Severance Agreements: Give Me My Stuff Back!

Severance agreements will almost always have language requiring, as a condition of receiving a severance payment, that any company property be returned to the employer. Typical employer property can include keys, uniforms, cars, emails and even intellectual property and work emails. This article discusses some common issues related to the return of company property in California severance agreements.

Why is the employer insistent about getting their property back?

Employers often include this language to keep company secrets from getting in the hands of competitors and to reinforce existing legal obligations that the employee already owes the employer. 

For legal background, the employee in most situations will already be obligated by law to return employer property to the employer at the end of his or her employment. This is for multiple reasons. First, employees will oftentimes sign documents, usually called “Acknowledgments”, at the inception of their employment, promising that customer lists, inventions, physical property, and other intellectual property acquired by the employee through his or her work belong exclusively to the employer. These acknowledgments are independently enforceable contracts even without a severance agreement. 

Second, the common law of agency, which has largely been adopted in California, states that inventions created or things made by an employee during his or employment, belong to the employer and not the employee. Therefore, independent of a severance agreement or any other contract, the law would very likely compel the return of company property to the employer. The employer’s demand in the severance agreement itself is simply a reminder to the employee of a pre-existing legal obligation and incentivizes the employee to follow through with it.

What type of company property typically must be returned?

The type of company property that must be returned very much depends on what the employee did while employed. For blue collar workers, the employee will oftentimes be in possession of tools, keys, or uniforms, but never in possession of emails, electronically stored property, or intellectual property. For white collar or remote workers, company property can include phones, laptops, printed papers, emails, spreadsheets, PowerPoint presentations, and any other form of electronically stored information.

How does the employee return company property?

Larger and more sophisticated employers who regularly terminate employees will typically be proactive in recovering company property from their former employees, even making efforts to do so before a severance agreement is agreed upon. This can include recovering this property from the employee in-person on his or her last day of work. For remote employees, it is customary for the employer to send the employee a postage prepaid box or envelope for the employee to mail the company property back to the employer. Employees are arguably not obligated legally to incur costs or expenses to return company property. (Lab. Code § 2802.) Moreover, requiring the employee to drive a long distance to return property in-person would require the employer to pay the employee the minimum wage.

For employers who are unclear on how company property is to be returned, employee’s should be proactive and ask their employer via email how the property is going to be collected by the employer. 

Have you been abruptly fired and been given a severance agreement? Contact the Law Office of Brian Mathias today. 

Severance Agreements: This is Top Secret

Ninety-nine percent of all severance agreements will contain a confidentiality clause. While severance agreements, at their essence, are an exchange of money in return for a promise not to sue the employer, the employee will often have to agree to other substantive requirements as well, including confidentiality. 

Why do employers want confidentiality?

Before explaining what confidentiality actually means in the context of a severance agreement, it is important to understand why confidentiality is viewed as important by the employer. The inherent value of severance agreements from the employer’s view is to buy the peace and quiet between the former employer and employee, to prevent lawsuits before they can ever start, and to keep legal costs predictable and as low as possible for the employer.

However, if an employee is legally allowed to tell other current employees that the employer offers severance agreements, or that generous severance payments are paid, additional legal claims from other employees could be encouraged. In other words, employers are fearful that other employees would smell “blood in the water” and leverage this against the employer in response to their own future terminations. 

What do confidentiality agreements usually say?

Confidentiality provisions typically state that the employee (but not the employer) is prohibited from disclosing 1) the terms, including the amount of the severance agreement, and/or 2) the sheer existence of the severance agreement to others. Depending on the exact language, this means that the employee is legally barred from even telling others that a severance agreement exists, let alone the specific amount that was paid by the employer. Again, employers do not want other employees to believe that severance agreements are readily offered because this creates a sense of legal entitlement and could make future severance packages more expensive for the employer. 

Are there any exceptions to confidentiality?

Confidentiality provisions are typically subject to a short list of exceptions, including certain people that may be told about the amount and/or existence of the severance agreement or specific circumstances where confidentiality does not apply. 

Most, if not all, confidentiality provisions will state that the employee may disclose the nature and existence of the severance agreement to the employee’s attorney, CPA, or financial advisor. This is necessary because the severance agreement itself will often state that the employee is encouraged to speak with an attorney before signing it; a tactic employers use to make the severance agreement enforceable if it is later challenged. Next, some, but  not all, confidentiality provisions will state that the employee may disclose the severance agreement to immediate family members, such as spouses and children. 

Importantly, many confidentiality clauses will state that even if the disclosure of the agreement’s terms to certain people is allowed, those additional people are also bound by the agreement’s confidentiality provision, and that if those additional persons breach confidentiality the employee bears the consequences. This means that family members that are allowed to know about the severance agreement must treat confidentiality as seriously as the employee herself. If not, the employee can be penalized or sued for breach. 

Lastly, disclosure of the severance agreement’s existence and terms to certain government entities is another common “carve out” to confidentiality clauses. These will often include the California Employment Development Department (“EDD”) or government entities in charge of collecting taxes. In essence, these government entities can compel the employee by law to disclose the terms of the severance agreement and are not themselves bound by the agreement. For example, in response to an application for unemployment benefits with the EDD, the EDD can require the employee to disclose what other sources of income have been received, if severance payments were made, and the amount of those payments. 

What happens if the employee breaches confidentiality?

Severance agreements usually specify what occurs if the employer or employee violates or “breaches” the terms of the settlement agreement, including its confidentiality clause. These penalties can range from a penalty of multiple thousands of dollars called “liquidated damages” or also forfeiture of part or all of the severance payment itself. 

Many severance agreements also include an attorney’s fees provision called a “fee hook”. This means that if a severance agreement is breached and court action is required to enforce the agreement that prevailing party gets their attorney’s fees paid back. This can be extremely significant because attorney’s fees could easily match or exceed the amount of the severance payment itself. These fees would be in addition to whatever penalties or damages are recovered as a result of a breach. 

For these reasons, employees should take confidentiality very seriously and thoroughly understand the terms of the severance agreement before signing it. 

Have you been terminated and been handed a severance agreement? Contact the Law Office of Brian Mathias today for an affordable consultation. 

Severance Agreements: How Long Do I Have to Sign?

Severance agreements, when offered, are given to the employee under frequently chaotic circumstances. Terminations often come as a surprise to the employee being fired, and being fired can be an emotionally and financially difficult time for the employee. Adding to this difficulty, employers typically require that severance agreements (if one is offered at all) be accepted and signed by the employee in a relatively short period of time.

How long do I have to accept a severance agreement?

In short, the severance agreement itself will state how long the employee has to accept whatever severance package is offered by the employer. Accepting is typically accomplished by signing the severance agreement and returning it to the employer by email. 

Because of a federal age discrimination law, most severance agreements will give the employee twenty-one (21) days to accept the agreement. (29 CFR § 1625.22 (d).) However, since age discrimination only protects employees that are age 40 and older, employers will sometimes put a much shorter time period for younger workers, such as seven days. 

What if I need more time to think about it?

If the employee needs more time to think over the terms of a proposed severance agreement, the employee should politely ask the employer to extend the stated time period. If the employer agrees, this should be confirmed with a follow-up email. This can be a risky move for the employee if the employer views the extension request as a rejection of the employer’s offer. 

What is the seven day revocation period all about?

Some severance agreements will contain a paragraph that says even if a severance agreement is signed by the employee, the employee has a period of seven days to change his or her mind and revoke their acceptance. This, again, is due to a federal age discrimination law that mandates how age discrimination claims can be voluntarily waived or released. Age discrimination waivers are not legally viewed as voluntarily unless seven-day revocation is allowed. (29 CFR § 1625.22 (e).)

The employee’s revocation, if exercised, is typically done by emailing the employer as specified in the severance agreement itself. If the employee does not revoke the agreement, the severance agreement takes effect on the eighth day after the severance agreement is signed. 

As a practical matter, the underlying employee will not want to have to rely on the seven-day revocation period, and should make a firm decision within the specified time period. 

Doesn’t a 45-day deadline apply?

Some severance agreements have a forty-five (45) day deadline. This, once again, is because of a federal law intending to protect employees affected by a mass lay off, legally called a “group termination.” Although mass layoffs do occur, 21-day severance agreements are far more common. 

What should I do If I am given a severance agreement?

The employee should not delay taking substantive action when a severance agreement is offered. This includes reading and understanding the requirements of the severance agreement itself, and most importantly, understanding the appropriate value of the severance agreement. Employees should strongly consider hiring an attorney for a one-time consultation to review the severance agreement and determine the potential value of any potential legal claims. This can be surprisingly affordable for the employee. 

If the employee decides to negotiate for a larger severance agreement, the employee must budget for adequate time to do this before the expiration date of the severance agreement. 

Have you been given a severance agreement? Contact the Law Office of Brian Mathias for a consultation today. 

Severance Agreements: How Much is My Severance Agreement Worth?

Sometimes terminated employees are offered a Severance Agreement by their soon-to-be former employer. A severance agreement, in essence, consists of a payment of money to the employee in exchange for a promise to never sue the employer for most employment laws. It buys the peace and prevents lawsuits before they ever can start.  

Since employees are often terminated abruptly and without warning, the decision to sign or reject a severance agreement can be a difficult one. Adding to this difficulty, most employees do not know how much money is acceptable, normal, or appropriate in their particular circumstance. 

The short answer is that severance agreements can range from $3,500 to $150,0000 or even larger, but the appropriate amount of money in a severance agreement ultimately depends on the particular case based on a number of factors and the willingness of the employer and employee to agree on a specific amount. 

First, in the big picture employers do not have to offer severance agreements at all. An employer may offer severance packages to some employees, but not others, and may offer similarly situated employees different amounts of money. The amount of the severance package is not set by law and the amount can be negotiated between the employee and employer. 

If a severance agreement is actually offered the biggest factor in determining the appropriate value is whether the employer believes it has violated any employment laws or not, or believes it has legal exposure because of the employee. For example, an employee who was fired for an unquestionably legal reason (such as a factory closure, resulting in a mass layoff), a severance agreement could be very low. This is because the employer believes its legal exposure to be minimal. However, if an employee is fired in legally questionable circumstances, for example after making legally protected complaints, after requesting reasonable accommodations, or after demanding that overtime be paid, the employer may be willing to offer a much larger sum of money. 

Because the appropriate value of a severance agreement is largely determined by the viability of the employee’s legal claims, employees should first consult with an employment attorney before signing them. An attorney can identify potential legal claims, a practice called “issue spotting”, to ascertain the value of any legal claims the employee would be giving up. For an employee with a potentially strong legal claim, rejecting the offer of a severance agreement entirely is often the best choice.  

Second, although the dollar amount of severance agreements are not set by law or other fixed standard, employers oftentimes rely on the length of the employee’s employment and/or the amount of the employee’s salary in determining the dollar amount of the severance agreement. Employees of very high rank will frequently be offered more than low level employees, even if the higher ranking employee worked for only a short period of time. 

Have you been offered a Severance Agreement by a soon-to-be former employer? Contact the Law Office of Brian Mathias for a consultation before signing. 

We've Accepted Your Resignation: All About Protected Absences

Even employee-friendly California acknowledges that employers have a reasonable expectation that their employees will show up to work as promised, be on time, and will not have excessive absences. Indeed, tardiness and absenteeism can readily serve as legitimate employer defense to employee claims of unlawful termination. Absenteeism or tardies can also cause a denial of benefits with the Unemployment Development Department (“EDD”). However, not all absences are created equal. 

What type of absences and tardies are protected?

Some absences and tardies cannot form the basis of a termination at all. In-fact, depending on the reason for the underlying absence, employees who have been fired for missing too much work can sue for significant damages in a wrongful termination case. It all depends on the underlying reason for the employee’s absence or tardy, and whether or not the employer had reasonable notice. Numerous reasons can create a protected absence or tardy, including jury duty, the death of a family member, civil service obligations with the national guard, and parent-teacher conferences. However, medical reasons for the employee or for an employee’s family member are by far the most common type of protected absence. 

Medical-related absences can range from anything between the common cold and missing work because of cancer. Even if the underlying health condition does not qualify as a “disability” for purposes of the California Fair Employment and Housing Act (“FEHA”) or a “serious medical condition” under the Family Medical Leave Act/ California Family Rights Act (“FMLA/ CFRA”) it can still be a protected absence for purposes of an unlawful termination. Moreover, there is not a specific legal cap on the total number of medical-related absences or tardies that can occur before they become unprotected, automatically allowing termination in all instances. The total number of protected absences and tardies depends on the circumstances of the employee, the employee’s position, and the size and resources of the employer.

Do I need to give my employer notice if I am late or absent?

Almost equally important as the purpose of the underlying absence, is that the employer has notice that the employee has taken an absence or is tardy for a protected reason. In other words, employers who have no clue why the employee is absent or late will not likely face legal liability for terminating an absentee employee, even if the underlying reasons for the absence were protected. For these reasons, it is often helpful for the employee to specifically and proactively inform the employer of any medical issues that are causing absences or tardiness. 

Moreover, legally adequate notice can take the form of a doctor’s note, a note or call from a spouse, or the employee herself. Notice does not have to be in writing, on a human resources department or company form, nor come from a doctor. Similarly, the employee is only required to give reasonable notice to the employer when they are absent or tardy for a protected purpose. Reasonable notice could be months ahead of time, for instance if the employee has a specific date for a surgery. Reasonable notice could also be no notice at all, for instance if the employee woke up violently sick. Lastly, under a legal concept called “constructive notice” an entire company or organization is deemed to be on notice if the employee’s lowest ranking supervisor was notified. 

Can my employer automatically fire me for missing a specific number of work days? 

No, not if any of the missed days are protected. An employment policy that disciplines or terminates an employee who has been absent or tardy a specific number of times is illegal if any of the underlying absences were for protected reasons. These policies are called, “no fault attendance policies.” Such policies are unlawful because they ignore that there are many situations where the employee cannot be punished for missing work. Despite being illegal for decades, no fault attendance policies are still prevalent. 

Can my employer say I resigned if I did not show up at work? 

Although decreasing in prevalence, employers will still frequently tell the employee that the employee has “resigned” if the employee did not show up to work, even if the absence was for a protected basis and the employee had no intention of quitting. This often is told to the employee in a letter from the employer that reads, in substance or affect, “We have accepted your resignation.” 

There is no legal authority in California for this practice. An employee’s involuntary termination, even if legally justified, does not become a voluntary resignation simply by the employer deeming it as such. Unfortunately, this practice is frequently used with the EDD in an effort to deny the employee unemployment benefits. Employers who engage in this practice risk exposure to both defamation and punitive damages.

Have you been fired for taking protected absences? Contact the Law Office of Brian Mathias. 

39-Month Re-Employment Lists: What the District Won't Tell You

Public school employees get a benefit not available to any other type of California employee. That is, the ability to go on the school district’s 39-Month Re-Employment List in the event the employee is too injured to keep working. While on paper the 39-Month Re-Employment List may seem like a perk, in reality the school district-employer will rarely, if ever, correctly follow the law and, as a result, completely undermine any protection the 39-Month Re-Hire List was designed to provide. 

This article will explore the hidden secrets of the 39-Month Re-Employment List. 

What is a 39-Month Reemployment List? 

As a refresher, the 39-Month Reemployment or Re-Hire List is a legal process that mandates how public school districts must terminate employees who are perceived as too injured or sick to keep performing their jobs. This detailed process is outlined in California Government Code section 45195, and specifies that if a permanent employee exhausts all their sick leave, and is still unable to continue working, they are placed on a “reemployment list for a period of 39 months” or 3.25 years. 

Employees who are placed on the list receive no pay, no benefits, and do not work for the district, but are, at least on paper, supposed to be given priority for rehire over other qualified candidates if and when they become healthy enough to work. While it does not matter how the employee initially became injured, the vast majority of employees placed on the 39-Month Reemployment List were initially injured at work and have ongoing workers' compensation cases. 

What is supposed to happen before an employee goes on the 39-Month Re-Employment List? 

Before the employee is ever placed on a 39-Month Re-Employment List the District-employer must correctly determine 1) that the employee is so injured that he or she cannot perform one or more essential job functions and 2) that no reasonable accommodations exist that would allow the employee to continue working in their current position. A reasonable accommodation is any type of workplace modification or a change in how the job is performed, that would circumvent the otherwise restrictive impact of the employee’s injury or illness (called a “disability”). 

If the District fails to correctly answer either of these questions, disability discrimination has occurred which is a violation of the California Fair Employment and Housing Act. (Cal. Gov’t. Code § 12940(a)). Notably, in order to commit disability discrimination the District does not need to have a hatred or dislike of injured people. The District’s mere incorrect conclusions about the employee’s ability to do the job, with or without accommodations, makes them liable. As explained in a separate article which may be found here, school districts rarely, if ever, legally place employees on the 39-Month Re-Employment List. 

What are the employee’s rights while on the 39-Month Re-Employment List? 

Even in the case where the employee was lawfully placed on the 39-Month Re-Employment List, this does not end the District’s obligations to the employee. For the entire time that the employee is on the 39-Month Re-Employment List, the District must proactively identify and offer vacant positions to the employee (called “reassignment accommodations''). Districts never do this. As a result, even if disability discrimination was not initially committed upon the employee’s initial placement on the list, simply ignoring the employee for the 3.25-year duration of the 39-Month Re-Employment List would separately constitute a violation of the California Fair Employment and Housing Act. 

Can the District just refer me to the open positions on its website? 

A school district employer cannot simply refer the disabled worker to the open positions on its website. For over twenty years, California law has confirmed that a reassignment accommodation requires more than simply referring the employee to the employer’s website or bulletin board to see what jobs may be open. Rather, the employer must proactively inform the employee about any open, vacant, and funded positions that the employer has. The reason for this requirement is simple. Employers often know about upcoming job vacancies long before they are ever posted online for the general public. Employers must share this level of insider information with the disabled employee on the 39-Month Re-Employment List before the general public is ever made aware of it.

The ramifications of this legal requirement on a school district and employees on a 39-Month Re-Employment List are enormous. This is because school district employers, even small ones, will often post hundreds of jobs over the course of an employee’s stint on the 39-Month Re-Employment List. Many of those positions will require no certification, college degrees, or technical knowledge. The employee must be proactively notified about every single one of these positions. If the employee is qualified for the position, the disabled employee must be given preferential opportunity for the position over all other candidates. In other words, the employee cannot be forced to interview and openly compete with a non-disabled worker applying for the same position. 

What if the District says the employee is unqualified to perform an open position? 

School districts will often unnecessarily keep employees on a 39-Month Re-Employment List by inaccurately telling the employee they are unqualified to perform an open position. Sometimes this is because the employer and their insurance carrier or third party administrator have the strategic legal objective that the employee never return to work. If this occurs, the employee should ascertain what the employer means by “unqualified”. If the employee is deemed unqualified in the sense he or she lacks a required teaching credential, a lengthy period of education, or a government license the employee does not possess, this could be problematic for the employee.  

More commonly, the employing school District will claim the employee is “unqualified” for a potential reassignment or transfer because the written job description has physical requirements that the employer believes the employee cannot satisfy. If this occurs, the employer is obligated to start a brand new interactive process with the employee, explore what accommodations might exist for the new position, and identify the precise job-related limitations it believes the employee cannot physically perform. Employers never bother to do this.

Moreover, while written job descriptions can potentially be accurate, they are oftentimes inaccurate, outdated, or written by human resources officials who never actually performed the job. For example, minimum weight lifting requirements in job descriptions are frequently in direct conflict with workplace safety trainings that require and encourage the employee to get help lifting any amount of weight deemed too heavy by the employee. In other words, the interactive process for a potential reassignment should not fail or succeed based upon a written job description, especially a minimum lifting requirement. 

Can a reassignment accommodation require the employee to take a pay cut? 

If a reassignment accommodation is appropriate, the employer does not have to offer the same rate of pay or salary that the employee was earning in their former position. However, if taken of the 39-Month Re-Employment List via a reassignment accommodation, the public school employee will re-accrue extremely valuable health benefits and retirement service credits with CalPERS. 

Have you been placed on a 39-Month Re-Rehire List? Do not give up. Contact the Law Office of Brian Mathias. 

39-Month Rehire List Myth Busting

Public schools are often the worst offenders of California’s anti-discrimination laws, disability discrimination included. Often times a public school employee’s placement on a 39-Month Rehire List is an indicator that disability discrimination has occurred or is still ongoing. All public school employees should know what the 39-Month Rehire List is and the most common ways that schools commit disability discrimination when this list is used.

What is a 39-Month Rehire List? 

To understand what a 39-Month Rehire (or Re-employment) List is and is not, one must first understand when it is legal and illegal to fire an employee whose illness, injury, or disability affects their ability to do the job. 

Generally speaking, it is completely legal for an employer to terminate a sick, injured, or disabled employee if the employee cannot continue to do their job because of their health condition. However, before the employee is terminated, the employer has a rigorous obligation to first determine if one or more modifications, tools, or adjustments to how the job is performed could allow that disabled employee to continue working, notwithstanding their health condition. These are called reasonable accommodations. If a reasonable accommodation exists, it is illegal to terminate the employee for health reasons. Employers who terminate an employee who could continue to do their job, with or without a reasonable accommodations, have committed disability discrimination. Dislike, hatred, or discriminatory intent towards sick, injured, or disabled employees has nothing to do with disability discrimination.

Disabled public school employees, including certificated and non-certificated staff, have an additional benefit not provided to other sick or injured employees. Instead of being fully terminated, public school employees who are too sick, injured, or disabled to continue working, even with accommodations, must be placed on a reemployment list for 39-months (California Education Code § 45195.) While on the 39-Month Rehire List, the disabled employee gets job priority over most other employees if they become healthy enough to resume working. 

However, in reality the 39-Month Rehire List rule is rarely applied by public school districts in a legal and correct way. Several common violations repeatedly occur, regardless of school district or the employee’s prior job title. 

Placement on the 39-Month Rehire List means the employee cannot perform the job, even with accommodations: 

An employee’s placement on a 39-Month Rehire List requires that the employee be actually and objectively unable to perform their regular job duties, called the “essential job functions,” even with accommodations. School districts frequently get this wrong and place employees on a 39-Month Rehire List despite the employee being able to perform the job with minimal or even  no accommodations. This occurs for a variety of reasons, including reliance on outdated or inaccurate medical information or the false belief that the employee’s medical restrictions are “permanent” and will never change. School districts will also rely exclusively on certain doctors to ascertain the employee’s medical abilities, such as a Panel Qualified Medical Evaluator, or “PQME,” but ignore other doctors with more accurate information such as the Primary Treating Physician or “PTP.” The employer’s subjective belief or intent does not matter; the employer must correctly and accurately determine that the employee cannot perform their position with or without accommodations for a placement on a 39-Month Rehire List to be lawful. 

The 39-Month Rehire List is not an exception to the duty to accommodate or engage in an interactive process:

School District employers often assume, incorrectly, that placement on a 39-Month Rehire List is an exception to or overrides the employer’s duty to accommodate, to engage in an interactive process with the employee, or to disability discrimination in general. The 39-Month Rehire List rule makes no such exception to the California Fair Employment and Housing Act or “FEHA.” If an employee is abruptly placed on 39-Month Rehire List without first going through one or more exhaustive interactive processes, this is often indicative of disability discrimination. 

Employees must be regularly contacted about open and vacant positions while on the 39-Month Rehire List: 

Employers internally and psychologically view employees on their 39-Month Rehire List as being permanently and forever terminated, with no remaining ties to their former position. While employees on the 39-Month Rehire List do not go to work, get paid, or accrue retirement service benefits, they are for purposes of the interactive process and the FEHA still employed by the District. This means that once on the 39-Month Rehire List, the employer-District must proactively inform the employee about new job vacancies that could accommodate the employee, even if the job vacancy is completely different than the employee’s former position. Referring the 39-Month Rehire List employee to a generic list of open positions on the employer’s website violates this duty because the employer must give the 39-Month Rehire List-employee “preferential consideration” over the general public if the vacancy might accommodate the employee (Jensen v. Wells Fargo Bank (2000) 85 Cal.App.4th 245, 265). Since even small school districts are regularly hiring for low and mid-level positions, the absence of regular contact from the employer while on the 3.25 year Rehire List is indicative of disability discrimination.  

Have you been placed on a 39-Month Rehire/Re-Employment List? Don’t let your employer let you rot. Contact the Law Office of Brian Mathias today and take action. 

How to Win Your EDD Appeal, Part 1

All employees who are terminated are presumed to qualify for unemployment benefits through the Employment Development Department or “EDD”. Because of this presumption, it was once common for employees to be readily granted unemployment benefits, even in the case of “for cause” terminations. That has now changed, and following a series of scandals the politically motivated EDD is aggressively denying unemployment benefits when given the weakest excuse for doing so. This means that employees who should readily receive unemployment benefits are being denied and must file a formal appeal to fight back against their former employer and against America’s worst run State-level bureaucracy. 

This article discusses one of the common reasons given by the EDD for denial of unemployment benefits: that the employee broke a reasonable employer rule (22 Cal.Code.Regs. § 1256-42). 

What is misconduct for purposes of the EDD?

For background, employees are entitled to unemployment benefits if they lose work through no fault of their own. This means that employees who voluntarily quit or who are fired for misconduct do not get benefits (Unemployment Insurance Code § 1256). For EDD purposes, misconduct does not automatically exist simply because the employee was fired for cause. Misconduct has to be intentionally bad behavior that threatens or damages the employer in a material or substantial way (22 Cal.Code.Regs § 1256-30 (b). A technical violation is not enough. 

What does violation of a reasonable employer rule mean? 

That the employee broke a reasonable employer rule is just one of many forms of employee misconduct that can disqualify the employee from receiving benefits. To establish that the employee violated a reasonable employer rule and cannot be awarded benefits, the EDD must establish all of the following:

1. The employee’s behavior actually violated the rule: Oftentimes, employers will terminate an employee alleging misconduct, despite clear evidence showing that the employee was just doing their job. An employee’s conduct must have actually violated some rule to be denied EDD benefits. If the employer was simply mistaken or has exaggerated what actually occurred, this can be the best way to win an EDD appeal. 

2. The rule is reasonable: Assuming the underlying conduct actually violated a rule, the EDD must find that the employer rule is reasonable. This means that the employer rule cannot violate the law, that the rule is more than a mere technicality, and that it must be feasible for the employee to adhere to the rule in the first place.  

3. That the employee knew or should have known about the rule: If the employer failed to inform the employee of the rule in the first place, misconduct cannot be found. 

4. The violation is willful or wanton: This means that the employee acted in more than a negligent way when violating the rule. While even some accidents could be considered “willful” the EDD will have to find that the employee made a conscious decision to disregard a rule which led to the accident. Simply being an inefficient or poorly performing employee is not enough to show “willful or wanton” behavior. 

5. That the violation is material: This means that the violation of the rule was more than a mere technicality, but a serious rule that substantively mattered. 

6. That the violation substantially injures or tends to injure the employer: This means that the violation of the underlying rule actually harmed the employer or that the violation could have harmed the employer even if no harm occurred. Rule violations that could not have possibly harmed anyone cannot be the cause of a denial of benefits. 

How to disprove violation of an employer rule at an EDD Appeal:

If your EDD benefits have been denied for violating an employer rule, you as the employee will want to provide facts showing that no such misconduct occurred. This is done through the testimony of the employee herself, through documents, or through the testimony of witnesses. While each case is different, the following sources of evidence can help disprove violation of a reasonable employer rule: 

1. Job descriptions: The job description can be helpful to the employee if it shows that the employee was authorized to engage in the underlying conduct alleged to be problematic by the employer or the EDD. 

2. Authorization from supervisors/ bosses: If the employee’s boss authorized the underlying employee conduct, has tolerated the same conduct from other employees, or has engaged in the conduct themselves, this can disprove violation of a reasonable employer rule. 

3. Selective rule enforcement: If the alleged conduct that violated the rule is tolerated by the employer from some employees, but not others, this too can disprove employee misconduct. A “reasonable rule” that is “materially violated” should lead to employee discipline every single time. 

4. Performance history: Although more serious rule violations could constitute misconduct upon the first violation, it is helpful to show that the employee was a positively performing employee with an absence of prior warnings about the underlying violation. 

5. Employee-intentions: Because only “willful or wanton” behavior can be the basis of misconduct, the employee’s subjective intentions and the reasons for the underlying violation are important. If the underlying rule violation was accidental, or if the circumstances leading to the violation were out of the employee’s control, this should be brought to the EDD’s attention at the appeal.

Have you been denied your unemployment benefits? Thousands of dollars could be on the line. Contact the Law Office of Brian Mathias for more information. 

What happens at an EDD Appeal?

The California Employment Development Department, or the EDD, has long been the worst run bureaucracy in California, even before the COVID-era when its many deep problems and poor customer service were brought to light via millions of additional claims for unemployment insurance benefits in 2020. Things then got a lot worse.  Following Governor Gavin Newsom’s campaign to clawback purportedly fraudulently issued benefits, applicants for unemployment benefits are now being denied benefits at an unprecedented rate. Employees who readily qualify for benefits are now being denied benefits in the name of fighting fraud.  Fortunately, an employee who is denied benefits or is being threatened with having to return thousands of dollars worth of benefits is able to fight back against bogus EDD determinations by appealing. This article will briefly explain the EDD appeals process. 

First, an employee who wants to appeal or challenge an action or decision by the EDD faces a strict deadline of just thirty days. Importantly, this thirty-day deadline often begins from the date on the EDD’s underlying letter to the applicant (called a “Notice of Determination”). This date is often different from the date that the letter was actually mailed or the date that the envelope was postmarked.  Because the EDD will delay the mailing of its letters, this means that the employee will actually have closer to three weeks to appeal. Employee-applicants who want to seek legal help should initiate their search for an attorney right away.  

Second, the appealing employee will want to provide the EDD with a written, fact-based explanation for why the employee is challenging the EDD’s decision and why the EDD made the incorrect decision. This written explanation should be succinct, clear, and based on readily provable evidence such as the employee’s own oral testimony or documents. While the EDD will provide a short, one-page appeal form, the short space provided for the employee to explain his or her side of the story is usually insufficient and an attached letter may be used for additional space. The applicant may also want to provide the EDD with written evidence, such as employment records, along with the written explanation. The appeal letter and any evidence should be copied, scanned, and sent via certified mail to the address stated on the Notice of Determination. It is free for the employee to submit the appeal. 

The EDD will then schedule a hearing with an EDD judge. Unfortunately, this is a process that can take up to six months from the date that an appeal is submitted by the employee.  If the prospect of an EDD hearing with a judge sounds intimidating, do not fret. EDD hearings do not have the look and feel of a regular trial or courtroom and much more relaxed rules of evidence and procedure are applied. Similarly, as of August, 2022 EDD hearings are still being conducting remotely via telephone. 

 Careful preparation for the hearing is critical. Applicant-employees should thoroughly prepare for their hearing by reviewing their own evidence and written explanation, by reviewing the details of their former employment, and by giving practice answers to likely questions. The hearing itself will typically last between 20 and 40 minutes long and the applicant-employee should assume that his or her former employer will also attend the hearing with the aim of denying the employee’s benefits.  The hearing itself will typically begin with the EDD Administrative Law Judge (called an “ALJ”) explaining the hearing process and describing what documents he or she  has received in conjunction with the appeal. The ALJ will then ask the employee background questions about the employee’s title, job responsibilities, their rate of pay and frequency of payment, the circumstances surrounding the employee’s termination, and what the employee has done since the termination to look for new work. The employee and former employer will have an opportunity to present evidence through their own testimony and the testimony of witnesses. The applicant and former employer are also permitted to cross examine each other at the hearing, including through an attorney if they are represented. 

Following the hearing, the ALJ will issue a written decision in approximately one week and will declare the winner. The ALJ’s written decision can also be appealed, however the prospects of winning that second appeal become much more difficult. 

Are you looking for an EDD lawyer? Contact the Law Office of Brian Mathias today. 

Why were my EDD benefits denied?

California’s Employment Development Department, or “the EDD”, issued twenty billion dollars in fraudulent unemployment benefits during California’s early COVID-era lockdowns. Unemployment benefits were automatically and mindlessly doled out to tens of thousands of people who were plainly not qualified to receive them, even under generously written and applicant-friendly rules. 

In an apparent face-saving measure, Governor Gavin Newsom has publicly campaigned on trying to claw back the benefits that should never have been issued in the first place. In reality, the EDD’s “claw back” campaign means that now workers who clearly and readily qualify for unemployment benefits are being categorically denied benefits. Indeed, employees who were granted benefits years ago by the EDD are now being retroactively targeted by the EDD. While it was once rare for employees to need help navigating a once employee-friendly system, employees are now needing legal help with unemployment benefits at an unprecedented rate. 

This article discusses some of the more common excuses the EDD will assert when trying to claw-back your unemployment benefits. 

First, the EDD will assert that the employee is disqualified from obtaining unemployment benefits for making a false statement to the EDD. (Unemployment Insurance Code § 1257 (a).) The law rightfully forbids applicants for unemployment insurance from lying in order to obtain them, legally called making a “willful” false statement or representation. However, the EDD will often confuse, perhaps intentionally, the existence of conflicting or confusing facts or versions of events with the employee lying and use this as a justification to deny benefits. This often arises over the reasons and circumstances of the employee’s termination, including whether they were fired for “misconduct” or when the employee’s last day of employment was. Employers and employees often have a good faith dispute about these issues, but again, this does not mean one party is willfully lying. Worse yet, the EDD will often fail to state in their underlying Notice of Determination what they even contend the employee is wilfully lying about. 

Second, the EDD will claim that the employee is “medically unable to work”. This often arises if the employee suffered from some health condition while employed and/or that the employee’s health factored into the employer’s decision to not accommodate or terminate the employee. Legally speaking, the EDD requires that an applicant for unemployment benefits to actually, “able to work and available to work”. (Unemployment Insurance Code § 1253 (c).) While theoretically some employees may be so injured or unhealthy that they can perform no work whatsoever, the law requires that employees be provided with reasonable accommodations. Only if no reasonable accommodations exist may an employee be lawfully fired because of their medical condition or disability. Moreover, just because the employer  claims that no accommodations exist does not mean that the employee can be denied benefits. Unfortunately, the EDD is often ignorant of the employer’s duty to provide reasonable accommodations and/or will blindly defer to the employer’s version of events and as a result deem the employee unqualified for benefits. 

Third, the EDD will often seek to deny benefits by claiming that the employee quit or resigned from his or her employment. The law disqualifies employees who quit or resign, without good cause, from obtaining unemployment insurance benefits. (Unemployment Insurance Code § 1256.) However, employers will frequently mischaracterize a termination or lay off as a resignation or as the employee “quitting” simply to frustrate the employee’s ability to get benefits. The EDD, who are now incentivized to deny and claw back benefits, will often blindly defer to these characterizations. 

Employees should be extremely cautious when dealing with a politically-charged EDD. The employee should carefully monitor all correspondence from the EDD so that he or she can promptly and timely appeal any denials of benefits. Appeals must be promptly initiated. Are you experiencing challenges in obtaining unemployment insurance benefits? Contact the Law Office of Brian Mathias today. 

What is a 39-Month Reemployment List?

Most public school employees have not heard of a 39-Month Rehire (or Reemployment) List until they or a friend are forced onto one. This article answers some common questions and addresses likely misconceptions about 39-Month Reemployment Lists. 

What is the 39-Month Reemployment List?

The 39-Month Reemployment List is, in short, a process that mandates how public school districts must terminate employees who are perceived as too injured or sick to keep performing their jobs. This detailed process is outlined in California Government Code section 45195, and specifies that if a permanent employee exhausts all their sick leave, and is still unable to continue working, they are placed on a “reemployment list for a period of 39 months” or 3.25 years. 

Employees who are placed on the list receive no pay, no benefits, and do not work for the district, but are, at least on paper, supposed to be given priority for rehire over other qualified candidates if and when they become healthy enough to work. While it does not matter how the employee initially became injured, the vast majority of employees placed on the 39-Month Reemployment List were initially injured at work and have ongoing workers' compensation cases. 

Am I actually fired if I get placed on a 39-Month Rehire List? 

For all intents and purposes, if you  have been placed on a 39-Month Reemployment List, you have been fired. Employees on the 39-Month Rehire List do not report to work, collect a salary, earn benefits, or contribute towards their CalPers or CalSTRS retirement service credits. School districts will bend over backwards and claim that their 39-Month Reemployment List is anything but a termination, but do not be fooled. 

What is the District supposed to do before I am placed on a 39-Month Reemployment List?

In almost every circumstance, an employee who qualifies for placement on a 39-Month Reemployment List will also be considered “disabled” for purposes of the California Fair Employment and Housing Act or “FEHA”. An employer’s mere perception or actual knowledge that an employee has a disability triggers an ongoing and rigorous obligation to engage in a timely and good faith interactive process with the employee and identify reasonable accommodations that would allow the employee to keep working. Reasonable accommodations are modifications or adjustments to the work process that allow the injured worker to continue performing the essential functions of their current position, or is a reassignment to an entirely new position that the employee can perform, called a “reassignment accommodation.” Click here to read an article on the interactive process. The employer’s failure to engage in an interactive process or provide reasonable accommodations constitutes disability discrimination.  

The FEHA implications mentioned above mean that before the employee is placed on a 39-Month Reemployment List, the employer-school district should have engaged in a series of ongoing, timely, cooperative, and factually substantive discussions with the employee and the employee’s medical providers about accommodations and how the employee could possibly keep working before placement on the 39-Month Reemployment List is ever considered. In reality, however, school districts will bypass the interactive process entirely and immediately place the employee on the 39-Month Reemployment List without offering any accommodations whatsoever. This means that many  injured school employees who can continue to work with minimal accommodations, or have already been working with injuries for quite some time, are  routinely placed on the 39-Month Reemployment List in violation of the FEHA. Indeed, employees will often work for many months with an injury, only to be abruptly placed on a 39-Month Reemployment List with little to no warning. 

What is supposed to happen after I am placed on the 39-Month Reemployment List?

After the employee is placed on the 39-Month Reemployment List, the District has a continuous and ongoing obligation to engage in an interactive process with the employee for the rest of the 3.25 years they are on the list. This means that the District is supposed to proactively alert the employee to new openings at the school district, even before those jobs are posted online for the general public. The District is also required to analyze any new or updated doctors notes provided to it by the employee, by the employee’s doctor, or through District’s workers' compensation insurer. If the employee’s medical condition has changed, the District is obligated to engage in another interactive process with the employee to see if the employee can continue working with those new restrictions. If the employee has improved or can otherwise be accommodated or reassigned, the employee must be swiftly taken off the list and rehired.

But all of this is just how things are supposed to happen. The harsh reality is that school districts secretly view their own 39-Month Reemployment List as a permanent termination and that the employee is never coming back. Districts never call the employee to alert them to open positions, districts never ask if their condition has changed, and they will frequently ignore updated doctor’s notes altogether. This is because school districts are encouraged, both internally and by their unscrupulous workers' compensation insurers to get rid of employees who have been injured. 

What should I do if I am placed on a 39-Month Reemployment List?

The employee’s potential courses of action after they have been placed on a 39-Month Reemployment List depend upon whether they have been mistakenly deemed by the employer to be too injured to work, or whether the employee is so injured that he or she can perform no work whatsoever, even with accommodations. 

Employees who believe they were mistakenly placed on their District’s 39-Month Reemployment List should vigorously and promptly fight their placement on the list. Offers to go on permanent or temporary disability, state disability, or Social Security Disability (i.e. TTD, SDI, SSDI) should be deeply investigated. The employee should attempt to have constructive discussions, in writing, with the District and also involve the employee’s doctors, as necessary. The employee should also consider seeking a plaintiff-side attorney who specializes in disability discrimination, reasonable accommodation, and the interactive process.

Do you have questions about the 39-Month Rehire List? Contact the Law Office of Brian Mathias today.

Classified Information: What's Your Classification as a California Teacher?

Most California public school teachers have employment rights that are much broader than employees in the private sector. Not only do California’s most protective anti-discrimination and anti-retaliation laws also apply to school teachers, such as the California Fair Employment and Housing Act and Labor Code section 1102.5, but most teachers may only be terminated under narrow circumstances and even then only when due process is provided. The nature and extent of a teacher’s employment rights depend on their underlying classification and length of service. 

Permanent Employees:

Teachers classified as permanent employees have received their teaching credential and have passed two years of probation. Permanent teachers have a vested property right in their job and may only be fired for “just cause” and when due process is provided to the employee. The reasons supporting a “just cause” termination include immoral or unprofessional conduct, dishonesty, unsatisfactory work performance, criminal convictions, and unfitness for service, among others. (Cal. Ed. Code  § 44932.) A just cause termination necessarily cannot be based on provably false or outdated accusations and the school district must substantiate the underlying reasons for the termination. 

Permanent employees can be laid off as part of a larger reduction in force, but even then are given preferential consideration over other employees in the event of a later rehire.

Probationary Employees:

Before becoming a permanent teacher, the teacher must work two consecutive years as a probationary employee. During this time period the teacher has far fewer rights than a permanent employee. A first year probationary can be given  a non-renewal notice (i.e. be terminated)  at the end of the first year without a stated cause or an evidentiary hearing. (Cal. Ed. Code § 44929.21.)

Importantly, just because first year probationary teachers need not be provided with a stated reason for termination by their employer, the underlying reason still cannot be based on unlawful motives, even in-part. For instance, probationary employees cannot be terminated because of a protected characteristic (i.e. their disability, need for reasonable accommodations, religion, race, etc.), nor can they be terminated for having engaged in protected activity, such as whistleblowing or complaining of unlawful working conditions. 

Second year probationary teachers have more rights than first year probationary teachers and must be provided with a non-renewal notice before the end of the school year on or before March 15th. The non-renewal notice must provide thirty-days’ notice and a written explanation for the termination. Probationary employees are also entitled to an evidentiary hearing before they are terminated. 

Temporary Teachers: 

Temporary employees are hired on a short term basis and for a fixed duration of time. Temporary teachers must be provided with written notice at the commencement of their employment that clearly describe the temporary purpose and duration of their teaching assignment. Unlike permanent and probationary teachers, temporary teachers do not have an expectation to continued employment after the expiration of the temporary assignment and may be terminated early for just cause. 

Substitute Employees:  

Substitute teachers are hired on a short-term basis to fill the position of an absent regular employee. (Cal. Ed. Code. § 44917.) Substitute employees have the fewest rights of all teachers and may be terminated for any reason. Substitute employees do not need to be given a reason for their termination, nor do they have the right to an evidentiary hearing before their termination. 

Are you a California school teacher facing termination or a contract non-renewal? Contact the Law Office of Brian Mathias today. 

The Employment Law You've Never Heard Of: The CFRA

Most employees have never heard of one of California’s most important employment laws; the California Family Rights Act or CFRA (pronounced “cee-frah”.) The CFRA provides employees who have a serious health condition with up to twelve weeks of protected time off work, legally called a “protected leave of absence.” It also provides the employee with protected time off if a close family member has a serious health condition. The CFRA leave of absence may be taken in one large and continuous chunk, or may be taken several hours at a time called “intermittent leave.” 

While many employees have heard of CFRA’s federal counterpart, the FMLA or Family Medical Leave Act, CFRA provides employees with far greater protections. All California employees and employers should know the CFRA basics. 

How does the CFRA protect employees? 

The CFRA is a form of a protected leave of absence, meaning the right to take time away from work. It offers two types of protections to employees who are qualified to receive it. First, employees who take a CFRA leave are entitled to reinstatement at the end of their leave of absence. In other words, the employee has the right to get their job back. Second, the employee’s health care benefits must continue during the CFRA leave of absence. CFRA leave is unpaid and the employer does not have to pay the employee’s wages or salary during the leave.

What employers are covered by the CFRA? 

Unfortunately, not all employers are required to provide their employees with CFRA leaves of absence. Currently in 2020, only large employers with fifty or more employees must provide CFRA leave. However, as of January 1, 2021 this will be dramatically expanded and employers with just five or more employees must provide CFRA leave to their employees. Both part-time and full-time employees are included when determining whether the employer has the requisite number of employees. 

What employees are covered by the CFRA? 

Not all employees are covered by the CFRA. Even the employer has 50 or more employees (or five or more in 2021) the employee must meet certain criteria in order to be eligible. First, the employee must have been employed for one year or longer with the employer. Second, the employee must have worked at least 1,250 hours in the twelve months preceding the requested CFRA leave, or approximately 25 hours per week on average. Therefore, neither brand new employees nor employees who work only a minimal number of hours are covered under the CFRA. Currently employees must work at a location within a 75 mile radius of 50 or more other employees to be eligible for CFRA. However, this 75-mile radius requirement will be eliminated in year 2021, allowing remote employees or employees who do not work near a traditional company headquarters to be included within CFRA’s scope.

What types of medical conditions are covered under the CFRA? 

Assuming the employer and employee are both covered under the CFRA, the employee must have a “serious health condition” in order to qualify for a CFRA leave of absence. Unfortunately, the definition of a “serious health condition” is highly technical and is a common area of dispute and confusion. A serious health condition includes, but is not limited to: (1) inpatient care when at least an  overnight hospital stay is expected; (2) a period of incapacity of more than three consecutive days when ongoing medical treatment is required, and; (3) treatment for chronic medical conditions or permanent medical conditions such as asthma, diabetes, epilepsy. (2 CCR 11087 (r) & 2 CCR 11097.)  Many medical conditions arising from Covid-19/ Coronavirus also qualify as serious health conditions.

Because the definition of a serious health condition can be very technical, employees should carefully work with their doctors and health care providers when completing any CFRA paperwork. Similarly, employees should seek legal help when employers dismiss out of hand an employee’s request for CFRA leave on the basis that the medical condition is not serious; employers cannot play doctor in this way.

Lastly, if even if an employee does not have a serious health condition for purposes of the CFRA, the same employee may still be entitled to a leave of absence as a form of reasonable accommodation under the California Fair Employment and Housing Act. 

What about the employee’s family members? 

The CFRA not only provides the employee with protected leave for the employee’s own serious health condition, but protected leave is also allowed if an employee’s family member has a serious health conditions. In other words, even if the employee is completely healthy, the employee may still receive CFRA leave to care for their sick family member.

Under the current state of the law, eligible family members include the employee’s children under 18 years old, parents, and spouse. However, beginning in 2021 eligible family members will include the employee’s children of any age, parents, grandparents, spouse, or sibling. Boyfriends, girlfriends, close friends, and housemates are not included as eligible family members.

How does an eligible employee get CFRA leave?

Employees who need time off work to care for their own medical conditions or for a sick family member should request CFRA leave from their employers. Employee’s may make this request verbally, but doing so in writing as soon as the need for leave is known is usually the best practice. The employee must state the reason for leave and that medical treatment is needed.  The employer is required to process the request quickly. In some situations, the employee may be requested to provide a medical certification, a type of doctor’s note, verifying the need for the leave. 

What happens if the CFRA leave is not granted? 

Because the CFRA is relatively unknown, legally complicated, and perceived as very burdensome and expensive by employers, CFRA violations are rather common, including violations that result in the employee’s termination of employment. Employers are prohibited from retaliating against employees who request or take CFRA leave. Employers are similarly prohibited from interfering with an employee who seeks to take a CFRA leave. Employers may be sued for violating the CFRA and employees may recover lost pay, lost benefits, human damages such as emotional distress, attorney’s fees, and even punitive damages.  Employees should consider contacting legal counsel proactively if their employer is refusing to grant a CFRA leave of absence. 

Do you have any questions about your CFRA rights? Contact the law office of Brian Mathias. 

Friend or Foe We Pay No Dough: California Bad Faith Insurance Litigation

When you think of an insurance company, what words come to mind? Untrustworthy? Greed? Betrayal? For good reason, most people distrust insurance companies. Indeed, many consumers expect even their own insurer to refuse to honor their insurance policies even after a clear cut, insurable, and catastrophic event, such as a wildfire. At best, consumers expect their insurance company to not pay without a long, drawn out, and difficult fight.  Insurance companies who betray their own customers by refusing to pay a valid claim or who unreasonably delay payment may be sued for insurance bad faith.

What is insurance bad faith? 

In California, insurance bad faith is legally a type of “breach of the implied covenant of good faith and fair dealing.” The implied covenant of good faith and fair dealing requires that each party to a contract not interfere with the right of the other to receive the benefits of the contract, to act honestly, and to not mislead the other party. (California Civil Jury Instruction No. 325.) More simply, one party to the contract cannot undermine the contract and must act in good faith.  The implied covenant of good faith and fair dealing is an unspoken promise in all contracts, including contracts for fire insurance, homeowners insurance, and auto insurance. 

In the context of insurance, the breach of the covenant of good faith and fair dealing can arise when, without proper cause, insurance companies refuse to compensate their insured for a loss covered by the policy. It may also arise when insurance companies unreasonably delay payment or fail to investigate the propriety of the underlying claim.

What are the consequences of insurance bad faith? 

There are special consequences for insurance companies who act in bad faith towards their insureds. These consequences are intended to discourage powerful insurance companies with seemingly unlimited financial resources from taking advantage of their comparatively powerless insureds, many of whom have faced a recent catastrophic event, such as the loss of a home.

Insurance companies that breach the implied covenant of good faith and fair dealing may be sued for more than simple breach of contract, that is the actual amount of the policy wrongfully withheld from the insured.  Insurance companies may also be held liable for human damages called “general damages” such as emotional distress, anger, inconvenience, physical pain, and suffering that naturally arise when insurance companies harm their own insureds. Finally, insurance companies can be held liable for attorney fees as well as punitive damages.

What are the defenses to insurance bad faith?

The first and foremost defense to a claim of bad faith insurance  is that the insurance policy in question never covered the particular insurance claim, called a “loss.” This can arise when the consumer purchased insurance that never covered the particular event that resulted in the loss, purchased too little insurance, or misunderstood the terms of their own insurance policy.

Next, insurance companies will assert the “genuine dispute” defense, meaning that the insurance company, in good faith and on reasonable, fact-based grounds, disputes the amount that it must pay.  In other words, that reasonable minds differ. The “genuine dispute” defense is often abused by insurance companies for the simple reason that insurance companies will deliberately seek out disinformation to dispute the claim or low-ball the claim. 

What to do when faced with bad faith insurance tactics? 

At the outset of an insurance claim, it is critical that the policy holder carefully manage and monitor the insurance claim, keep organized records, and keep close track of written and verbal communications with the insurance companies. This standard can be very difficult to achieve in the wake of an event that triggered the need for insurance in the first place. For instance, in the aftermath of a wildfire, an insured person may have lost their home, all their personal possessions, and temporarily relocated to a different county. Nevertheless,  it is important that insureds deal with their insurance company in a timely and responsive way to help prevent and detect insurance bad faith.

Lastly, insured persons should be conscious of the relatively short twelve month statute of limitations that applies to bad faith insurance claims in the context of fire. This deadline to file suit is triggered by the “inception of the loss” or the fire itself. For this reason, when faced with perceived bad faith insurance tactics, one should consider contacting an attorney sooner rather than later. 

Are you a recent victim of wildfire? Are you now having to battle your own insurance company? Contact the Law Office of Brian Mathias today. 

Who is the California Labor Commissioner?

Many people have heard of California the Labor Commissioner (sometimes referred to as the Labor Board or the Labor Commissioner’s Office). This article discusses what the Labor Commissioner actually does, and the pros and cons of using the Labor Commissioner to resolve a dispute with your employer instead of filing a lawsuit.

Who is the Labor Commissioner? What types of employment law claims do they hear? 

In short, the Labor Commissioner is a quick and theoretically more user friendly venue for employees to try and resolve payment and wage disputes with their current or former employers.  It operates similar to a regular lawsuit; the employee files a claim and later gets trial in front of a Labor Commissioner who acts as both judge and jury and decides the outcome.  A ruling is then issued which has the same force and effect of a judgment issued in regular civil court. If the employee prevails, this means that the employee will get an award of monetary damages. 

The Labor Commissioner is not made up of one single office or commissioner, but twenty separate offices located across California, including offices in Salinas and San Jose operated hundreds of Deputy Labor Commissioners. . 

On paper, the Labor Commissioner has the legal authority (called “jurisdiction”) to resolve a wide variety of employment disputes. The reality, however, is that the vast majority of employees use the Labor Commissioner to resolve one or more of the following types of wage disputes: 

• Unpaid overtime (i.e. when employees work longer than 8 hours per day or more than 40 per week);

• Missed meal periods, lunch breaks, and rest breaks;

• Unpaid Paid Time Off or vacation paid; 

• Waiting Time Penalties (i.e. when employees are not issued a timely final paycheck);

• Misclassification claims (i.e. when an employer claims the employee is “salaried” and/or is not entitled to receive overtime);

• Independent contractor misclassification claims (i.e. when an employer claims the worker is an independent contractor and not an employee).

Generally speaking, the Labor Commissioner’s Office does not have the jurisdiction to resolve wrongful termination or retaliation claims. These types of cases are administered by the California Department of Fair Employment and  Housing. 

What are the benefits of the Labor Commissioner’s Office? 

For perspective, employees are not required to go to Labor Commissioner’s Office to resolve a payment dispute with their employers. Employees have the option of pursuing the same types of claims in regular court or negotiating directly with their employer instead of pursuing a legal remedy with the Labor Commissioner. 

There are three main benefits of using the Labor Commissioner. First, filing a claim is free. Employees do not have to pay any money to submit their claim and get a trial. In contrast, it costs $435.00 to file a lawsuit in regular court and this is just one of many types of costs associated with a lawsuit. Since the Labor Commissioner does not charge any sort of fee, employees have an incentive to bring claims for relatively small amounts and for legally tenuous claims.

Second, the Labor Commissioner resolves cases much faster than regular court. After an employee files their claim, employees will generally get a hearing and a final ruling within six to eight months. In contrast, pursuing the same claims in regular court can take two years or more.

Third, the Labor Commissioner is much more user friendly than regular court and the process is designed for persons without attorneys. The Labor Commissioner uses relatively user-friendly pre-printed forms, all of which are available online. There is no requirement for an employee to draft a customized lawsuit dozens of pages long.  There are very few rules related to the admission of evidence. In contrast, the procedures and rules that apply to pursuing a wage dispute in regular court are highly technical and are virtually impossible for a non-legally trained person to comply with. Failing to comply with a procedural rule in regular court can easily result in the judge throwing out your case. 

What are the negatives associated with the Labor Commissioner’s Office? 

There are many potential negatives to filing a claim with the Labor Commissioner instead of pursuing a claim in regular court. First and foremost, while on paper the Labor Commissioner is required to provide employees with a fair hearing and follow the law, this is not always the reality. The Labor Commissioner’s Office can be notoriously sloppy, lazy, and understaffed, greatly complicating the underlying employee’s claim and risking their chance of prevailing. Moreover, many of the persons who work at the Labor Commissioner’s Office responsible for administering your case lack legal training, even in the narrow issues of employment law supported by the Labor Commissioner’s Office. While the regular court system can also have these negatives qualities, the defects are much more pronounced and consistent with the Labor Commissioners’ Office. 

Second, employees only have a limited opportunity to obtain “discovery” from their employer in a case with the Labor Commissioner. Discovery is the legally compelled sharing of facts, documents, and the names of witnesses from the opposing party in a lawsuit (or even from an entirely unrelated non-party to the lawsuit) which are relevant to the legal dispute. In other words, discovery is the mechanism to obtain evidence about your lawsuit before the actual trial. Sometimes, no discovery is required, however, the lack of meaningful discovery at the Labor Commissioner’s Office means that the most favorable evidence to your case will be suppressed if it is in the exclusive possession of the employer. Inversely, employees (and employers) may be ambushed by damaging evidence for the first time at trial.

Third, the Labor Commissioner generally cannot award attorney’s fees to a victorious employee. For those employees represented by attorneys, this can mean that the employer has far less incentive to settle your case because the employer does not face the additional risk of paying tens of thousands of dollars in addition to whatever is owed in unpaid overtime, rest breaks, and penalties. 

In conclusion, there are positives and negatives to using the Labor Commissioner. The facts of a particular case determine if the positives and negatives are actually important to the specific case. For this reason, before a case with the Labor Commissioner is filed, it is prudent for the employee at least contact an employment attorney to see if the case is worth being brought as a regular lawsuit. 

I’ve filed my Labor Commissioner Case. What happens next?

Assuming you have made an educated decision to file your claim with the Labor Commissioner and not in regular court, the next step is to appear at the mandatory pre-hearing conference. Both the employer and the employee are instructed to attend the conference, which is typically scheduled 60-120 days before the actual hearing or trial. At the conference a representative of the Labor Commissioner's Office (typically a non-attorney) will review the employee’s complaint and see if a settlement can be made. It is mandatory for the employee to appear at the pre-hearing conference and the employee’s failure appear will result in the dismissal of the case.  

After the pre-hearing conference, the next major step is to attend the hearing or trial, called a Berman Hearing. The employee and the employer must bring their evidence and any witnesses to the hearing. The hearing takes place in a private conference room setting, nothing resembling a typical courtroom. At the hearing, witnesses will be sworn in. The judge, called a Deputy Labor Commissioner, will typically ask both the employee and the employer questions, which must be answered truthfully. The employer and employee may also cross examine each other. In the event the employer fails to show up, the employee must still prove their case.

The Deputy Labor Commissioner will typically write a detailed decision or judgment, sometimes several months after the hearing takes place. The parties have the ability to appeal the decision in regular court. However, there are strict and very harsh financial consequences if the employer unsuccessfully appeals a case from the Labor Commissioner. Employees should immediately search for an attorney in the event the employer appeals a ruling of the Labor Commissioner.

Do you have a case pending with the Labor Commissioner? Contact the Law Office of Brian Mathias. 

Severance Agreements Part II: What Can't Be Included in a Severance Agreement?

Many terminated employees are presented with a Severance Agreement by their former employer. The purpose of  a Severance Agreement is to prevent employment litigation before it ever begins. Legally speaking, a Severance Agreement is a written contract; in exchange for money, the employee promises to never sue the employer, legally called a “release of claims.” Employers are legally permitted to seek a release for almost every type of conceivable legal claim from the employee by way of a Severance Agreement. This article discusses several important rights that employees cannot legally release in their Severance Agreement. Part One of this article, discussing Severance Agreement basics, may be found here.

Non-Competition Clauses:

In most cases, a Severance Agreement cannot include a non-competition clause. In short, a non-competition clause is an agreement that the employee will not open a competing business or work for a future employer that is in competition with the former employer.  California has close to a total ban on non-competition clauses, which are considered a “restraint on trade.” (Bus & Prof Code § 16600.) No other state has as absolute a prohibition on non-compete clauses as California. The public policy behind this statute is to encourage open competition, employee mobility, and to protect the legal right to pursue lawful employment and business. (Edwards v. Arthur Anderson LLP (2008) 44 Cal.4th 937, 946.) Courts will broadly construe this right to compete and will disallow non-competition clauses in all but the narrowest of circumstances. 

Since most other states affirmatively allow non-competition clauses, employers headquartered outside of California are far more likely to include unlawful non-competition clauses in their Severance Agreements. Notably, California’s prohibition on non-competition clauses does not affect an employer’s rights to protect their own intellectual property and trade secrets. 

Workers' Compensation Claims:

California has a  separate and robust judicial system for litigating and resolving legal claims for on-the-job injuries called the Workers' Compensation Appeals Board (“WCAB”.)  The WCAB has the exclusive power to resolve workers' compensation claims and a WCAB judge must approve any agreement between the employer and employee to resolve a workers' compensation claim. Accordingly, employers cannot resolve a workers' compensation  claim by way of an ordinary Severance Agreement outside of the WCAB. 

Notwithstanding this prohibition, employers will frequently have the employee verify by way of a Severance Agreement that the employee has not suffered an on-the-job injury. This language can easily be missed in a 10-15 page, single spaced Severance Agreement packed with unfamiliar legal language and run-on sentences. This affirmation -that the employee was not injured- can be used against the employee in a subsequent workers' compensation claim. 

Employees who have been injured on-the-job or who have filed a workers' compensation claim should contact an attorney before signing a Severance Agreement. Employees who have been terminated following an on-the-job injury (called an “industrial injury”) are among the most common groups subjected to unlawful disability discrimination.

Unemployment Insurance Benefits:

Employees who are terminated, without good cause, are eligible for Unemployment Insurance benefits. Unemployment Insurance is not insurance at all. Rather, the benefits are a form of welfare or government assistance, paid for by the employer, and administered by the California Employment Development Department (“EDD”.) Unemployment Insurance benefits are temporary in nature and normally last up to six months. The amount of the weekly benefits are only a fraction of what the employee actually earned while employed. The total amount depends upon how much money the employee earned while employed and the length of their employment with a $450.00 per week maximum payment. The benefits are available for workers who are “unemployed  through no fault of their own.” (Unemp. Ins. Code § 100.) Employees who have been fired for poor performance or other legitimate cause can still receive Unemployment Insurance benefits. Only employees who were terminated for misconduct may be denied the benefit (i.e. absenteeism, insubordination, fighting/ arguing.)  

Employees cannot waive their right to receive Unemployment Insurance benefits in a Severance Agreement. (Unemp. Ins. Code § 1342; Citronen Cars Corp. v. Unemployment Ins. Appeals Bd. (1980) 107 Cal. App. 3d 945, 949 fn. 6.)  As a matter of public policy, California mandates that employers and employees cannot enter into a contract that affects the employees right to receive a benefit.

Unpaid Wages:

Employers are prohibited from requiring an employee to sign a Severance Agreement (or any other type of release of legal claims)  as a pre-condition of receiving wages that are indisputably owed to the employee. (Lab. Code § 206.5.) Any such release is deemed “null and  void” as a matter of law. (Id.) The only instance in which an employer may condition a release upon payment of wages is if the employer can establish that there is a bona fide or good faith dispute over the wages. (Chiandrah v. Pick Up Stix, Inc. (2009) 171 Cal.App.4th 796, 803.) Employers cannot retroactively fabricate pretextual reasons to not pay owed wages. If wages are concededly due, and there is no dispute over the amount of hours worked by the employee, the employer must issue payment without delay and without the condition the employee sign a Severance Agreement or other release. 

Despite the clear language of Labor Code § 206.5, most Severance Agreements will contain multiple references to the employee’s wages, including representations from the employee that they have been paid their regular wages and that any money offered in the Severance Agreement is over and above what they actually earned as wages. 

In conclusion, severance Agreements are lengthy, complicated, and are almost always given to an employee when the employee is under some level of mental distress  or shock from a recent termination. Notwithstanding the clear prohibitions of what things cannot be legally included in a Severance Agreement, employers and their attorneys will often push the limits.   This behooves many employees to seek legal representation as soon as they have been presented with a Severance Agreement. 

Have you been presented with a Severance Agreement? Contact the Law Office of Brian Mathias for a consultation. 

The Right to Wear Pants: Obscure California Employment Laws

There are hundreds of thousands of laws that govern the employer-employee relationship in California. The government does not keep a running tally of the total number of laws, however, the California Labor Code currently reaches section number 9,104. Even this number is misleading because sections are many times numbered sequentially to the tenth decimal (i.e. Labor Code section 98.1, 98.2, 98.3, 98.4, etc.) Similarly most individual sections contain multiple subsections (i.e. Labor Code section 98(a), 98(b), 98(c), etc.) Thus, the total number of laws within the Labor Code is many times greater than the highest section number. 

Nor are California’s employment laws found exclusively within the Labor Code. For instance, California’s most robust employment law, the Fair Employment and Housing Act, is found in the California Government Code beginning at section 12,940. Hundreds of additional employment laws applying to school employees are found in California’s Education Code, and even California’s Unemployment Insurance Code, governing unemployment benefits, reaches section number 18,012.  

Furthermore, California’s 29 legal codes contain only those laws enacted by the Legislature. Many thousands of additional employment laws are found within the California Code of Regulations; i.e. rules that are authored by bureaucrats to implement or clarify those laws authored by the elected legislature. On top of it all, there are thousands of additional federal employment laws and regulations that apply to California employees.

With hundreds of thousands of employment laws on the books many are simply forgotten about and remain obscure.

The Right to Wear Pants: 

Government Code Section 12947.5 reads, “It shall be an unlawful employment practice for an employer to refuse to permit an employee to wear pants on account of the sex of the employee.” (Gov’t Code § 19247.5(a).) Employers are allowed to enforce uniform, grooming, and appearance standards, however, female employees cannot be required to wear skirts or dresses and must be permitted to wear pants. The law contains an exception for Hollywood, “Nothing in this section shall prohibit an employer from requiring an employee to wear a costume while that employee is portraying a specific character or dramatic role.” (Gov’t. Code § 12947.5(c).)

Political Retaliation:

There are several major but infrequently litigated laws that protect an employee’s right to engage in political activity. (Lab. Code §§ 1101-1102.)

In 1937, California passed a law stating that an employer may not forbid employees from participating in politics or becoming political candidates. (Lab Code § 1101(a).) Nor may employers “control or direct” the political activities or affiliations of employees. (Labor Code § 1011(b).) Notably, these laws also prohibit an employer from “tending to control or direct” the employee’s political activities, meaning that the employer cannot even indirectly interfere with the employee’s political beliefs. (Labor Code § 1011(b).) Employers cannot terminate an employee for being for or against President Trump, President Obama, the NRA, the ACLU, nor any other politician or political cause deemed unacceptable by the employer or the employer’s customers or clients. 

Lawful Conduct During Non-Work Hours:

An employer is broadly forbidden from demoting, suspending, or discharging an employee as a result of the employee’s lawful conduct occurring during nonworking hours away from the workplace. (Lab. Code § 96(k).) In other words, an employer cannot terminate an employee simply because the employer dislikes the employee’s hobbies, lifestyle, or any other activities that occur outside of work and are entirely legal, even if deemed controversial or unpopular by the community at-large; (e.g. chewing tobacco, African big game hunting, or spanking one’s own children.)

This particular law is infrequently litigated and it remains unclear if only the California Labor Commissioner has the power to sue employers for violating it. Furthermore, an employer may still terminate an employee for lawful off-work activity, “if it is in direct conflict with the essential enterprise-related interests of the employer and where breach of that contract would actually constitute a material and substantial disruption of the employer’s operation.” (Lab. Code § 98.6(c)(2)(A).)

Workplace Rights for Veterans

The laws prohibiting discrimination on the basis of an employee’s veteran or military status are just as strong as those laws that prohibit employment discrimination on the basis of the employee’s race, gender, religion, or disability. (Gov’t Code § 12940(a).) This means that employers cannot refuse to hire, terminate, or otherwise discriminate against an employee because they are a veteran, because they participated in a war, or because the employee has a family member in the military.

Similarly, California has a host of protected leave laws that apply to members of the military and military families. This includes the right of a military spouse to take a ten-day leave of absence to visit their spouse on leave from a military deployment. (Cal. Military & Vet. Code § 395.10.) 

California’s Secret Labor Day:

Everyone knows that Labor Day falls on the first Monday in September. Unbeknownst to many, California recognizes Workers’ Memorial Day on April 28th, California’s secret Labor Day. (Lab. Code  § 29.5 [“The Governor shall annually issue a proclamation declaring April 28 as Workers’ Memorial Day in remembrance of the courage and integrity of American workers, and recommending that the day be observed in an appropriate manner.”]

Turn Down that AC!

California has a variety of laws intended to protect workers from heat exposure with the object of preventing heat stroke.  However,the federal Occupational Safety and Health Administration (“OSHA”) goes so far as to recommend, but not require, that office temperatures be kept between 68-76 degrees.  (OSHA Technical Manual, Sec. III Chp. 2 V(A)(4).) The laws regulating workplace temperature are more stringent in the agricultural, construction, and landscaping industries.  

There are hundreds of thousands of employment laws that apply to the California employer-employee relationship. Don’t take the law into your own hands. Contact the Law Office of Brian Mathias.

Collect Your Final Paycheck: The California Waiting Time Penalty

Employers who terminate an employee are faced with the clear and sometimes onerous obligation to  immediately pay the employee all of their unpaid wages. Employers who fail to do so face the consequence of paying the employee the waiting time penalty for each day that the wages are not paid, in addition to the unpaid wages.  (Lab. Code §§ 201, 203.) A similar obligation is triggered when an employee suddenly quits, requiring the employer to pay all wages within 72 hours. (Id.) Both employees and employers should be cognizant of the California waiting time penalty.

What does the law actually say and how is the law applied?

There are three separate laws that describe a California employer’s obligations to pay final wages and the associated waiting time penalty for employers who fail to do so. 

First, the law makes clear, “if an employer discharges an employee, the wages earned and unpaid at the time of discharge are due and payable immediately.” (Lab. Code § 201.) California courts have confirmed that this law means exactly what it says; final wages must be paid on the same day of termination. Furthermore, the employer must also pay the employee all other technical forms of wages, including paid time off (“PTO”), commissions, and bonuses.

Second, “If an employee quits his or her employment, his or her wages shall become due and payable not later than 72 hours thereafter, unless the employee has given 72 hours previous notice of his or her intention to quit.” Even if an employee abruptly quits the employer must still pay the employee their final wages within three days. Courts have clarified that an employer’s 72-hour window to pay begins only after receiving actual or constructive notice of the resignation.  (Nishiki v. Danko Meredith P.C. (2018) 25 Cal.App.5th 883, 890.)

Finally, Labor Code section 203 defines the waiting time penalty itself, “If an employer willfully fails to pay, any wages of an employee who is discharged or who quits, the wages of the employee shall continue as a penalty from the due date; but the wages shall not continue for more than 30 days.”  This means that the waiting time penalty itself depends on the employee’s daily rate of pay.  

Courts have repeatedly interpreted the term “willfully” in Labor Code section 203 to mean that the employer “intentionally failed or refused to perform an act that was required to be done,” or “that the person knows what he is doing, intends to do what he is doing, and is a free agent.” (Nishiki v. Danko Meredith, P.C. (2018) 25 Cal.App.5th 883, 891.) In other words, to obtain the penalty the employee does not need to prove that the employer intentionally sought to defraud the employee of his or her final wages. (Nishiki v. Danko Meredith, P.C. (2018) 25 Cal.App.5th 883, 891 [The word “willful” does not imply anything blameworthy, malice toward the other party,  or an evil purpose to defraud employees of wages.”].) 

Furthermore, Courts have confirmed that ignorance of California’s sometimes draconian labor laws is not a defense. (Diaz v. Grill Concepts Services, Inc. (2018) 23 Cal.App.5th 859, 869.) Employers cannot claim as a defense that they were unaware of the final paycheck requirement. 

How is the waiting time penalty calculated? 

The amount of the waiting time penalty depends on the employee’s daily rate of pay. (Lab. Code § 203.) Calculating an employee’s daily rate of pay for purposes of the statute can be somewhat confusing, especially if the employee’s wages or hours worked fluctuate from week to week, or if the employee receives occasional commission payments. The rule of thumb, however, is that the daily rate of pay is calculated in a manner that is very favorable to the employee and assures a larger than expected waiting time penalty. The maximum waiting time penalty of thirty days will always exceed what the employee actually earned in salary or wages in any given month while employed. 

As an example, an employee who works five days per week and earns $80,000 per year in salary would have a daily rate of pay of $307.69 per day for a maximum waiting time penalty of $9,231, even though the employee’s average monthly salary was just $6,667.00.  An article that discusses the calculation of the daily rate of pay in detail may be found here.

As the statute makes clear, there is a thirty-day cap on the waiting time penalty. The waiting time penalty stops at thirty days, once the owed wages are fully paid, or once the employee files a lawsuit. (Lab. Code. § 203.)  

How do employers end up owing the waiting time penalty?

There are several common ways that employers may end up owing a waiting time penalty to their former employees. 

First, employers will not infrequently require employees to wait until the next normal pay day to give the employee their final paycheck. This approach may be appealing for the many employers who have third-party payroll companies issue pay checks, however the practice immediately triggers liability for the waiting time penalty unless the normal pay day coincidentally falls on the day of termination. 

Second, final wages are due regardless of the employee’s conduct or performance as an employee. The world’s worst employee must still be paid immediately upon termination or within 72 hours of their resignation.

Third, employers frequently end up being liable for a waiting time penalty if they misclassify their workers as salaried or “exempt” employees, if the employer allows off-the-clock work to occur, or if the employer fails to pay overtime to an hourly or “non-exempt” employee. 

To illustrate, take the hypothetical case of Jared, a former employee of Hot Dog on a Stick.  Jared is hired as a restaurant manager for Hot Dog on a Stick and is classified as a salaried or “exempt” employee earning $50,000 per year. However, Jared spends the majority of his time engaged in non-exempt duties such as frying food, squeezing lemons, and washing uniforms rather than exempt duties of hiring and managing the restaurant’s other workers. Jared also works an average of 50 hours  per week. 

When Jared is fired for theft of food, his employer correctly pays him his last and final paycheck on the actual day of termination, as calculated by his $50,000 salary. However, his final paycheck fails to include the many overtime hours that Jared should have paid all along given that he was an improperly classified exempt employee. His final paycheck therefore did not include all of Jared’s earned wages, triggering the waiting time penalty. Jared may sue his former employer for non-payment of overtime wages and also the associated waiting time penalty. 

How may an employee collect their waiting time penalty? 

Most employers do not automatically pay the associated waiting time penalty.  This means that the employee must take action to collect the penalty, either on their own or with the help of an employment law attorney.  An employee may negotiate directly with their former employer, file a civil lawsuit, or may file a claim with the Labor Commissioner. Before attempting to file any type of lawsuit, employees should contact a plaintiff’s employment law attorney to see if representation may be warranted. Most employment attorneys take such cases on contingency and will obtain a result that is greater than what the employee could obtain on his or her own. 

Have  you been recently terminated from your job? Contact the Law Office of Brian Mathias to see if you may be entitled to the California waiting time penalty. 

The Great Commission: California Employee Commission Payments

Commissions, like bonuses, are a form of incentive compensation. Incentive compensation is money paid to an employee, in addition to the employee’s salary or wage, to encourage increased performance from the employee or to retain the employee’s services for a longer period of time.

What are commissions? 

Commissions are a form of employee wages and are legally defined as “compensation paid to any person for services rendered in the sale of [an] employer’s property or services and based proportionately upon the amount or value thereof.” (Cal. Lab. Code § 204.1.) In plain English, commissions are money, stock options, or other forms of compensation issued to an employee for having met predetermined performance standards, such as the sale of the employer’s products. The predetermined performance standards are determined in advance on a contractual basis, meaning that the actual benchmarks that must be satisfied by the employee to earn the commission will vary on a case-by-case basis. 

Any contract to pay commissions must be in writing. (Cal. Lab. Code § 2751.) This contract, called a Commission’s Agreement, must describe how any commissions are calculated, when the commissions must be paid, and what benchmarks (called “conditions precedent”) the employee must satisfy in order to earn the commission. 

Commission’s Agreements can take a number of different forms. Most frequently, the employee will receive a fixed percentage on every dollar of sales made, or in the alternative, the employee may receive a fixed percentage of sales made after reaching a predetermined quota of goods sold (i.e. five percent of all products sold or 10% after $150,000.00 of goods have been sold.) 

What happens to an employee’s right to receive commissions if they are fired?

Many employers require an employee to be currently employed in order to receive a commissions payment. This is highly problematic for the employee who performs most of the expected legwork to generate a commission, but is then abruptly terminated just prior to finalizing the underlying sale, thereby depriving the employee their commission. 

The law on this particular subject is very complicated. However, a terminated employee’s right to collect a commission for work performed depends on a number of factors, including: 1) The language of the underlying written Commission’s Agreement between the employer and employee;  2) Whether the employee was terminated in violation of the California Fair Employment and Housing Act or other public policy; 3) Whether the employee was terminated for good cause, malfeasance, or theft; and 4) Whether the employer committed fraud against the employee to evade paying the employee their commission. Employees who  have been terminated in violation of the California Fair Employment and Housing Act or other public policy stand a much greater chance of being able to collect their unpaid commissions than employees who have simply been terminated for actual or perceived poor performance.   

How can employees collect an unpaid bonus or commission?

Once a commission or bonus is earned by the employee, it essentially becomes the employee’s property. Legally, the non-payment of an earned commission is viewed no differently than the non-payment of the employee’s wages or salary.   An employee can use a variety of legal procedures to collect any unpaid commission or bonus, including a civil lawsuit, to collect their unpaid wages. If an employee prevails in a civil lawsuit against their employer to collect their unpaid commission, the employee may also be entitled ten-percent interest, court costs, the employee’s reasonable attorney’s fees, waiting time penalties, and penalties under the Labor Code Private Attorney General Act (“PAGA”.) In many instances, the penalties and attorney’s fees associated with an unpaid commission or bonus will exceed or be many times larger than the unpaid commission itself. This incentivizes aggrieved employees to vigorously enforce their rights and pursue unpaid commissions.  

Are you owed any unpaid commissions or bonuses? Contact the Law Office of Brian Mathias today. 

This is Going In Your Personnel File! All About California Employment Records.

Current and former California employees have a right to inspect certain employment records kept by their employer. These include the employee’s personnel file and payroll records. This article briefly discusses some of California’s employment record keeping requirements.

The Personnel File.

A personnel file is commonly understood as the collection of documents kept by an employer about a particular employee. California’s Labor Code states (1) what documents must be kept in a personnel file, (2) how current and former employees may request and inspect their personnel file, and (3) what penalties employers face if they refuse a lawful employee request to inspect their personnel file.  (Cal. Lab. Code § 1198.5.)

California law does not provide much guidance for what documents must actually be included in the employee’s personnel file. However, the law does specify that the file must include “records that the employer maintains related to the employee’s performance or any grievance concerning the employee.” Therefore documents such as disciplinary write-ups, records of verbal warnings, reprimands, performance improvement plans, suspensions, performance evaluations, and termination letters must be kept in the employee’s personnel file. California also states that an employee, upon request, shall be given a copy of “any signed instrument related to the obtaining or holding of employment.” (Cal. Lab. Code § 432.)  Therefore, any contracts signed by the employer and employee such as commission agreements, agreements for bonus compensation, employment contracts, signed employee handbooks, and arbitration agreements must be produced along with any request for the employee’s personnel file.

California law also provides some examples of what documents do not have to go into an employee’s personnel file including records relating to the investigation of a criminal offense and letters of reference. Law enforcement personnel also have separate rights related to the maintenance and inspection of their personnel files.

How to inspect your personnel file.

Both current and former employees have a right to inspect their own personnel files following the submission of a written request to their employer. While the law states that the inspection may be done in-person at the place of employment, the common practice is to mail or email the employee a copy of the records in lieu of an in-person inspection. Employers may elect to charge the employee for the actual reproduction costs of the personnel file (i.e. $0.10 per page).  

Importantly, employers are required to produce the personnel file for inspection within 30 days of receipt of the employee’s request.  Employers who do not permit the inspection face a $750.00 penalty. The employer may also be sued by the employee through a civil lawsuit or at the Labor Commissioner if records are not produced. Under certain circumstances, the employee may recover their attorney fees if a lawsuit was required to compel production of the personnel file.  

Payroll Records.

Payroll records are commonly referred  to as “pay stubs” and are legally referred to as  “itemized wage statements”. In contrast to personnel files, California is very strict in regard to what employee payroll information must be kept by the employer.  

California requires employers to provide an accurate and written itemized statement showing: (1) the gross wages earned (ithe amount before deductions) (2) the total hours worked by the employee, (3) the number of piece-rate units earned and any applicable piece rate if the employee is paid on a piece-rate basis (the number of units sold, picked, miles driven, etc.), (4) all deductions (taxes and withholdings), (5) net wages earned (the amount after deductions are taken), (6) the inclusive dates of the period for which the employee is paid, (7) the name of the employee and only the last four digits of his or her social security number or an employee identification number other than a social security number, (8) the name and address of the legal entity that is the employer; and (9) all applicable hourly rates in effect during the pay period and the corresponding number of hours (the employee’s regular hourly rate and any overtime rates). (Cal. Lab. Code § 226(a).)

The itemized wage statement must be provided to the employee semi-monthly and even more frequently in some circumstances. The failure to maintain any records or even providing the employee with inaccurate payroll information by mistake can expose the employer to very harsh penalties of up to $4,000 per employee, as well as penalties under the Labor Code Private Attorney General Act (“PAGA”).

Like personnel files, current and former employees have a right to inspect their payroll records even when the payroll records were furnished to the employee on a regular, semi-monthly basis. Employers must produce payroll records no later than 21 days of the employee’s request and employers who fail to timely produce records face a $750.00 penalty as well as paying the employee’s attorney fees.

Employees who believe they have been fired as a result of unlawful discrimination, retaliation, or harassment will often request their personnel file and payroll records shortly after their termination. If you have been terminated and would like assistance requesting and reviewing your own employment records, contact the Law Office  of Brian Mathias.