Surprisingly, military brass has a very clear understanding of sexual harassment.
For more information, call Steven Kesten at: 415-457-2668.
June 19, 2009: The Supreme Court made it more difficult for plaintiffs to prevail in workplace age discrimination cases. Gross vs. FBL Financial Services means that now the burden rests solely on the plaintiff to prove that age was the deciding factor in the firing, demotion, or other adverse treatment they received from an employer.
Before this case, a two-step approach had been used (as is still the law in other federal discrimination cases). If the plaintiff could prove that age was a factor in employment decision, then the burden sifted to the employer to prove that it had a legitimate, non-age related reason for the decision.
December 12, 2008
RE: EMPLOYMENT AND BUSINESS UPDATE FOR 2009
Dear Friends, Clients and Colleagues:
Each year brings a new set of laws, regulations and scams. The number of new statutes, ordinances, regulations and case law continue to grow and impose an ever greater burden on businesses, especially small businesses and professional practices. Below is a brief review of some of the more important new laws that may impact your business or profession.
E-Verify
You may have heard about E-Verify, the computerized system by which an employer can match an employee’s identification with the federal government’s database of workers eligible for employment based on citizenship status. E-Verify is free to employers and, in the future, will be mandatory for all new hires. The system is reported to have about a 10% mistake factor. Because of the likelihood of mistake, you may want to delay signing-up for the E-Verify system.
Beginning summer of 2008, the Department of Homeland Security and Department of State are issuing “passport cards” which may be used to verify employment status.
Minimum Wage
California State minimum wage is not scheduled to rise in 2009 and will remain at $8.00. The Governator is also encouraging the introduction of other new laws to reduce the amount of wage and hour litigation, including litigation concerning meal and rest breaks violations that have plagued businesses. For the last eight years the courts have been terribly inconsistent on questions concerning an employer obligations to provide meal and rest breaks and how they may be implemented.
San Francisco minimum wage will go up to $9.79 per hour beginning January 1, 2009. Even if your office is located outside San Francisco, employees working within City limits must be paid this City specific minimum wage.
Computer Professionals: Labor Code Section 515.5 has been amended. If you employ professional computer oriented employees, effective 2009, the hourly amount they must be paid to be exempt from overtime is $36.00 per hour or an annual salary of $75,000.00. This amount will increase with the CPI January 2009. It is important to keep in mind that not all computer related employees qualify for the exemption under the duties test.
Meal and rest break compliance requirements remain unsettled in California since the Brinker case was granted review by the Supreme Court. To be safe, meal and rest breaks should be enforced and non-exempt employees must confirm, in writing, each day they take or don’t their breaks. It is essential that employees sign off on a notice confirming the company’s meal and rest break policy. It is the employer’s legal obligation to keep records on meal and rest breaks taken and these records should be kept in storage for a minimum of four years. Effective 2008, the statute of limitations concerning meal and rest break violations is four years. Not only are employers penalized for violating this component of the Labor Code, additional penalties can be added under Labor Code Section 203 which equal thirty days of wages for each affected employee.
Duty free meal breaks must be at least 30 minutes long and must be provided during the 5th hour of work, or before. Ten minute rest breaks should be made mandatory during the mid-morning and mid-afternoon. Though there is an exception to this rule for construction companies under very limited circumstances, the exception is so narrow it is best to follow the general rule.
The Brinker case also held that employers are liable for wages if they know or should know that employees are working off the clock. If you have employees who arrive at work early to avoid peak rush hour traffic and begin working before the regular workday or, if you have employees that run errands for the business before arriving at the office or after the official workday, this is compensable time.
The Starbucks case made it abundantly clear that business owners and employees holding a supervisory or management position may not take any portion of pooled tips even if they provide direct service to the patron.
Bradstreet vs. Wong confirmed the decision in Reynolds vs. Bement which held that officers and directors are not personally liable for corporate debts to employees for unpaid wages. Some of you might recall that prior to 2006 when the Reynolds case was decided, officers and directors were held liable.
What the court gives with one hand, it takes away with the other. This new case also opened the door for personal liability of the officers and directors. If the plaintiff/employee can pierce the corporate veil, the officers and directors may, in fact, be liable for unpaid wages.
What to do? Make certain you are following all mandatory corporate formalities so that your corporation cannot be pierced. This includes holding regular annual and special meetings, adhering to corporate bookkeeping requirements and otherwise following typical corporate formalities. If you haven’t held a corporate meeting in the last 12 months, it’s time to call my office.
In Lonicki vs. Sutter Health the court held that an employer cannot interfere with an employees outside employment, including employment with a competitor.
In Edwards vs. Arthur Anderson the court held that any non-compete signed by an employee is void as a matter of law. The court threw out the old defense of “narrow restriction”. However, trade secret agreements and confidentiality agreements remain enforceable provided they do not contain a non-compete component.
If your company provides computers, PDA’s, cell phones or other communication devises, check the company’s written privacy policy. If your company doesn’t have a privacy policy, now is the time to create one. In Quon v Arch Wireless Operating Company the court directed employers to be explicit regarding the scope of privacy extended to employees.
In the Quon case the court reversed a long line of cases that held that employees have no reasonable expectation of privacy with regard to the computers, cell phones and other electronic devises furnished by the employer. This is likely to be an area the court will explore again in the company years since more and more of our lives are spent using a variety of electronic devises that store conversations, text messages, emails and other forms of communication.
What to do? Make certain you have an explicit and comprehensive privacy policy signed by every employee.
The Americans With Disabilities Act or ADA has been revised and those revisions become effective January 1, 2009. The new law is titled the ADA Amendments Act. The provisions of the ADA have been greatly expanded in a variety of ways including a new more extensive list of covered disabilities. The new law excludes consideration of mitigating measures and expands the definition of “major life activity”.
What to do? Employers should be cautious of every decision to terminate, demote or taking any other adverse employment action against a covered employee. Most court watchers expect this newly expand law to generate a great deal of litigation in the coming years as the courts try to make sense of the greatly expanded provisions.
Family Leave has been expanded so that an eligible employee or spouse, son daughter, parent or next of kin of a covered service member is entitled to a total of 26 weeks of Family Medical Leave to care for the service member.
Scams:
Many of you continue to report the receipt of correspondence from companies offering to sell annual board of director meeting minutes to your company. The charges typically range from $100-200.00 for which you receive a fill in the blanks form, nothing more. These solicitations arrive in official looking envelopes that appear to come from the Secretary of State. Don’t fall for this expensive scam.
Because of the decision in Bradstreet vs. Wong referred to above, it is even more critical that your annual and special meeting minutes be done properly and that efforts be made to prevent anyone from piercing the corporate veil to attack you personally in litigation.
The above isn’t an exhaustive review of all the changes in the law that are of significance to your business and you can expect that as we wind through 2009, new cases will be decided and new laws passed by the state legislature and Congress that are of significance to your business or professional practice.
Best wishes for a healthy and happy new year.
Sincerely yours,
Steve
IMPORTANT NEW CASE
Summer 2008
Pearson Dental Supplies, Inc. v. Superior Ct. of Los Angeles County, No. B206740
In a claim against former employer for age discrimination under California's Fair Employment and Housing Act (FEHA), petition for writ of mandate to confirm arbitration award was granted where the one-year limitation period did not unreasonably restrict plaintiff's ability to vindicate his rights under the FEHA.
This is a remarkable case because it reverses a trend in California law that began with the Armendariz and Circuit City cases.
In Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal.4th 83 (2000), the Court held that California would uphold an arbitration agreement given certain factors. Specifically, the Court held that mandatory employment arbitration agreements are enforceable if they provide for a neutral arbitrator, allow for more than minimal discovery, direct the arbitrator to issue a written award with findings and conclusions, permit the recovery of all types of relief and remedies that are available in a civil action, and do not require the employee to bear unreasonable arbitration costs.
In Duffield v. Robertson Stephens & Co., 144 F. 3d 1182 (9th Cir. 1998), cert. denied, 525 U.S. 982, 996 (1998), the Ninth Circuit held that, under the Civil Rights Act of 1991, employers may not require employees to waive their Title VII right to a judicial forum.
After eight years of reasonably consistent decisions, along comes Pearson Dental Supplies which held that an employee can agree to shorten the time within which an employee can file for arbitration. This case is amazing because it permits an employer and employee to dramatically reduce the time within which an employee can seek legal redress. This reverses an eight year trend.
What to do?
The short answer is probably nothing needs to be done right away. I expect there will be another case to come along in the near future that will curtail or reverse this holding.
Here is a new Memorandum from the California Labor Commissioner explaining how Deputy's in the Division of Labor Standards Enforcement are to interpret the new Brinker case which, as many of your know, explains an employer's obligation with respect to meal and rest breaks.
State of California DIVISION OF LABOR STANDARDS ENFORCEMENT - HQ MEMORANDUM
TO: DLSE Staff
FROM: Angela Bradstreet, Labor Commissioner
Denise Padres, Deputy Chief
Robert Roginson, Chief Counsel
DATE: July 25, 2008
SUBJECT: Binding Court Ruling on Meal and Rest Period Requirements
On July 22, 2008, the California Court of Appeal issued its decision in Brinker Restaurant Corp. v. Superior Court of San Diego County (Hohnbaum), (2008) ___ Cal.App.4th ___ , 2008 WL 2806613. The court in Brinker decided several significant issues regarding the interpretation of California’s meal and rest period requirements. The decision is a published decision, and its rulings are therefore binding upon the Division of Labor Standards Enforcement (DLSE).
The decision in Brinker included the following rulings regarding the interpretation of California’s meal and rest period requirements: Meal Periods The court held that Labor Code ¤ 512 and the meal period requirements set forth in the applicable wage order mean that employers must provide meal periods by making them available, but need not ensure that they are taken. Employers, however, cannot impede, discourage or dissuade employees from taking meal periods.1
The court rejected the so-called “rolling five-hour” requirement as being inconsistent with the plain meaning of Labor Code ¤ 512 and the applicable wage order.2 An employer must make a first 30-minute meal period available to an
Memo to DLSE Staff re Binding Ruling on Meal and Rest Period Requirements July 25, 2008 Page 2 hourly employee who is permitted to work more than five hours per day, unless
(1) the employee is permitted to work a “total work period per day” that is six hours or less, and (2) both the employee and the employer agree by “mutual consent” to waive the meal period.3 The court also found section 512 to plainly provide that an employer must make a second 30-minute meal period available to an hourly employee who has a “work period of more than 10 hours per day” unless (1) the “total hours” the employee is permitted to work per day is 12 hours or less, (2) both the employee and the employer agree by “mutual consent” to waive the second meal period, and (3) the first meal period “was not waived.”4 Employers are not required to provide a meal period for every five consecutive hours worked.5 The court held that the employer’s practice of providing employees with an “early lunch” within the first few hours of an employee’s arrival at work did not violate California law, even though that would mean that the employee might then work in excess of five hours without an additional meal period.6
Rest Periods
The court held that the rest period requirements set forth in the applicable wage order mean that employers must provide rest periods, but need not ensure that they are taken. Employers, however, cannot impede, discourage or dissuade employees from taking rest periods.7 The court held that employers need only authorize and permit rest periods every four hours or major fraction thereof and they need not, where impracticable, be in the middle of each work period.8 The court interpreted the phrase “major fraction thereof” to mean the time period between three and one-half hours and four hours and not to mean that a rest period must be given every three and one-half hours.9 In so doing, the court rejected as incorrect a 1999 interpretation by the Labor Commissioner that the term “major fraction thereof” means an employer must provide its employees with a 10-minute rest period when the employees work any
time over the midpoint of each four hour block of time.10 The court ruled that the rest periods must be given if an employee works between three and one-half hour and four hours, but if four or more hours are worked, it need be given only every four hours, not every three and one-half hours.
The court also ruled that the applicable wage order rest period provisions do not require employers to authorize and permit a first rest period before the first scheduled meal period. Rather, the applicable language of the wage order states only that rest periods “insofar as practicable shall be in the middle of each work period.” Accordingly, the court concluded, as long as employers make rest periods available to employees, and strive, where practicable, to schedule them in the middle of the first four-hour work period, employers are in compliance with that portion of the applicable wage order.
The court relied upon the plain meaning of the Labor Code and applicable wage order provisions in making its determinations. The court found persuasive the reasoning in the federal district court decisions in White v. Starbucks (ND Cal. July 2, 2007) 497 F.Supp.2d 1080 and Brown v. Federal Express Corp. (CD Cal. Feb. 26, 2008) 2008 WL 906517, and concluded that employers need not ensure meal periods are actually taken, but need only make them available.13
The court distinguished the decision in Cicairos v. Summit Logistics, Inc. (2006) 133 Cal.App.4th 949, concluding that the facts in Cicairos established that the employer failed to make meal periods available to employees and that the court there only decided meal periods must be provided, not ensured.
All staff must follow the rulings in the Brinker decision effective immediately and the decision shall be applied to pending matters. Please ensure that any wage claim filed with DLSE that has a meal or rest period issue is reviewed by your Senior Deputy prior to making any final determination on its merits.
Independent contractor versus employee
Not all workers are employees as they may be volunteers or independent contractors. Employers oftentimes improperly classify their employees as independent contractors so that they, the employer, do not have to pay payroll taxes, the minimum wage or overtime, comply with other wage and hour law requirements such as providing meal periods and rest breaks, or reimburse their workers for business expenses incurred in performing their jobs. Additionally, employers do not have to cover independent contractors under workers� compensation insurance, and are not liable for payments under unemployment insurance, disability insurance, or social security.
The state agencies most involved with the determination of independent contractor status are the Employment Development Department (EDD), which is concerned with employment-related taxes, and the Division of Labor Standards Enforcement (DLSE), which is concerned with whether the wage, hour and workers� compensation insurance laws apply. There are other agencies, such as the Franchise Tax Board (FTB), Division of Workers� Compensation (DWC), and the Contractors State Licensing Board (CSLB), that also have regulations or requirements concerning independent contractors. Since different laws may be involved in a particular situation such as a termination of employment, it is possible that the same individual may be considered an employee for purposes of one law and an independent contractor under another law. Because the potential liabilities and penalties are significant if an individual is treated as an independent contractor and later found to be an employee, each working relationship should be thoroughly researched and analyzed before it is established.
There is a rebuttable presumption that where a worker performs services that require a license pursuant to Business and Professions Code Section 7000, et seq., or performs services for a person who is required to obtain such a license, the worker is an employee and not an independent contractor. Labor Code Section 2750.5
1. Q. How do I know if I am an employee or an independent contractor?
A.
There is no set definition of the term "independent contractor" and as such, one must look to the interpretations of the courts and enforcement agencies to decide if in a particular situation a worker is an employee or independent contractor. In handling a matter where employment status is an issue, that is, employee or independent contractor, DLSE starts with the presumption that the worker is an employee. Labor Code Section 3357. This is a rebuttable presumption however, and the actual determination of whether a worker is an employee or independent contractor depends upon a number of factors, all of which must be considered, and none of which is controlling by itself. Consequently, it is necessary to closely examine the facts of each service relationship and then apply the law to those facts. For most matters before the Division of Labor Standards Enforcement (DLSE), depending on the remedial nature of the legislation at issue, this means applying the "multi-factor" or the "economic realities" test adopted by the California Supreme Court in the case of S. G. Borello & Sons, Inc. v Dept. of Industrial Relations (1989) 48 Cal.3d 341. In applying the economic realities test, the most significant factor to be considered is whether the person to whom service is rendered (the employer or principal) has control or the right to control the worker both as to the work done and the manner and means in which it is performed. Additional factors that may be considered depending on the issue involved are:
1. Whether the person performing services is engaged in an occupation or business distinct from that of the principal;
2. Whether or not the work is a part of the regular business of the principal or alleged employer;
3. Whether the principal or the worker supplies the instrumentalities, tools, and the place for the person doing the work;
4. The alleged employee�s investment in the equipment or materials required by his or her task or his or her employment of helpers;
5. Whether the service rendered requires a special skill;
6. The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision;
7. The alleged employee�s opportunity for profit or loss depending on his or her managerial skill;
8. The length of time for which the services are to be performed;
9. The degree of permanence of the working relationship;
10. The method of payment, whether by time or by the job; and
11. Whether or not the parties believe they are creating an employer-employee relationship may have some bearing on the question, but is not determinative since this is a question of law based on objective tests.
Even where there is an absence of control over work details, an employer-employee relationship will be found if (1) the principal retains pervasive control over the operation as a whole, (2) the worker�s duties are an integral part of the operation, and (3) the nature of the work makes detailed control unnecessary. (Yellow Cab Cooperative v. Workers Compensation Appeals Board (1991) 226 Cal.App.3d 1288)
Other points to remember in determining whether a worker is an employee or independent contractor are that the existence of a written agreement purporting to establish an independent contractor relationship is not determinative (Borello, Id.at 349), and the fact that a worker is issued a 1099 form rather than a W-2 form is also not determinative with respect to independent contractor status. (Toyota Motor Sales v. Superior Court (1990) 220 Cal.App.3d 864, 877)
2. Q. The person I work for tells me that I am an independent contractor and not an employee. He does not make any payroll deductions or withholdings for taxes, social security, etc., when he pays me, and at the end of the year he provides me with an IRS form 1099 rather than a W-2. By paying me in this manner does it mean I am automatically an independent contractor?
A. No. The fact that a person who provides services is paid as an independent contractor, that is, without payroll deductions and with income reported by an IRS form 1099 rather than a W-2, is of no significance whatsoever in determining employment status. Your employer cannot change your status from that of an employee to one of an independent contractor by illegally requiring you to assume a burden that the law imposes directly on the employer, that being, withholding payroll taxes and reporting such withholdings to the taxing authorities. 3. Q. Does it make any difference if I am an employee rather than an independent contractor?
A. Yes, it does make a difference if you are an employee rather than an independent contractor. California�s wage and hour laws (e.g., minimum wage, overtime, meal periods and rest breaks, etc.), and anti-discrimination and retaliation laws protect employees, but not independent contractors. Additionally, employees can go to state agencies such as DLSE to seek enforcement of the law, whereas independent contractors must go to court to settle their disputes or enforce other rights under their contracts.
4. Q. When I started my current job my employer had me sign an agreement stating that I am an independent contractor and not an employee. Does this mean I am an independent contractor?
A. No. The existence of a written agreement purporting to establish an independent contractor relationship is not determinative. The Labor Commissioner and courts will look behind any such agreement in order to examine the facts that characterize the parties� actual relationship and make their determination as to employment status based upon their analysis of such facts and application of the appropriate law.
5. Q. How can it be that the Labor Commissioner determined I was an employee with respect to a wage claim I filed and won, and the Employment Development Department (EDD) determined I was an independent contractor, and denied my claim for unemployment insurance benefits?
A. There is no set definition of the term "independent contractor" for all purposes, and the issue of whether a worker is an employee or independent contractor depends upon the particular area of law to be applied. For example, in a wage claim where employment status is an issue, DLSE will often use the five-prong economic realities test to decide the issue. However, in a separate matter before a different state agency with the same parties and same facts, and employment status again being an issue, that agency may be required to use a different test, for example, the "control test," which may result in a different determination. Thus, it is possible that the same individual will be considered an employee for purposes of one law and an independent contractor under another.
6. Q. What can I do if I believe my employer has misclassified me as an independent contractor and as a result am not being paid any overtime?
A. You can either file a wage claim with the Division of Labor Standards Enforcement (the Labor Commissioner's Office), or you can file an action in court to recover the lost overtime premiums. In both situations, it will first be necessary to determine your employment status, that is, employee or independent contractor, before the issue of overtime can be addressed and decided. Additionally, if it is determined that you are an employee and you no longer work for this employer, you can make a claim for the waiting time penalty pursuant to Labor Code Section 203. Eligibility for this penalty is dependent upon your employment status, as independent contractors are ineligible for the waiting time penalty. 7. Q. What is the procedure that is followed after I file a wage claim?
A.
After your claim is completed and filed with a local office of the Division of Labor Standards Enforcement (DLSE), it will be assigned to a Deputy Labor Commissioner who will determine, based upon the circumstances of the claim and information presented, how best to proceed. Initial action taken regarding the claim can be referral to a conference or hearing, or dismissal of the claim.
If the decision is to hold a conference, the parties will be notified by mail of the date, time and place of the conference. The purpose of the conference is to determine the validity of the claim, and to see if the matter can be resolved without a hearing. If the claim is not resolved at the conference, the next step usually is to refer the matter to a hearing or dismiss it for lack of evidence.
At the hearing the parties and witnesses testify under oath, and the proceeding is recorded. After the hearing, an Order, Decision, or Award (ODA) of the Labor Commissioner will be served on the parties.
Either party may appeal the ODA to a civil court of competent jurisdiction. The court will set the matter for trial, with each party having the opportunity to present evidence and witnesses. The evidence and testimony presented at the Labor Commissioner�s hearing will not be the basis for the court�s decision. In the case of an appeal by the employer, DLSE may represent an employee who is financially unable to afford counsel in the court proceeding.
See the Policies and Procedures of Wage Claim Processing pamphlet for more detail on the wage claim process procedure.
8. Q. What can I do if I prevail at the hearing and the employer doesn�t pay or appeal the Order, Decision, or Award?
A. When the Order, Decision, or Award (ODA) is in the employee's favor and there is no appeal, and the employer does not pay the ODA, the Division of Labor Standards Enforcement (DLSE) will have the court enter the ODA as a judgment against the employer. This judgment has the same force and effect as any other money judgment entered by the court. Consequently, you may either try to collect the judgment yourself or you can assign it to DLSE.
9. Q. What can I do if my employer retaliates against me because I thought I was misclassified as an independent contractor and objected to not being paid overtime?
A. If you are an employee and your employer discriminates or retaliates against you in any manner whatsoever, for example, he discharges you because you question him about your employment status, or about not being paid overtime, or because you file a claim or threaten to file a claim with the Labor Commissioner, you can file a discrimination/retaliation complaint with the Labor Commissioner�s Office. In the alternative, you can file an action in court against your employer. If, on the other hand it is determined that you are in fact an independent contractor, DLSE cannot assist you as it does not have jurisdiction over independent contractors, and you would have to go to court to enforce your rights.
Prohibited Employment Practices
The Fair Employment and Housing Act specifies:
* Prohibits discrimination in all aspects of employment including hiring, termination and terms and conditions.
* Prohibits harassment of employees or applicants and requires employers to take all reasonable steps to prevent harassment from occurring.
* Requires that all employers provide information to each of their employees describing the forms of sexual harassment, its illegality, the internal and external complaint processes and legal remedies.
* Requires employers to reasonably accommodate employees or job applicants with disabilities in order to enable them to perform the essential functions of the job.
* Requires employers to provide leaves of up to four months to employees disabled because of pregnancy or childbirth.
* Requires an employer to provide reasonable accommodations requested by an employee, with the advice of her health care provider, related to her pregnancy, childbirth, or related medical conditions.
* Requires employers of 50 or more persons in a 75 mile radius to allow eligible employees to take up to 12 weeks leave in a 12-month period for the birth of a child, the placement of a child for adoption or foster care, for an employee's own serious health condition, or to care for a parent, spouse, or child with a serious health condition. (Employers are required to post a notice informing employees of their family and medical leave rights.)
* Requires employment agencies to serve all applicants equally; to refuse discriminatory job orders; to refrain from prohibited pre-employment inquiries or advertising.
* Prohibits discrimination by unions in membership or employment referrals.
* Prohibits retaliation against any person who has filed a complaint with the Department, participated in a Department investigation or opposed any activity prohibited by the Act.
The law provides for a variety of remedies, which may include:
* Hiring
* Back Pay
* Promotion
* Reinstatement
* Cease and Desist Orders
* Damages for Emotional Distress
* Reasonable Attorneys Fees and Costs
* Expert Witness Fees
* Administrative Fines and Court Ordered Punitive Damages
Persons who believe they have experienced employment discrimination may file a DFEH complaint. Complaints must be filed within one year from the date of the alleged discrimination.
Persons wishing to file a lawsuit directly in court must obtain a "right-to-sue" from the DFEH. For information on this process, call my office telephone number: 415-457-2668 or drop me a line at stevekesten@gmail.com
WHEN IS A BONUS NOT AN INCENTIVE?
Once upon a time back in the early 90’s I owned an old Chrysler La Baron convertible. Each time the kids and I entered the car, a mechanized voice would state in a very emphatic tine, the door is a jar. Of course, one of us would have to ask, “when is a door not a door”? Answer: When it is a jar.
When is a bonus not an incentive? When it discourages productivity. A division president of a larger company regularly corresponds with tidbits from her workplace. Her latest email concerns a bonus plan used by the parent company that actually discourages sales. Seems that in this instance the bonus is based on the salesperson reaching a certain benchmark. However, unlike many thoughtfully structured bonus plans, the salesperson must reach the benchmark to earn the bonus, getting close isn’t good enough to require payment of a pro rate portion.
In this particular company, a salesperson will know by mid summer how likely they are to reach the benchmark required for receipt of the bonus that is paid shortly after the end of the calendar year. If a salesperson’s numbers are on track to reach the benchmark, the salesperson continues to work hard at making sales right up to Dec 31. However, if the salesperson realizes by mid July that the benchmark can be approached but not reached, the incentive becomes a disincentive. The sales person, realizing s/he won’t earn a bonus becomes demoralized and disenchanted. In this company, salespeople only reach the bonus benchmark about fifty percent of the time which means that half of the company’s sales people stop producing at peak level around mid year.
Not only do the sales people stop working at peak performance, their overall productivity actually falls and they develop an adversarial relationship with the company. Instead of seeing themselves as part of a team working toward the goal of greater sales, they feel defeated and isolated. The fall off of moral and productivity is the direct result of diminished effort brought about by the disincentive of a bonus plan that isn’t paid pro rata.
Studies show that employees who receive feedback on both good and bad characteristics of their performance out perform those who receive only negative feedback. A bonus plan that only rewards the employee for 100% success is like a performance review that ignores all the good things the employee does and focuses exclusively on the one or two mistakes the employee might make.
November 25, 2007
Cyber Monday
Everyone has heard of Black Friday, but have you heard of Cyber Monday? Issues concerning personal use of of company computers by employees during time that should be devoted to work has been an issue of concern for employers since the first chat room sprung up.
The first Monday after the Thanksgiving holiday weekend is now known as Cyber Monday by online retailers and those who track time theft. Employees that are more inclined to shop during work hours than at any other time will spend more time shopping on the Monday after Thanksgiving than any other day during the holiday season.
Many of the companies I've interviewed acknowledge and accept that there is a certain amount of time most employees will need to attend to personal matters online. Ordering prescription medicine, checking flight information for mom and dad, kids or an arriving aunt or uncle tend to be short lived searches and require a minimum of company time, often less time than do the same tasks via telephone.
Though most employees with whom I spoke recognize that time spent shopping is time not devoted to the employer's enterprise, a minority of employees believed themselves entitled to an undefined and unstated amount of personal time for online matters. This is time that is above and beyond the duty free lunch and morning and afternoon breaks. This belief appears premised on the simple fact that upper management engages in exactly that same behavior. What is good for the manager is good for the gander, or something like that.
How important is it to develop and implement a company policy concerning use of company computers for personal online activities? It all depends on the company and the people. Those employees who work by the hour will be paid overtime for producing work that should have been done during the regular work day. Exempt employees, those who aren't paid overtime wages for work in excess of eight hours a day or forty hours a week (California law), may be permitted shop to their hearts desire provided they put in the necessary number of unpaid overtime hours to get the job done at no additional cost or inconvenience to the employer.
Still, even hourly workers may need to spend a few extra minutes online to take care of personal matters unrelated to work. Cell phones and access to the online world have changed the workplace making it harder for employees to resist the use of work time for taking care of personal matters. Tracking this information may make it easier for employers to defend rest break violation claims and justify terminating an employee. Both employers and employees have a great deal to consider to better understand how technology is changing the landscape for contemporary labor.
Got to go: I found that great eBay buy item I've been searching for.
Friday, November 16, 2007
Important Links
It is almost Thanksgiving and we're finally getting under way with the Blog. You'll probably notice that I devote as much attention to management philosophy as I do to reporting on new cases and statutes. The reason for reporting the way I do is that by implementing good management techniques employers reduce claims and employees have a better overall work experience. Employers and employees sometimes seem at odds with each other when in reality they have a common goal: to create a healthy workplace free of interpersonal problems in which the business can earn healthy profits and the employees share in the success by being paid a fair wage, benefits and the ability to participate in decision making and thereby propel growth which leads to higher earnings, salaries, increased benefits and a happier more stable and productive organization.
From time to time I'll be including information detailing what companies I interview do right and what they do wrong. To start us off, I'd like to recommend a new book that opened my eyes to a variety of ways to improve the work experience for business owners and employees alike: The 4- Hour Work week by Timothy Ferriss.
To start off the blog it seemed appropriate to include a series of important links for any employee who believes he or she has been the victim of illegal conduct by an employer or co-worker. These links are equally useful for all California employers. Many employers forget that to achieve sales growth they need a happy and productive workforce. High employee moral is a reflection of the care given by the employer and supervisors to making certain employees feel protected and secure in their position with the company. Each day attorneys such as myself receive calls from employees who have been victimized and have no where to turn for help but the legal system. In a healthy, balanced workplace should be systems in place that permit employees to seek the aid of management. If your management team isn't sympathetic to pleas for help, someone hasn't done a very good job of training. I've always believed the legal system should be the venue of last resort for resolving disputes and problems.
Though there are many ways to train people to be better employers, managers and supervisors, the place you have to start in California is with those informative posters the employer is required to post in the workplace. Federal and State workplace posters can be ordered by calling Steve Kesten at (415) 457-2668 or by visiting the California Chamber of Commerce web site.
CALIFORNIA SPECIFIC WEBSITES OF INTEREST:
California Department of Fair Employment and Housing: http://www.dfeh.ca.gov/
California Division of Labor Standards and Enforcement: www.dir.ca.gov/DLSE/dlse.html
California Employment Development Department: http://www.edd.ca.gov/
FEDERAL EMPLOYMENT LAW
U.S. Equal Employment Opportunity Commission: www.eeoc.gov
ANOTHER INTERESTING SITE
www.workplacefairness.org
Posted by Steve Kesten at 7:15 AM
Thursday, November 15, 2007
First Entry
Greetings California employees and employers and others interested in creating a happy and productive workplace:
Tomorrow I will start posting news of interest to California employees and employers concerning new laws, new cases, new management developments and more. Check in when you have a few minutes to update yourself.
