It is important for any business owner, whether large or small, to have a good working relationship with an experienced legal counselor.  Your attorney should make sure your business or organization is in compliance with both state and federal laws and regulations, offer advice and guidance on key projects, and help with any other day-to-day needs associated with running a successful business.  Including an attorney who sees your business as a “business” and not a “legal question” is also important.   Your attorney should take time to get to know your business, spending time getting a better understanding of your business goals and objectives, as well as learning how you prefer to operate your business.  Having a good working relationship with an attorney who understands business and tries to improve your bottom line is critical in today’s economy.  Sounds expensive though doesn’t it?

Small and mid size companies often have smaller budgets and cannot afford to hire an in-house attorney, and instead rely on expensive outside counsel to handle the day-to-day legal needs of the business. Not only is this expensive, but also inefficient – outside counsel rarely have the intimate understanding needed to carry out the company’s vision.  Some firms or attorneys, however, will partner with your company to ensure affordable yet continuous contact with your business, the best way to truly understand your needs and protect your interests.

Often these arrangements take the form of what is often called “outsourced general counsel services”, where the attorney may work from the firm’s offices, or provide your company with an experienced general counsel who can office at your location on a part time basis. The fees are usually billed at a discounted rate commensurate with the value provided to the client.

Often times, without sufficient legal counseling, other members of your team spend time dealing with legal matters instead of their particular area of expertise. These matters can be delegated to your outsourced general counsel, whose sole purpose and expertise is to navigate these matters.

Having an attorney that knows your business and who can offer the following type of services on a fixed monthly fee provides a competitive advantage over the competition:

• Contract Review and Negotiation
• Employment Advice and Counseling
• Human Resources Advice and Counseling
• Insurance Review and Risk Analysis
• Lease Drafting and Review
• Non-Disclosure/Licensing Agreements
• Entity Formation, Governance and Record Maintenance
• State and Federal Compliance Review
• Dispute Resolution
• Day-to-Day Legal Advice
• Day-to-Day Business Counseling
• Legal Alerts and Updates

In today’s tough economy, you need a firm that understands how important it is for clients to receive practical and effective legal counseling in a manner that delivers real value.  Instead of paying high legal fees for individual services on an hourly basis, these outsourced general counsel arrangements often provide a flat monthly fee that is less expensive than the typical hourly rates offered by more traditional firms .  The fees are based on the value and quality of service clients receive, instead of just billable hours or time spent preparing the necessary documents or legal work.  The law firm should actually consult with you to determine what value the services have in your operation.

Here are some firms offering this type of service to its customers:

Liberty Law, A.P.C. (Northern California) – (disclaimer: Liberty Law authors this blog)

Shepherd Law Group (Boston, MA)

Lancaster Helling (Austin/Dallas, TX)

Hortin CC (Atlanta, GA)

Linsey Krolik (Campbell, CA)

Plaintiffs, in Stuart v. RadioShack, sought reimbursement for expenses related to use of their personal vehicles to perform inter-company store transfers, which vehicle use was known by the employer even though the employees had not followed proper internal procedures for requesting reimbursement. The issue before the court was whether an employee must first make a proper request for reimbursement with his or her employer before the employer’s duty to indemnify under Labor Code section 2802 is triggered.

California Labor Code section 2802 provides that “An employer shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties.”  And Section 2804 further provides that “Any contract or agreement, express or implied, made by any employee to waive the benefits of this article or any part thereof, is null and void.”

The Court addressed the question of what happens when an employee does not report the expense according to company policy, and held, in effect, that the requirements of the statute must override any internal reimbursement rules set by the employer. California employees have a right to be reimbursed for their work related expenses, such as business travel, equipment, materials, and training, when the employer knows or has reason to know that the employee has incurred the expense, even when the employee fails to follow internal reimbursement protocol established by the employer.

Employers should continue to create policies and procedures for expense reimbursement; however, they should also recognize that they remain liable to reimburse the employee’s expenses even when the employee fails to adhere to the exact terms of the reimbursement policy. Case law now provides that the employee’s failure to follow company reimbursement protocol will be an unlikely defense for employers who fail to make a valid reimbursement required under Labor Code 2802.

Earlier this week, Governor Arnold Schwarzenegger vetoed several employment-related bills, which was a positive development for employers.  The California Legislature had passed the following bills and sent them to the Governor for signature:  (1) AB 335, which would have prohibited forum selection and choice of law clauses in employment agreements, if the clauses provided for a forum other than California or the law of a state other than California for resolution of disputes between a California employee and the employer; (2) AB 943, which would have prohibited employers in most instances from obtaining credit reports for use in hiring decisions; (3) AB 793, which would have increased the statute of limitations and recovery period for compensation-related claims; and (4) AB 527, which would have created a presumption in Labor Commissioner proceedings that all pay records relating to the claim would be presumed false if the Labor Commissioner found that two or more records for any pay period were falsified.

It’s important for employers to remember that while the default employment rule in California may be “at-will” (Labor Code §2922) there are some other factors and circumstances that can bear on your decision to move forward with the termination of an employee.

Having a termination check list can be helpful to remind you of any red flags that warrant further consideration before moving forward with a termination decision.  Below, is a list of items you will want to consider before terminating someone. This is not an exhaustive list, but includes several key factors to consider. You may also want to consult with counsel on termination decisions.

• Is there any documents (write-ups, warnings, etc..) or other objective evidence (i.e., video of employee theft) to support the termination?
• Are the managers or those who are participating in the termination all in agreement about the grounds for termination?
• Is this termination consistent with what the company has done in the past under similar circumstances or is the person being singled out for different treatment?
• Are there overlapping concerns about workers compensation leave, medical issues, or family leave rights that warrant the consultation with counsel?
• Have internal company policies been followed?
• If your company policy calls for progressive discipline (system of warning and write-ups before termination) have these steps been followed? Is there documentation to support the progressive discipline action taken before termination?
• Does the termination potentially violate any state or federal statutes prohibiting discharge under the present circumstances (i.e., can’t fire someone for filing a workers comp claim, or taking time off to serve on jury)?
• Is anyone making the termination decision based on the person’s protected class (i.e., sex, race, national origin, gender, age, family status, etc..) or because the employee engaged in a protected activity (i.e., notified a state agency of a product liability issue (whistleblowing), serves on a volunteer fire department, filed a complaint with the Dept. of Fair Employment and Housing, harassment complaint, etc..) – can’t make a termination decision based on these factors.
• Is the termination decision consistent with the performance or conduct of the employee that has been discussed or documented in the past?
• Is the termination decision consistent with previous reviews of the employee (last review was a glowing report two weeks ago and now the person needs to be fired, what changed – is it something legitimate)?
• Has the employee been talked to about the incident? Is there sufficient evidence to reject the employee’s version of events?
• Is there a contract, or were any employment promises made (i.e., how long a position will last) that converts the “at-will” employment relationship into something other than an “at-will” employment relationship? Have any alternatives to termination been considered?
• Is the employee suffering from any disability, medical condition, pregnancy, etc.. (or is employee tending to someone in the employee’s family with a medical condition)? The employer may need to consider an accommodation or other alternative to termination.

Reviewing the checklist above before you decide to terminate someone will help you avoid some common termination pitfalls.  Like I said before, this is not an exhaustive list of items to consider, but it is a good starting point. You may want to build on this list, using employment issues you have seen in the past that are particular to your place of employment.

For some help with compliance issues – check out this post too on hiring outsourced general counsel.

Employers, please remember that you need to keep on top of your non-exempt employees about taking their statutorily required meal and rest periods.  You should have a copy of the wage order that governs your place of business (get it here) and review it every now and then to be sure you are still keeping up on the wage and hour compliance issues discussed in the orders.

For meal periods: Remember that no employer shall employ any person for a period of more than five (5) hours without providing them with a meal period of not less than 30 minutes, except that when the person is working less than 6 hours a day the employee may waive the meal period. The waiver, however, must be in writing, signed by the employee and in the personnel file ahead of time. The employee has the right to revoke the wavier too.

For days when the employee will be working more than 10 hours, the wage order requires you to provide a second 30 minute meal period for the employee, except that if the total hours worked will not be more than 12 hours for the day, the employee may waive the second meal period if they actually took the first meal period and have a signed waiver in their file ahead of time.

Unless the employee is relieved of all duty during a 30 minute meal period, the meal period will be considered an “on duty” meal period and counted as time worked. An “on duty” meal period is only allowed only when the nature of the work prevents an employee from being relieved of all duty and when by written agreement between the parties an on-the-job paid meal period is agreed to. The written agreement shall state that the employee may, in writing, revoke the agreement at any time.

If you fail to provide your employee with a meal period as outlined above, you are required to pay the employee one (1) hour of pay at the employee’s regular rate of compensation for each workday that the meal period is not provided. These penalties can add up fast so you need to make sure your employees are tracking their time worked, their meal periods, and whether they missed the meal period. You should also be tracking when you paid them the one hour penalty, which should be right away after finding out about any missed meal period.

Similar to the meal periods (except rest periods are paid breaks), every employer shall authorize and direct that all employees take a rest period, which insofar as practical should be in the middle of each work period. The authorized rest period time shall be based on the total hours worked daily at the rate of ten (10) minutes net rest time per four (4) hours or major fraction thereof.  However, a rest period need not be authorized for employees whose total daily work time is less than three and one-half (31/2) hours. If you call someone off break before the get their net 10 minutes, you should give them a new 10 minute break after whatever necessity that required they be called back to duty has ended.

Like the one hour penalty in the meal period context, if an employer fails to provide an employee a rest period in accordance with the applicable provisions of the wage order, the employer shall pay the employee one (1) hour of pay at the employee’s regular rate of compensation for each workday that the rest period is not provided.

Often times the employer feels bad about disciplining the employee who works through a meal period because they are simply trying to work hard. Let them know that its nothing personal (you are not trying to punish hard work), but as the employer you can be held liable for missed meal and rest periods, so they must take them or face discipline.  You can and should discipline employees who do not adhere to company policy regarding the tracking and taking of meal and rest periods.