The phrase “no good deed goes unpunished” applies in many contexts, including California employment law. Here are six ways that employers get into trouble by trying to do favors for their workers.
- Treating an employee as an independent contractor. Some workers want you to treat them as independent contractors so they aren’t subject to withholding. But even if they agree to it in writing, that doesn’t protect you from liability. First, if the workers change their minds and bring wage claims, you can be on the hook for a variety of penalties. These include penalties for not having issued proper wage statements, not providing meal and rest breaks, and not properly tracking the employees’ hours. In addition, the Employment Development Department, Franchise Tax Board, Internal Revenue Service, and others can pursue you for not properly withholding and paying payroll taxes.
- Paying employees in cash. Sometimes an employee may ask you to pay them under the table. Like paying them as contractors, you won’t have the pay records you’re required to maintain and the agencies that collect payroll taxes can come after you. You’re basically defrauding the government. They don’t like that and they’ll punish you if they find out.
- Allowing star employees flexibility to break the rules. It’s tempting to give top performers leeway when it comes to attendance, standards of behavior, and work rules generally. Don’t do it. Others can characterize it as favoritism, or even discrimination. It also makes it harder to hold other employees accountable for breaking those rules.
- Giving a terminated employee a glowing reference. Maybe you feel bad about firing someone and giving them a glowing reference eases your guilt. However, if the employee challenges the termination in court or arbitration, expect to get grilled on the conflict between the employee who was so bad you had to fire them and the employee described in your glowing reference letter. While you’re at it, you should also anticipate getting grilled on your demonstrated willingness to make false statements. Also, if their next employer relies to its detriment on untrue statements you made in the reference, it can sue you for fraud.
- Giving positive evaluations to underperformers. Don’t get me started! I’ve ranted about this enough, including here and here.
- Not terminating employees who deserve to be. No one likes firing people. But sometimes it’s necessary. If you retain employees who misbehave or consistently fail to meet performance standards, you get punished in two ways. First, it becomes harder to terminate that person later on. Second, it becomes harder to terminate others for similar shortcomings. Both problems arise because you’ve set a precedent of what you’ll tolerate.
On the other hand, if you weren’t willing to tolerate a certain level of punishment, why are you employing people in California to begin with?