HIRING WORKERS

OLIVIA CHU, MELANIE RAMEY, CHETAN GUPTA

PRACTICUM ASSOCIATES

NEW BUSINESS PRACTICUM — WILLIAM A. KELL, SUPERVISING ATTORNEY NOVEMBER 28, 2016

Classify Worker Relationships

Recruiting & Hiring

Exempt v. Non-Exempt

Searching for Candidates

Back Ground Check

New Employees Company

HIRING

CONTENT

CLASSIFYING WORKER

RELATIONSHIPS

5 TYPES OF LABOR RELATIONSHIP

EmployeesWorkers are employed directly by the company for which work is performed. Workers receive training/ongoing supervision from the company and other resources.

Contingent Workers

Independent Contractors

Interns

Volunteers

Workers are employees of a temporary employment agency, but receive some on-site oversight by the company that hired the agency.

Workers are their “own boss,” completing a “project” or providing service to the company, as negotiated in the IC agreement. Contractor receives only minimal supervision or resources from the company.

A “volunteer” is generally a person who performs unpaid work for public service, religious or humanitarian reasons.

An individual cannot “volunteer” to work at a “for-profit” company.

An internship is a carefully structured unpaid work experience for entry-level job-seekers

EMPLOYEESThe default relationship, unless affirmative

steps are taken to set up another

• Are Governed by a Detailed Overlay Of Federal, State, And Local Laws, plus Sound Business Practices

• How To Set Up:

• Government Requirements: Employer must comply with the 17-pt Employer Checklist (See Handout)

• Minimally Necessary: Use an Application, Interview, Check References, Use an Offer Letter, Provide Supervision

• Optimal: Create and Adopt a Set of Personnel Policies - See CA Chamber Resources – www.Calchamber.Com – (Annual Subscription Required)

• Distinguish: Employment at Will vs. Contracted Employment

EMPLOYEES

KEEPING TRACK OF EMPLOYER REQUIREMENTS

• Keeping track of employer requirements is so complex, it also takes a lot of time and money

• We highly recommend using HR Services 1. Accountants 2. Payroll Services: ex. Paychex, Zenefits

• These are deductible business expenses – and essential for peace of mind.

CONTINGENT WORKERS

Companies that use temporary employment/staffing agencies must be cautious and

evaluate the agency in advance to determine compliance with all applicable employment

• Make sure the leasing company well versed in payroll, employment practices, and personnel record keeping requirements under California and federal law. Request a sample personnel file and a description of the leasing organization’s payroll process.

• Find out about how the employment agency screened applicants during the hiring process.

• Consider how the leasing organization’s benefits compare with those provided to your regular employees to avoid the morale problems that could be created if there is great disparity between the two.

• Request proof of bonding or insurance and written assurance of indemnification, then review the leasing organization’s assets to ensure it is a solid organization and apt to remain in business.

• Who will provide workers’ compensation coverage for the leased employees? Confirm coverage if the leasing organization is securing the coverage.

• Who will be responsible for workplace safety issues, such as training? Existing case law indicates that you cannot divest yourself of your duties under the occupational safety and health laws.

PRACTICAL CONSIDERATIONS WHEN USING A TEMPORARY EMPLOYMENT AGENCY

USEFUL EVALUATION CONTRACTING FOR FOREIGN WORKERS

• Review all existing contracts. Contact those contractors to obtain assurances of their labor and employment compliance.

• Consider including legal protections for wage-and-hour violations, workers' compensation coverage and claims involving retaliation for protected conduct

• Limit reliance and use on contracted labor or services and determine internally where efficiencies can be made with regard to workload or hiring of additional employees

• A “foreign labor contractor” means a person who performs “labor contracting activity,” which is “recruiting or soliciting for compensation a foreign worker who resides outside of the United States in furtherance of that worker's employment in California.” It does not include the services of an employer if those services are solely to find workers for the employer's own use.

• Employers who use temporary foreign workers in California should seek the advice of labor and employment and/or immigration counsel.

INDEPENDENT CONTRACTOR

There is no set definition of "independent contractor". You should assume all workers are employees unless they clearly meet the classification of independent contractors.

• Whether the person performing services is engaged in an occupation or business distinct from that of the principal;

• Whether or not the work is a part of the regular business of the principal or alleged employer;

• Whether the principal or the worker supplies the instrumentalities, tools, and the place for the person doing the work;

• The alleged employee’s investment in the equipment or materials required by his or her task or his or her employment of helpers;

• Whether the service rendered requires a special skill;

• The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision;

• The alleged employee’s opportunity for profit or loss depending on his or her managerial skill;

• The length of time for which the services are to be performed;

• The degree of permanence of the working relationship;

• The method of payment, whether by time or by the job; and

• Whether or not the parties believe they are creating an employer-employee relationship may have some bearing on the question, but is not determinative since this is a question of law based on objective tests.

SOME OF THE FACTORS TO DETERMINE INDEPENDENT CONTRACTOR

UNPAID INTERNSInterns can participate in work experience

programs without pay, so long as the Company meets the detailed state law

requirements for using interns.

MULTI-FACTOR TEST FOR UNPAID INTERN

• The training provided to the intern by the Company is similar to that which would be given in a vocational school

• Interns do not displace regular employees, but work under close observation

• The Company derives no immediate advantage from the activities of interns, and, on occasion, the Company’s operations may be actually impeded by the intern’s presence.

• The interns are not necessarily entitled to a job at the conclusion of the training period

• The Company and intern each understand that the intern is not entitled to wages for the time spent in training

ADDITIONAL ISSUES: EXEMPT

CLASSIFICATION, RECRUITMENT, &

HIRING

EMPLOYEE CLASSIFICATION: EXEMPT V. NON-EXEMPT

Exempt employees, typically managers or professionals, are exempt from many

wage and hour requirements.

TWO-PRONG TEST

• Compensation Prong An employee must earn a monthly salary equivalent to no less than two times the state minimum wage for full-time employment.

• Duty Prong Exempt employees are your key personnel who possess management and decision-making responsibilities.

COMPENSATION PRONG

• Effective December 1, 2016, an employee needs to meet the federal salary test for the executive, administrative and professional exemptions in order to be exempt under both California and federal law.

• The federal salary test of $913 per week (amounting to $47,476 annually for a full time employee)

• Placing an employee on a salary does not exempt that employee from wage and hour laws.

• Salary is limited to cash wages. It cannot include payments “in kind,” such as the value of meals and lodging.

• Employers must comply with the law that gives the most protection to the employee — federal or state.

DUTY PRONG

• Exempt employees customarily and regularly direct or supervise at least two other employees

• Exempt employees generally manage the company or a portion thereof, either a customarily recognized department or subdivision

• Exempt employees possess the authority to hire and fire employees or to recommend action in this area

• Exempt employees customarily and regularly exercise discretion and independent judgment

• Exempt employees must be primarily engaged in exempt duties, i.e., more than one-half of the employee's work time must be spent engaged in exempt work.

• Note: an employee who does not perform exempt duties on a regular basis cannot be classified as exempt for a temporary assignment.

COMMON EXEMPT ACTIVITIES COMMON NONEXEMPT ACTIVITIES

• Interviewing, Selecting And Training Employees

• Setting And Adjusting Pay Rates And Work Hours;

• Directing Work; Supervising And Evaluating Workers

• Handling Employee Complaints

• Disciplining Employees; Planning, Determining, Or Distributing Work

• Deciding On Types Of Merchandise, Materials, Supplies, Machinery Or Tools;

• Controlling Distribution Of Merchandise, Materials And Supplies;

• Providing For The Safety Of Employees And Property.

• Performing the Same Kind of Work as Subordinates

• Production Work

• Making Sales

• Stocking

• Performing Routine Clerical Duties, e.g., Bookkeeping, Cashiering, Billing, Filing And Operating Business Machines

• Checking And Inspecting Goods

• Performing Maintenance Work

SEARCHING FOR CANDIDATES

Recruiting and Interviewing Employees

RECRUITING

• Posting Positions Internally Union contracts or internal policies require some employers to post job-opening notices to their current workforce. Whether or not you must take this step, posting a job internally is a good source of new candidates.

• Recruiting Other Employees Already Employed You may generally recruit at-will employees of another employer by offering more favorable employment conditions. Exception: you may not otherwise unlawfully interfere with another Employer’s relationships with their workers, even at-will employees.

• Using Job Applications Creating a standard job application to gather information about applicants is usually recommended. However, 1. Questions must conform with legal requirements for interview questions (see later slide)2. You cannot charge applicants a fee to apply for a job, either by charging an application, processing, or acceptance fee.

ADVERTISING

• Ads must comply with same legal requirements as interview questions (e.g., non-discrimination required)

• Ads for jobs with no specified duration are presumed to be employment at-will

INTERVIEW

• Try to conduct interviews consistently

• Ask only Appropriate (Legal) Questions, e.g.:

(X) Are you a U.S. citizen?(O) If you are hired, can you verify eligibility to

work in the United States?Avoid: Q’s about marital status, children,

religion, race/ethnic status, gender/sexuality• Take good notes

BACKGROUND CHECK AND TESTING

Employers can legally check certain records, e.g., driving, criminal, if related to

the employment

BACKGROUND CHECK AND TESTING

• Checking Applicant References You should require the candidate to sign a waiver authorizing you to investigate all information he/she submits on a job application

• Physical Examination/Psychological Test 1. Related to the ability to fulfill specific job requirements (e.g., 20-20 vision needed)2. required only AFTER a job offer has been made to the applicant (offer can be contingent on passing physical exam)

• Employers are generally prohibited from requiring a consumer credit report for applicants

• I-9 Verifying Eligibility Every employer, regardless of size, has to verify that an individual is authorized to employed in the United States. You must verify every new-hired employee’s eligibility by completing a Form I-9 within three business days of the employee's first day of work for pay.

• E-Verify: https://www.uscis.gov/e-verify

Check!

NEW EMPLOYEESAfter you decided to offer the

employment.

NEW EMPLOYEES

• Pay California’s minimum wage is $10.00 per hour and the federal minimum wage is $7.25 per hour. (California’s minimum wage applied)

• Offering Employment To maintain employment-at-will relationship, have new employee sign an offer letter ; if you have an employee handbook (personnel policies), be sure to reference that in the offer letter so that the employee agrees to adhere to its guidelines.

• Verifying Social Security Numbers https://www.ssa.gov/bso/bsowelcome.htm

• San Francisco Bay Area Commuter Benefits Employers with 50 or more full-time employees in the San Francisco Bay Area are now required to offer commuter benefits to employees who walk or bike to work or use public transportation, car sharing or van-pools.

• Mandatory Sexual Harassment Training California law mandates that employers with 50 or more employees provide two hours of supervisor sexual harassment training. For more information on this requirement, see: goo.gl/WB980W

Q&A