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January 2012

New Laws for the New Year May Warrant Updating Employee Handbooks

On January 1, 2012 a host of newly enacted employment laws went into effect, creating new rules and regulations for employers everywhere.  As such, it is once again time for employers in California and other states alike to consider whether the new rules and regulations, and continued judicial decisions, warrant updates and revisions to companies' employee handbooks. 

Legislation that will directly impact California businesses in 2012 includes:  limitations on reviewing employee credit reports for employment purposes (codified at California Labor Code § 1024.5); new penalties for misclassifying employees as independent contractors; and new rules prohibiting discrimination on the basis of appearance and apparel consistent with the employee's gender identity (the Gender Non-Discrimination Act, A.B. 887).  One significant newly enacted employment law, the Wage Theft Prevention Act of 2011 (the "WTPA" codified at California Labor Code § 2810.5) adds a number of notice requirements for employers and increases the penalties available under existing provisions of the California Labor Code.  The WTPA, which is modeled on a similar New York state law, requires that employers provide written notice to employees at the time they are hired of specific information, including

  • the name, address and telephone number of the employer's workers' compensation insurance carrier;
  • the regular payday designated by the employer;
  • the rate or rates of pay and basis thereof (whether paid by the hour, shift, day, week, salary, piece, commission, or otherwise, including any rates for overtime);
  • allowances (if any, claimed as part of the minimum wage, including meal and lodging allowances);
  • the name of the employer, including any "doing business as" names used by the employer; and
  • any other information the Labor Commissioner deems material and necessary. 

The WTPA also requires employers to provide written notice to existing employees within seven days whenever there are changes to such information. 

Judicial decisions in 2011 have also clarified certain obligations for employers, which could make revisions to an employee handbook necessary.  For example, in Rogers v. County of Los Angeles, the California Court of Appeal issued an opinion which may require employers to offer accommodations, including additional leave, to employees who have already expended authorized leave for medical reasons.  Further, the California Supreme Court recently heard oral argument in the matter of Brinker Restaurant Corp v. Superior Court and is expected to issue a decision offering long-awaited clarification of such issues as whether employers are required to affirmatively compel employees to take meals or merely provide employees with the opportunity to take a meal break, and whether an employee's meal break must occur near the middle of the work period or whether it may be taken at the beginning or end of an employee's shift.  These decisions stand to significantly impact the obligations of employers and the policies and procedures contained in their employee handbooks.  

Employers derive a number of benefits from the distribution of a well-drafted, comprehensive, and up-to-date employee handbook.  First, a well-drafted employee handbook can serve as an important employee relations tool.  An employee handbook can bolster morale by communicating to employees that the organization takes employee grievances seriously.  In this regard, an employee handbook can create a disincentive for employee lawsuits by making the employee feel an integral part of the organization.

Second, a comprehensive employee handbook can guide employee expectations.  By setting forth the employer's policies and procedures, employees who are disciplined for infractions are less likely to feel unfairly treated should the need for disciplinary action arise.  More importantly, affirmatively setting forth standards of conduct, overtime policies, employee duties of loyalty and ethics, as well as other policies can preemptively forestall infractions and contribute to workforce efficiency.

Third, an up-to-date employee handbook can act as affirmative evidence that a company observes and complies with its legal obligations in the event that an employee does sue, especially in matters for which evidence of legal compliance will otherwise be scarce, such as compliance with rest period regulations.

Employers are urged to consult with counsel if they are unsure whether new employment laws in their state warrant drafting an updated employee handbook. 


Employment Law

Employment Law