5 Tips How Your Small Company Can Avoid Labor Law Problems in California

(Internet Resources on Employment Compliance for California’s Small Businesses)

California’s labor laws have given it a reputation as a “non business friendly” state that makes life difficult for employers. In my consulting practice we have audited many California small businesses and found most of them to be seriously non-compliant with many state employment standards and regulations.

A business owner could face serious fines or disruption if a government agency finds his or her company in violation of California’s labor code regulations, which are extensive. Disgruntled ex-employees can find “trolling” lawyers who will pay them a fee for insider information that leads to their filing suit against you for even minor infractions. The plaintiff bar attorneys have prospered from this state’s confusion of rules and regulations and have targeted numerous small and medium sized businesses with employment related litigation.

If you are a small California business employer, it is in your best interests to take the steps necessary to ensure you are compliant with the state’s labor laws. The links in this article can assist the small employer in taking the steps he or she needs, using free or inexpensive resources available on the Internet, to avoid labor law compliance problems. The guidelines outlined here are intended for use by employers with under 50 employees. For those firms with over 50 employees, this advice is still valid but there are other major legal requirements that the larger employer must consider to be fully compliant with the labor codes, such as state and federal leave laws and sexual harassment training for your managers. For the smaller business, here are the primary five areas on which you will need to focus.

#1 Update your Employment Law Posters!

The California Department of Labor and the federal government require employers to post information related to wages, hours and working conditions in an area frequented by employees where it may be easily read during the workday. The number of posters required is determined by the size and nature of your business but could total up to 10 or more.

Employers should study and make sure they understand the regulations on these posters to determine which regulations are applicable to their business so they can answer questions from employees.

#2 Be compliant with all Safety and Health regulations – In California, every employer has a legal requirement to provide and maintain a safe and healthy workplace for its employees, according to the California Occupational Safety and Health department standards. As of 1991, each employer must have in place a written, effective Injury and Illness Prevention Program (IIPP). This does not have to be a complex document but must encompass certain elements. In addition to developing a plan, there is a requirement that you train your workers on preventing workplace hazards (and document that training). Your IIPP plan must be updated every time you change your operations where the hazards involved also change. In addition.

#3 Pay close attention to how you pay your employees – In California, most state employment regulations “trump” federal regulations because state standards are usually stricter. Many small business owners make the mistake of paying all or many of their employees a straight salary in order to keep payroll a simple process. This is especially true in businesses which have an office environment. This can be a very perilous approach as you most probably will be in violation of overtime rules which have very stiff penalties.  know the legal requirements for overtime wages, breaks and lunch periods for your workers.

A critical area many small businesses fail to recognize is the proper classification of employees, as they apply to mandatory overtime pay – exempt from overtime or not exempt.

#4 Respect your Employees’ Privacy and secure personnel files – Today the law protects the privacy of employees with some pretty severe sanctions against employers who violate a person’s medical privacy or identity. Separate basic personnel information into two files – a personnel file (with payroll tax forms, or basic job information in it such as training documents, performance reviews and disciplinary or commendation notices) and a separate confidential file with medical, credit, benefits and personal family or dependent information. Supervisors or other interested management must be restricted in their access to the personnel file only. Only the person designated as the human resources record keeper is to be entrusted with the access to the confidential file. Make sure these files are always secured. Protect your employees’ personal information.
#5 Don’t forget to properly verify your employees’ work status – The immigration authorities are under increasing pressure to enforce the laws, and experts agree that enforcement will increase in the coming years as the debate wears on regarding illegal immigration. There have been some well publicized raids all over the country. The I-9 employment form must be completed by every employer on every employee, even US citizens. These documents must be completed properly and kept up to date if certain documents are presented on an employee’s legal status to work in the US.

As a further measure, you should also use the government’s free service to verify that the social security numbers being presented by applicants are valid, which will reduce the chances that you are hiring an illegal alien. This may become a requirement in the near future as the immigration service cracks down on employers. The government is now using tax filings with mismatched or invalid social security numbers to look for employer who knowingly hire workers who are in the US without proper labor authorization.

While this article is not inclusive of every labor code issue employers may face, it does cover the “hot” areas which will give you a running head start to being essentially compliant with California state and the federal laws. It might be a prudent investment for every business owner with more than five employees to have a human resource and payroll audit done periodically by an HR professional. This exercise can help you spot areas of vulnerability and non compliance so that you can address those issues before they become a major crisis and costly disruption of you business.

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