Overview of California Handbook Laws
California labor laws have long dictated the content and operation of employee handbooks within the state. California’s labor code contains implied contract provisions that apply directly to employee handbooks, including handbook provisions by which an employee may be bound, and handbook terms that create binding, implied contracts.
Importantly, California has a long and distinguished history of making good faith effort to follow mandatory handbook requirements. To that end, it is always preferable that handbooks be provided in whole or in part to state employment agencies and local labor commissions. The reasoning behind this reasonable task is to allow examination of the handbook provisions on state agency and county commission level. This might have the effect of better understanding the need for subsequent updates when changes in federal or state law occur. Clearly , it is also wise to consider the fact that many company employees will read and rely upon employee handbook statements. Therefore, in the event of potential litigation, it would be highly beneficial to show that a reasonable effort was made toward compliance with relevant laws. The fact that a handbook may be used to document unlawful conduct of a supervising employee is very real. Therefore, every effort should be made to structure and draft all handbook communications in a clear and easy to understand manner. It is also obvious that handbook provisions must be otherwise demonstrably lawful and clearly communicated to all employees who seek clarity on their obligations.
What must be included in the California Employee Handbook?
Employers have a lot of discretion in the content of their employee handbooks, but California law does require some inclusions. For example, every California employee handbook must state that employment is "at-will." This is important because the presumption in California is that employment is for a specific term and that an employer cannot terminate an employee without cause. However, this presumption can be overridden by a written contract. In order to rebut the presumption, the contract must be clear and explicit terms such as "for a term of one year" or "until I find something better." To avoid being compelled to maintain an employee for a specific term, every California employee handbook must include the following statement: Your employment with [Company Name] is at-will and may be terminated by you or the Company with or without cause or notice, at any time.
Employers are also required to make two more inclusions in their employee handbooks and that is a policy against harassment and its complaint procedure and meal and rest break policies.
Employee rights and responsibilities
Among the most important categories of policies that your California Employee Handbook should address are those concerning employee rights and obligations. You can dedicate an entire blog entry to each of these topics, but in this entry, I will briefly discuss how a number of these policies and their accompanying employee handbooks are evaluated by California courts.
Wage Statements: California law requires that, semi-monthly at the latest, employers provide employees a wage statement that includes details such as the name of the employer’s legal entity, the employee’s name, pay period, the total hours worked by the employee, all earned unused vacation time, accurately itemized deductions, accurate gross and net wages, etc. The failure to provide employees with a proper wage statement exposes employers to possible claims under California’s Private Attorneys General Act ("PAGA"). A single violation of the wage statement laws subjects the employer to $100, with an additional $200 for each aggrieved employee for each violation. For employers that hire masses of workers in California, the penalties for wage statement violations can become exponential.
Time Off Policies: All California employers are required to provide employees with paid sick leave, as a result of AB 1522. This means that certain employees are entitled to three (3) days of paid sick leave, while other employees – those that are eligible for paid sick leave under FMLA and/or CFRA may have the ability to combine paid sick leave, FMLA and CFRA time off, resulting in increased job-protected leave. Employers should carefully track any policies that provide for health-related time off in order to prevent potential retaliation claims.
Equal Employment Opportunity: California employers should draft the basis of its Equal Employment Opportunity policy keeping in mind the Fair Employment and Housing Act ("FEHA"). At a minimum, the policy should list all of the protected classes of employees under the State’s anti-discrimination laws and include a disclaimer stating the company does not discriminate on the basis of any of these classes. The policy should also include a clear notification that retaliation of any kind will not be tolerated.
Policies on privacy and electronic monitoring
When rules of the road when it comes to privacy and monitoring are included in an employment handbook, a compliance tip is to incorporate those rules into employee handbooks. Monitoring of e-mail is of particular interest now.
Of course, keeping in mind that for California employees, an employer’s right to monitor computer use is significantly affected by agency law (including whether the employee accesses the computer in the "scope of employment") and the anti-wiretapping law (Civ. Code section 631).
State law imposes the criminal penalties, but does not prohibit an employer from electronically monitoring communications. Instead , the law requires that employers inform employees that their electronic MAIL and voice MAIL may be intercepted. (Under the federal law (ECPA), employers must advise employees that their electronic communications may be intercepted, but there is an exception for telephone/in-person conversations.)
Employers should also understand the difference between private (not working time) and confidential communications, i.e., when an employee can reasonably expect their conversation to be private (not overheard) or confidential (that the contents will not be repeated or disclosed). Also, employers should understand the impact of different types of electronic systems/sources (non-telephonic communication) when it comes to private and confidential communication.
Modifications and distribution of the California Employee Handbook
The last thing you need after you have worked diligently with an attorney (and maybe a consultant) to review or draft an employee handbook is to have a current version of the handbook "leaked" on the internet. Moreover, if you have spent precious resources doing all that hard work, it just makes sense to ensure that the handbook is not out of date when you do distribute it to employees.
Updating
Regular review of the handbook is more important than you may think. Occasionally, changes in the laws would run afoul of the policies in the handbook (if the handbook is not updated). At minimum, you should review your handbook at least once a year. In addition to the regulators changing the laws that impact the handbook, the needs of your organization may change – worker populations can change, what your organization does and how your culture might evolve will change. You would obviously do this twice as fast if you are actually hiring for new positions, right? We hope so.
Distributing
Once the new handbook is ready, you will need to distribute it. Give each employee (both new and existing) a copy of the handbook (either paper or electronic) and have them sign an acknowledgement that they have read the handbook (yes, even fine print counts, especially the obviously onerous arbitration agreement terms that you have inserted). You can insert this into your application and/or offer letter, but it should probably be on its own form that you ask about at any time.
If you have new employees, you can include the handbook with all of your employment forms that you have handed to the employee upon his or her first day of work.
That said, it doesn’t necessarily matter that much whether you distribute the handbook electronically or in hardcopy. The only things you need in writing are any mandatory disclosures under California law and the acknowledgment of receipt. If you want to be extra safe, you can get a signature on the pages of the handbook where the enforceable provisions are (like the at-will and arbitration provisions in the handbook).
That "extra" is only to make sure that you have taken every step you possibly could to have the best case possible. It would only be in the rarest cases that you lose a case on the basis of breach of contract on the handbook as long as you include the right language to begin with and it is signed by an authorized person.
Legal implications of a non-compliant handbook
Depending on the issue, the failure to adhere to California law in a handbook could both result in administrative penalties and give rise to a lawsuit for damages. Some of these issues are easily remediable with a simple revision to the handbook, while other legal violations could set an employer up for multi-million dollar class action or even Private Attorney General Act exposure . Even for faults that are easily correctable or otherwise minor, an employer with an outdated handbook should work to have it brought into compliance as soon as possible in order to avoid any potential liability. A thorough legal review will also help employers avoid ill-advised admissions and disclaimers that carry their own legal consequences. For example, warning employees that the handbook is not an employment contract is a wise move but can potentially backfire if an employee views that disclaimer as making the entire handbook and any policies contained within it nonbinding.