Articles Posted in Employment

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More and more startups are issuing stock and other forms of equity as a form of compensation for work, especially in the early stages of a venture. This arrangement allows a business to recruit talent that they otherwise wouldn’t be able to afford and, if the company is successful, can result in a significant windfall for people who worked to get a company off the ground without a guarantee of compensation.toad-river-brown_3737_990x742

Generally speaking, when you are transferred equity in a company it is necessary to pay taxes on the fair market value of that equity as you would with any other type of income. In many cases, however, a grant of equity is subject to a vesting agreement, which means that the equity is not actually owned by the grantee until a certain period of time passes. As a result, at the time of the grant, nothing is actually owned, so there is no tax liability associated with the initial grant. When the stock vests, however, that income becomes realized, meaning that there may be significant tax liability, particularly if the company has done well.

83(b) elections can minimize tax liability associated with grants of equity

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Any company with employees is aware of the fact that conflicts between people are inevitable. Conflicts can arise due to disagreements about work-related matters or because of issues that are purely personal. Fortunately, these kinds of conflicts are often resolved informally and without the intervention of an employment attorney or even the human resources department. In some cases, however, an employee may file a lawsuit against his or her employer in an attempt to hold it liable for discriminatory policies, discriminatory acts committed by management, or even the failure to address inappropriate conduct between one employee towards another.Fotolia_61516923_Subscription_Yearly_M-300x149

There are several steps that California employers can take to minimize their legal liability as a result of discrimination lawsuits, some of which are detailed below.

Have an employee handbook

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When drafted properly, employee handbooks encourage open communication in the workplace, set employee expectations, and shield businesses from the financial burden of legal liability. Here are 3 reasons why your business should have an employee handbook.

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3 Reasons Why Your Company Should Have an Employee Handbook

  1. Establish Your Company’s Character
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Last year, California legislators passed the Healthy Workplace Healthy Family Act of 2014, which provided the opportunity to accrue paid time off for sick leave to almost every California employee. The law allows qualifying employees who have worked at least 30 days to begin accrual and to use that sick time after 90 days of employment. The law covers temporary, part-time, and full-time employees with very few exceptions. Such exceptions only apply to certain employees with collective bargaining agreements, some air carrier employees, and in-home providers of supportive services.

Because the new law so widely affects California employers, all business owners should thoroughly familiarize themselves with it to avoid legal disputes or sanctions for noncompliance.

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Basic requirements for employer compliance

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In 1967, President Lyndon B. Johnson signed an historic law into effect prohibiting employment bias on the grounds of age: The Age Discrimination in Employment Act (ADEA). This act gives certain labor protections to workers over age 40. But do you know how this law affects employment at your company? Here is an overview of the ADEA and some key information to know.

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What is the Age Discrimination in Employment Act?

The ADEA specifies that any time an employer makes a decision about personnel, whether hiring, determining pay, firing, or considering position changes, it cannot factor age into the final decision.  Decision makers are not allowed to establish preferred ages in any step of the hiring process.  It’s important to note asking for a candidate’s birth date on an application however, is not illegal.

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Large companies frequently have corporate employee handbooks that are updated on an annual basis to reflect changes in employment laws or company policies. However, many small business owners with few employees may not see the need in having such a handbook that formally sets out employment policies and rules. While it is true that simply speaking to employees about your policies may be easier and more time-efficient than developing an official handbook, there are several reasons why it is worth taking the time and energy to do so.

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Assistance in developing your policies

Many new business owners have not taken the time to sit down and formulate official policies when it comes to employees. Owners may be tempted to “wing it” when it comes to worker management and develop rules along the way. This can be risky, however, and can lead to disputes if there are not rules set in stone. Developing a handbook will make it necessary for you to sit down and decide what types of policies you want for your employees. This can ensure that your policies are applied fairly and evenly from the start to all workers. Continue reading ›

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Employment in California is generally “at-will,” which means that either the employer or employee may terminate the employment relationship at any time without good cause. However, under certain circumstances termination may be considered unlawful, and an employer can be exposed to possible liability for wrongful termination. It is important to know when termination may be wrongful under the law so that possible legal claims by former employees can be avoided.

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If you have an employment contract

If you and your employee entered into an employment contract that provides job security for a specific duration, California law requires you to show good cause for terminating the employee in breach of the contract. At times, in the absence of a written contract, an employee may try to claim that an employment contract was implied based on promises or other statements made by an employer. In order to avoid any claims of an implied contract, be sure to include clear language regarding “at-will” employment in your handbooks, policies, and all communications with potential employees and employees. Continue reading ›

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Meal and rest breaks are mandated by the state and allow employees to re-energize and reset during their workday. Surprisingly, providing a lunch break is not a federal requirement, however allowing employees to take breaks can reduce safety-related incidents in many industries. Failing to give an employee adequate breaks can result in steep fines from the state.

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California Law: Meal and Rest Breaks

Employees in California are legally owed meal and rest breaks depending on the amount of time worked. Here are the standard requirements for meal and rest breaks under California law. Continue reading ›

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If you employ workers, chances are good that your business is subject to a number of labor laws enacted by the United States Department of Labor as well as the California Department of Industrial Relations. Failure to comply with these labor laws can cause a lot more than disgruntled workers; non-compliance can result in sanctions by the federal or state government and/or potential legal actions from employees to recover damages. Business owners are often not aware that they are violating the law until it is too late and they are facing costly legal consequences. The best way to preemptively avoid any labor law dispute is to consult with an experienced employment law attorney to ensure all of your policies and practices are in line with the law.

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Topics Covered By Labor Laws

Labor laws such as the Fair Labor Standards Act (FLSA) and the California Labor Code cover a wide variety of topics related to employees, compensation, and more. The following are only a handful of issues that labor laws may affect: Continue reading ›

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California has distinct wage and hour laws in place to ensure the proper pay of employees. Employers often need clarification on California wage and hour laws. Each industry is different but here is an overview of requirements in the state.

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California Wage and Hour Laws

Minimum Wage

California’s minimum wage is set at $9.00 per hour. Unlike some states, California does not allow for tipped employees to be paid less than the state’s minimum wage.

Overtime

Employers often ask when they need to pay overtime wages.  Whether or not an employee is “salary” or “hourly” is not determinative of overtime pay entitlement, rather, it matters if the employee is “exempt” or “nonexempt.” “Nonexempt” employees are entitled to overtime at the rate of one and a half times their regular rate of pay for:

  • All time worked in excess of 8 hours in a workday
  • All time worked in excess of 40 hours in a workweek
  • The first 8 hours of work performed on a seventh (or more) consecutive workday

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