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How Can I Protect My Company After An Employee Files a Frivolous Lawsuit?
Sadly, it's not uncommon for unhappy employees to file meritless lawsuits against their companies. In most instances, it is to avoid a planned termination. If an employee has brought a frivolous claim against your company, after a reasonable investigation of the facts and law, and the purported claims do not state a viable cause of action, we can filed motions to hold attorneys, and their clients, jointly liable for pursuing frivolous claims.
However, we only can file these motions in limited circumstances, and our clients have always used the award to resolve the lawsuits. The most commonly pled employment claims either do not allow an employer to recover at all, or only limited recovery, and only against the employees themselves, not their counsel. Because the employees often times cannot satisfy any such judgment, the award is only as good as the paper it was written on.
What Should You Do?
Your options will change based on a variety of issues that are likely to change the course of how you wish to proceed. The options available will depend on a variety of factors, such as:
- the notice of claims, whether oral or written, directly or indirectly, if it is a lawyer letter, an administrative charge, or a lawsuit, and the stage of proceedings,
- the forum in which you will be adjudicating the issues are critical,
- the potential legal claims raised or anticipated, including:
- the potential legal exposure that exists beyond the employee at issue for unknown and often unrelated violations by the employer. For example, even if this employee’s claims are bogus, if we find that the employee has been misclassified under wage and hour laws either as an independent contractor or exempt employee, this will have significant repercussions for the employer because it typically effects all of the other potentially misclassified employees who are performing the same or similar functions.
In all these situations, we analyze the forum, the notice, the issues, timing, and propose options that are best suited for the employer after conducting an upfront investigation of known facts and current law.
What Happens If The Complaint is Filed Right Before We Terminate Them?
Occasionally, the day before a previously scheduled meeting to terminate an employee, that employee will send an email claiming that their supervisor has been harassing and retaliating against them. The company knows this is a frivolous accusation and made solely to avoid termination. But what should the employer do next?
You should expect to enter a lawsuit claiming, at the very least, unlawful harassment, retaliation, wrongful termination, and failure to prevent harassment and retaliation, in violation of the California Fair Employment and Housing Act. Even if you are correct that the employee’s claim is frivolous to avoid termination, the mere timing of the complaint and termination decision will raise legally viable claims.
In these situations, an immediate investigation of the employee’s allegations by a qualified investigator who has no affiliation with the parties or issues is required with the decision to terminate held in abeyance. The outcome of the investigation will dictate how the employer will proceed to minimize liability.
Speak With a California Labor and Employment Lawyer
When the facts support a cross-complaint that has caused damages to the employer, we strongly recommend pursuing all such claims, especially as it can offset any damages awarded to the employee, and regardless of collection, a strong cross-complaint is effective in defending frivolous cases and sends a strong message to your workforce. If you need helping defending against a frivolous California employment lawsuit, contact Lisa Sherman to schedule a free intial consultation at 213-341-4417. Not ready to chat just yet? Consider downloading one of our employee termination legal guides.
Are Employers Required to Grant Employees Leave to Attend Alcohol/Drug Rehabilitation?
If your Company is covered by California Labor Code § 1025, then you will be required to reasonably accommodate the request, regardless of whether your Company policies permit it. The California statute provides, that:
“Every private employer regularly employing 25 or more employees shall reasonably accommodate any employee who wishes to voluntarily enter and participate in an alcohol or drug rehabilitation program, provided that this reasonable accommodation does not impose an undue hardship on the employer.
Nothing in this chapter shall be construed to prohibit an employer from refusing to hire, or discharging an employee who, because of the employee's current use of alcohol or drugs, is unable to perform his or her duties, or cannot perform the duties in a manner which would not endanger his or her health or safety or the health or safety of others."
If your Company employs more than five employees, then you are also covered by FEHA. Alcoholism/drug addiction is likely a disability, and therefore, you will also be required to reasonably accommodate under FEHA.
What may an Employer Lawfully Deduct from an Employee's Final Paycheck?
Various provisions of the California Labor Code prohibit employers from withholding wages to which an employee is entitled. For example, Cal. Lab. Code § 212 prohibits employers from discounting amounts owed to employees and Lab. Code § 216 prohibits a person who has the ability to pay from willfully refusing to pay wages owed to an employee. Moreover, Lab. Code § 225.5 provides a civil sanction in the form of penalties for violation of these sections, intentionally or unintentionally.
Any employee advances upon which the employer will seek repayment must be authorized in writing directing the employer to authorize only the amounts authorized for each pay period. The Division of Labor Standards Enforcement will not permit a “balloon payment” to be recovered from a final check, even if specifically authorized by the employee.
However, the DLSE may recognize an exception to the principle if the employee enters into a new, valid agreement at or before the termination that expressly authorizes the deduction of the full balance owed from the final paycheck.
Can an Employer Legally Deduct Breakage From a Non-Exempt Employee's Compensation?
California’s Wage Orders generally prohibit employers from taking deductions from a nonexempt employee’s wages as a result of any cash shortage, breakage or loss of equipment.
Given that this is a new employee who made a $60 mistake, it is unlikely that this is permissible. Only where an employer can show that the loss is caused by a dishonest or willful act or by the employee’s gross negligence which does not appear to be the case here.
Updating policies to ensure that they are legally compliant is crucially important because the policy alone is unlawful.In this situation, it would be best to use this mistake as a teaching/counseling opportunity only. It is likely that your policy stating that the Company has the right to deduct non-recoverable losses from the employee is unlawful.
Is Company Required to Reimburse its Employees for Claimed Business Use of Personal Cars, Cellphones, Computers and Other Costs?
This is where carefully crafted workplace policies are crucial. Cal. Labor Code § 2802 requires employer to indemnity employees for all necessary expenses or losses they incur in direct consequence of discharging their duties or obedience of the employer’s directives. The key here is on whether these expenses are “necessary” which should be clearly defined in your policies or every employee who chooses to use their personally-owned car, cell phone, home computer, ipad, home phone, and you name it, will be asking for reimbursement because they used it for work.
In a 2014 California Appellate Court case, Cochran v. Schwan’s Home Services, 228 Cal.App.4th 1137 (2014), the Court held that the employers was obligated to reimburse an employee’s personal cell phone used for work based on the employer’s clear policy requiring service representatives use their personal cell phones for work.
The Court rejected consideration of whether or not the employee actually incurred any costs in situations where the employee, for example, paid a fixed monthly amount for an unlimited plan or someone else paid for the phone). The Court held that the employer was still liable for some “reasonable percentage” of the employee’s cell phone that was required for work, regardless if the employee actually incurred any costs on their own.
Absent policies, procedures and agreements defining use of technology and devices for your employees, California companies remain exposed to potential liability to all their employees who are using personal devices for “work.” Labor Code § 2802(c) provides that the employees are entitled to attorneys’ fees incurred by the employees enforcing their rights to recovery. Often times, violations of the Labor Code will be accompanied by a Private Attorney General Act (PAGA) claim which permits an aggrieved employee to stand in the shoes of the state in seeking compliance.
Is an Employer Required to Pay a Salaried Employee Overtime for After-Hours or Weekend Work?
It depends on whether you are an exempt, salaried employee not subject to overtime or a non-exempt, hourly employee, subject to overtime. A full analysis of the Wage Order(s) governing your workplace, and the actual duties that you perform dictate whether or not you are classified correctly. Generally, if you are performing a position in which more than 50% of your workday is not spent making independent business decisions, then your salaried amount would be divided by 40 hours a week/8 hours a day to determine your regular rate of pay.
For any hours that you work in California answering emails/calls after hours that exceeds 8 hours in a workday or 40 hours in a workweek, then would be compensated at 1.5 times the regular rate.
Most employers require that overtime must be authorized. So, if you were responding to emails and calls over the weekend in response to others, you should report them immediately to your supervisor and request compensation. Your employer is likely to instruct you not to perform work of any kind without authorization in the future, and that you may be subject to disciplinary action if it occurs again. Your employer still must pay the overtime incurred, but the only way the employer can police overtime is to require pre-authorization.
Can an Employer Limit Damages an Employee Recovers for Unlawful Harassment if S/He Chooses to Sue?
A California employer can limit damages awarded to an employee under California law based on the doctrine of avoidable consequences. To prevail on this defense, an employer must prove three elements:
- The employer took reasonable steps to prevent and correct workplace sexual harassment;
- The employee unreasonably failed to use the preventive and corrective measures that the employer provided; and
- The reasonable use of the employer’s procedures would have prevented at least some of the harm that the employee suffered.
The employer must be prepared to show that it adopted appropriate anti-harassment policies and communicated essential information to its employees concerning the policies and implementing procedures. In addition, the procedures must protect confidentiality as much as practicable, and the employer consistently and firmly enforces its policies.
Moreover, the employer will also want to show all evidence tending to show that the employer took effective steps to encourage individuals to report harassment and for the employer to respond effectively.
If an employer can show that if the employee had taken reasonable steps to utilize the complaint procedures, the harassing conduct would have stopped, the employer will still remain liable in all instances for any compensable harm the employee suffered before the time at which the harassment would have ceased.
Note: under federal law, this defense acts as a complete affirmative defense barring any recovery, but most cases in California are not brought under federal law.
What is an Employee Entitled to Recover if Unlawful Harassment by a Supervisor is Substantiated?
Under California’s Fair Employment and Housing Act (FEHA), an employee who prevails on a claim of unlawful harassment is entitled to recover damages which generally include compensatory damages, which generally include, medical expenses, physical or property damages, if any, emotional distress, and economic damages, if any, caused by the harassment.
Liability lies against the supervisor in his or her individual capacity, and the employer, who is strictly liable for the actions of the supervisor.
If the supervisor is a director, officer or managing agent of the corporation or the corporation ratified (explicitly or implicitly) approved the supervisor’s conduct, and the alleged conduct meets the requirements for recovery of punitive damages, the employee may also be awarded punitive damages. In addition, the employee as the prevailing party will recover the costs of suit and “reasonable” attorneys’ fees. Intentional conduct, such as, punitive damages is not covered by insurance.
Can an Employer Legally Change the Hours of Work and Workdays of Its Non-Exempt Non-Union Employees?
Unless your employer has changed your work days and hours for an unlawful purpose, generally the answer is yes. There is also typically standard language in your employee handbook or other policies that states an employer’s right to change days and hours of employment. In addition, California employers are required to give “Notice to Employee” of changes in the employment relationship, although this is rarely done other than initially upon hire. (See, Labor Code § 2810.5 notice available on www.dir.ca.gov).
Any such notice is usually accompanied with a reminder that nothing in the notice changes the at-will employment relationship.
Employer Just Received Notice of a Lawsuit for Failure to Terminate Supervisor after Employees' Claims of Harassment. Now what?
You must retain experienced employment counsel to represent your company in the lawsuit. If the conduct has stopped and you did take corrective action against the supervisor, then you have abided by your legal obligations. These employees cannot demand that an employer terminate another employee merely because they are not happy with the outcome.
Your counsel should send a letter to the employees’ attorney, if represented, informing them of the law, as well as, reminding them of their legal obligations under Cal. Code of Civ. Proc. § 128.7 in pursuing frivolous claims that are not supported by the facts or the law.