It is that time of year.  We continue to wait for the Governor to sign or veto some controversial bills such as:

  • The Stand Act (prohibiting confidentiality in harassment and sexual assault settlements); and
  • AB 3080 (prohibiting mandatory arbitration for new and current employees, but presumably allowing arbitration with an opt out, and prohibiting nondisclosure of harassment issues to protect future employees going forward).

As we wait, there was one bill recently passed that clarifies a few things about California’s salary history ban that is worthy of a quick mention.

As you may recall, effective this year, employers were prohibited from asking an applicant about his/her salary history.  Employers are also required to provide pay scale information to an applicant on the position applied for upon reasonable request.  Recently, some of those terms have been clarified, as follows:

  1. First, an applicant is now defined as an individual seeking employment who is not currently employed with that employer in any capacity or position.  So current employees are not entitled to pay scale information.
  2. Second, a reasonable request, is now defined as a request made after an applicant has completed an initial interview with the employer.  This would prevent someone not qualified for a position from obtaining salary range information about it.
  3. Third, pay scale is defined as a salary or hourly wage range for the position.  Not quite sure what the confusion was there.
  4. Fourth, as most of us already surmised, it is perfectly acceptable to ask an applicant about his/her salary expectations.
  5. And finally, while prior salary cannot justify any disparity in compensation, an employer can consider current salary as a factor to justify a wage differential as long as it is based on:
    • A seniority system;
    • A merit system;
    • A system that measures quality or quantity of production; or
    • A bona fide factor other than sex, race or ethnicity (such as education, training, or experience).

Now if only the legislature would take up some very serious issues facing employers, especially after Dyanmex (and the resulting war against contractor status), such as my personal favorite idea, to create a new category of workers called “dependent contractors”.  Maybe next term.  One can always hope.

I just returned from the Cornell HR in Hospitality Conference in Las Vegas with my partner Carolyn Richmond.  I participated in the Executive Summit and shared ideas with some of the most innovative minds in the hospitality industry.  Here is my annual top ten list of take-aways:

  1. While no one knows what will happen under the Trump Administration, some common assumptions include:  Less active Department of Labor and NLRB (especially as to non-union work forces ); EEOC likely to apply current law to egregious situations, but not expand it
  2. That said, states like California will pick up the slack, so California employers should not expect any decrease in claims or lawsuits
  3. One of labor’s biggest concerns about the Trump Administration is the shift in courts; there are 117 vacant federal court vacancies, which means a lot of conservative judges could be appointed and rule in a more business-friendly way
  4. A less powerful NLRB may mean more corporate campaigns, and with that may come more RICO lawsuits to challenge them
  5. How hotels treat their Sales Managers (whether exempt or non-exempt) is still all over the map, although the trend is certainly towards classifying lower level sales and catering managers as non-exempt
  6. Employees are focused on more than just compensation and benefits; renewed focus on culture, recognition and development
  7. Benchmarking is only part of the equation, because if you pay the median, you can’t differentiate from others and get the best candidates
  8. Acknowledging that many millennials move on after a few years, many recruiting efforts now focus on alumni re-recruiting, which changes the off-boarding process and the attitudes towards employees who leave
  9. Automation is a hot topic in hospitality, but companies need to balance guest experience with efficiency; Human Resources should embrace technology to free up time to focus on people, not mundane tasks
  10. Anticipate trend to de-regulate tip pooling so that more employees can participate without such archaic restrictions on back of the house and time spent touching tables

I was speaking to a group of women entrepreneurs last week for Women in LAVA, a great group chaired by my partner Emily Yukich. The topic was Hiring for Startups and I was presenting the legal side of how to hire and onboard to limit risk. My theme was: An Ounce of Prevention is Worth a Pound of Cure.

To that end, there are three things that every California employer should have, regardless of whether you have five employees or five thousand: (1) an employee handbook that sets forth your policies and expectations; (2) a confidentiality agreement that clearly defines and allows you to protect the key aspects of your business; and (3) an arbitration agreement.

Common mistakes include: Preparing these documents without regard to the particularities of the business (such as defining) “confidential information” in a way that is nonsensical for their company), or having the three documents contradict instead of cross-reference each other. Another common mistake is to fail to update these document periodically, as the business grows and as the applicable law changes. The policies a business needs change with different thresholds of employees, especially small businesses when they hit 25 and 50 employees.

And finally, there tends to be a lot of confusion over when a business should enter into an employment agreement with employees. Put simply, most agreements define employment for a particular term, and typically provide the employee with some comfort level as to pay and benefits during a defined period of time. An employment agreement may be necessary for a key executive, but is more than most businesses need for the vast majority of their workforce. Rather, what most employers need is an offer letter which provides employers with more flexibility and explains the concept of employment at-will (i.e., employment for no particular amount of time, no guarantees, and that can end with or without notice or cause). The offer letter should reference the policies in the handbook, the confidentiality agreement, and the arbitration agreement, and should not set forth any terms or concepts that contradict those documents. While you can have an employment agreement providing for employment at-will, I find that many such agreements contain contradictory terms (such as employment for a particular time period or termination for cause), and typically do not recommend it.

Taking some time to set up these documents at the onset is the best way to protect your business as it grows. It is a much better option than spending your time, energy and money fixing issues in response to an employee complaint, or worse yet a lawsuit, agency charge or attorney demand letter. Remember, an ounce of prevention is worth a pound of cure.