March 4, 2015

HR Spring Cleaning—Easy as 1, 2, 3

With spring’s promise of renewal and rejuvenation, it’s the perfect time to embark on the annual ritual of spring cleaning.  That usually means cleaning oft-neglected items such as windows and carpets, dusting those hard-to-reach places and removing excess clutter from the home.  But for the human resources professional, spring is an ideal time to clean up legal compliance issues that may be gathering dust, and if left unattended, can cause a big mess that will be much harder and more expensive to clean up later.  Fortunately, there are some basic steps members can take now to reduce exposure to employment litigation risk.


1.  Review and update employee handbooks

If you don’t have an employee handbook, then the first step is to create one.  While there is no law requiring employers to provide handbooks to their employees, there are good reasons to do so. First, there are a number of policies that virtually all employers simply must have (e.g., anti-discrimination, anti-harassment, certain protected leave policies, to name a few).  The handbook is a logical, centralized place to group those and other useful, if not legally required, policies.  Handbooks and signed acknowledgments also can assist in an employer’s legal defense in the event of a lawsuit; conversely, the lack of a handbook can tank an employer’s defense.

Creating an employee handbook can seem like a daunting task, but employment and labor law attorneys—including several in the WG Ag Legal Network—can help you create one at a reasonable cost.  Believe me, that’s money well spent.  Also, the Western Growers Personnel & Procedures Manual contains great information and sample policies to help ag employers get started with creating a handbook.

Once an employer has a handbook in place, it must be reviewed periodically to ensure that all policies are current and lawful.  Best practice is to conduct a handbook review at least annually, or on an ongoing basis to monitor changes in the law or employer’s policies.  Employers should distribute or post revised handbooks, reissue acknowledgment forms and collect signed acknowledgments from all employees.


2.  Review Wage & Hour Compliance

Hopefully by now, all employers with piece-rate employees have either begun paying at least the base minimum wage for each hour worked (with or without an incentive compensation bonus) or have begun separately tracking and paying non-productive time, rest breaks and heat recovery periods.  (Yes, there are other compensation schemes, but I believe these are the best options.)  Even growers and shippers who do not directly hire piece-rate workers must ensure that their farm labor contractors (FLC) are complying with the new piece-rate rules or risk being held legally responsible for any unpaid wages.  Pursuant to the new AB 1897, it’s more important than ever to conduct the due diligence necessary to ensure that their FLCs are fully licensed and insured (including workers’ compensation), reputable and compliant with all employment, labor and health and safety laws.  It is also important to have well-drafted agreements with the FLC, including an indemnification provision ensuring that if the employees were not paid all wages owing due to the FLC’s compliance failure, the grower-shipper won’t be left holding the bag.  On the flipside, FLCs should consider having indemnification provisions of their own ensuring that if the client failed to pay enough to cover all hours worked (e.g., non-productive time and rest break periods), despite objections by the FLC, the client will reimburse the FLC for any underpayment and related costs.

Employers and clients of FLCs should perform periodic wage-hour audits to ensure that foremen are accurately recording all hours worked, time spent performing non-productive activities (e.g., pre-shift exercises, tailgate meetings, cleaning equipment, etc.), rest breaks and heat recovery periods.  Also, be sure to review paystubs to ensure they contain all required information, including how many hours of sick leave an employee has available pursuant to the new Paid Sick Leave law.


3.  Consider adopting a mandatory arbitration policy

Over the last decade, California courts had been hostile to employers requiring employees to sign class action waivers in arbitration agreements, finding such agreements to be fundamentally unfair to employees.  However a couple of recent U.S. Supreme Court and California Supreme Court decisions have made it clear that such pre-dispute waivers are not fundamentally unenforceable.  Rather they are consistent with federal policy favoring making the resolution of certain claims more efficient.

In light of these court decisions, employers should consider whether to implement mandatory arbitration procedures, jury trial waivers, class action waivers, or some combination of these.  Arbitration gives the employer and employee an alternative to protracted and costly civil litigation.  Jury trial waivers minimize the risk of runaway juries and ensure an arbitrator or a judge will issue the decision.

Class action waivers limit an employee to pursuing only his or her own claims and not claims on behalf of other employees.  Class action lawsuits are far more costly for employers to litigate and resolve than lawsuits brought by individual plaintiffs.  In light of the rash of wage and hour class action lawsuits that have been filed recently against ag employers, arbitration agreements with class action waivers make sense for most employers.  It is important to ensure such agreements are drafted or reviewed by experienced employment and labor law counsel, since drafting errors could render the agreement unenforceable.

By cleaning up some potential trouble spots now, you can minimize the employment law risk your company faces in 2015.