Can I Pay Family Members Below Minimum Wage?

Q.     My sister just called me and told me that my knuckle-headed nephew received a speeding ticket his first week after getting his driver’s license.  Evidently, it may run in the family …. Please do not mention it to my nephew’s grandparents –  after 25 years my first speeding ticket at 16 years old is still a fresh wound.  Being somewhat sympathetic to my nephew’s plight, I suggested that he come work at my business after school and on weekends to pay for his increased insurance premiums and the fine.  I would pay him a flat fee, under minimum wage of course, because punishment should still be punishment.  After he has paid off his ticket and he has shown me that he is a hard worker, I will consider hiring him.  Is there any issue with treating family as family and not as employees?

A.     Yes.  Under the California Labor Code, your nephew would be considered an employee and would need to be treated as such.  That means that you must pay him minimum wage and overtime, and provide Workers’ Compensation Insurance for any work-related injury.

Additionally, because your nephew is a minor, he will need a work permit.

If you fail to treat your nephew like an employee, your speeding ticket may not be your only run-in with the law.  In addition to civil sanctions, violating child labor laws and failing to pay minimum wage may subject you to criminal liability.  And, you don’t want to fight the law because, usually, the law wins.

This Legal Update / Bulletin is for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. The hypothetical question is posed to illustrate a point and does not contemplate all potential legal considerations This update should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

Are Office Betting Pools Illegal?

Q.     Tomorrow starts March Madness and the office is busy filling out the brackets.  Everybody puts in $5 and the winner will receive a little over $100 and a year of bragging rights.  My company keeps no money.  Even so, I’ve heard the pool is illegal.  Because lawyers, and particularly employment lawyers, try to take the fun out of every potentially fun office event, I thought I would ask why the pool is illegal.

A.     You are right, the pool is technically illegal.  In California if: 1) the amount of the pool is less than $2,500; and 2) the organizer does not profit from the office pool – then it is an infraction (like a speeding ticket).  Prior to 2010 you may have been subject to a felony conviction and $1,000 fine.  You may also be subject to Federal prosecution under the Professional and Amateur Sports Protection Act, also known as the Bradley Act.  Notwithstanding, most commentary notes that small office pools will not receive significant government scrutiny and prosecution is (very) unlikely.  It should be noted that, like President Obama (who this year smartly picked Kentucky to win it all), there is a good chance the prosecutors and police have also filled out brackets.  Accordingly, many employers will simply throw caution to wind.   A few additional things to consider:

  • What do your own policies say about gambling?  Certainly if you want to prohibit the office pool you can.  If you do have a policy, you want to enforce it – otherwise it may undermine the policies you actually intend to enforce.
  • Be careful about setting a precedent.  Although you may be willing to take a small risk with March Madness, do you want to go down the path of Fantasy Football and other popular office gambling events?  In addition to the potential illegality, these events may take away from productivity.  Challenger Gray & Christmas publishes a “March Madness Report.”  This year the report notes that businesses may lose as much as $1.9 billion for distracted and unproductive workers glued to their brackets instead of working.
  • Gambling may also lead to another American tradition known as “talking trash” which may in turn then lead to harassment claims.
  • Technically a winner is suppose to report all winnings to the IRS (although they can be offset by any gambling losses).

…….let the madness, and workplace distractions, begin.

This Legal Update / Bulletin is for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. The hypothetical question is posed to illustrate a point and does not contemplate all potential legal considerations This update should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

Can an Employer Consider a Prospective Employee’s Social Media Content In Making a Hiring Decision?

Q.     I just had a prospective employee come in.  I was really impressed, but in the wake of the Oklahoma Fraternity scandal, and how stupid people can be by putting EVERYTHING on the internet, I thought it would be a good idea to do some further investigation.  I am a luddite, so I had my nephew, who does not work for my company, do a search on this so-called “internet” (aka, the “World Wide Web”), and he found a series of pictures which shows this prospective employee out partying with his friends – he appeared drunk and in a hot tub with several women who were wearing only wet t-shirts.  It also appeared from the pictures that some of the attendees were smoking marijuana in the background.  He then commented on the pictures by stating “Still flying high – but I want my t-shirts back! #bestnightofmylife.”  Although not as bad as the Oklahoma Fraternity scandal, I am afraid this guy is a walking sexual harassment suit, not to mention the fact that I would be very concerned about his ability to carry himself in a professional manner.   That said, I am not sure I can make a decision based on what my nephew found on the internet.

A.     As the growth of social media continues to expand, it is becoming more and more commonplace for employers to check a prospective employee’s social media profile.  In 2012, California passed a law that forbids employers from asking  prospective employees their social media passwords, but there is nothing that prevents an employer from searching what is publicly on the internet.   That doesn’t mean an employer should not have some concerns.  While an employee may have a hard time making a claim for an invasion of privacy when their information is publicly available, the fact that an employer viewed a prospective employee’s Facebook, Instagram or Twitter posts may give the prospective employee a better claim for discrimination.  This makes sense if the prospective employee lists on his or her Facebook page (or other social media outlet) his or her religious affiliation, sexual orientation, marital status, political view points, etc., and then claims the employer based its decision not hire upon those protected classes.

Additionally, an employer must be careful not to have a third party do the background check without complying with the Fair Credit Reporting Act disclosure and notice requirements.  In the above scenario, the “nephew” did the search.  Other interesting questions may also arise.  Although California Labor Code section 96(k) does not create the ability for an employee to file a lawsuit, it does provide an administrative remedy for preexisting rights under the Labor Code.  Specifically, 96(k) states that the Labor Commissioner shall have jurisdiction over “claims for loss of wages as the result of demotion, suspension or discharge from employment for lawful conduct occurring during nonworking hours away from the employer’s premises.”  Finally, Labor Code section 432.8 prohibits inquires about convictions for certain marijuana offenses that are over two years from the date of conviction.  What if this party was three years ago and resulted in a misdemeanor conviction?  How does an employer un-ring the bell?

In the end, using a search engine may be a way to get a better understanding of your prospective employees, but there is some risk. #alwaysliability

This Legal Update / Bulletin is for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. The hypothetical question is posed to illustrate a point and does not contemplate all potential legal considerations This update should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

Do I Need to Update Dated Sections of My Employee Handbook if I Do Not Enforce Them?

Q.     I recently had an employee ask me about our internet usage, dress code, and other policies in our handbook.  Unfortunately, I have not touched that handbook in years, and I am not sure if most of our policies are still relevant, like the “you-break-it-you-buy-it” policy, and the “all women must wear skirts, pantyhose and make-up” policy.  That said the cover of all eight pages does have a pretty groovy bubble letter and rainbow font.  Don’t worry, I don’t actually enforce those old policies anymore (just the important ones), but I do still occasionally jam to Andy Gibb or the Bee Gees every now and again.  So, is it really that important that I update my handbook and policies?

A.     Yes and yes!!  While your policies may have worked in the 70’s, there have been hundreds, if not thousands, of new laws regarding employment that have been introduced since then.  Recently, the National Labor Relations Board (“NLRB”) have been cracking-down on companies with handbooks and policies that violate current regulations (mainly targeting social media policies, which it is fair to assume your handbook doesn’t have).  The NLRB has quietly heightened its scrutiny of company handbooks and policies and appears to be asserting itself in the predominately non-union private sector.  Though the NLRB cannot assess fines or award damages against businesses with handbooks and policies that are found to be in violation of the National Labor Relations Act, a disciplinary action or termination that was based on these policies could be invalidated, not to mention a failed union election, if employees claim to be intimidated by such policies.   Although you may have stopped forcing your employees to follow those older policies, if any claim is made against you, fighting the claim will be an even more strenuous uphill battle than it would be otherwise.  Plus, imagine the scandal if your out-dated policies went viral?  Not good for business!  It’s best to leave the past in the past and update your handbook on a yearly basis.  Disco is dead – except, of course, on Pandora.

This Legal Update / Bulletin is for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. The hypothetical question is posed to illustrate a point and does not contemplate all potential legal considerations This update should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.