Employment Law

Should I Sign the Severance Agreement My Boss Gave Me?

Evaluating Whether It Makes Sense To Accept a Severance Package Offered by Your Employer

Losing your job is often a frightening experience, and you may feel financially vulnerable if you are unsure of where you will find your next employment opportunity. When you are being laid off, your employer might ask you to sign a severance agreement – a contract, which typically includes some level of monetary compensation in exchange for a release of your legal rights.

Should I Sign a Severance Agreement?

Signing a severance agreement to obtain a much-needed payout can be understandably tempting, but you should always be careful to protect your interests. Employers will often use severance agreements to restrict your rights in pursuing legal action against them in the future. Consequently, you must thoroughly review the terms of any severance agreement and weigh the pros and cons of signing. Below, we review many of the questions you should be asking, what to watch out for, how and when you should negotiate, and other important factors to consider.

Why Are You Being Offered a Severance Package?

It is important to understand that businesses operating in California are in no way obligated to necessarily offer you a severance package when you are being terminated. This is true even if you are being dismissed due to factors outside your control, like a company-wide layoff. Therefore, you must evaluate why your company has chosen to offer you a severance package and what they hope to gain from you signing a severance agreement.

Note that severance packages can sometimes be obligatory if there are provisions requiring one in your employment agreement. A mandatory severance offer is often included for senior executives and other salaried employees. Unions can also sometimes require some level of severance be offered. An employer might openly have a policy to offer severance packages as a reward for company loyalty.

Absent an existing contract or company policy, however, an employer is most likely to offer a severance package when they seek to protect themselves from future legal action. To accomplish this, the company will attempt to incentivize you to sign a severance agreement, which will voluntarily restrict some of your rights.

If all of this sounds a bit dubious, be aware that severance agreements in most circumstances are considered perfectly acceptable by California courts. Many common provisions of a severance agreement are legally enforceable. In some cases, employers may attempt to include terms that are not enforceable and will not hold up to scrutiny in court. You must also sign the severance agreement voluntarily.

What Are the Terms of the Severance Agreement?

In order to receive the monetary incentives of a severance package, you will first have to sign the severance agreement. It is critical you understand that these terms are seeking to protect the company, not you. Never sign a severance agreement without carefully reviewing its contents. Make every effort to understand what each item means and how it can impact your future rights.

Common provisions of severance agreements include:

  • Non-disparagement requirements. This means you will not be permitted to publicly speak negatively about, or “disparage,” the company or its employees.
  • Restrictions on your rights to file future lawsuits against the company. Signing a severance agreement can mean voluntarily relinquishing the ability to file or participate in lawsuits against the employer, even in situations where there is a legitimate offense. These types of clauses typically preclude you from pursuing cases involving wrongful terminationemployment discriminationsexual harassment, and retaliation.
  • Non-disclosure agreements. In many cases, you will have already signed some form of a non-disclosure agreement, or NDA, as a condition of your past employment. A severance agreement will often reaffirm, renew, or modify the terms of a previously signed NDA. Additions often include restrictions on speaking about why you were dismissed and the terms of your severance package.

Generally, these types of severance agreement terms are considered legally enforceable. This means that if you violate the agreement, your employer has the option of filing a lawsuit against you.

Are There Any Red Flags in Your Severance Agreement?

As we mentioned above, there are some terms that employers will sometimes insert into severance agreements that are neither lawful nor enforceable. In these situations, an employer is banking on an employee not understanding their rights and not having the resources to litigate the matter should it later become a point of contention. Consequently, it is important to identify problematic terms and address them before an agreement is signed.

Examples of terms an employer cannot enforce in a severance agreement include:

  • Requirements that force you to lie under oath. While an employer can include non-disparagement and nondisclosure clauses, they cannot force you to lie if called to testify in court.
  • Requirements restricting your ability to report crimes. While a severance agreement can preclude you from filing lawsuits against a company, they cannot prevent you from reporting crimes carried about by the company or its employees.
  • Non-compete clauses. There are some very limited situations where an employer may be able to specify you cannot work within a given industry for a certain amount of time after your dismissal. California has historically rejected any attempt to enforce these provisions.
  • Any relinquishing of owed wages. An employer cannot lawfully deny you wages that you have earned, including overtime, and unused vacation days. It should also be noted that an employer cannot delay the payment of final wages due to an ongoing severance negotiation.

If one or more of these types of clauses appear in your severance agreement, proceed with extreme caution. Do not sign the severance agreement without first consulting with an experienced employment lawyer.

What Is Included in Your Severance Package?

There is no reason to sign a severance agreement without a robust severance package to justify your relinquishing numerous rights. Companies typically set their own policies on the monetary size of a given package or determine them on a case-by-case basis.

In most cases, the amount offered in a severance package will scale with the number of years that you have been employed at the company. On the lower end, a terminated employee can expect to receive a week’s pay for each year worked at the company. For example, if a person worked at a company for 5 years, they would potentially be offered 5 weeks’ pay in their severance package.

Employers could potentially offer more, with some companies choosing to offer 2 weeks’ pay or even a full month’s pay for each year worked. Your employment or union agreement might also specify the minimum amount of a severance package.

High-ranking executives can even potentially receive a “golden parachute,” a lump sum severance package that is in theory a reflection of their contributions to the company. These larger deals are often negotiated in advance as part of an employment agreement when an executive joins the company.

Can You Negotiate the Size of Your Severance Package?

There is no rule preventing you from attempting to negotiate the terms of your severance agreement or the size of your severance package. You should always know your worth and take the necessary steps to protect your interests.

Keep in mind that severance agreements tend to be inflexible, with companies often refusing to budge on modifying common terms like non-disparagement causes. The only major exception is when concerns about a legally questionable or unenforceable provision are raised. Your employer is likely to take you more seriously if you retain legal representation to assist you in contesting objectionable points.

You may have more luck when negotiating the monetary size of your severance package. Remember that you are under no obligation to sign any severance agreement and can walk away at any time, meaning you may have some leverage in asking for a larger payout. Your employer might attempt to lowball you with a paltry severance despite years of loyal commitment to the company. If you are only being offered one week’s pay per year worked, consider asking for two week’s pay per year. There is generally no harm in countering, and companies are incentivized to do whatever it takes to get a severance agreement signed.

Note that you may have a limited ability to counter depending on your circumstances. Those who belong to a union may have negotiations handled on their behalf by their representatives. An employment agreement might also explicitly lay out the terms of a guaranteed severance offer.

If you have only been at a company for a short amount of time, a severance package may not be offered at all. If you do receive an offer, you will likely not have much room to negotiate, as by that point you will only have made limited contributions to the company.

Are You Considering Legal Action Against Your Employer?

This is perhaps the most important question to consider when evaluating whether you should sign a severance agreement. Most of the rights you give up when signing a severance agreement hinge your ability to participate in legal action taken against your employer.

If you believe you were wrongfully terminated or retaliated against by your employer, you should not sign a severance agreement without first consulting with a lawyer. It can be tempting to accept the immediate lucrative benefits of a severance package, but it is critical that you not give up your rights in the process. A successful wrongful termination lawsuit can lead to the reinstatement of your job, the recovery of lost wages, and awards for punitive damages. In addition to holding your employer accountable for their actions, you will likely receive more money as part of a successful legal action than you would through a severance package.

Employers understand this, which is why their only priority is to protect themselves by limiting financial liabilities. It is typically more cost-efficient to pay a hefty severance package versus undergoing a legal battle waged by a former employee, even if the matter is eventually settled out of court.

Why You Should Seek Help From an Attorney

First, your attorney can review your severance agreement and advise you of potentially adverse provisions in the contract. If you received a severance agreement, your employer (more likely than not) used an attorney to help them draft the agreement.

In using an attorney to help them draft your severance agreement, your employer likely took every opportunity to insulate themselves from a great deal of future risk. For example, most severance agreements contain provisions that make it so that you cannot disclose what you learned or heard while in the workplace and may include penalties if you violate the provision.

Additionally, most severance packages will have some form of limitation of liability on behalf of the former employer. Once you sign the severance agreement, you can no longer sue your employer for any damages for discrimination or other unlawful conduct, such as wage and hour violations. If your employer violated your rights, you give up your ability to take legal action when you accept the severance.

If you are not sure whether or not your severance package will fully cover what you thought it should financially, signing means you can likely never do anything about your concerns. The severance agreement will have been carefully constructed by your former employer’s attorney so that it limits your rights while maximizing the benefits to your former employer.

Even if your former employer does not have an attorney helping them create the severance agreement, you need your own attorney to help you. Your employer might have included illegal provisions in the agreement or could violate laws or statutes in the language that they used.

What they include could be unenforceable, or it could be enforceable and put you in a negative position. Without legal guidance when drafting an agreement, the agreement could be detrimental to either party signing it.

Severance Packages Often Include Non-Disclosure Provisions That Could Expose You to Liability

The contents of your severance package will likely include provisions that require that you not disclose information that you learned while you were employed. This could include information that is essential to the job or trade that you learned and would be valuable to you in your working life after your time with the company.

Non-disclosure agreements can also include penalties and other provisions that could expose you to future liability or litigation. Former employers are not always honest or positive in their intentions, and a carefully crafted non-disclosure agreement could make it so that you have a difficult time getting a job in a similar company or the same industry without exposing yourself to costly litigation in the future.

Non-Compete Clauses in Your Severance Package Could Make You Unemployable

When you are losing your current position and receive a severance package offer, you are likely going to be considering what you will do next to earn a living and support your family. Without a steady income, your financial stability might maintain for a decent amount of time, but the economy is not always stable, but the inflation rate has been on the rise in a very stable way.

Keeping this in mind, knowing that you can line up valuable employment that puts your skills and experience to use is important. However, your severance package might include a non-compete clause that prevents you from working for another company in the area or industry for some time.

A non-compete clause might not seem especially intimidating at the moment of signing your severance package, as you are also ideally getting a check alongside your severance agreement. You can rest assured that this check is as low as possible from the perspective of the employer, as they intend to maintain profitability while getting rid of the employee they are breaking ties with.

The severance package might seem to cover some of your lost wages or salary and other work benefits for some time, but unless you are getting a platinum parachute like the disgraced executives of corporate American during the banking crisis, your settlement amount will run out, and you will be seeking out additional employment.

Losing Employment Value Can Entitle You to Legal Relief

Some severance agreements prevent you from putting your valuable experience and education to work for you. When this happens, your specialty degree with a high student loan payment becomes a liability, as you cannot work in the field, but you still have to keep making student loan payments.

Employers cannot enforce some non-compete agreements for this reason.

When your non-compete agreement prevents you from finding gainful employment that is equal in value to what you did before, a court may refuse to enforce it.

While you might think that you have to take a lower-paying job in another industry or work a lower position because of the severance agreement you signed, this may not be the case. In fact, if you did not work in gainful employment for a considerable amount of time and missed out on wages and benefits because of an unconscionable severance package and non-compete agreement, you could even seek damages.

Your Employment Attorney Can Help You Collect Your Full Benefits

When you receive a severance offer that seems lower than it should be or fails to effectively cover what it should, your employment attorney can help. Our experienced California employment attorneys have handled many cases involving severance and know the norms.

Employers and their lawyers take advantage of employees who have never gone through a severance negotiation by offering them as little as possible while encouraging them to sign as quickly as possible.

Your employment attorney will step into your shoes, take over all negotiations, and ensure that you receive the fullest possible severance package that your employer is willing to provide. If you already accepted a severance agreement, your attorney might have a solution.

If you have questions about whether you should sign a severance agreement or believe you are the victim of wrongful termination, call (619) 342-8000 or contact us online to schedule a free case evaluation.

Am I Entitled to Paid Sick Leave in California?

There are a variety of benefits that are available to employees in California, and one of them is paid sick leave. Accruing paid sick leave and being able to use it is a benefit that, as we will explore below, the law established in California in 2015. If you are a qualified employee who meets the criteria, you should accrue paid sick leave through your qualified employment, and the leave will be available when you need it due to illness or related issues.

Some populations, however, are exempt from the law and may not be able to collect on paid sick leave like other employees in the Golden State. Read on to learn more about paid sick leave and how an employment attorney can ensure you collect what you are entitled to.

To Collect Paid Sick Leave in California, You Must Be Qualified

To collect on paid sick leave in California, you must meet the requirements to qualify. To qualify for sick leave, an employee must work for the same employer, so long as it began on or after January 1, 2015, for at least 30 days within a year in California. Paid sick leave began to accrue for employees starting on July 1, 2015.

Additionally, the employee must satisfy a 90-day empowerment period before taking any sick leave, which is similar to a probationary period. Qualifying for paid sick leave depends on first meeting the initial duration of time worked, while the period of employment must next meet the 90-day requirement.

What Employees Can Get Paid Sick Leave in California?

Knowing whether you are entitled to sick leave in California is important before beginning to collect benefits, and you can often determine this by the characteristics of your employment.

In California, all employees who work for the same employer within a year in the state have rights under the sick leave law enacted in 2015. This includes part-time, per diem, and temporary employees, in addition to full-time employees. Whether you are a full-time or a part-time employee, you will have the capacity to accrue and use paid sick leave in the state. If your employer takes any steps to try to prevent you from using such paid sick leave benefits, reach out to a local employment attorney to discuss what legal relief or compensation might be available to you.

Certain Employees are Exempt From the Paid Sick Leave Law in California

Most employees who meet the basic qualifications can collect paid sick leave. However, not all employees are eligible, as some are exempt from this law’s protections. The first population of persons exempt from the paid sick leave law is providers of publicly funded in-home supportive services, although only until July 1, 2018.

Union employees with specified sick leave provisions may be exempt from paid sick leave, depending on their collective bargaining agreement. Additionally, individuals who work for air carriers – including flight deck or cabin crew members – are exempt from the paid sick time leave if they receive compensated time off that is at least the equivalent of the requirements of the new paid sick leave law.

Independent contractors are exempt from paid sick leave requirements, as they generally do not have coverage under employment laws as employees do. Companies such as Uber and Lyft pushed California voters to overturn the law that required drivers to have employee status. Once Prop 22 passed, rideshare drivers lost their hope of employee status, which would have brought many benefits, including paid sick leave.

Finally, retired annuitants working for governmental entities will not automatically receive paid sick leave in California. If you are not sure whether you are in one of the exempted populations, discussing the facts and circumstances of your situation with an employment lawyer will identify your rights and how you can best uphold them.

Collective Bargaining Agreements and Paid Sick Leave

Collective bargaining agreements are common in the modern employment environment, especially with companies that want to operate outside of particular employment laws and regulations. When an employer uses their unequal bargaining power to pressure employees into accepting agreements that are not in their best interests, the agreements may not be enforceable, and those impacted may be able to recover damages.

The fact that your employer has a collective bargaining agreement does not mean it was bargained for the collective good of the employees. If your employer denies you paid sick leave, and you believe a collective bargaining agreement in place at your work is wrongfully causing this, you should learn whether you can take legal action.

Connect with a local employment attorney to discuss your case and determine what options might be available to you in terms of collecting on the lost value of paid sick leave you were entitled to.

Why Should I Hire an Employment Attorney?

If your employer denied you the benefits you deserve, your employer violated your rights, and the law provides remedies for those in this situation. Going against your employer personally can be stressful and intimidating, and also you can be at a significant disadvantage if your employer has experienced legal representation of their own.

Companies that avoid paying out benefits to entitled employees are often engaging in willful misconduct to the detriment of those who help them generate a profit. An employment attorney has experience working on similar cases and knows what damages are available to you and the process through which to collect them. An attorney steps in on your behalf and handles the stress of your day-to-day negotiations, and works to maximize the outcome of pretrial negotiations – or the outcome realized through court action.

Connect With a Local California Employment Attorney to Discuss Your Benefits

If your employer denied your ability to take paid sick leave despite meeting the eligibility requirements, you might be entitled to legal relief. Connecting with an employment attorney can help you explore your options, and if you have a case, collect the most compensation possible on your behalf.

Are You an Employee or Independent Contractor?

In the modern world, you may not know whether you are an employee or an independent contractor, as this is a complex legal test. However, there are many distinct differences between an independent contractor and an employee – regarding both worker and company obligations.

If your employer incorrectly classified you as an independent contractor, you may have missed out on the benefits that employees might receive, such as healthcare coverage, retirement benefits, wage and hour protections, anti-discrimination protections, and the potential to collect unemployment or workers’ compensation.

Below, we’ll explore the difference between an employee and an independent contractor and the factors that you should analyze. Additionally, we’ll consider what compensation you might deserve if a misclassification as an independent contractor took place, when in fact, the character of your work was in line with that of an employee.

Reach out to a local employment attorney to discuss the options available to you and to maximize any compensation that you might be entitled to.

The Payment Structure Influences Contractor or Employee Status

Generally, employees receive payment as an hourly rate or a salary, while an independent contractor receives a project-based rate. For example, a company needs a 100-page report written about the options available for the competitors on the market.

If a person writes that 100-page report over three weeks, on-site at the company’s premises from 9 a.m. to 5 p.m., and receives a set payment rate per hour, they are likely an employee. This is especially true if they continue working for that company after they finish this report on other projects the company needs help with.

An independent contractor would be a person contracted to write the 100-page report for a set rate, on a set deadline, using their own office and computer. The individual would complete the same 100-page report, but on their own schedule within the confines of the deadline. The obligations of the company are very different between the two options, as well as the rights and protection of the employee.

Control and Supervision Determine Employee or Contractor Status

One of the key features of an employee is that of control, in that they are under the control and supervision of the company employing them. While an employee can still be a manager with control over others, if they are accountable to the company during the time they work, they are an employee.

An independent contractor, by contrast, works on their own schedule, using their own equipment, and for a set rate that is not hourly. If a contractor is fast, they make more per hour, if they are slow, they make less. Employees can receive unemployment, healthcare, and other benefits, however, so the lesser freedom can still be worthwhile.

Take, for example, an electrician – an individual whose job is to repair or build electrical systems for buildings. For an electrician to be an employee, they would be under the control and supervision of their employer and would be using the tools of the employer – and perhaps a company truck – and working on jobs the employer set up.

An employee electrician on a job would generally go to jobs that the company set up, for which the electrician receives an hourly rate. An independent contractor would use their own vehicle, their own tools, and line up and schedule their own customers.

The Owner of the Equipment Impacts the Professional Relationship

Ownership over the equipment needed for the job can also determine whether you are an employee or an independent contractor in some situations. Using the electrician example, the employee uses a company’s tools, while the independent contractor uses their own.

Your Employee Status Affects Your Rights Under Employment Laws

Employee status brings many benefits, but one of the most important is that you receive rights and protections under many different employment laws. No laws will apply that require an employer to pay you a certain minimum amount per hour.

If you were to lose your job, you would then not have the potential to collect unemployment, as your earnings would not get reported as employment. If you experience discrimination, you might have little recourse against the company.

When an employer incorrectly classifies you as an independent contractor and you did not receive a set minimum wage, or you experienced discrimination or harassment on the job, you may seek compensation. If your employer incorrectly classified you, you may also seek additional damages for the employee benefits you should have received while working.

Reaching out to an employment attorney can provide you with an opportunity to explore the details of your employment. If you have a viable case, an employment lawyer will file it for you and fight for the maximum compensation possible.

The Issues of Rideshare Drivers

Uber and other rideshare companies have long faced accusations of misclassifying employees as independent contractors. Both legislative and judicial measures in California ruled in 2020 that rideshare drivers and other gig workers should be employees and receive all the benefits that employees do, including a minimum hourly wage.

However, rideshare company lobbyists are incredibly influential, and despite ongoing efforts to classify rideshare drivers as employees, Proposition 22 passed in November 2020. It stated that Uber and Lyft can continue to treat drivers as independent contractors instead of employees, even if drivers would benefit from employee status.

Connect With an Employment Attorney Today

The facts and circumstances of your situation will determine whether you are an independent contractor or employee and what, if any, compensation you deserve for back pay, missed benefits, and more. A local California employment attorney can help you explore your options and maximize compensation in any case you might have.

Signs That Your Termination Was Discriminatory

Losing your job can be a life-changing experience that impacts all facets of your day-to-day lifestyle. When you think you have lost your job due to a wrongful reason, you may seek compensation for your lost earnings and other damages or even reinstatement to your position.

Many factors can show when a wrongful termination was wrongful. In this article, we’ll explain a protected class and when a firing decision violates the law. If your employer fired you because of your gender, age, sexual orientation, or a variety of other characteristics, you might be entitled to damages.

An employment attorney in your area can provide you insight into your case by applying local law and statutes to the facts and circumstances of your case and then take the right action to obtain the settlement or damages that you deserve for your wrongful termination.

What is a Protected Class Status, and What Protections are Available?

When firing someone – or making any employment decisions – an employer cannot take certain characteristics into account. Employers cannot discriminate against potential employees or present employees based on their race, color, religion, national origin, disability, genetic information, age, or sex.

The law protects persons over 40 from employment discrimination based on age, whether deciding to hire or fire. Employers cannot make employment decisions based on gender identity, sexual orientation, or pregnancy status of an employee. The inability to discriminate based upon genetic information includes the family medical history of an individual.

Knowing which classes have protections can show whether or not your firing violated your rights as a member of a protected class.

Employers Cannot Use a Protected Class Status as the Basis for Termination

If you lost your job because of your protected class, you may pursue damages. If an individual loses their job because of their sexual identity, for example, and their employer terminated them after learning about this on social media, that termination was wrongful. Should a person lose their job because of their advanced age and higher pay demands because of their seniority, they may likewise seek compensation.

Identifying situations where you lost your job, specifically because of your membership in a protected status, can be difficult to determine clearly. Employers may present alternative reasons for the termination that seem rightful, obscuring an otherwise wrongful termination. An employment attorney who has worked on similar cases can assess the facts and circumstances of your termination and determine whether you might have a viable case for wrongful termination.

California is an Employment-At-Will State

California is an employment-at-will state. An employee or an employer can, at any time, unilaterally decide to terminate employment upon notice to the other party. If an employee worked for the company for a specified term, either party can terminate the employment when the other party breaches the agreement. Being in a state that follows the employment-at-will model makes it more difficult in some instances to collect damages for wrongful termination, as termination is wrongful in fewer circumstances.

If a Termination is Due to Retaliation, It is Wrongful

With the at-will element, employers can terminate employees for any reason, except one that the law would prevent due to discrimination or retaliation.

In California, an employer cannot terminate an employee in retaliation for the employee’s filing of a complaint of discrimination, their participation in a discrimination investigation or lawsuit, or their acts opposing discrimination such as threatening to file a charge or complaint of discrimination.

Employees who file complaints in line with discrimination laws have protections in their activities to ensure that companies comply with related laws.

Knowing whether your employer terminated you in retaliation for taking protected action in some situations can be difficult to determine. You do not have eyes inside of managerial meetings, nor do you know what they discussed as the topic in the meeting that led to your termination.

Having an employment attorney on your side is especially valuable in collecting evidence in support of your case. An employment attorney knows what questions to ask to determine what the influencing factors behind your termination decision were. If they were wrongful, your lawyer will know how to make the most of your damages.

Connect With an Employment Attorney to Discuss Your Wrongful Termination Now

A local California employment attorney with experience working on other wrongful termination cases knows the procedure to begin your claim. Discrimination is only one of several different bases for wrongful termination, and these include retaliatory termination, one that goes against public policy, or one that prevents you from exercising your rights.

Employers are generally ready to put up a fight against wrongful termination. They want to avoid liability or any possible reputational damage, so they will challenge your claim. You need an experienced employment attorney to handle your case.

If you are unsure whether your firing was wrongful, have a legal professional assess your situation, legal rights, and the best options to receive the relief you deserve.

Is Your Employer Failing to Take Your Per Diem Wages Into Account For the Purpose of Calculating Your Overtime Pay?

Per diem payments, sometimes also called a “daily allowance,” are made to workers in many industries. Per diem payments are supposed to cover for expenses incurred in furtherance of the employer’s business that would otherwise be reimbursable to the employee, and when used properly they can save workers the hassle of preparing expense reports for their employers. 

However, some employers may want to use “per diem” payments as a means of paying wages, which could lead to violations of state and federal overtime laws. Labor laws that set forth minimum wages require all eligible employers to pay employees overtime at “not less than one and one-half times” the employees’ regular rates of pay. True per diem payments are excluded from the regular rate of pay. But if a per diem benefit functions as compensation for work performed rather than as genuine reimbursement for expenses incurred, the per diem payments need to be calculated in the employees’ regular rate of pay because they are functionally “wages” for the purpose of overtime laws. 

If an employer wrongly treats wages as per diem payments, the employees’ overtime rate of pay would be unlawfully reduced. The employee might also be undercompensated for PTO under certain circumstances, such as where the employer’s policy provides for payment at the “regular rate of pay,” or when an employee receives a payout of earned-but-unused vacation pay at the end of employment.  

The question of whether a per diem payment is functionally a “wage” or truly a reimbursement for expenses can be difficult to answer. An accurate assessment ultimately depends on the facts and circumstances of the particular case, but courts resolving the issue have looked at some of the following factors:

  • The amount of per diem payments in relation to other compensation;
  • How the employer treats the per diem payments;
  • Whether the employer requires substantiation of any expenses incurred by the employee;
  • Whether employees receive per diem payments regardless of their working location and any need to cover expenses;
  • Whether the per diem payments do not reasonably approximate actual expenses; and
  • Whether the per diem payments vary with the hours worked.

If you are being paid per diem or a daily allowance and you suspect your employer may be using “per diem” payments to reduce your regular rate of pay for labor pay purposes, contact an experienced labor lawyer immediately because you could recover the unpaid wages in a civil lawsuit against your employer. 

California Workers: You May Be Able to Say “No” to Forced Arbitration

On September 15, 2021, the United States Court of Appeals for the Ninth Circuit lifted an injunction that had prevented enforcement of two California statutes: Labor Code section 432.6 and Government Code section 12953. The Labor Code statute prevents employers from requiring their employees, as a condition of employment, to give up their right to sue in court for violations of the Fair Employment and Housing Act (“FEHA”) or the Labor Code. The Government Code section makes it an “unlawful employment practice” for purposes of the FEHA if an employer violates the Labor Code section. 

Although the statutes are broadly written to protect the workers’ access to the courts, one common application would be in the context of forced arbitration agreements. Such agreements have become a fixture of the modern workplace, and employers frequently require employees, as a condition of employment, to waive their right to a court trial in the event of a legal dispute with the employer. Labor Code section 432.6 and Government Code section 12953 work together to protect a worker’s right to say “no” when an employer asks the employee to waive their right to a court trial as part of a forced arbitration agreement, at least for claims under the FEHA or the California Labor Code. If an employer discharges or refuses to hire a worker who properly exercise his or her right to say “no,” the anti-retaliation provision of the FEHA create an independent basis for a lawsuit against the employer. This gives the new statutes some “teeth” by empowering workers not only to assert their rights, but to hold companies accountable when those rights are denied.

Together, the FEHA and the Labor Code contain the majority of protections available to California workers. For example, the FEHA contains the principle anti-discrimination, anti-harassment, and anti-retaliation laws that protect California workers’ right to equal opportunity in the workplace. The Labor Code protects the rights to a minimum wage, and to overtime for many workers in California. Now, California workers have a right to say “no” when their employers want to force employees to give up their rights to have those claims heard in court. 

Businesses may yet appeal this issue to the United States Supreme Court, which would then have the final say on whether to invalidate these statutes as a matter of federal law. For now, California workers are free to protect their access to the courts. Workers should say “no” if current or prospective employers try to make them sign forced arbitration agreements, and they should contact an experienced labor and employment attorney if they experience any discrimination or retaliation for asserting their rights. 

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