Employee Relations 101

CHATSWORTH, Calif. - Remember your first job? "That damn slave-driving boss!" "It's too difficult to be on time!" "Should I call in sick?" "All of those stupid rules!"

But now you are the boss. "Those damn lazy employees!" "They're always late!" "Do they always call in sick on Monday?" "All of those stupid rules!"

This month's topic is "all of those stupid rules." It should serve as a wake-up call for any employer — even those with only one employee.

Start with the basic employment relationship. The greatest temptation for businesses that are new and/or small is to classify employees as independent contractors. Sure, if you hire a gal to design a Web page for a flat fee, and she does it at her own place and on her own schedule, she really is an independent contractor. So, if she is a truly independent contractor, be sure you have a written contract with all relevant terms. But if you have a guy that comes to your place three afternoons a week and takes care of your office work, he is an employee — part time, but nevertheless an employee.

Employment begins with the hiring process. For reasons too numerous to mention here, the minimum Human Resources Department requires at least a filing drawer containing a file folder for each employee, present and past. Another folder should contain completed application forms for all non-hired applicants, including notes like, "Offered $10/hour — applicant did not accept offer." And while it is a good idea to keep all of your business records in locked filing cabinets and password-protected computer files, it is super-important that personnel records be kept that way because of employee privacy rights and identity theft.

There are many things applicants should not be asked. There should be no questions that could trigger a discrimination complaint (age, race, religion, marital status, number of children, etc.), nor should there be pre-employment questions that could risk identity-theft accusations (social security number, date of birth, etc.). Feel free, however, to ask the obvious questions: Education, employment history, salary history and reason for leaving each job.

Once the decision is made to hire the applicant, you must open an employee file. It must include the employee's application form, along with copies of a photo identification and social security card. There also must be a completed I-9 form, establishing eligibility to work in the United States. (You can be fined for not keeping these, even if each of your employees is legal!)

See http://www.uscis.gov/graphics/formsfee/forms/i-9.htm.

Next, you need to get the employee on the payroll. If you are small, you may wish to use a payroll service (which might be your bank). The employee must complete a W-4 form to establish payroll withholdings. In some states you are required to report new employees to the state (for reasons including child-support enforcement).

Employees are presumptively hourly, or "non-exempt," which means paying overtime — always 1-1/2 times regular wages for over 40 hours/week worked. Other state and federal rules define when double time is mandatory, and many states have more extensive overtime rules. And just because you define someone's salary as "monthly" doesn't mean you aren't required to pay overtime; it depends on their status.

"Exempt" (from overtime pay) employees are those paid by the week or month, without regard to hours worked. Be careful about this! There are very strict rules on what categories of employees can be classified as exempt, such as managerial and professional employees. You can never go wrong misclassifying an employee as non-exempt (i.e., paid extra for overtime), but you can really create a mess by the opposite.

Employers and employees must keep time records (use a time clock!); you must have workers compensation insurance; you must pay employees on time with checks that don't bounce; you must allow them to examine their personnel files; you must have family and military leave policies; and various other "musts" exist on a state-by-state basis.

Contrary to popular belief by employees, in most places employees need not give a two-week advance notice before quitting (although it is a good idea, since employers are reluctant to hire someone who has a habit of just walking off jobs); employers have no obligation to give severance pay; employers are under no duty to give paid sick leave, paid vacation, paid bereavement leave or paid medical insurance.

True, at-will employment means an employer can terminate an employee without assigning a reason. However, there are well-known exceptions, such as discrimination based upon race, religion, sex, etc.; and less-well-known reasons, such as termination "in violation of public policy," which is why it is usually a lousy idea to terminate an employee without having a really good reason, such as illegal conduct (e.g., theft), layoffs (i.e., there isn't enough work to keep the employee busy) and poor employee performance (although it is not always such a good idea to tell the reason). If you want to fire an employee for some other reason, ask a lawyer first.

The political reality is that more voters are employees than employers, so legislation favorable to employees is commonplace, tempered only by the fact that more political contributions come from employers than employees. Another reality is that more jurors are employees than employers, so there is a cottage industry of lawyers who do nothing but "sue the boss."

Now, here is where some tough love is in order. Employees are always accusing employers of playing favorites, and the most important way to avoid being validly accused of that is to have in place a written set of policies, which invariably means an Employee Manual, setting out all company policies and following them to the letter.

"Do we work on Columbus Day?"

"It's in the Employee Manual."

"Can I take paid time off to vote?"

"It's in the Employee Manual."

"Can I use my sick time if my child is sick?"

"It's in the Employee Manual."

"Can I work through lunch and then leave a little early?"

"It's in the Employee Manual."

You get the point. In fact, good employers, when confronted with such questions, often don't remember the answer, but it is an immense relief to find it in the Employee Manual. It should be an invariable policy to "go by the book"! And an employee can't claim ignorance of company policy if, on Day One, he/she is handed an Employee Manual and required to read it on the spot, followed by, "Any questions?"

Even the smallest business must be careful to have firmly established, written employee policies, updated as necessary. An attorney is a good place to start so as to get it right from the outset.

Clyde DeWitt is a Los Angeles attorney whose practice has been focused on adult entertainment since 1980. He can be reached through AVN's offices, or at [email protected]. Readers are considered a valuable source of court decisions, legal gossip and information from around the country, all of which is received with interest. Books, pro and con, are encouraged to be submitted for review, but they will not be returned. This column does not constitute legal advice but, rather, serves to inform readers of legal news, developments in cases and editorial comment about legal developments and trends. Readers who believe anything reported in this column might impact them should contact their personal attorneys.