The California Chamber of Commerce has a list of the most common mistakes employers make that result in lawsuits. You can find the full list at The Top 10 Things Employers Do to Get Sued.
Here are three that you may not have heard about before. Since I’m not an attorney, I will summarize some of the points made by CalChamber.
2. Be nice to employees – let them take lunch whenever they want to.
You can’t do that.
Nonexempt staff, which means hourly, must be provided a 30-minute or longer unpaid lunch break by the end of the fifth hour of work.
Penalty? One additional hour of wages according to the article.
Let someone work for lunch so they can go home early? You are liable for one additional hour of compensation. Take lunch at some point after already working for 300 minutes? That’s an extra hour of pay.
Let several of your staff do that a few times a week for a few years and you are talking some serious money.
7. Don’t give employees a final check if they fail to return company property.
The article says you can’t withhold the final paycheck if someone doesn’t turn in their keys, laptops, phones, or other equipment provided by the employer.
When you fire someone, you have to give them their final paycheck right away. That means the same day you fire them.
So if you do the smart thing of walking someone off the premises at the end of the termination interview, that means you need to give them that final paycheck during the interview.
If someone quits with 72 hours notice or more, you owe them their final paycheck on their last day. If you get less than 72 hours notice, you have 72 hours to provide the final check.
Penalties? Severe. One day of wages for every day the check is late. Oh, that would be calendar days, not business days.
If it took a week for your payroll department to process the check that’s another week of compensation. Hold the check for a week or two until the person turns in their laptop or cell phone? That’s another week or two of pay.
Final thing you may not have heard about?
10. Implement a “use it or lose it” vacation policy and avoid paying out all that money at termination.
In California you can’t have a “use it or lose it” vacation policy according to the article. The concept is that accrued vacation is just one more form of wages. After it is earned, an employer cannot take it away.
Penalty? An employee can make a claim for that “or lose it” time that was lost. There’s no time limit on how far a person can go back to get that lost pay.
The option available to an employer is to set a maximum accrual. If an employee accumulates over a certain amount of vacation without taking it, then the employee does not earn any additional vacation. When some vacation is taken then accrual of vacation resumes.
Check out the article for some other items that you may not have heard of before. I was not aware of the penalty for not providing a paycheck on the last day or the penalty for not providing the lunch break before the end of the fifth hour of work.
The article is very good. It is also a very short read. Just might save you a bunch of money in attorney’s fees.