How long should California employers maintain employee records?

California employers are subject to a myriad of federal and state requirements for the retention of employment records. Here is a brief list of important records employers should maintain and the time periods they should be retained in order to avoid civil penalties and to protect against litigation. This is a general list that pertains to most employers in California. Employers should consult with an employment attorney to ensure that they are in compliance with all applicable document retention laws. Download file

New I-9 Form Available

The United States Customs and Immigrations Service (USCIS) has recently published the new Form I-9, Employment Eligibility Verification. Employers can download the new form at the USCIS website. Employers are required to complete a Form I-9 within three business days of hiring a new employee and are required to retain the forms for three years post-hire or one year after termination of employment, whichever is longer. Employers are required to use this new form by January 2006, but can begin using it before that time.

Verify Employees’ Social Security Numbers Online

The Social Security office now offers employers the ability to verify employees' social security numbers online (click here for the website).
The site also provides information to employers about their reporting requirements and what to do if the social security number provided by the employee does not match. Registration is required to use the service, but it appears to be a valuable resource for employers.

Employee Uniforms

Question: May I require my employees to wear a particular uniform?

Answer: California law allows employers to require employees to wear particular types of clothing or uniforms to work. If an employer requires non-exempt employees to wear a uniform, the employer must pay for and maintain it for the employee. What constitutes a "uniform" is not always clear.

According to the California Labor Commissioner, the term "uniform" includes any apparel and/or accessories of distinctive design or color. An employer may prescribe the weight, color, quality, texture, style, form, and make of a "uniform" required to be worn by employees. When an employer simply requires employees to wear "basic wardrobe items which are usual and generally usable in the occupation," the clothing is not a uniform. For example, specifying that employees wear white shirts, dark pants, and black shoes and belts, all of unspecified design, does not constitute a "uniform." The employer is not required to pay for that clothing or its maintenance. If the required clothing can double as street clothes, it is probably not a "uniform."

Some safety equipment or protective apparel must be worn by employees as a matter of law. Proper safety equipment such as goggles, gloves or other accessories or apparel must always be provided by the employer if they are required by a regulation of the Occupational Safety and Health Standards Board.

How is maintenance of a uniform handled?

In addition to the cost of the uniform, the employer must provide non-exempt employees with reasonable maintenance of the uniforms. The employee can either maintain the uniform itself, or pay the employee a weekly maintenance allowance of an hour's pay at minimum wage, provided that an hour's pay is a reasonable estimate of the time necessary to maintain uniform properly. It is reasonable to require employees to maintain uniforms requiring minimal care, such as washing and tumble drying, without reimbursement; however, special care, such as ironing, dry cleaning or separate laundering because of heavy soiling or special color, must be reimbursed to non-exempt employees. An employer may never impose a financial burden on employees, with respect to purchasing or maintaining clothing, which would reduce the employees' wage rate below the minimum wage.

What An Employer Needs To Know About Arbitration Agreements

Question: I am considering requiring all new employees to sign an arbitration agreement. What do I need to know to prepare an enforceable agreement?

Answer: Many employers view arbitration agreements as a cost-effective and time-saving method for resolving disputes with their employees. In recent years, the Courts have issued differing opinions on whether such agreements are enforceable. Generally speaking, the courts closely scrutinize arbitration agreements because the employee lacks equal bargaining power, particularly where an agreement to arbitrate is a condition of employment. The courts examine both procedural unconscionability (i.e., oppression or surprise to one side that arises from unequal bargaining power) and substantive unconscionability (i.e., whether the terms of the agreement are unduly harsh or one-sided). The California Supreme Court has held that an agreement to arbitrate is unenforceable only if both the procedural and substantive elements are satisfied, but that these types of unconscionability are viewed on a sliding scale. Armendariz v. Foundation Health Psychare Services, Inc., 24 Cal.4th 83 (2000). In other words, the more substantively oppressive the terms of the arbitration agreement, the less evidence of procedural unconscionability is required.

In Armendariz, the California Supreme Court set forth the minimum requirements for an enforceable arbitration agreement: (1) a modicum of mutuality; (2) a neutral arbitrator; (3) all costs beyond those normally incurred in litigation to be borne by the employer; (4) some discovery; (5) a written decision with some reasons for the award; (6) the same relief available as in litigation. 24 Cal.4th at 103-13. Subsequent decisions by the California courts and the Ninth Circuit Court of Appeal have found unconscionable provisions that restrict an employee's appeal rights to a second arbitrator and to awards exceeding $50,000, require payment of a deposit and fees for each arbitration session by the employee, and limit an employee to a one-year statute of limitations. Fittante v. Palm Springs Motors, Inc., 105 Cal.App.4th 708 (2003); McManus v. CIBC Word Markets Corp., 109 Cal.App.4th 76 (2003); Circuit City Stores, Inc. v. Mantor, 335 F.3d 1101 (9th Cir. 2003).

Employers should keep in mind the risk of invalidation if their agreement is improperly drafted. While the courts have enforced arbitration agreements where only one term is unconscionable and can be severed, they have denied enforcement where the entire agreement was permeated with objectionable provisions or the purpose of the agreement appears to be to obstruct the employee's claims. Compare, Little v. Auto Stiegler Inc., 29 Cal.4th 1064 (2003) (severing provision and enforcing agreement), with Ingle v. Circuit City Stores, Inc., 328 F.3d 1165 (9th Cir. 2003) (refusing to sever or enforce).

Given the complicated issues in this area, employers should consult with experienced employment counsel before drafting or implementing an arbitration agreement. The focus in drafting these agreements should be on changing the forum for resolution of the dispute, rather than seeking to gain a substantive advantage over the employee. Some general "DO's" and "DON'Ts" are worth noting:

* DO consider allowing the employee an opportunity to opt-out of arbitration within 30 days after being notified of the program.
* DO provide a procedure for the selection of a neutral arbitrator.
* DO specify the types of claims that are subject to the agreement.
* DO provide for some mutuality, rather than just requiring arbitration by the employee.
* DO allow for more than minimal discovery.
* DO require a written decision by the arbitrator setting forth the basis for the award.
* DO allow for some judicial review of the decision.
* DO include a severability clause in the event any provision is found unenforceable.
* DON'T bury the agreement to arbitrate in pre-printed complex forms that the employee is unlikely to read.
* DON'T limit the statute of limitations for any claims.
* DON'T limit the employee's ability to pursue class or group claims.
* DON'T require the employee to share the cost of the arbitration fees or to incur other costs that they would not bear in ordinary litigation.
* DON'T limit the recoverable damages.
* DON'T provide for one-sided amendments or changes to the agreement by the employer.