In California, a 30 minute lunch period must be provided by the start of the fifth hour of work, no exceptions. Companies are subject to penalties if the break begins even a minute beyond the fifth hour of work, and don’t let your more workaholic staff members try to talk you out of it by signing some kind of waiver, either — they are also not allowed.

The meal break must be taken in full (no sneaking back early), and it has to be away from the work area in order to count. In other words, no scarfing down a burger while hunched over the keyboard, trying to avoid answering the phone with a full mouth. While your IT department will no doubt celebrate this rule, which could very well cut down their keyboard-replacement budget, staff who are accustomed to eating at their desks may be sorely disappointed.

If you were inadvertently overlooking this rule, be aware of any resistance to it, as the employer is liable for any violations. If an employee does volunteer to waive the requirement, consider it an opportunity to impress upon them how inflexible the requirements are, and to reinforce the importance of their compliance.

Integrating a time-and-attendance system into in-house payroll can all but eliminate well-intentioned violations of this law. Work stations can be disabled during the break period, which in concert with consistent coaching should shift the organization to a culture of compliance.

Curious if there are other California labor rules that you may be ignoring? Wondering if you’re following all of the laws in another locale where you do business? Pacific Data Marketing can help. Contact us to see how well your knowledge of labor laws is serving you, and to learn how we can support your human resource processes.

When it comes to vacation time, California is not a “use it or lose it” state. All vacation time accrued and not used must be paid to the employee when they leave the company. Like the other requirements for pay at termination, vacation pay must be given in person to the employee upon termination.

Like many California labor laws, this requirement can’t be waived. It overrides any company policy that puts time limits on vacation; once the time is earned, it remains until it’s used or paid out. For example, if a company provides two weeks of vacation time every year, but mandates that it all be used in that same calendar year, the time would be carried over anyway. Specifying how much of the time may be carried over from year to year also isn’t enough to override this law. In California, the vacation time carries over regardless of policy.

The one limited exception is if your policy caps the amount of vacation time which may be accumulated. If the example company above, instead of requiring the time be used, had established a cap on the accumulation, that would be a stronger position to be in. Perhaps they could continue to dole out two weeks a year, but set a cap of six weeks total.

Setting vacation rules to comply with California’s laws is no more difficult than it is in less restrictive environments. The usability of an in-house payroll system affords you full control over the rules which are built into the system. Particularly for companies that have employees in California and elsewhere, this ability to customize makes compliance an automated process rather than a tremendous burden.

Whether you’re in California or not, Pacific Data Marketing can make sure that you aren’t ignoring important labor laws. Contact us to arrange for an audit of your payroll and human resource processes.

When an employee leaves the company, whether it’s voluntary or not, they must be paid in full on their final day. Direct deposit doesn’t count — they must be given their pay in person. This is a non-negotiable rule in California that cannot be waived by the employee.

Sudden terminations, then, can be difficult, because all the calculations for payroll must be performed, and a paycheck with a statement of earnings and deductions must be produced. Failing this, the employer’s only other legal recourse is to place the employee on paid administrative leave until that paycheck can be produced.

If you’re aware of these strict requirements, your payroll service may be able to assist you in cutting a manual check. The biggest problem with this is extra payroll service fees; nothing ever seems to be included with the base per-employee, per-check price. It’s also important to remember that the final check won’t be reflected until the next payroll batch process your server’s mainframe runs; it’s not reflected in real time.

The only exception to the final paycheck rule is if the employee gives less than 72 hours notice that they are resigning; in that case, the deadline is three days past when that notice was given. Other than that, the final check must be presented upon termination, even if the employee agrees in writing to another method, such as direct deposit.

Cutting the final check is a much smoother process with the flexibility of an in-house payroll system. Since you already control your payday, cutting an additional check is a task which takes little time and no extra cost — other than the price of a sheet of check stock, of course. It’s reflected immediately in the system and keeps you well within the law.

To find out how your company can cut all of its paychecks faster, reducing administrative costs and lost interest income, contact us today.

In addition to the federal FMLA (Family Medical Leave Act), Californian employees are also protected by the CFRA, or California Family Rights Act, as well as pregnancy rights laws. All told, an employee may be entitled to as much as seven months of time off while their job is protected. People say that workers in Europe get a lot of time off, but two-thirds of a year is definitely a big deal.

Taken together these layers of rules are so complex that the only way to ensure compliance is with a calendar. The time periods overlap, the notice requirements are different, and if you don’t have a self-taught expert in family leave as part of your HR department, it’s best to reread all of the regulations every single time the issue crops up. (It’s actually a good idea no matter how many years you’ve been in human resources, because the laws frequently change, and each set of circumstances is unique.)

Particularly for a small company, it can be challenging to keep that position open while ensuring the duties are performed. There are cost associated with cross-training, and if existing staff is unable to juggle it all, a temp may be needed to fill in during the leave. It’s very important not to let that frustration turn into negative or disparaging consequences about or to the employee on leave; this can have legal consequences.

Utilizing an HR platform which integrates payroll takes much of that burden off your HR staff. The appropriate notifications can be automatically calculated and calendared for generation on the appropriate dates. Each set of legal requirements can be set as rules in the system, ensuring full compliance. Auditing the process is as easy as writing custom reports to track the milestones.

Negotiating these and other complicated legal requirements can be made easier. Contact Pacific Data Marketing to learn how for your company.

There’s a new rule on the horizon for commissioned sales in California: as of January, 2013, the specifics of the commission structure must be laid out in writing. Previously, commission structure letters were only required of employers who have “no fixed and permanent place of business in the state,” but now the all employers who pay commissions will be subject to the rule.

The commission structure letter must be given to any employee for which “the contemplated method of payment of the employee involves commissions,” and specifies that it shall “set forth the method by which the commissions shall be computed and paid.”

Employers must sign this agreement, and obtain a signed receipt from each employee they give it to. If the agreement expires without termination or a new agreement being put into place, those commission terms remain in effect.

Letters such as these are easily configurable in an in-house payroll system, because you control your payroll data and can add and modify fields as needed to comply with new regulations. Our clients who pay commissions already had fields for commission rates and other variables, so it was just a question of creating a new payroll report.

External requirements, such as the employee providing a signed receipt as proof that they were given the written commission agreement, aren’t driven by payroll. However, tracking information like this is part and parcel of an integrated HR system, protecting you from costly oversights.

As noted above, this is an expansion of an older rule which was only imposed upon companies without a permanent office in the state, which was shot down by the courts because it targeted out-of-state companies only. The legislature wanted to preserve that requirement, and determined that the best way to do so was to place it on even more companies than before. However, there is one way that this new law is better: failing to comply with the old rule meant that a violator was subject to triple damages; that language was removed this time around.

If you’d like to find out if there are other labor rules you’re overlooking, in California or elsewhere, contact us for a consultation on your processes and the pitfalls of your local laws.

While offer letters are always good practice when hiring salaried employees, a new California law makes this the best way to comply with notification laws for hourly employees, as well. Labor Code §2810.5 requires a Notice of Pay Details be given to all employees within seven days of hiring or changes occur to those details. This is a new regulation as of 2012, and has many organizations scrambling, since they did not provide offer letters to hourly or non-exempt employees.

The notification must include:

1. the employee’s pay rate,

2. meal/lodging allowance, if any,

3. the employer’s payday,

4. the employer’s name and any “doing business as” names used by the company,

5. the employer’s full contact information,

6. the employer’s worker’s compensation insurer’s full contact information, and

7. other information the Labor Commissioner deems “material and necessary.”

Other information may be included, such as termination clauses, work hours, and expense reimbursement policies. The letter can also include or refer to the entire employee policy manual or other documents which must be signed upon hiring. It should be noted that, while many national and multinational companies include non-compete agreements, including them in the offer letter does not change the fact that non-compete covenants are illegal in California.

The most efficient way to ensure that these letters are generated and signed is by having them automatically generated as part of the hiring/new payroll process. Offer letters which are customized by job classification and other criteria may then be generated to comply with all legal requirements and employment terms. Should any future change in details be legally significant, it will trigger the generation of a new notification as per the labor code.

Because payroll services are inflexible when it comes to new and custom reports, an in-house system built by PACIFIC DATA Marketing is an alternative which can address new laws such as these when they first take effect, rather than months later. Anticipating this need, we already provide the service of offer-letter generation for both salaried and hourly employees, and can easily customize them to address any number of specific employment relationships.

If you’re looking for the peace of mind which comes from having an automatic system to address these legal requirements, contact us to arrange for a consultation.

Call them what you like: non-compete covenants, agreements, and clause are virtually never valid in California, and haven’t been for 130 years. Despite them being forbidden by law, a number of companies continue to use them; if the employee takes legal action after signing one, it may lead to penalties against the business.

The California Civil Code has expressly forbidden non-compete agreements since it was first passed in 1872. The Business and Professions Code § 16600 provides that “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” Employers cannot require their employees to agree that they will not take a job with a competitor, no matter how narrowly they define the non-compete clause, including within a set period of time or specified geographic area; former employees are also free to seek jobs with the clients of their former employer. This was most recently affirmed in a 2008 California Supreme Court case, Edwards v Arthur Anderson, in which the judges found that such agreements are “null and void” under the law.

Trade secrets, including customer lists, are given some protection, but it’s a thin layer at best. While an agreement not to solicit business from the company’s clients for a specified period of time after leaving is enforceable, your former employee is still permitted to advise them that he or she has left, and may conduct business should your client initiate the contact.

Some narrow exceptions to the non-compete rules do exist; they always involve the selling of an ownership interest in the company, and are laid out in § 16600 of the law. However, courts are wise to the use of sham agreements designed to trigger this exception; it only counts if a substantial interest in the company is being transferred, so that the “goodwill” of the business is included. For example, requiring employees to purchase a single share of stock, and to sell it upon leaving, would not make a non-compete agreement legal in California.

This is not a right which employees are permitted to waive, so getting staff to agree to such agreements does not make them valid. While some employers will make the business decision to execute non-compete covenants despite the longstanding laws forbidding them, such agreements will only be effective unless and until the employee realizes differently. How much of a deterrent such agreements are in California depends solely upon the ignorance of the employees signing them, which is a very thin defense. In fact, if a company refuses to hire someone, or terminates them, because they do not sign such an agreement, they can be sued for wrongful termination. Rather than getting entangled in such litigation, some employees may choose to sign the document, knowing it carries no legal weight.

California labor laws are, as this example illustrates, complex and written largely for the benefit of the employee. PACIFIC DATA Marketing can help companies negotiate the labyrinthine regulations and come out on top; contact us for more information.

Harassment in the workplace is illegal under several federal statutes, but the California Fair Employment and Housing Act is even more stringent than those laws. Behavior which denigrates another employee or demonstrates hostility towards him or her because of any protected personal characteristics is considered harassment. Those characteristics include ethnicity, gender, national origin, sexual orientation, religion, and disability, among others.

The rules in California consider what’s reasonable from a woman’s perspective when determining if harassment has occurred. Harassment can be verbal (such as sexual innuendo or off-color joking), non-verbal or visual (like suggestive looks, leering, whistling, and suggestive cartoons), or physical (for example, uninvited shoulder-rubbing or physically impeding someone’s path). For the behavior to be harassment, and not just discourteous, it must be severe and/or pervasive in nature.

Supervisors who ignore a report of harassment put their company at risk; this can be construed as an admission that the company failed to act to prevent the behavior. Employers can be found liable in harassment cases even if the alleged victim is a non-employee; if the accused is a supervisor, that liability can even extend into situations which occur off premises and outside of working hours.

Having policies in place which lay out the definitions of harassment and the consequences for violating them is the first step towards protecting the company. Managers and supervisors must also receive two hours of training every two years, if the company has 50 or more employees.

When a report of harassment is made, it must be taken seriously and investigated. If a court is later involved, it will look for evidence that the company consistently enforced its policy on harassment, and that the response was reasonably calculated to stop the behavior.

Harassment, whether it is subtle or overt, can best be detected and prevented by developing a culture of respect, openness, and communication. If your company employs people in California, contact PACIFIC DATA Marketing for a review of your existing harassment policies and protocols to make sure you’re protected.

The Commonwealth of California is a very employee-friendly state, and none of the regulations make this more clear than the rules for daily overtime. Any hours beyond eight worked in a single day must be paid at time-and-a-half; in addition, any hours over forty worked in the pay week are also paid as overtime. This is a labor law which sometimes catches out-of-state employers unawares.

While most California business owners are mindful of the daily overtime rule in general, the concept of “makeup time” is not as widely understood. Particularly when the employer enjoys a good relationship with the staff, informal requests to work more on one day in order to leave earlier on another abound. Makeup time is allowed under the law, but how it’s implemented is very structured.

Employers who wish to allow makeup time must have a formal, written agreement with each employee. That agreement must stipulate that the hours must be made up in the same work week, even if the pay period is longer than a week. If the company’s stated work week begins on Monday, then the employee must make up the time by the following Sunday in order for it to be in compliance with the law.

Many companies simply don’t allow makeup time because of the complexity, while others do so informally, relying on everyone involved to remember the understanding. Not permitting it at all is legal, but an automated system that generates the formal agreement and tracks the time will probably be more warmly received by the staff. Casual, oral agreements may promote an avuncular relationship, but they do not comply with the law whatsoever, and can expose the company to penalties.

The rules regarding daily overtime can be complex, which is why we recommend a system designed and managed by experts to ensure that they are all addressed and complied with.

Success in business depends a lot upon flexibility. You need to be able to allocate resources where they are needed, and to do it quickly. That kind of flexibility doesn’t happen without preparation: forecasting demand in different sectors, negotiating contracts to control future costs, cross-training employees. That kind of flexibility also doesn’t mesh well with the inflexible reporting options typically available from a payroll service.

If flexibly allocating labor is a key factor in business success, then a meaningful labor allocation report is the key metric for measuring it. The standard payroll report will spit out a labor allocation report by earnings, but most companies need a lot more information, including data organized by:

• cost center,
• department,
• job, or
• client.

Innovative labor solutions that control costs and maximize profits have transformed how we do business. An employee may be a CSR in the morning and an admin at night. They may work in multiple departments, or for two or more related businesses. These kinds of solutions are keeping companies competitive, and represent the creative power of the entrepreneurial spirit.

They are also giving payroll services fits.

Services do their level best to provide a selection of standard reports, but labor allocation is hard to pin down. Like the general ledger report, the information is fairly standard but the data a company needs to pull from it varies widely. Because there are so many different ways to configure a labor force, there’s no possible way to create a standard allocation report which is useful to all of their clients. Different organizations need the data grouped and organized differently, and that’s well beyond the capabilities of a service trying to satisfy thousands of clients with a single report.

To gain that level of visibility into your labor allocation, you’re going to need a custom report on these critical data. If you’re discovering that this is the answer you get from your payroll service more often than you’d like, contact us to learn how to take control of your payroll and make your own decisions about what critical reports you need.