Does summer employee earn paid vacation

Dear Alex:

I own a small retail store and hired a seasonal employee for the summer. The employee has worked for my business for one month as a full-time hourly employee, but now she has requested a week off for vacation.

My longtime employees receive two weeks of paid vacation each year, but I had not intended for my seasonal employee to receive any vacation time.

My business does not have a written vacation policy, so do I have to pay this new employee for her week of vacation?

The lack of a written vacation policy is not unusual for small businesses, but in situations like this, can cause confusion as to whether the standard practices in your business apply to all employees, or just some.

Preventing this sort of confusion is one of the primary purposes of maintaining written employment policies.

Although it may have been your intent for seasonal employees to receive different benefits than their permanent counterparts, without having established clear and written policies in advance it will be problematic if you now try to enforce policies that call for differential treatment.

There is an ambiguity as to whether your seasonal employee is entitled to accrue vacation time just like the permanent employees.

If the issue were brought before the California Division of Labor Standards Enforcement (DLSE), the ambiguity would almost certainly be interpreted in favor of the employee.

Therefore, assume that your seasonal employee and all employees will benefit equally from any vacation policies you offer.

Do not assume, however, that you must pay your month-old employee for a full week of vacation.

The state of California does not require that employers provide employees with vacation time. But if vacation time is provided, it is classified as a form of wages that are earned.

As wages, vacation time accrues proportionately with the hours of paid work performed. In most businesses, two weeks of vacation per year means 10 work days of paid time off.

Those 10 days are earned evenly over the course of the year, and are not granted all at once.

To determine how much vacation accrues every week requires a little bit of math. A typical full-time employee works 40 hours per week, so two weeks of vacation would be 80 hours of vacation.

Eighty hours earned evenly over the 52 weeks in a year results in 1.538 hours of vacation earned every week.

If your employee has worked for four weeks, then she has earned 1.538 hours of paid time off in each of those weeks.

After four weeks, your employee will have earned a total amount of paid time off of approximately 6.2 hours. The remaining 33.8 hours of time off that your employee has requested can be unpaid.

After this issue is resolved, it would be well advised for your business to adopt written employment policies to prevent ambiguities such as this in the future.

Alex Myers is a business attorney with Myers & Associates in Napa. Reach him at alex@myers-associates.com or 707-257-1185. The information provided in this column is not intended as legal advice, nor does it create an attorney-client relationship. The information is not a comprehensive analysis of the law — if you need legal advice, contact an attorney.

This column originally ran in the Napa Valley Register on June 7th, 2016. You can read it on the Register's website here: "Does summer employee earn paid vacation"

The case of the accidental landlord

Dear Alex:

When my adult granddaughter moved back to Napa from out of state last year, I allowed her to move into a guest house on my property.

Since then, she has acquired two dogs and allowed her boyfriend to move in with her. The dogs are damaging the house, there are too many cars in our driveway, and while I love my granddaughter I would like her to find another place to live.

I have tried to talk with her about the situation, but she won’t hear me out.

What do I do?

If a mutual agreement cannot be reached between your granddaughter, her boyfriend and yourself, unfortunately your only recourse will be to commence formal tenancy termination procedures.

You have inadvertently created a landlord-tenant relationship, and are now subject to the full scope of California’s landlord-tenant laws.

This is a classic example of what I call “the accidental landlord.”

It frequently starts with a favor to a friend or family member, and over time the generosity of the homeowner is taken for granted, the occupant may develop a sense of entitlement to remain in possession of the property, and in the worst cases what started as a loving gesture results in a legal landlord-tenant dispute and eviction.

What many people fail to realize is that when you allow a person to move into your property, even if they aren’t paying you rent, that occupancy comes with legal rights that cannot be waived or ignored.

Even permitting just one person to move into a spare bedroom of your house can grant that person rights as a “lodger,” which are rights very similar to the rights of a tenant.

If you and your occupants come to a disagreement, if they disobey your house rules, or if you simply think that it is time for everyone to move on, without reaching a mutual agreement your only option will be to proceed through legal avenues in order to recover possession of your property.

Terminating a residential tenancy is not as simple as posting a 30-Day Notice of Termination and changing the locks.

Many times, 30-days’ notice is insufficient; the notice period for terminating a month-to-month tenancy can be 60 days, 90 days, or some other length of time if there is a lease that calls for a different notice period.

Only after that period expires is the occupant in violation of his or her legal right to remain. At that time, you cannot compel the occupant to move until you have a court order granting you that right. That means an eviction case must be filed with the court.

As you can see, the process of recovering possession of property from an occupant who does not wish to vacate is anything but simple.

Property owners should always use caution and discretion when allowing a person to move into their property. It is best to use a written lease from a reliable source, and be aware that even a favor to a friend or relative comes with significant legal implications.

Alex Myers is a business attorney with Myers & Associates in Napa. Reach him at alex@myers-associates.com or 707-257-1185. The information provided in this column is not intended as legal advice, nor does it create an attorney-client relationship. The information is not a comprehensive analysis of the law — if you need legal advice, contact an attorney.

This column originally ran in the Napa Valley Register on May 24th, 2016. You can read it on the Register's website here: "The case of the accidental landlord"

Does employer have to provide auto insurance for drivers?

Dear Alex:

I own a restaurant, and we have decided to offer food delivery services. Our employees will drive in their own cars, but I have been told that I will need auto insurance for my employees.

If my employees already have their own auto insurance, why do I have to provide insurance for them?

When an employee is acting on behalf of an employer, inside or outside the office or workplace, the employer bears the risk of liability for actions of the employee.

In a food delivery service, one of the most significant concerns is the possibility of an automobile accident.

If your delivery person is driving food to a delivery and causes an accident, your business may be responsible for the damages resulting from that accident, even if the employee is driving his or her own vehicle.

It is very likely that your employee’s personal auto insurance policy will not cover losses suffered while the employee is conducting business activities for your restaurant. The potential for significant damage and losses from automobile accidents is fairly high, and is a risk that should be insured.

The rule that an employer may be liable for the actions of an employee, when the employee is acting within the scope of his or her employment, is called “vicarious liability,” or sometimes “respondeat superior.”

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The rule of vicarious liability applies broadly to all businesses, not just in the case of employees driving for their employer.

Employers sometimes feel that this rule is unfair; they may argue that if the employee is the one to cause an accident, the employer cannot control that risk and should not suffer because of the employee’s negligence or misconduct.

However, it is ultimately the employer who benefits from the activities of the employee, so in the eyes of the law it is also the employer who should run the risk of losses resulting from those activities.

This rule also protects victims. Frequently, employees do not have access to sufficient resources to compensate the losses of the victims of their actions.

Employers, however, are considered to be more economically capable of insuring against such risks, and therefore their own liability for the acts of their employees aids in ensuring that victims have access to the resources needed to remedy their losses.

Not all employee activities are the responsibility of the employer.

Many factors contribute to the determination of whether the employee or the employer is responsible for damages caused by an employee. This includes whether the activity was within the employee’s scope of work, and the time, nature and place of the employee’s conduct, and the intent of the employee in the conduct of their behavior.

Activities outside the scope of the employment, even if made on the employer’s time, may not be the liability of the employer. Independent contractors are not employees; therefore in most cases, companies will not face vicarious liability for the activities of independent contractors.

Alex Myers is a business attorney with Myers & Associates in Napa. Reach him at alex@myers-associates.com or 707-257-1185. The information provided in this column is not intended as legal advice, nor does it create an attorney-client relationship. The information is not a comprehensive analysis of the law — if you need legal advice, contact an attorney.

This column originally ran in the Napa Valley Register on May 10th, 2016. You can read it on the Register's website here: "Does employer have to provide auto insurance for drivers?"

Three things to know about the board of directors

Many businesses, from single-owner retail stores to Fortune 500 companies, are organized as corporations.

Corporations are owned by shareholders, and the shareholders elect a board of directors to govern most of the company’s business decisions. It is then the board of directors that selects and hires the CEO, CFO and other officers of the company.

The board makes significant business decisions such as corporate asset acquisitions, or selling off divisions of the company.

When electing directors, the shareholders are often faced with questions by prospective board members about what it means to serve on a board, as well as questions from other shareholders about the qualifications and background of the director candidates.

1. Boards serve at the mercy of the shareholders. The right to elect a director to serve on a corporation’s board is tied to the voting power of the shares owned by a shareholder.

The directors elected by any shareholder or group of shareholders are often expected to represent the objectives of their electing shareholders, and share their sensibilities.

If a director is not performing up to the expectations of the shareholders who elected them, the director can be removed from office. A corporation’s strength and viability are often measured by the strength and qualifications of its board of directors.

2. Directors are protected from liability for bad decisions.

Directors of a corporation owe a fiduciary duty to the shareholders of the corporation, which means that the directors must act with the best interest of the shareholders in mind.

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The duties of the directors are outlined specifically within the corporation’s bylaws, but in most cases, the purpose of a corporation and the objective of its directors is to increase the corporation’s value for the benefit of the shareholders.

Director’s decisions are supposed to be made in an attempt to accomplish the goal of increasing shareholder value. But sometimes director’s decisions are wrong, and the corporation can end up losing money, or even going out of business, because of the decisions of the directors.

As long as the director’s actions were taken in a good faith effort to accomplish their duties according to the corporation’s bylaws, directors are shielded from liability for their choices.

Directors may exercise their best good-faith business judgment, and even if that judgment is wrong and the corporation loses money, the directors cannot be sued or held financially liable for those mistakes. This protection is called the business judgment rule.

3. Not all boards of directors are treated equally. Sometimes a limited liability company (LLC) will have a board of directors.

Limited liability companies are very flexible business entities, and as a result of that flexibility, LLCs can operate under any fashion of management structure that the LLC’s members want.

The rules for each LLC’s activities are customized in a document called an operating agreement. Operating agreements of LLCs serve much the same function as bylaws of a corporation.

However, only directors of corporations will automatically benefit from the basic liability protection of the business judgment rule.

Alex Myers is a business attorney with Myers & Associates in Napa. Reach him at alex@myers-associates.com or 707-257-1185. The information provided in this column is not intended as legal advice, nor does it create an attorney-client relationship. The information is not a comprehensive analysis of the law — if you need legal advice, contact an attorney.

This column originally ran in the Napa Valley Register on April 26th, 2016. You can read it on the Register's website here: "Three things to know about the board of directors"

What about a nondisclosure agreement?

Dear Alex:

I have a great idea for a new phone app.

When I contacted the app development company, they refused to sign my nondisclosure agreement. I want to get my app made, and I want to protect my idea.

What should I do?

Many startup clients face this question when trying to shift from the idea phase to product creation. Until a product like an app is under development, the entire business exists only as an idea, and protection of that idea is of paramount importance to the entrepreneur who created it.

Eventually, the idea will need to be shared. Indeed, the entire foundation for success of the business will depend on the idea being shared as much as possible.

The value of the business is usually not simply in the idea, but in the execution of the business plan, making a product, and building a business around that product.

Nondisclosure agreements (NDAs) can be valuable and serve an important purpose, but the value is often overstated with respect to the stage at which your prospective app is currently situated.

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An app-based business idea can be simplified into two components: what the business is going to do, and how it will be done. Unless you are an engineer or programmer, the “what” is usually more thoroughly developed than the “how,” until the product is made.

The “how” is frequently the more difficult component to execute and will require engineers and programmers to develop. If you have the technical components of the “how” figured out, those are ideas worth protecting.

Protecting the idea of “what” your business will do, is often impractical and difficult to enforce. Furthermore, the “what” of your business will eventually become something that should be made known as broadly as possible, not hidden.

From a practical perspective, established app development companies and sophisticated investors in these types of prospective businesses, are not in the business of stealing ideas. If they developed a reputation for stealing the ideas of their clients, nobody would do business with them.

These companies are busy working on building their own businesses and serving their clients.

Additionally, these companies have many clients and many prospective clients. Frequently, prospective clients will approach them with an idea for a business that already exists, or even for an app with functions that are the same as another app that the company has already developed, which could create a conflict of interest with the app developer’s existing clients.

For these reasons, it is somewhat of an industry standard not to sign NDAs, particularly at the early stages of client discussions.

If, however, the information to be shared is truly proprietary and unique, discretion should be exercised, and vetting of business partners and colleagues should be very carefully conducted before disclosure of any unprotected proprietary information.

Alex Myers is a business attorney with Myers & Associates in Napa. Reach him at alex@myers-associates.com or 707-257-1185. The information provided in this column is not intended as legal advice, nor does it create an attorney-client relationship. The information is not a comprehensive analysis of the law — if you need legal advice, contact an attorney.

This column originally ran in the Napa Valley Register on April 12th, 2016. You can read it on the Register's website here: "What about a nondisclosure agreement?"

Should 'manager' get overtime?

Dear Alex:

Our restaurant recently promoted an employee to manager. As part of the promotion she received a raise in pay, and is now paid a salary instead of hourly.

The new role also requires hours longer than she used to work, including some days exceeding eight hours per day. She told us that she expected to earn overtime for hours worked in excess of eight hours per day, but we believe she is exempt from overtime because she is a manager.

Should she be paid overtime?

Certain types of employees do not earn overtime or other wage-and-hour benefits. These employees are classified “exempt” employees. If an employee is improperly classified and paid as exempt, the employer may be required to pay back wages, taxes, interest and penalties all at once. This can become a very large amount of money in a short period of time.

Exempt employees are usually paid a salary, at least twice the minimum wage, and payment is not based on the hours worked. Exempt employees are usually professionals, executives or administrators who have a significant amount of independence in their jobs.

Exempt employees must meet both the minimum salary requirement, as well as perform the duties that the law considers executive or managerial. Unfortunately, sometimes it can be tricky to accurately identify whether an employee should be exempt or nonexempt.

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One of the jobs that can be difficult to classify is the restaurant manager.

Restaurant managers, if they are exempt, would fall within the exemption for executives and managers. The salary requirement of at least twice minimum wage is simple for the employer to figure out, but the issue of whether the employee’s duties satisfy the performance requirement can be a challenge to determine.

The employee’s title as “manager” is not the determinative factor; instead, the actual duties performed and type of work required of the manager determine whether the employee is or is not exempt.

Some of the basic requirements of an exempt manager require that the manager must supervise at least two other employees on a regular basis, and have the power to hire and fire employees, or at least have the power to recommend hiring and firing decisions.

The manager must also spend at least half of her work time engaged in managerial duties, and regularly exercise independent discretion and judgment in those management tasks. Some of these criteria are subjective, and in the case of a restaurant manager, who may spend much of her time on the restaurant floor assisting service staff, the line gets blurry.

Whether your manager’s specific circumstances meet the exemption requirements depends heavily on how much authority and independence she is given in managerial decision making, and how her time at work is spent.

Be wary of relying solely upon her job title as “manager” in your classification decisions.

Alex Myers is a business attorney with Myers & Associates in Napa. Reach him at alex@myers-associates.com or 707-257-1185. The information provided in this column is not intended as legal advice, nor does it create an attorney-client relationship. The information is not a comprehensive analysis of the law — if you need legal advice, contact an attorney.

This column originally ran in the Napa Valley Register on March 29th, 2016. You can read it on the Register's website here: "Should 'manager' get overtime?"