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Government Requirements Kit
A Note about Labor Laws Go to topics
Hiring employees is an important, but serious step for any business. Regardless of a business' size, employers must comply with a vast number of state and federal laws, or face significant fines. Small businesses are particularly vulnerable to fines because many don't know the laws or keep appropriate records.

Key areas: Here are some areas of frequent labor disputes.
At will employment and termination At-will employment means that the employer and employee have a right to terminate their relationship at any time with or without cause. This is invalidated if the employer implies that employees are protected by a higher standard. Avoid making statements (written or oral) regarding job security, anything that implies an employment contract or anything that implies that the employee can only be terminated for specific causes. This is an area of extensive lawsuits.

California allows three exceptions to at-will employment: Public policy, implied-contract, and covenant of good faith and fair dealing. This means that if an employee is fired for filing a workers comp claim or refusing to break a law or there is a general understanding about job security or the employee does not feel their employer dealt with them fairly, the employer can be held for wrongful termination. Wrongful termination can also be extended to employees who quit because "any reasonable person" could not work under those conditions, called "constructive discharge".

Should you use employment contracts? In general, no. Employment contracts invalidate at-will employment - so you can only fire someone (or an employee can only quit) if it complies with the contract. If you have an employment contract and one party violates it, the other party can seek financial compensation. With that said, employment contracts are sometimes used if the hiring firm wants a key employee to commit to being with the company for a specific period of time, or if a key employee wants the hiring firm to commit to compensation if (s)he is dismissed within a certain period of time. If you want to use an employment contract, it is critical that both parties work with attorneys to protect their interests.

Please note that if you use an employment contract, the person is still your employee, not an independent contractor.
Can you hire workers as independent contractors? Only if the person is truly in business for him/herself - and you have no RIGHT to control the worker or the work. They can
  • choose to hire others to do the actual work
  • choose their hours
  • choose how to do the work
  • work for others
Click here for more information about independent contractors.
Employee records Keep payroll records, and documents involved in hiring, promotion, performance, and safety training for four years. Do not keep notes or anything that you would not want to see presented in a court of law. If you use independent contractors, do not keep their files with employee records, or use any of the same forms, because they are vendors, not employees.
Job interviewing See Questions You Shouldn't Ask in an Interview and ADA: Americans with Disabilities Act.
Minimum wage See Minimum Wage.
Fair employment Don't discriminate in age (40+), race, sex, color, ancestry, religion national origin, physical or mental disability (including AIDS), medical condition (including cancer), marital status, or denial of family care leave. Provide equal opportunity. Pay equal pay for equal work.
Pay upon Termination In California, when you terminate an employee you must pay the employee all their pay, including accrued vacation if your company provides vacation benefits, within 24 hours of termination.
No sexual harassment All employers must have a written sexual harassment policy and take "all reasonable steps" to prevent sexual harassment. You should also have complaint and investigation procedures.

Every California business must also distribute a sexual harassment information sheet to each employee. It explains what constitutes sexual harassment and the remedies and procedures for reporting it.

Local employee protection laws? Contact your city to learn about any local employee protection laws affecting private business. Some cities have restrictions regarding computer terminals and some prohibit businesses from discriminating against employees due to their appearance.
Questions? For further information regarding discrimination or harassment, contact the California Department Fair Employment and Housing at (800)884-1684
 
 
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