Third year of law school is typically reserved for long weekends, fretting over the bar exam, finding a job, and rounding out a legal education that, for the first two years, is primarily confined to the classroom. Like many of my peers, I longed for a practical supplement to my legal education. Specifically, I wanted to get involved and make an impact in a legal forum where I would experience something new, different, and unexpected. The Katrina-Gideon Project, an immersion program guided by the Sacramento Public Defender’s Office and Pacific-McGeorge School of Law, would present this and much more to fifty law students who traveled to New Orleans, Louisiana in December 2006 to offer assistance to the New Orleans Public Defender’s Office in the aftermath of Hurricane Katrina.
Up until the fall of 2005, New Orleans was primarily known for the Bourbon street experience, a haven for conventions, and a place to indulge in southern delicacies, namely beignets, po’ boys, muffaletta sandwiches, and, of course, Pat O’Brien’s world famous hurricanes. While New Orleans still conjures up images of joyful French Quarter revelers, Hurricane Katrina and its disastrous effects presented the world with a new image of New Orleans—lack of preparedness and a legal, political, and social infrastructure in disarray. Like other governmental entities, the New Orleans Public Defender’s office was struggling—case demand was growing due to rising crime and arrest rates, attorneys were moving to other states, and defendants were facing extended waiting times, sometimes without knowing what charges faced them. As a result, the Public Defender’s office needed assistance with interviewing defendants, working up case files, identifying preliminary legal challenges and drafting pre-trial motions. The Katrina-Gideon Project would help to alleviate some of these problems, while at the same time offering students like me an opportunity to engage their legal knowledge, help a suffering city, and face several moral and legal issues at a very young point in their legal careers.
The Arrival – Expect the Unexpected
I arrived in New Orleans without having any practical criminal experience. Sure, I had taken criminal law and criminal procedure, but the Katrina-Gideon Project was my first foray into interviewing, counseling, and applying the criminal foundations I had learned during law school. Upon landing in New Orleans, my mind raced, thinking about casebook lore… Who was I going to defend? Did the evidence still exist against my client? Did the officers give proper Miranda rights? Was my client innocent? Man… I was preparing to be (gasp!) a lawyer. Further, I had no idea what to expect. There were rumors of lack of preparedness and conflicts between the New Orleans Sheriff and New Orleans Public Defender’s Office. Put simply, I was scared, excited, frantic, and optimistic upon landing at Louis Armstrong International Airport.
Students involved with the Katrina-Gideon Project were placed into seven groups. Some of the groups would be going to the local parish prisons to interview prisoners and work up case files, while others would go to the outlying prisons to interview defendants who had been relocated during Hurricane Katrina. All would be expected to do their best and assist the public defender’s office in any capacity required. I was fortunate to be placed in the group led by Paulino Duran, the head Sacramento Public Defender. Paulino led my group to Angola State Prison to interview inmates who had been transferred there from New Orleans during Hurricane Katrina.
While I was thankful to be in the group headed to Angola State Prison, I was not excited about waking up at 4:30 a.m. to catch the train to Angola. What I didn’t know, and what Paulino explained on the way to Angola, was that Angola was one of the last plantation-style prisons in the U.S. Specifically, some of the inmates work in the fields during the day and earn two cents an hour for their efforts. Other inmates worked in the processing plant—Angola is a self-sufficient prison with a processing plant and cannery—while some were required to be in their prison wings for 23 hours a day. Paulino also explained that Angola was the largest prison in the U.S. in terms of inmate and acreage. Angola also provided the setting for many highly publicized inmate crimes, escape attempts, as well as being the location du jure for many Hollywood motion pictures, such as Dead Man Walking and Monster’s Ball.
As we approached Angola, the first thing we encountered was the security gate. It was a mammoth over-crossing, and the police detail was extensive. An employee of the prison was assigned to our group, and he led us to where our clients were being held. We approached our building, a seemingly normal prison building with a security checkpoint, an appeals chamber, and visiting rooms. We entered the security checkpoint and the employee led us to the room where the Orleans Parish Prisoners were being held. Upon entering the room, we were astonished to see about 15 prisoners sitting in rows to our immediately left. Many were our clients—but, much to our surprise, many were not.
My first client was a 40 year-old man arrested for cocaine possession. He was a gentle man with four children and a steady job. His case was baffling because he had been incarcerated for over two years for possession of .06 grams of cocaine. In addition, his bail had been continuously increased, with nary a justification. At the outset, I asked him the questions I had prepared the night before. I wanted to know everything about the alleged crime; where the police were, where he was standing, was it daytime, where any witnesses available? I also wanted to know about his background—did he have any business references, ties to the community, any prior convictions, was he on parole or probation, did he know how to read, was he taking any medication, was he a U.S. citizen, etc. My goal was to draft the best possible case memorandum so that the New Orleans P.D. would be prepared for the next court appearance.
My second client was not on my scheduled list, and I did not have a case file related to his alleged criminal charges. As such, I had not prepared any questions, and did not know anything about this individual. He posed a unique challenge because he was charged with homicide and, up until that point, I was under the impression that we would only be dealing with relatively minor felonies. I was a little startled when he told me what crime was charged with, but I just applied the same line of questioning as the first interview. I asked him about the crime, but because I didn’t have the case file, the questioning had a different tone. I wanted to know excruciating details. We wanted to know all of the parties involved, the facts of the underlying charge, was there any seized evidence, had he made any statements, and other questions relating to the basic nature of the charge.
Following the preliminary questions relating to my second client’s alleged crimes, my partner and I took some time to speak with him about everything from the Saints to world politics. This was by far the most engaging and important part of the trip for me. This simple dialogue—void of scripted questions—was what made me to relate to who my client was, and why in fact I wanted to help him. He was a person just like me. He had political views just like me. He was an avid football fan like me, and rooted on Sundays with same zealousness as I did.
Following our interviews, I wrote memoranda to the New Orleans Public Defender’s office summarizing my client interactions and identifying the constellation of legal issues presented in my meetings. I also made several recommendations regarding case posture and preliminary motions that should be filed. It took me many days to complete the case summaries and recommendations, but I believe I prepared the public defender while advocating for my clients. I also learned valuable lessons relating to litigation and the collaborative process. For instance, I worked with some amazing lawyers, and was able to produce a written document that helped my clients during the disposition of their cases. In addition, while interviewing my clients and drafting my case memorandum I learned about the basics of litigation and how the “system” actually worked. I like to say I went to “litigation bootcamp” as it was necessary to get up to speed regarding statutory filing and hearing requirements, supporting paperwork, and making sure my client’s rights were preserved (or if they were violated). Although couched in criminal pre-trial litigation, the awareness and exposure to filing deadlines, required documentation, and general pre-trial positioning continues to lend itself to my civil practice on a daily basis.
I arrived in New Orleans with lots of book knowledge, but no practical criminal experience. I hoped for a challenging (morally, emotionally, intellectually), eye-opening, influential experience, and I think I received just what I expected—and maybe even more. As a member of this unique project, I was able to view a ravaged area, participate in the interviews of two men accused of crimes, and have spirited conversations with my peers centering around capital punishment, the criminal justice system, and southern hospitality. Although all of the aforementioned objectives and experiences were important to me as a member of Katrina-Gideon Project, I think the most important aspect is that I was given an opportunity to help rebuild a historic city and aid individuals at a time when all appeared lost. For that, I think I am a better person, and lawyer.
In the recent U.S. Supreme Court case of Sprint/United Management Co. v. Mendelsohn, the Court left the door open for plaintiffs in employment cases to introduce damaging evidence that other employees were also harassed or discriminated against. In Sprint, 51 year-old employee Ellen Mendelsohn brought an age-discrimination suit against the company after she was laid off in an ongoing company-wide reduction in force. Mendelsohn wanted to introduce testimony of other former Sprint employees who claimed that their supervisors had discriminated against them too because of their age (“me too” evidence). None of these other witnesses worked in the same department with Mendelsohn, none of them ever worked under any of Mendelsohn’s supervisors and none of them had ever brought a lawsuit alleging age discrimination. Rather than ruling that “me too” evidence either is or is not admissible, the Court held that there is no bright line rule either permitting or excluding such evidence, but that such evidence must be assessed on a case-bycase basis. In other words, each court will be allowed to determine whether such evidence will or will not be allowed in a particular case and the parties will have little or no indication of which way the court will rule before the case actually goes to trial.
How “Me Too” Evidence Impacts Employers
What this means for employers is that “me too” evidence may be admissible against the company in a harassment or discrimination suit. Thus, a plaintiff in a discrimination case may attempt to assemble a large group of disgruntled employees to come to trial and testify that they were also discriminated against, making it much easier for the plaintiff to prove his/her own case by inference. And, since the admissibility of “me too” evidence will be determined on a case-by-case basis, it may be harder for employers to get cases dismissed at an early stage.
How Employers Can Protect Themselves
The prudent employer will try to avoid harassment/discrimination claims in the first place by establishing strong anti-harassment/discrimination policies, providing appropriate supervisor training on those policies and taking every report of harassment/discrimination seriously. In the event a disgruntled employee testifies that he/she was the subject of harassment or discrimination, the employer may be able to diffuse such testimony by demonstrating that the employee never complained while they were employed or that the company took immediate and effective action upon receiving a complaint.
With the declining economy, bankruptcy filings are on the rise. You need to be prepared in case one of your employees files a bankruptcy. There are two types of bankruptcy cases that are commonly filed by individuals. An employee may file a Chapter 7 bankruptcy and attempt to discharge (wipe out) his or her debts. If an employee’s income is too high or an employee has assets that need protection (or for a variety of other reasons), an employee may file a Chapter 13 bankruptcy and establish a repayment plan for his or her debts over 5 years. When an employee files bankruptcy (either Chapter 7 or Chapter 13), an automatic stay is created which prohibits creditors from pursing any actions against the employee to collect a debt or pursue a claim. Typically, unless your employee owes you money for some reason (possibly an advance on income), you will not receive notice of the bankruptcy from the bankruptcy court. However, your employee may choose to tell you that he or she has filed bankruptcy. You will likely be notified if there is an ongoing wage garnishment, because a wage garnishment or levy must stop as a result of the protection of the automatic stay. Once you receive notice of an employee’s bankruptcy, you should immediately stop withholding wages pursuant to a garnishment order until further notice.
Your employee may need to take some time off of work in order to meet with his or her bankruptcy attorney. In addition, after the filing of a bankruptcy, your employee will need to attend a hearing known as a 341 meeting of creditors. The employee will be examined by a bankruptcy trustee concerning his or her assets, liabilities, income and expenses. These hearings can be continued multiple times by the bankruptcy trustee. Your employee has no control over the date and time that these hearings are set. In addition, your employee has little ability to reschedule these hearings. When your employee needs to take time off work to attend these hearings, you should consult your policies concerning employee absences. For example, if you offer PTO (“paid time off”) or time off for personal days, your employee may use this time to attend the bankruptcy hearings. You cannot discriminate against or terminate an employee because he or she filed for bankruptcy. (You also are prohibited from discriminating against job applicants simply because they have filed for bankruptcy protection in the past.) If you have an employment contract with an employee who has filed for bankruptcy and you want to terminate the contract while the bankruptcy case is open, you should consult a bankruptcy attorney because you would need to obtain the court’s permission to get relief from the automatic stay before you terminate the contract.
Be mindful of your employee’s right to privacy. Although bankruptcy petitions are public documents, financial information concerning your employee (such as garnishments) should be kept private between you and the employee. Also, financial records, such as garnishment information, should be maintained separately from personnel records and only accessed on a need to know basis.
If you have a claim against an employee or former employee who files bankruptcy, you may be able to file a complaint to ensure that the debt isn’t discharged through the bankruptcy depending on the type of claim. For example, if you have a claim against an employee for misappropriation of trade secrets or embezzlement, those debts may be nondischargeable. However, you have to file a complaint within 60 days after the meeting of creditors. If you have this situation arise, consult a bankruptcy attorney immediately.
Several high-profile class action lawsuits have been settled recently, with employers agreeing to pay millions to employees for missed meal and rest breaks. In the lawsuits, employees claimed that their employers did not allow them to take meal and rest breaks or to take them in a timely fashion. Generally, these types of class action lawsuits seek compensation for all affected employees for a four year period preceding the date the lawsuit is filed. In order to avoid a similar fate, it is important that you understand and consistently apply the rules regarding meal and rest breaks.
In California, non-exempt employees must be given a 10 minute rest period for every four hours of work. The rest period is to be taken in the middle of each four hour work period as far as is practical. A rest period need not be provided for employees whose total daily hours of work are less than 3.5 hours. The 10 minute rest periods are considered time worked and must be paid. The employee may not be required to perform any work during a rest period. The rest periods may not be waived. If the employer fails to provide the rest period, the employer must pay the employee one additional hour of pay at the employee’s regular rate for each work day that a rest period is not provided. Although an employee is not required to take his/her rest period, the employer must “authorize and permit” the rest period. Failing to take into the account the need for rest periods when scheduling and assigning tasks may be deemed a failure to permit the rest period.
Non-exempt employees who work more than five hours per day must be provided with a meal period of not less than 30 minutes. The meal period must begin before the end of the fifth hour of work. If the employee works more than five hours per day, but less than six hours per day, the meal period can be waived by mutual consent. If the employee works more than 10 hours in a given day, a second meal period of not less than 30 minutes must be given. If the hours worked are more than 10 hours per day, but less than 12 hours, the second meal period can be waived by mutual consent only if the first meal period was not waived. If the employer fails to provide the meal period, the employer must pay the employee an additional hour of pay at the employee’s regular rate. However, in contrast to rest breaks, employers have an affirmative obligation to ensure that meal periods are taken as required and to keep proper records with respect to each employee. Accordingly, it is important that you require your employees to sign in and out for their meal breaks.
The meal period may be unpaid unless the employee is not relieved of all duties. An on-duty (paid) meal period may be permitted only when the nature of the work prevents the employee from being relieved of all duty and when there is a written agreement between the employer and the employee for an on-duty meal period. If the employer requires the employee to remain at the work site or facility during the meal period, the meal period must also be paid.
What You Can Do To Protect Yourself
Given the magnitude of the risk associated with claims for missed meal and rest periods, many employers are now proactively addressing this issue. There are several things you might want to consider doing to protect against claims for missed meal and rest periods. First, you should include provisions in your Employee Handbook regarding meal and rest periods, informing your employees in writing that such breaks must be taken. Second, you may want to include a stand alone acknowledgement form, similar to your at-will acknowledgement form, in which employees certify that they have read and understand the company’s meal and rest period policies and that they agree to abide by those policies and take all required meal and rest periods. Finally, you may wish to include a statement on your employees’ time sheets, which the employee signs, certifying that they have worked all hours indicated and that they have taken all required meal and rest breaks for each day worked. While none of these methods guarantees you will not face a missed meal or rest period claim, they will provide you with the best defense possible should such a claim arise.
As most of you know, California’s Fair Employment and Housing Act (“FEHA”) prohibits discrimination and harassment on the basis of sex, race, religion, color, national origin, ancestry, disability, medical condition, marital status, age, pregnancy, and sexual orientation. FEHA also prohibits retaliating against an employee for opposing or complaining about discrimination or harassment.
For the past decade, both the California Legislature and the California Courts have grappled with the issue of whether individual supervisors or co-workers can be held personally liable for discrimination, harassment or retaliation. Ten years ago, the California Supreme Court held that individuals may not be held personally liable for discrimination, and that liability for discrimination instead lies only with the employer. For example, assume that Company X is found to have terminated an employee because of her race. Company X can be held liable for discrimination. The supervisor who made the termination decision, however, cannot be held liable.
In contrast, FEHA specifically provides that individual supervisors and co-workers can be held liable for harassment. So assume that Supervisor Y, who works for Company X, is found to have sexually harassed an employee. In this case, Company X and Supervisor Y can both be held liable for harassment.
What about retaliation? For the past five to ten years, most courts that have considered the issue have held that individuals can be held liable for retaliation. On March 3, 2008, however, the California Supreme Court held that individuals cannot be held personally liable for at least some forms of retaliation. Here’s an example of what this means. Assume an employee of Company X complains to the HR Department that he believes he was passed over for a promotion because of his sexual orientation. The HR Department discusses the issue with the employee’s supervisor, who is angry to learn of the employee’s complaint. One month later, the supervisor fires the employee for performance issues. If the employee can prove that the performance issues were pretextual, and that he was actually fired because of his discrimination complaint, Company X may be liable for retaliation. The supervisor, however, may not be held personally liable.
What if the employee in the above example had instead complained to the HR Department that he was being harassed based on his sexual orientation? Would the result be different? Maybe. That’s because the California Supreme Court stated in a footnote that it was expressing no opinion on whether an individual who is personally liable for harassment would also be personally liable for retaliating against someone who reports that same harassment. Whether or not personal liability exists in this situation is thus a question that will have to be answered by another court or by the California Legislature.
Note that there are 7 Justices on the California Supreme Court, and 3 of them dissented. The dissenting Justices ended by opining that the California Legislature should clarify FEHA to specify precisely whether individuals can be liable for retaliation, and, if so, under what circumstances. It remains to be seen whether the Legislature will take that advice.
While this new decision is a boon to individual supervisors, it does nothing to change an employer’s liability for retaliation. Employers thus need to remain vigilant about promulgating and enforcing policies against discrimination, harassment, and retaliation.
Political news is a hot topic. People are discussing the presidential election, the war in Iraq and gay marriage everywhere, including in the workplace. Every employee has his/her own outlook on politics and many employees want to share their opinions. However, while one employee may have good intentions in discussing his/her political views, another employee may not perceive it that way. A political discussion can quickly evolve into a political debate, leading to tense relationships in the workplace. If co-workers are unable to work together or if employees become distracted by intense political discussions, they will have less time to pay attention to work. For employers, this can translate into lost productivity, loss of employees or even a harassment lawsuit.
You cannot fire an employee because of his/her political views. California law prohibits employers from interfering with an employee’s outside political activities or from imposing political viewpoints on employees. However, you can take some steps to ensure a productive and cooperative work environment. Banning all political discussions is not recommended. However, you may and should take action if political discussions result in disruption or complaints. The approach you decide to take will depend on your policies and the work culture. Here are some simple steps that you as an employer can take in dealing with political discussions at work:
Restrict use of the company e-mail system and bulletin boards to work-related items.
Remind employees to treat everyone with respect and to maintain professionalism.
Do not force your views on your employees.
Have an open door policy and/or complaint procedure.
Be fair to all employees regardless of your own personal political views.
Address performance issues if they arise, but focus on the work issue, not the political issue.
These simple steps may help you avoid conflicts among employees due to their political views and prevent claims before they arise.
The California Family Rights Act (“CFRA”) applies to companies with 50 or more employees and allows an employee to take up to 12 weeks of unpaid “family care and medical leave” if the employee has worked for the company for more than a year and has a minimum of 1,250 hours of service during the previous year. Grounds for leave under the CFRA include child-related needs (e.g., birth and adoption), the serious illness of a family member or, as relevant here, when an employee’s serious health condition “makes the employee unable to perform the functions of the position of that employee.” During an employee’s medical leave under the CFRA, the employer must continue to provide the employee with health benefits and, when the employee returns to work, he or she must be given the same seniority as before the leave.
Based on the language of the CFRA alone, it seems logical to presume that an employee who can work for another employer doing the same job that he or she does for you is not “unable to perform the functions of the position of that employee.” Well, the California Supreme Court weighed in and rejected that presumption.
Antonia Lonicki v. Sutter Health Central
Antonia Lonicki worked at a hospital owned by Sutter Health Central as a certified technician in the hospital’s sterile processing department. Ms. Lonicki claimed she suffered from stress due to the fact that the hospital was a Level II trauma center and other work-related difficulties. After her shift was changed one day and her request for vacation was denied, Ms. Lonicki left work and claimed that she was too upset to return. At the request of her supervisor, Ms. Lonicki obtained a note from a nurse practitioner for a one-month leave of absence for “medical reasons.” Over the next month, Ms. Lonicki saw several other healthcare professionals with regard to her medical complaints, including a physician chosen by Sutter. The opinions of these healthcare professionals differed with respect to whether Ms. Lonicki could return to work for Sutter without restrictions. Despite Sutter’s numerous requests that Ms. Lonicki return to work, Ms. Lonicki did not do so. Sutter discharged Ms. Lonicki for failure to appear for work.
During the time that Ms. Lonicki was on medical leave from Sutter, she was working part-time at another hospital (Kaiser) where her duties and tasks were nearly identical to those she performed at Sutter. At her deposition, Ms. Lonicki testified that her duties at Kaiser were “about the same,” but that it was “a lot slower” at Kaiser because Kaiser was not a Level II trauma center.
In defending against Ms. Lonicki’s lawsuit charging that Sutter violated the CFRA, Sutter argued that Ms. Lonicki did not qualify for CFRA medical leave because her part-time job with Kaiser demonstrated that she did not have a “serious health condition” that made her “unable to perform the functions” of her full-time job at Sutter. The Court did not accept this argument. While the Court found that Ms. Lonicki’s ability to work part-time for Kaiser doing tasks virtually identical to those she claimed she was unable to perform for Sutter was strong evidence she was capable of doing her full-time job at Sutter, that fact alone was not dispositive. The court reasoned that a serious health condition that prevents an employee from doing the tasks of an assigned position does not necessarily indicate that the employee is incapable of doing a similar job for another employer. The court illustrated its point with the following example: A position in the emergency room of a hospital that regularly treats a high volume of critical injuries may be far more stressful than similar work in the emergency room of hospital that sees relatively few critical injuries.
What Can Employers Take From the Court’s Decision?
The California Supreme Court’s decision establishes that an employee’s ability to perform similar duties for another employer does not conclusively prove that the employee may be denied CFRA medical leave. Instead, the inquiry as to whether an employee is unable to perform the functions of his or her position for purposes of the CFRA must focus on the specific job assigned to the employee and not simply the general job functions. Thus, any policy or practice of automatically denying or terminating CFRA medical leave based on the fact that an employee is performing similar tasks for another employer is likely to lead to trouble. The Court’s decision makes it clear that there is no safe harbor. Rather, employers must carefully review and consider all of the relevant facts in determining if an employee is truly “unable to perform the functions of the position of that employee” for purposes of determining if CFRA medical leave must be given.
As most of you probably know, California law requires an employer to reimburse its employees for all necessary expenses incurred in discharging their duties. For example, if you require an employee to use her own car to perform her job, you must reimburse the employee for automobile expenses. Examples of other reimbursable expenses could include travel expenses, business cards, office equipment, certain employer-mandated training, or amounts spent on marketing efforts.
The California Supreme Court has recently decided that an employer may satisfy its expense reimbursement requirement by paying its employees increased compensation in the form of increased base salary or commission rates, or both. At issue in the case was the proper way to reimburse employees who are required to drive their own automobiles as part of their job duties. All sides agreed that California law requires employers to fully reimburse its employees for automobile expenses actually and necessarily incurred in performing their job duties. The issue raised by the case was what methods an employer may use for providing such reimbursement. The court found that there are three methods an employer may use to calculate the amount of reimbursement required. Although this case was limited to reimbursement for automobile expenses, it would apply to other expenses employees incur in performing their job duties.
The first reimbursement method is the actual expense method, which requires the employer to calculate the expenses that an employee actually and necessarily incurs. The actual expenses of using an automobile, for example, include gas, maintenance, repairs, insurance, registration, and depreciation. The actual expense method is the most accurate method, but it is also the most burdensome because it requires detailed recordkeeping by the employee of amounts spent in each of these categories, along with information needed to apportion those expenses between business and personal use. Moreover, because an employer is only required to reimburse an employee for necessary business expenses, the actual expense method requires an employer to consider the reasonableness of an employee’s choices. For example, an employee’s choice of automobile will significantly affect the expenses associated with using it, because it’s more expensive to drive a Lincoln Navigator than a Toyota Corolla. When calculating actual costs, the employer would need to decide which portion of these costs were necessary (and thus reimbursable), and which merely reflected employee preference for a more expensive car. Because this method can be so burdensome, most employers do not use it for reimbursement of automobile expenses. However, it is commonly, and easily, used for reimbursement of other expenses (such as air fare, meals, etc.).
The second method of calculating reimbursement for work-required use of an employee’s own automobile is the mileage reimbursement method. Under this method, the employee keeps track of the number of miles driven to perform her job duties, and the employer multiplies the miles driven by a predetermined amount that approximates the per-mile cost of owning and operating an automobile. Although not required to do so, many employers use what is known as the IRS mileage rate, which is a rate set by the IRS for federal income tax purposes. This rate is based on national average expenses for fuel, maintenance, repair, depreciation and insurance. Because the mileage reimbursement method necessarily results in an approximation of actual expenses, an employee will always be permitted to show that the reimbursement amount paid is less than the actual expenses the employee necessarily incurred for work-required automobile use. If the employee can make such a showing, the employer must make up the difference.
The third, and final, method of calculating automobile reimbursement expenses is the lump-sum payment method. Under this method, the employee need not submit any information to the employer about miles driven or actual expenses incurred. Instead, the employer merely pays the employee a fixed amount (either through higher wages or commissions) for automobile expense reimbursement. This fixed amount should be based on the employer’s understanding of the employee’s job duties, including the number of miles the employee typically drives to perform those duties. In fixing this amount, the employer must be sure that it is sufficient to provide full reimbursement for actual expenses. If it is not, the employee will be permitted to challenge the amount of the lump-sum payment as insufficient.
It is important to note that there are numerous laws governing the payment of wages that do not apply to expense reimbursement. For example, there are tax consequences for both the employer and the employee associated with classifying payments to employees as wages, rather than expenses. The amount payable as wages is also subject to minimum wage laws. Finally, California Labor Code section 226 requires employers to provide its employees with itemized wage statements containing a host of information. In order to make it easier to show compliance with these various wage laws, an employer who chooses to use the lump sum payment method would be well advised to pay the lump sum separately from its employees’ regular wages. Alternatively, if an employer chooses to combine the wage and lump sum payments into one check, the employer should separately identify the amount of the combined payment that represents wages, and the amount that represents reimbursement for expenses.
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