that they may not be permitted to require employees to agree to arbitration clauses or agreement under particular circumstances, according to a new law in the state. The new law, Assembly Bill 51, limits the ways an employer can use an arbitration clause. In brief, you may not be able to require new employees to sign employment contracts that contain arbitration clauses. We want to provide you with more information about the new law, which was supposed to take effect in early 2020, and to explain what its implications might be for California businesses.

Understanding California Assembly Bill 51

California Governor Newsom signed Assembly Bill 51 into law in October 2019, to commence in January 2020. The law is designed to prohibit employment discrimination, and one aspect of the bill is that it prohibits employers from requiring job applicants or current employees, as a condition of their employment, to enter into arbitration agreements. The legislative reasoning behind this part of the bill was that arbitration agreements can unnecessarily silence employees and can prevent them from making concerns about sexual harassment at work, public.

Under the new law, it is unlawful (and actually criminal) for an employer to require a job applicant or an employee to agree to an arbitration under the California Fair Employment and Housing Act (FEHA) or the California Labor Code, as a condition of that person’s employment. The law does not invalidate currently existing arbitration agreements. Yet business advocates have filed a lawsuit to prevent the new law from taking effect, arguing that the Federal Arbitration Act (FAA) preempts AB 51. The U.S. District Court for the Eastern District of California recently issued a preliminary injunction that prevents California from enforcing the terms of AB 51. Until the case is ultimately decided, what should your business do?

Impact of AB 51 on Businesses in California

For many businesses in California, arbitration—including mandatory arbitration—can help to keep business costs down and can prevent costly business litigation in the event of an employment or other contract dispute. As such, it is in the interest of many small businesses in Northern California that the law be preempted by the FAA.

In the meantime, what should you, as a business owner in the Fremont area, do to ensure that you are in compliance with existing law? Most importantly, you should know that any arbitration agreement that existed prior to January 1, 2020—when AB 51 was supposed to take effect—does not fall under the new law at all. Even if it were to take effect, arbitration agreements in force prior to this date will remain lawful. Next, you should keep in mind that AB 51 only applies to claims under the FEHA or the California Labor Code. Accordingly, it is certainly lawful to require employees to agree to arbitration for disputes that would not arise under either of these laws.

If you want to require an employee or prospective employee to agree to arbitration for claims that could potentially be covered by AB 51, it is important to recognize that you are taking a risk as a business. If AB 51 is ultimately determined to be lawful and not preempted by the FAA, then any arbitration agreements you make after January 1, 2020 could result in both civil and criminal penalties. However, if AB 51 ultimately cannot take effect, an arbitration agreement that would otherwise be prohibited by AB 51 could be enforceable in California. If you have questions about your business’ situation, you should speak with a business lawyer as soon as possible. 

Contact a Fremont, CA Business Law Attorney

If you have questions or concerns about how the new limits on arbitration could impact your business, it is important to speak with an experienced Fremont business law attorney as soon as possible. The law will have significant practical considerations for many small business owners, tech companies, and other businesses in the region.

 Contact the Law Office of Lynnette Ariathurai online today or call us at 510-794-9290 to learn more about whether California employers can still have mandatory arbitration agreements with employees. We represent business owners across Northern California in Fremont, Hayward, Union City, Milpitas, and Newark.

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Business legal services in Silicon Valley

Hiring Employees vs. Independent Contractors

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When you are hiring new people to work for your business, it is essential to have clarification about whether you are hiring employees or independent contractors. The distinction between employees and independent contractors is important for your own business purposes, as well as for the worker. As you may know, employees have certain rights that independent contractors do not have, and accordingly, Bay Area employers have certain obligations to employees that they do not have to independent contractors.

There is a new law in California that clarifies the test an employer should use for determining whether a worker is an employee or independent contractor. You should seek advice from our Fremont area business law attorney to determine what you must do to comply with the law concerning employees and independent contractors.

California’s ABC Test

Assembly Bill 5 (AB 5) took effect on January 1, 2020. The new law replaces the common law test for determining whether a worker is an independent contractor or an employee. Under the new law, you must classify workers as employees—and not as independent contractors—unless your worker meets all the following conditions of the ABC test:

  • A: The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;
  • B: The person performs the work that is outside the usual course of the hiring entity’s business; and
  • C: The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

To be clear, your workers will be considered employees unless you can prove, based on the elements of the ABC test above, that they should be classified as independent contractors.

Business Exemptions for the ABC Test

Some businesses are exempt and do not need to take the test. In total, there are seven categories of exemptions. Determining whether your business meets the exemption requirements can be complicated. One important note is that if your business is determined exempt from this ABC test, it would then fall under the previous case law for determining whether a person is an employee or independent contractor. Our firm can help you to determine whether you fall under one of the exemptions and, either way, we may be able to provide advice on restructuring your business if it is possible.

Contact a Fremont Business Law Attorney

When you are hiring new workers for your business, you must have clarification about each worker’s classification. The new “ABC test” in California for determining a worker’s classification as an independent contractor or employee can be confusing, but an experienced business law attorney can help you. Contact the law office of Lynnette Ariathurai online or call our firm at 510-794-9290. We serve businesses throughout Fremont, Newark, Hayward, East Bay, Milpitas, Union City, San Leandro, Gilroy, San Jose, and Santa Clara, CA.

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Business legal services in Silicon Valley

6 Ways to Prevent Wrongful Termination Claims

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Sooner or later, every business will have to deal with an employee claiming that they were wrongfully terminated from their job. The reality is that employers usually terminate employees for performance or due to downsizing. Whenever you must make the business decision to terminate an employee, you should be aware that the employee may file a claim or attempt to sue you.

Your company’s termination process, and how it handles employees during the termination process, very often has a direct impact on whether the employee decides to file a wrongful termination claim against your company post termination. Even when you have a clear termination policy and clearly communicate it to employees as they join the company, and follow it as the employee exits the company, a lawsuit may follow.

Here are some best practices to help you avoid wrongful termination litigation

  • Define work performance objectives.

If you make the decision to terminate an employee, it should not be a great surprise for the employee. Document the employee counseling process – from warning, to reprimand, and to suspension. Communicate the progressive disciplinary measures with expectations for improvement to the employee and document this in his or her employee file. Thus, having a system to identify performance objectives, and comparing an employee’s individual performance against those objectives, and then communicating with the employee whether they meet or don’t meet those criteria, makes the actual termination, for performance reasons, simpler and less shocking to the employee.

  • Terminate with compassion.

Even if an employee expects to be terminated from employment because of performance failures, they may still be shocked when terminated and react poorly. A termination from employment is a stressful event. Wherever possible use compassion and empathy to deliver the news while remaining firm that despite everyone’s best efforts, a separation from employment may lead the employee to find a better position elsewhere.

  • Consider liability insurance.

Because employee lawsuits against employers for wrongful termination are common, an employer should consider liability insurance, to help pay for legal fees and any potential claim for damages. Make sure you understand the available insurance options – including what is covered, whether you are permitted to select your own attorney, and whether the claims are paid per claim or per claimant.

  • Comply with all state and federal employment laws, when applicable.

Most employers do not know all the state and federal employment laws applicable to their businesses.  There are several Supreme Court cases and laws implemented during the year.  It is best for business owners to see an Employment Law attorney annually to review their policies and procedures (see below Item 5) and to know the laws applicable to their businesses. 

Make sure your company follows all the rules associated with employment promulgated by the federal Department of Labor and the State of California’s Labor and Workforce Development Agency. Posting requirements, payment of severance wages, and responding to unemployment insurance inquiries are very important.

Also, before terminating an employee, consulting with an attorney would be best practice.  Your Business Attorney will review documentation, then help clients through the termination process to minimize claims.

  • Employment handbooks.

Writing down your employment policies and procedures as well as distributing copies of the company’s employment policies and procedures to employees is the foundation of providing a defense to a claim for wrongful termination. Employees should be provided with an employment handbook at the start of their employment and required to sign a receipt indicating that they received the handbook and accept the employment policies contained in the employment handbook.

  • Train your human resources team.

Your human resources personnel should be up to date with all the labor and employment laws in California or wherever else your company maintains employees. Don’t underestimate the power of developing soft skills, like using effective and efficient communications during the onboarding and termination processes.

Develop a termination plan and related employment policies

Avoiding wrongful termination suits and defending against them if they arise are just two realities of employer-employee relationships today. Assure that your company is following all applicable state and federal laws. If you own a small business and seek assistance preparing an employment handbook and related employment policies and procedures, contact Aria Law firm, a Fremont business lawyer for an initial consultation. Counseling clients in Fremont, CA near Newark, Hayward, East Bay, Milpitas, Union City, San Leandro, Gilroy, San Jose, Santa Clara, We look forward to putting our legal experience to work for you.

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Business legal services in Silicon Valley

New Wildfire Smoke Employment Requirements for California Businesses

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On July 29, 2019 California’s Occupational Safety and Health Standards Board issued emergency regulations to protect outdoor workers from the harmful effects of wildfire smoke. The emergency regulations are in response to the wildfires that have plagued the state in the last several years. Employers are now required to monitor levels of smoke at workplaces or worksites and take protective action in response to changed conditions that put worker safety in jeopardy. The new emergency regulations are effective through January 28, 2020, with two potential 90-day extensions, until the permanent rule is effective sometime in 2020.

Affected Employers

For the most part, workplaces at which the air quality index reaches a certain level are required to comply with these emergency regulations. Employers must monitor air quality, and when it reaches or is expected to reach a dangerous level, reduce their employee’s exposure to smoke. Affected industries include agriculture and construction; occupations like delivery, maintenance, and landscaping workers; and even retail locations, like restaurants and banks, where outside doors are opened throughout the day by patrons. There are exempt employees, such as firefighters fighting a wildfire and workers inside buildings or vehicles with mechanical ventilation, for example.

Communication and Training Requirements

Employers are required to update, communicate, and train employees about wildfire smoke and these health and safety regulations. Employers should consult with an employment lawyer to update workplace policies and employment handbooks to reflect these new regulations.

Next Steps

California businesses must comply with these new health and safety regulations. The first step, however, is to investigate if your business is required to comply with these rules. To learn if your business is exempt from the new regulations, contact an employment law attorney. Secondly, employers will need to create policies and procedures to satisfy the planning, education, and training components of the regulations.

Wildfires are disruptive to employers and employees alike. Like other natural disasters, you must anticipate your wildfire response to maximize employee safety while minimizing disruption or intervention into the work of your organization.

Employers should meet with an employment lawyer at least once a year regarding new laws or changes to regulations that might impact their business. Employment handbooks should be reviewed annually, and updated at a minimum every three years. It is important to keep current and comply with federal, state, and local labor and employment laws to protect your company and employees. If you are a business in Fremont, Newark, Hayward, East Bay, Milpitas, Union City, San Leandro, Gilroy, San Jose, or Santa Clara, California, consult legal counsel today to learn how to bring your business in compliance with the new emergency regulations to protect employees from wildfire smoke.

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Business legal services in Silicon Valley

Navigating California’s Work Breaks and Overtime Laws

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California’s work breaks and overtime laws regularly confuse companies that do business in California. Understanding your obligations to provide rest and meal periods to employees is critical to the operation of any size business. A mistake, however innocent or inadvertent, results in costly penalties at rates much higher than any wages that may be due. The crux of the problem involves understanding which employees must be relieved of all their duties prior to a work break and what that entails, and which employees are entitled to overtime compensation for working in excess of 40 hours in a work week.

When companies encounter these issues they are immediately blindsided by numerous laws, case law, and regulations in the area of labor and employment law. If your business has inadvertently misclassified a worker as an independent contractor instead of an employee or an hourly worker as a salary worker, you could find yourself owing these employees hundreds of hours of unpaid wages. 

Rest and Meal Breaks

California law requires employers to provide a paid 10-minute rest break to it employees, relieving them of all their work-related duties, when they work for more than 3 1/2 hours.  This break should be as far as practical in the middle of a worker’s shift, not at the beginning or end of the work period.  The assignment of the slightest task during an employee rest period is not permitted. The break itself must be paid and the employer is not required to record the rest period.

The same is true for meal breaks — no employer may interrupt a worker’s meal period by requiring them to perform a task. This 30-minute meal period every five hours does not have to be paid, should fall in the middle of the worker’s shift, and must be recorded.

In Augustus v. ABM Security Services, Inc., the California Supreme Court issued a ruling holding an employer responsible to pay wages to security guards when they were required keep their pagers and radio phones on during rest and meal breaks. The court awarded the employees close to $90 million in statutory damages, interest, and penalties.

Overtime Laws

California’s overtime laws mandate that any hourly worker who works more than eight hours a day or more than 40 hours in a work week receives overtime compensation for the extra hours. That means that the employee shall not be employed more than eight hours in any workday or more than 40 hours in any work week unless he or she receives one and one-half times his or her regular rate of pay for all hours worked over the threshold.

If you are a business in the East Bay Area including Fremont, Newark, Hayward, Milpitas, Union City, San Leandro, Gilroy, San Jose or Santa Clara looking for guidance on overtime and rest and meal break laws and regulations, seek legal advice and counsel from a California business lawyer today.

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Serving Businesses and Start Ups in the Greater Bay Area including Fremont, Hayward, Union City, Castro Valley, Milpitas, and Newark, CA.

The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. Contacting us does not create an attorney-client relationship.