Starting & Managing Your Business 101: Employee Rights

  By: Richard E. Korb[1]

Managing a small business requires dealing with issues related to employee rights, wages and taxation, compensations and benefits, workplace safety, and etc.  Employment law is the field that regulates the relationship between a business owner and employees, including issues of wrongful termination, discrimination, wages, and workplace safety.

Employee rights include:

-         Right to fair wages/overtime pay

-         Right to be free from discrimination and harassment

-         Right to a safe workplace free of safety hazards

-         Right to privacy

Minimum wage

Employees are entitled to minimum wage in order to be able to earn enough to meet basic needs. This rule does not apply to independent contractors and certain categories of workers. For example, independent contractors are not covered by minimum wage laws.

In addition, certain types of farm workers, seasonal and recreational workers, student workers are not entitled to minimum wage; some states do not require employers to pay minimum wage if workers receive tips. Commission sales employees, i.e. a salesperson who earns more than half of their compensation in commissions, are also exempt from minimum wage laws. Executive, professional, and administrative workers who earn at least $455 a week regardless of the number of hours they work are also not entitled to minimum wage. Other categories of workers not covered by minimum wage laws include casual babysitters and newspaper delivery people.

The federal minimum wage is $7.25/hour. In California, the minimum wage is $8 per hour, and workers who receive tips are still entitled to full minimum wage.

If an employer is covered by the federal Fair Labor Standards Act (FLSA), he is required to pay overtime to employees who work more than 8 hours in one day or 40 hours a week. Certain categories of employees are not entitled to overtime payment. Employees who work in an executive, administrative, or creative professional field and earn more than $455 per week on a salary basis are not considered to be eligible for overtime payment.

-         An executive employee’s primary duties include management of the employer’s business, supervision of at least two full-time workers, the authority to make decisions to hire or fire employees

-         An administrative employee performs office work related to the management of employer’s business operations and makes independent judgments about significant issues

-         A professional employee’s primary duties include performing work that requires advanced knowledge in the field of science or performing work that requires imagination, originality, and talent in a creative or artistic field

Other categories of workers who are not eligible for overtime payment include outside sales employees, i.e. employees whose main duty is making sales and who work away from employees premises, and computer employees, i.e. someone who earns no less than $455 a week and whose primary duties include application and development of computer systems and programs.

Discrimination and Harassment

Discrimination in employment, i.e. unfair treatment based on personal characteristics such as gender, race, religion, etc. is illegal and protected under anti-discrimination laws. Harassment takes place when supervisor’s or co-workers’ actions/words create an intimidating, hostile, and threatening work environment.

What can you do if you are being discriminated or harassed?

You have several options when dealing with such issues.  First, you can try to confront your harasser and ask his or her offensive behavior to stop. If confronting the harasser does not work, you can complain to your supervisor. This step is very important because if you decide to file a lawsuit and fail to use complaint procedures established in employee handbook/complaint policy, you may not hold the company liable in a lawsuit.

Keeping a journal and recording incidents of discrimination/harassment is also very important if you consider taking an action such as a lawsuit. You should record dates of such incidents and collect any offensive notes or letters, photographs, cards, copies of your complaints, etc. that can be used as evidence in court. If a complaint also does not work, you might consider filing an employment discrimination complaint with the Federal Employment Opportunity Commission (EEOC), or the California Department of Fair Employment and Housing (DFEH).

Workplace Safety

Employees are protected from having to work in dangerous or hazardous conditions. The federal Occupational Safety and Health Act (OSHA) regulates workplace safety issues. The CAL/OSHA enforcement unit exercises jurisdiction over the places of employment in California and conducts inspections of workplaces in response to complaints, reports of accidents, or as part of inspection program of businesses that have a high risk of workplace hazards, injuries, or illnesses. CAL/OSHA provides workers safety and health consultation through on-site assistance and programs that provide educational materials on workplace safety and health issues.

If you believe that you are in imminent danger, i.e. performing your work can cause serious injury or even death and there is no time to remove the danger, you have the right to refuse to work. If the danger is not imminent, you can let your employer know about the problem or complain to OSHA.

Because there are many regulations related to workplace safety, it might be hard to follow all those regulations. In order to ensure that you are providing safe and hazardous free work environment, you can review the OSHA small business handbook that was created to help small business owners to follow the requirements of the OSHA Act.

Right to Privacy/Workplace Monitoring

Employers may have the right to monitor employees’ off-duty behavior; however, such monitoring is limited due to employees’ right to privacy.

For example, an employer can monitor phone calls that you make at work. However, if an employer realizes that the call is personal and does not involve customers or clients, he or she should stop listening.

Employers can also use computer monitoring such as software that allows them to see what is on your screen, as well as determine the time spent away from your computer (idle time) and even how many keystrokes you are performing per hour. Electronic mail can also be subject to monitoring. Employers do not have to notify you about monitoring. In order to avoid trouble, you should limit your personal communication at work and assume that your personal messages may not remain private.

Workers Compensation Insurance

Workers are also entitled to workers compensation insurance in case of a work-related injury. Employers are required to purchase insurance for their employees by many state laws, including California.

California law requires employees to have workers’ compensation insurance if they have even one employee. Some states require employers to provide coverage for non-work related sickness or injury by providing disability insurance. Employers are required to provide disability insurance in California, Hawaii, New York, New Jersey, and Rhode Island.

Out-of-state contractors who do not hire employees who reside in California are exempt from workers compensation insurance requirements and must provide a certificate of insurance from workers’ compensation insurance carrier.

Purchase of workers compensation insurance limits a company’s financial exposure in the event of a lawsuit for work-related injuries and insures there will be monies available to pay for injured workers’ medical expenses. Therefore, insurance serves as a protection for both employers and employees.

Workers compensation insurance covers medical treatment, disability payments, permanent injuries, as well as benefits to employee’s dependents in case of a death.

Failure to purchase insurance can be a misdemeanor. If an employer fails to purchase insurance, employees have the right to sue the business in civil court. In California, employees also have the option of filing a workers’ compensation claim against the Uninsured Employers Benefits Trust Fund.

Compensation benefits include payments for lost wages, medical expenses related to the injury, and death benefits. The process of administering compensation benefits starts with a notice about injury given to an employer, which is followed by medical examination and investigation of the circumstances surrounding injury. The next step requires an employee to file a compensation claim with an administrative agency, which considers the evidence and makes a final decision.

[1] RICHARD E. KORB is a seasoned attorney with 30 years of business litigation and transactional (contracts) experience. Over his legal career, Richard has successfully litigated and resolved over 300 court cases in the fields of contract law, real estate, employment, unfair competition, bankruptcy and general civil law and he has drafted and negotiated over 250 contracts and licenses for large and small companies alike. Richard leverages his experience as a former partner in a 100-person law firm and chief counsel for a public software company to assist individuals and companies, from start-ups to multi-nationals, with a broad spectrum of legal matters.  In addition to his legal practice, Richard is a court-approved mediator and serves on the Alternative Dispute Resolution (ADR) panel for both the Alameda and Contra Costs County Superior Courts. ©2011 Richard Korb