An employee has a cause of action for wrongful termination against his or her employer, if the termination breaches one or more terms of the contract of employment, a statute or a provision in employment law. The employee may claim wrongful termination, if the termination was based on discrimination, retaliation, an employee’s refusal to commit an illegal act, or if the employer is not following its own termination procedures. A wrongful termination claim can lead to two main remedies: reinstatement of the dismissed employee, and/or monetary compensation for the wrongfully terminated employee.
In California, employers may reduce civil liability exposure by designating their employees as “at-will” employees, which means that they can terminate or demote their employees “at-will,” whether or not there is cause to do so. However, this defense is not absolute. The employer still has a duty to exercise good faith and fair dealing throughout the term of the employment. The “at-will” doctrine never applies if the employer terminates the employee based upon discrimination, retaliation, or any other illegal acts.
An employee may claim discrimination against his or her employer, if the employee was mistreated based upon race, color, national origin, age, gender, religion, disability (physical and mental), marital status, or sexual orientation. The California Department of Fair Employment and Housing (DFEH) is the state agency that protects employees from employment discrimination pursuant to the California Fair Employment and Housing Act (FEHA). FEHA is the principal California Statute prohibiting employment discrimination, covering employers, labor organizations, agencies, apprenticeship programs and any person or entity who aids, abets, incites, compels, or coerces the doing of a discriminatory act.
FEHA also prohibits retaliation against anyone for opposing any practice forbidden by the Act, or for filing a complaint, testifying, or assisting in any proceedings under FEHA. All FEHA complaints must be filed with the DFEH within one year from the date of the alleged discrimination. Employees may either choose to have the DFEH file the lawsuit as an agency, or the employees may file the lawsuit directly in court by obtaining a “Right-to-Sue” letter from the DFEH. To establish a cause of action for discrimination, the employee must prove that they are in a protected class, and that they were performing their job competently, but were discriminated against by an adverse employment action.
California law prohibits an employer from retaliating against any employee who engages in protected activity under the Fair Employment and Housing Act (FEHA). Government Code section 12940(h) protects employees who resist or object to discrimination or harassment from retaliation. That provision makes it unlawful for any employer or person to discharge, expel, or otherwise discriminate against any employee because the employee has opposed any forbidden practices or because the employee has filed a complaint, testified, or assisted in any proceeding.
To establish a cause of action for retaliation, a plaintiff must show that (1) he or she engaged in a protected activity; (2) the employer subjected the plaintiff to an adverse employment action; and (3) the protected activity and the employer’s adverse employment action were causally connected. An employee’s opposition to discrimination or harassment need not be a formal charge to qualify as a protected activity, but it must be sufficient to put the employer on notice as to what conduct it should investigate. In most cases, the employee may establish retaliation, if the employee is terminated or suffered any other adverse employment action after making any complaint in the workplace.
INDEPENDENT CONTRACTOR MISCLASSIFICATIONS
Employers often times improperly misclassify their employees as independent contractors, so that they do not have to pay payroll taxes, minimum wages, overtime, comply with other wage and hour law requirements such as providing meal periods and rest breaks, or reimburse their workers for business expenses incurred in performing their jobs. In addition, employers do not have to cover independent contractors under workers’ compensation insurance, and are not liable for payments under unemployment insurance, disability insurance, or social security.
There is no set definition of the term “independent contractor,” so courts have different interpretations on whether a worker is an employee or independent contractor in a particular situation. California courts have applied an economic realities test, which considers whether the principal has control, or the right to control the worker, both as to the work done and the manner and means in which it is performed. Courts may consider numerous facts for control, such as the length of time for which the services are to be performed, the degree of permanence of the working relationship, and the method of payment. Even where there is an absence of control over work details, an employer-employee relationship may be found, if the employer retains pervasive control over the operation, if the worker’s duties are in integral part of the operation, and if the nature of the work makes detailed control unnecessary. The existence of a written agreement purporting to establish an independent contractor relationship, and the fact that a worker is issued a 1099 form rather than a W-2 form is not final determination with respect to independent contractor status. Absent some compelling evidence, the law and the courts presume that one is an employee rather than an independent contractor.
FAILURE TO REIMBURSE FOR BUSINESS EXPENSES
California Labor Code §2802 obligates employers to reimburse their employees for all necessary expenses incurred in the course and scope of their employment. This means employees have a right to be reimbursed for their work related expenses, such as equipment, materials, training, business travel, uniforms, and even legal expenses. Labor Code §2804 prohibits employers from waiving an employee’s reimbursement rights under §2802, and prevents employees from willingly forfeiting these rights.
In the issue of mileage reimbursement, the employer bears the burden of proving that the rate is reasonable based on the total vehicle expenses incurred during the preceding year, if the employer elects to reimburse the employees based on the actual costs at a rate less than the IRS mileage rate. Mileage reimbursement must be made when wages are paid or at least once per calendar month, as determined by the employer. Any payment must be made no later than the end of the calendar month, following the month in which the expenses were incurred. Any payment processed on an employee’s normal payroll check must reflect the reimbursement amount separately. Employers may not take any deductions from the reimbursement amount.
WAGE AND HOURS VIOLATIONS
The California Labor Code and the Federal Fair Labor Standards Act govern wage and hour laws. Employers often violate three main categories of the wage and hour requirements: unpaid wages, unpaid overtime wages, and failure to meet minimum wage requirements. Under the California Labor Code, employers are required to provide an uninterrupted meal break within the first five hours of work, ten minute breaks for every four hours of work, paid time for tasks required to prepare work, a second meal break for shifts longer than ten hours, and proper pay stubs with all required information. Another common cause of wage and hour violations is when an employee is misclassified as “exempt” from receiving overtime pay. Under Labor Code §510, certain exceptions apply to an employee working pursuant to an alternative workweek.
California Labor Code §310 states that any work in excess of eight hours in one workday and any work in excess of 40 hours in one workweek, and the first eight hours worked on the seventh day of work in any one workweek, shall be paid at the rate of one and one-half times the regular rate of pay. Under the same section, any work in excess of 12 hours in one day and any work in excess of eight hours on any seventh day of a workweek shall be paid no less than twice the regular rate of pay. California employees can recover lost wages, as well as other damages and penalties under certain circumstances, against their employer who have violated the wage laws by filing an action in court or by pursuing an action through the Division of Labor Standards and Employment Agency (DLSE) for administrative relief. Employers who fail to pay required overtime may be liable for any unpaid overtime compensation and an equal amount as liquidated damages, plus attorneys’ fees and costs. For willful violations, damages can include earned overtime up to four years back, punitive damages and attorney’s fees.
MISCLASSIFICATION FOR NON-EXEMPT EMPLOYEES
Employers sometimes misclassify employees as exempt, even when they should be non-exempt. The reason is that the employers can save money in overtime wages. Non-exempt employees are also known as “hourly” employees. California law requires employers to pay hourly employees one-and-a-half times their regular hourly rate, if they work more than eight hours in a work day and/or 40 hours in a work week. Overtime must be paid in wages, not in other forms of compensation, such as goods or time off. Exempt employees are generally those who are paid a salary regardless of the hours worked. There are several classifications of salaried employees that are exempt from these legal minimum Wage and Hour requirements under California law. Such classifications include outside salespersons, independent contractors, employees of certain retail establishments, and others who meet various job exemptions, such as those who hold a bona fide executive, administrative, or professional job.
An employee’s job title alone is not determinative of their exempt status. An employee’s classification is based upon the specific tasks that employee performs. Any employee who is named a manager but who does not actually manage other employees may not be an exempt employee under California law. The employer has the burden of proving that the employee spends more than 50% of his/her time in supervising and managing other employees. Misclassified exempt employees, or independent contractors, may be entitled to unpaid overtime wages, pay for working off the clock, compensation for working through meal breaks, unpaid vacation/sick/personal leave, unpaid reimbursement for business expenses and attorney’s fees.
California Government Code §12940(j) makes it unlawful for an employer to harass an employee because of their race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, or sexual orientation. Workplace harassment is defined as any unwelcome or unwanted conduct that denigrates, shows hostility or an aversion toward another person on the basis of their protected class as stated in §12940(j). Conduct is unwelcome if the employee did not solicit, instigate or provoke it, and the employee regarded the conduct as undesirable or offensive. This is known as a “hostile work environment,” in which the employer creates, condones or permits a hostile, intimidating or offensive work environment. Examples of workplace harassment include verbal harassment (sexual or racial comments), visual harassment (staring or writing offensive emails), and physical harassment (inappropriate touching, assault, etc.) Employers and the harassing employee may both be liable for workplace harassment.
Even if the employer did not have actual knowledge of the harassment, the employer may be liable for failing to prevent the harassment. Failure to prevent harassment is oftentimes added as a separate cause of action against the employer. An employer is liable for failure to prevent harassment if the entity, or its agents or supervisors, knows or should have known of the harassment and fails to take immediate and appropriate corrective action. Additionally, an employer is strictly liable for harassment of an employee by any of its supervisors or managers. If the harassment is done by a supervisor or manager, it is not necessary to prove that the employer had knowledge. The employer must always treat all complaints seriously, investigate them promptly, thoroughly, and then document its efforts completely.