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Hiring Practices

Hiring Practices and Employee Termination

Many federal and state laws regulate employment practices and prohibit discrimination on the basis of, among other things, sex, age, race, color, marital status, national origin, religion, or physical handicaps. These anti-discrimination laws apply to almost every aspect of the employer-employee relationship, including hiring, compensation, promotions, work assignments, and work conditions. In addition, if you will be contracting with the federal government, you will be required to establish an affirmative action program.

The U.S. Department of Labor and the U.S. Equal Opportunity Commission are the principal federal agencies in this area. The California Department of Fair Employment and Housing also regulates employment practices to protect people from employment discrimination. California anti-discrimination laws and regulations generally are more stringent than the federal requirements. Whenever such requirements overlap, the corporation will usually be bound by the more stringent standards.

Wage, Hours, and Working Conditions

The federal government, through the Wage and Hour division of the U.S. Department of Labor, enforces minimum wage and overtime laws and regulations and establishes other aspects of working conditions for nearly all employees of firms engaged in interstate commerce. Notable exceptions to these rules include executives, administrators, professional personnel, and outside commission salespeople. These exceptions are set forth in highly technical statutes and legal counsel should be sought before final determinations are made regarding exempt status of employees.

Through the Division of Labor Standards Enforcement of the Department of Industrial Relations, California enforces laws governing the payment of wages, the minimum wage, hours of work and overtime, conditions of employments, equal pay for equal work, and compliance with compulsory Workers’ Compensation laws. The Industrial Welfare Commission of the Division of Labor Standards Enforcement has the authority to eliminate working conditions detrimental to the welfare of California workers. The Commission issues special orders setting minimum wages, hours of employment and overtime, and standards for working conditions, both in general and for specific industries.

Both California and the federal government regulate safety in the workplace, both in civil and criminal matters. To the extent that California declines to act on a matter, the federal government may assert jurisdiction.

Workers' Compensation

California law requires nearly every employer to obtain Workers’ Compensation insurance for its employees. There are penalties for noncompliance. The Workers’ Compensation laws impose liability on the employer for any work-related accident, regardless of the employer’s negligence. Workers’ Compensation insurance provides a schedule of benefits to the injured employee or his or her heirs if the employee is killed. Workers’ Compensation liability insurance can be obtained either from the local office of the State Compensation Insurance Fund or from state-licensed Workers’ Compensation private carriers. Acts of an employer which are judged to be willful or grossly negligent are not covered by workers’ compensation insurance, and the employer may be liable up to an amount equal to the court award for the injury. Alternatively, a business can obtain a certificate of consent to self-insure from the Director of Industrial Relations.

Employee Benefits

If the corporation decides to provided other benefits to its employees, such as group insurance, or if the corporation adopts a pension or profit sharing plan, the corporation may be subject to the Employee Retirement Income Security Act of 1974 (ERISA). ERISA requires that an employer meet specified requirements and provided certain information to employees if an employee welfare plan is instituted. Welfare plans can include benefits such as health insurance, long term disability insurance, group term life insurance, and accidental death insurance. The ERISA requirements for a pension or profit-sharing plan, even for a very small business, are complex and expensive. Because of the complexity of these reporting requirements, and because of the potential for fines and other civil and criminal penalties, we recommend that you contact us for further advice if there are any questions on this matter.

Labor-Management Relations

Nearly all corporate employers are governed in their labor relations by the National Labor Relations Act, although very small employers are sometimes excluded. Agricultural employers are governed by the California Agricultural Labor Relations Act. As a practical matter, if the corporation faces a union organizing campaign, it will almost certainly be covered by a wide array of governmental laws, regulations, and procedures. Failure to comply with applicable rules could result in either the expense of rerunning the election of the automatic certification of the union. If the corporation is faced with a union organizing campaign, we recommend that you contact us immediately before taking any action.

Notices

Employers are required to post, in a conspicuous location, a number of notices regarding employees’ rights. Some of the notices most commonly required, and the agencies from which copies may be obtained, are as follows: Industrial Welfare Commission orders (California Department of Industrial Relations, Division of Labor Standards Enforcement); federal minimum wage notice (Wage and Hour Division, U.S. Department of Labor); notice entitled “Safety and Health Protection on the Job” (California Department of Industrial Relations, Division of Occupational Safety and Health); notice regarding the Fair Employment and Housing Act (California Fair Employment and Housing Commission); federal civil rights notice (U.S. Equal Opportunity Commission); notice of paydays and time and place of payment (Department of Industrial Relations); and workers’ compensation notices (which should be obtained from your workers’ compensation insurance carrier).