Dan

Welcome to Sound Business Insights. I’m Dan Watkins. This episode’s about employment law updates 2024. This podcast is not intended to provide legal advice.

Neil

Dan, we’ve got some updates for our employer clients for changes that are coming at us for 2024. Why don’t we just start with minimum wage and changes to our sick pay policies?

Dan

Okay, sounds good. Let’s talk about minimum wage first. Don’t you wish it would just be that easy. We say minimum wage is $16 an hour and that’s it, but it’s never that easy. In California, it’s an employer. You have to know not only the state’s minimum wage, not only the county’s minimum wage, not only your area of town, your municipality. You got to check with everything to make sure you are at the right minimum wage price. And then on top of that, you have to figure out what industry you’re classified as because the minimum wage could be different for you in that regard. If you’re a fast food worker, it’s different. If you are in healthcare, it can be different. So yes, $16 an hour way above a lot of states, and there’s a lot more to know about minimum wage.

Neil

And Dan, there are some complications if your employees aren’t just in one place and they’re traveling around providing services in multiple locations.

Dan

That’s true too. I mean, your terms of employment, where they work or do they work? County, state, different states out of the country. Everybody wants a piece of the action when it comes to tax law and they’re part of the money. And so you have to have what we call conflict of law resolutions by your lawyer to tell you whether this qualifies for that or this does not qualify for that. And whether you get deductions, if you’re paying taxes in another jurisdiction, whether or not you’re paying the right amount. And this all turns into one thing that I think you should be focused on as an employer, and that is if your paycheck stub is wrong in any way off by a penny, off by a million, as I say, you could be subject to a class action lawsuit by having one of your employees, ex-employees even go into some lawyer’s office. They take a look at the paycheck and say, aha, he got this wrong. It technically should be this. And even though it’s not that big of a deal dollar wise, you could have some lawyer trying to get attorney’s fees out of you and filing a class action lawsuit because the pay stub was filed. Does that seem fair?

Neil

No. That seems like an opportunity for too many people to stick their hand into the back pocket of an employer for a seemingly small offense. Dan, is there a way that employers can protect themselves and take action to fix something if they find something minor that’s gone on?

Dan

Yeah, they could call us first. We have an HR department. You don’t have to pay a lawyer. His hourly rate, our paralegals, our HR team, they’re up to date on all these types of things. You can have your administrator or your office manager contact us and say, look what’s coming down the pipe. And we also do HR manuals, employee manuals, and they all have all that information in it. We’ll also review your paychecks. They’ll actually look at it, review those things, because really all of these laws come out every year on pay and increases and sick leave and leave for anyone under the sun who knows you when you’re sick, everything you can think of, it’s going to change all the time. And a lot of employers, they don’t go talk to their lawyers. They don’t want to spend 2000 bucks updating every year. Absolutely. When you could spend $200 calling one of our HR team or having one of your team call us and checking what’s in, what’s new, having a resource there. So you’re always on top of it.

Neil

So you mentioned sick pay, Dan, there’s been a change in the amount of sick pay hours and then in some of the ways that we’re going to be tracking it. What are some of those updates?

Dan

Well, sick pay is now a minimum of 40 hours. Wow. It’s very confusing. We just like saying PTO, but it’s sick pay. So old school owners of businesses like me would be thinking, well, that’s because you’re sick now. The definition of what sick is and what is, and you can’t ask it when you combine the other laws. You can’t ask why people are sick or how they’re sick or barely even ask for a doctor’s note. I mean, you have to be careful what you’re doing. So yeah, it’s 40 hours now. It accrues. You have to have so many days by the hundred 20th calendar day, there’s more technicalities than I can list right now. I’m just saying that you don’t call us, call somebody and get they’re real skinny on it and make sure you’re in compliance.

Neil

Absolutely. And this applies to part-time workers as well.

Dan

Yes, it does.

Neil

Is there some kind of a cap that you can accrue up to a period of time or does it just keep going and going and going?

Dan

That’s a good question. When we talk about caps, minimum cap, 80 hours, depending on the kind of business you’re in, some employers don’t like you to have it 500 hours because some employers use it as a savings bank, which is not a good idea for them and not a good idea for the employer because cashflow can be crushed by some employer. Say, I’m leaving now, I want my 500 hours. So yeah, there’s a minimum 80 hour cap and how you structure that and how you approach them about what they should and shouldn’t do with your cap also changes every year. Whether you can pay them down in cash or pay them down in more time or pay them down in other forms of employer benefits, you should see yes about

Neil

That. And it’s also interesting that the law now speaks to it’s not the day or even the hours, it’s what’s ever greater. So if they’re working, the example that I saw in the law was if they’re working 10 hour days, then realistically it’s five days, which would mean they get 50 hours instead of 40. So there’s a lot of nuances that they need to stay up with. And that’s going to be reflected in the employee handbook. It’s going to be changes throughout the organization.

Dan

Correct. You have to have posters too. You can have all of the notices up what you can get from the state. Yes. And you should make sure you’re up to date on that. But if you ever looked at your poster wall, you realize there’s a bunch of things in there in how they work together. We can help with that.

Neil

Then the next major issue for employers comes down to non-compete, non-competing. California has, they’ve done everything they can for the last 10 years to just obliterate the law, but there’s something that’s changed this time that really has teeth, and even people that don’t think they have a non-compete policy might have non-compete language in their employee handbook. So can you talk about what’s different about non-compete this year for all employers?

Dan

Well, they know that this is a union driven state that protects workers, and they know that lawyers like myself have been writing trade secret clauses with teeth, and that’s to help competition.

Neil

Yes, enforceable trade secrets,

Dan

Right? Trade secrets that also at the same time make it difficult for your former employees to go off and steal your business, including sometimes stealing your customer lists, which means your customers or stealing your employees. But with this law, we need to write things differently and take a different approach.

Neil

So there’s a notice that’s required by February 14th that anything previous regarding non-compete is void. Is it just a good idea if you’re an employer, just to make sure you tell every single employee there is no non-computer. Is there a specific formula they’re going to have to follow?

Dan

I wouldn’t go automatically just giving out notices. You’re inviting a lawsuit. I would definitely, if you have non-competes, I mean it’s been to have non-compete clause for anyone but an owner or a partner who’s also an owner in any of your contracts for a long time. And it also been a way where plaintiff’s lawyers can get punitive damages against you. The purpose of an illegal non-compete clause is to intimidate employees not to compete with you or go to other places of business to restraint trade. They call it restraint on alienation, and you can get hit with punitive damages for using that type of strategy. I believe it was Farmers or State Farm a long time ago got hit for having one of those clauses in their employment manuals and in their agreements. It is valid in other states. So you have companies that go from state to state with the same clauses, or they come from another state and they open up a business out here and they don’t know that not only is it void, but it is a grounds for suing you for using intimidation to stop people from having freedom to work where they want.

Neil

And in that example, if they’ve used a boilerplate contract they’re using everywhere, they actually have to give notice by the middle of February that it’s void and that it’s not enforceable. Correct.

Dan

Exactly. Yeah, that’s it. So we do millions of dollars in transactions. We write tons of employment agreements, and we have not only clauses and ways we write our trade secrets that are still aggressive, but on the right side of the line, yes. But also good advice on employment practices to perhaps obtain your same goals. I mean, think about this. 10 years ago we didn’t have everybody bombarding everyone by email and text messages, headhunters. It didn’t matter who you are, your employees are getting just solicited for job offers. They’re being lied to about, oh, social media all. You could double your pay. You could double your pay. That happened in the tech boom and now it’s a tech kind of a depression now. But once a whole bunch of them start going and then there’s a scare, right? And employers are paying more and more, and then the scare ends, it’s all rumor, and then there’s not as many jobs as you need to fill those. Then you have prices crashing and you have volatility. So that’s what’s going on. And the employers think that their little non-compete clause is going to stop it then, not in California at least.

Neil

Yeah. There’s one more element of this that I’m not understanding as a lay person, Dan, and that is it talks about the requirement to notify former employees if you had them under a non-compete, that that is no longer binding on them. Am I reading that right?

Dan

Yeah, you’re reading it right. First, you got to know what the old non-compete agreements used to be. Then I used to write, they used to say an enforceable non-compete was you can’t go to work for a competitor anywhere in the United States or in the world for five years. Then you had to write it differently. Now you could say within a reasonable geographic area, and it’s got to be directed towards the field that they’re in. You’re a business in, it can’t just be anyone that you have to define what a competitor. So that would be anywhere within San Diego County and in this business. Then the legislature said, that’s a bunch of bss. You can’t do that anymore. And so it’s been evolving to you get less and less power over your employees way, and if you write it, you can get stung really hard with a lawsuit, a class action lawsuit. So if you had that clause five years and you have employees out there that had that clause and they’re still worried about you, you’ve got to let them know, we’re not enforcing that anymore. Don’t sue us. Don’t take it to a lawyer and sue us. So yeah, that’s important. Wow. You’re just avoiding lawsuits

Dan

And better to err on the side of caution in the state of California. Correct. There was one other interesting aspect to me is not only our customers, but then one of the questions I would have as an employer is, what about you coming after my employees? And they seem like they’ve left that area Mercury on purpose. What does it speak to you?

Dan

I don’t think it’s murky, but I’ve been reading lots of articles. The lawyers here are passing articles back and forth, arguing which side it’s on. I don’t think it’s murky.

Neil

And we’ve been talking about some of these changes. There’s a mandate regarding compensable hours worked and training and what certifications you come through the door with. Can you talk to me about how those have changed and what employers need to know about those areas?

Dan

Well, a lot of laws come from court of appeal decisions. California Supreme Court decisions, and this is one of them. In most jurisdictions in California, you’re not supposed to charge people to train them, and if you do, there were limited ways in which you do. So now it’s just plain out, no, don’t do it. A lot of people bring in trainees and they say, okay, if you go through our training program 40 hours, then maybe if you graduate and get this card that says you’ve graduated or certificate, then maybe we’ll hire you at a real good job and then half of them don’t get it or whatever. So they’re just, they’re baiting and switching people. They’re enticing them to come along with the lure of a great job and not paying them. So the legislature said, no, we’re a union friendly state and we are going to make every employer pay for every minute and the cost of that training,

Neil

Is that a change?

Dan

Well, it’s a change because it’s a statute now and it’s a lot easier to enforce. That’s less ambiguity. And basically it’s like putting a bullseye on an employer for your average greedy plaintiff’s lawyer that sues employers and lets them go after them with, I’m sure there’s attorney’s fees in there and everything else you can imagine. There’s no getting around it. Don’t do it.

Neil

The presumption of retaliation. Retaliation is an area in employer’s minds that’s always aligned that we’ve got to walk.

Dan

Retaliation has been a lawsuit for a long time, but it’s been hard to prove. And the reason it was hard to prove was one, again, a court of appeals came down with a decision that two, when a retaliation claim, first you must state a prima fascia case, and only then does the burden of proof shift.

Neil

What does prima facia,

Dan

You got to put up strong proof first. The burden of proof is on you, and then we’ll go back to having the burden of proof on them. But private face cases, you have to have all the elements and you have to prove intent. What’s in the employee’s mind. You can prove intent by circumstantial evidence, but you still have, it’s a lot harder. And employment lawyers are less likely to take the case if it’s going to be hard to prove. Now, they put a red line in the sand and said, if something bad happens to me within 90 days of taking the protective action like pregnancy leave or all the other things that you see out there that they’re now allowed to do or interviewing with another employer, anything that I do that I should have a right to do if I get fired now or you demote me or you do anything that I consider a demotion or a loss of value, then the burden of proof is on you, the employer. You got to prove that a reason you did it was not to retaliate.

Neil

So the assumption now is that you were retaliating and now I got to go into court with you and prove I wasn’t much, much more difficult standard. Correct. This is just going to invite more actions.

Dan

That’s the whole intent of it, is to invite, make it easier for, see, they don’t pay for enforcement in our state legislature. They don’t pay for

Neil

It. No. They’re making an incentive for someone else to do it for them. Right.

Dan

It’s a shifting of the cost, right? To the employer. They say, we got all these thirsty guard dogs out there ready to bite a chunk out of employers, but

Neil

Plaintiff’s attorneys, right?

Dan

These plaintiffs lawyers are out there and they say, okay, here you go. Here’s another incentive to go sue your businesses. If someone would ever in the budget office add up the total cost of businesses before because you’re supposed to have a budget, right? And you should, every law that’s passed, supposed to have a budget on how it’s going to affect the state, right? They don’t do that here. They don’t have a budget on how much it costs. Employers every time they put a bullseye on us and said, okay, plaintiff’s lawyers go get them for this. Go get them for that,

Neil

And we’re guilty until we’re proven innocent.

Dan

You know what happens when the burden of proof shifts?

Neil

Yeah. The number of cases filed against you gets increased because the standards are completely inverted,

Dan

And on top of that, it’s harder to win. It’s harder.

Neil

So you’re to settle

Dan

On top of that, you got to pay your lawyer more. Let’s say you’re right. You got to not only prove you’re right, you got to prove your right beyond a reasonable doubt. All they have to do is say, yeah, I got moved from this department to this department within 90 days, so now if I don’t do anything, I win a big lawsuit against you. They don’t have to prove anything, and you got to prove I didn’t do this for a bad purpose. It really was because we got a new customer in, or I got a new contract. And you got to prove it beyond any doubt that a jury or a judge might have. I mean, it’s still a preponderance of the evidence, but still the burden’s on you when it’s supposed to be on them. You want to sue me for money? Prove it. Right? This is saying, you want to sue me for money. I better prove that I’m a good guy.

Neil

So we’re talking about documentation first document out of everything. What’s your advice on that front for employers? First of all, don’t do anything for 90 days because it’s a losing battle. Correct. And then if you are going to, if you must, then what? Talk to us document.

Dan

Well, I hate saying that over and over, but talk to us first because we are allowed to give you advice. Yes. And nobody can know about it. You talk to your coworkers, you talk to anyone, they become witnesses. You talk to us, look, this is how I really feel, whether it’s good, bad, or ugly, we’re going to tell you how to feel. We’re going to tell you whether you should be doing this or not. And if you’re insisting on going forward, then we’re going to help you do so with the least chance of you being sued.

Neil

Right?

Dan

Sometimes you have no choice and things happen at the same time,

Neil

And it may seem like we’re saying, call us. Call us. That’s not the issue. The issue is if I don’t as an employer and I make a wrong step, this change in the law is huge, and they’ve just handed plaintiffs the ability to put me up against the wall and take a large amount of the money out of my bank. So this is a matter of, okay, which is it? Take five minutes to place a call to a paralegal and get some insight or risk, literally a lawsuit and a plaintiff’s action, and I’m on the defensive from the word go, and no matter what, it’s going to cost me the time and the money to defend myself anyway. So why not head it off?

Dan

They should have put in the law. What if you’re an employer? This constitutes evidence that will prove that you didn’t do anything wrong. But only a lawyer trained to know what is admissible evidence and what is not can understand that. Well, as an employer, I’m thinking they should have put it in, and once I do prove it, then I have the ability to come back after them. They’ve just wasted my time and money. So they’ve already defined what the plaintiff’s burden is, but they don’t define what evidence you could have. They could prove that the plaintiff was wrong. They don’t have that in the definition, and they won’t for years and years until the court of appeals says, well, I think, yeah, this is it. And this isn’t. I mean, as a lawyer, we know but’s got to be case law. I think it’s unfair to every employer out there getting stuck with these kind of laws that make it more and more difficult to even know when you’ve crossed the line or what evidence you need to save. What documentation? You just got a new server. Do I need to save all those emails? Oh, apparently you do. Or maybe you don’t go see us. Yes, a 20 minute call. We’ll probably save you a few hundred thousand.

Neil

Thank you, Dan.

Dan

Thank you.

Dan
You can learn more about the Watkins firm at https://watkinsfirm.com or call our office at (858) 535-1511.