Paying Talent on Time: What Talent, Producers and Agents Need to Know

One of the most confusing situations that confronts both talent and producers is when should talent be paid. Some producers are almost religious when it comes to “same day pay” while others place talent on payroll and may not pay for up to a month. Often, talent will contact my office with complaints of either not being paid timely and in rare occasions, when producer’s checks actually do not clear and “bounce.” This article will cover what talent, producers and agents have to be aware of in regards to when is payment due to talent. In California, there are serious penalties for failure to timely pay talent for work performed

Special attention must be paid to the California Labor Code when discussing work related payments. According to the Labor Code section 207, employers must establish regular paydays and post notices of when such days are. For example, if your production company has office staff and or production staff that are paid on the 15th and 30th of each month, these days will be presumed to be your regular pay schedule. Even though performers may not be part of your usual payroll schedule the 15th and 30th may be deemed to be your required days for paying talent, if you do not pay talent the same day and instead pay talent through a payroll service. For example, if talent works for your production company on August 28th and your usual pay date is the 30th you may be required to pay talent on the same day as you pay the rest of your employees.

If you are a small producer and do not have a regular payroll schedule to pay other employees then you must look to California Labor Code section 204 as to when talent must be paid. For wages earned between the 1st and the 15th of the month you must pay talent for their work no later then the 26th day of the same month. If the wages are earned between the 16th and the 31st of the month, wages must be paid no later then 10th day of the following month. For instance if talent works for you on August 8, 2012 that talent must be paid no later then August 26, 2012. If the shoot occurred on August 30, 2012 then talent must be paid no later then September 10, 2012. However, “payroll” does not mean that a producer get two weeks to pay talent. It actually means that a producer utilizes a real payroll service and other employees are being paid on the same date and that the producer is paying payroll taxes on the talent’s earnings. Simply stated, a producer cannot pay talent two weeks late and simply write a check for the full amount of the scene without deducting and paying taxes.

This information may come as a surprise to some of those that are reading this article. What will be more shocking is what are the penalties imposed by not following these payment schedules or in case your check bounces even if you pay the same day.

Failure to timely pay wages is not a situation you want to find yourself in as a producer. The penalty for such is that the talent’s right to payment at their rate continues for up to 30 days. Allow me to rephrase that, a producer will be required to pay the talent everyday for up 30 days as a penalty. For example, if talent performed for you on August 30, 2012, wages would have to be paid by September 10, 2012. If you did not pay talent by that date, that talent would be entitled to a penalty of whatever their rate was for the shoot (for example $1000) for each day payment was made late. Under Labor Code section 203 and 203.1 (in case of a check that does not clear) if you did not pay talent until September 30th you can be hit with a $20,000.00 penalty by the California Labor Commissioner for paying 20 days late. The penalty is $1000.00 per day (or whatever the talent rate is for that shoot) for up to and including the 30th day. Obviously, this is an extreme and severe penalty but one is that is often imposed and maintained by the Labor Commissioner. Even if you agree to settle with talent for less then the full penalty you will have to agree to send all payments to the Labor Commissioner’s Office who in turn will send it to the performer. Meaning there is no getting out of the this situation.

Further, it should be noted that nothing in the Labor Code has anything to do with whether a model release was signed nor can the Labor Code be contravened through a written agreement with talent. Simply put a producer cannot add a clause to a model release agreement indicating that they have up to six months to pay wages. Lastly, in addition to what is awarded to talent by the Labor Commissioner for unpaid wages, penalties and interest, the attorney representing talent will also be entitled to attorney’s fees.

Special attention should be paid by agents to this situation as well. It is often practice and custom within the adult industry for the agents to ask producers to pay them directly and then in turn the agent pays the talent. By doing this, the agent may unwittingly make themselves the employer in this matter and be subject to the same penalties for failure to pay talent timely. In California, there is a general legal conclusion that employment follows wages, which means if you pay the wages you may deemed to be the employer. Or in the alternative, if you are a producer and you pay the agent instead of the talent directly you may be in violation of the Labor Code if the Labor Commissioner determines you should have paid talent directly and did not and the agent failed to pay talent timely.

In conclusion, the payment of wages to talent is still a relatively untested area of law in the adult industry that is rife with potential pitfalls for the unwary and uninformed producer and agent. It is strongly recommended that you review your wage payment policies with a lawyer that is well versed in employment law and the Labor Code.

UPDATE:

I wanted to also add in some relevant case law and a brief synopsis of such so anyone reading this can realize how it applies directly to the adult industry.

In Smith v. L’Oreal USA, Inc. (2006) 39 Cal. 4th 77, the California Supreme Court ruled directly on this issue. Ms. Amanda Smith worked for L’Oreal as a “hair model” at an upcoming L’Oreal hair show. L’Oreal agreed to pay her $500 for one day’s work at the show. Ms. Smith worked at the show, where her hair was colored and styled, and she then walked a runway a few times. Ms. Smith stayed at the show until she was told she could leave. L’Oreal did not immediately pay her the $ 500 in wages it owed her, but waited over two months to do so.

Ms. Smith filed a law suit against L’Oreal, alleging that she worked for one day, that her employment was terminated at the end of the day, that L’Oreal violated its obligation to pay earned wages promptly upon separation, and that it should pay her “waiting time” penalties under Labor Code Section 203.

The California Supreme Court agreed. The Court held that the discharge element of Section 201 can be satisfied either when an employee is involuntarily terminated from an ongoing employment relationship or when an employee is released after completing the specific job assignment or time duration for which the employee was hired. An employee who works on a job assignment of short duration is not excluded from the protective scope of Sections 201 and 203.

If a production company does not pay your talent at the end of the shoot this could result in huge penalties being assessed against that employer. This would also apply to any temporary employees, including but not limited to directors, camera people, lighting or production assistants.

August 13, 2012 0

Performer Testing… Is There a Hidden Agenda ?

I hate having to wear my tinfoil hat as one of my Twitter followers pointed out but sometimes it is necessary. Several days ago I posted an article about “Who Should Pay for Performer Testing.” Now I feel compelled to discuss what testing may or may not mean to those who actually control it.

Most industry members see testing as a profitable money making endeavor for whomever controls it. While others believe that those that control the test results can also control the release of information in case of a STI outbreak and might even be able to minimize potential legal liability. Some just see it as a “pissing contest” between several egos.

There is a third potential possibility as well. Many people are now starting to understand that information is worth money. Data mining is a big time business in this world. STI testing results are indeed worth money to the United States government as well as corporations developing new drugs for STIs.

If you follow me on Twitter you might have noticed that on August 9, 2012 I tweeted about how the National Institutes of Health offer grant money to study HIV screening and testing ( http://grants.nih.gov/grants/guide/pa-files/PA-11-118.html ) On Saturday, August 11, 2012, Talent Testing Service announced that they just formed a partnership with University of California, Los Angeles on a sexual health study ( http://business.avn.com/company-news/Talent-Testing-Service-Partners-with-UCLA-on-Sexual-Health-Study-485112.html ).

Performers wanting to receive a $40 gift card and free follow up STI medical care can participate in the study. Which essentially means that UCLA will have the right to their test results and medical care to use as part of their study – in essence a performer waives their right of privacy in so much that the information will could be sold. I am sure this information will be sanitized – meaning names will be removed since UCLA probably doesn’t care about a performer’s name or identifying information – rather UCLA cares about the empirical data – how often one tests, how often one catches an STI, the treatment received for such, how long the treatment lasted and how effective the results of the treatment were. That could be a data goldmine for a drug company trying to develop the next anti-biotic to fight any one of the many STIs on the planet.

How much can a group or organization receive for this type of information ? According to the link I posted to the National Institutes of Health’s grant overview information website, there is no limit. However if you want more than $500,000.00 you have to call the NIH directly. Apparently you cannot just email the application for a grant requests at that level.

I am not saying that Talent Testing Services received the grant themselves, however it does appear that UCLA has indeed received grant money for the study of STIs. The performers present a very unique situation in the world when it comes to STI research. I am going to bet that no where else in the United States does a group of people test for and possibly contract STIs as much as performers do in porn. And now that the testing cycle is being pushed to every 14 days, the amount of information is only going to increase and therefore the potential gold mine of data will increase in value as well.

As I tweeted, “there is gold in them thar HIV tests !”

August 12, 2012 0

Who Should Pay for Performer Testing ?

On July 24, 2012, Manwin the owner of membership websites known as Brazzers and Mofos and tubesites such as YouPorn, PornHub, and Tube8 made an announcement that they would donate $50,000.00 per month to create a “Performer Subsidy Fund” to reimburse performers for the cost of testing in the adult industry (See story here).

This fund would be administered by the Free Speech Coalition through their APHSS program. Basically, Manwin stated that they would reimburse all performers the costs of their tests within a given month up to $50,000.00, whether those tests were for Manwin productions or not. Manwin also called for other production companies to join with them in their generosity and also donate to the fund. They further donated a total of $35,000.00 to FSC/APHSS to administer the fund. However, they did place a time limit on the program indicating that the program would only run through the end of 2012. At which point it would be re-evaluated to determine if it would be continued into 2013.

Many people within the industry pointed out that this was a very generous, albeit suspicious offer from Manwin. There is a general opinion within the industry that Manwin, through their tubesites, was a direct contributor to the economic downfall of porn production. Why now would they voluntarily come forward and support performers to reimburse testing costs ? Some people even opined that they believed this was Manwin’s attempt to take over medical testing procedures in the industry.

However I think the answer can be found in California Labor Code section 222.5 which reads in relevant part;

“No person shall withhold or deduct from the compensation of any employee, or require any prospective employee or applicant for employment to pay, any fee for, or cost of, any pre-employment medical or physical examination taken as a condition of employment, nor shall any person withhold or deduct from the compensation of any employee, or require any employee to pay any fee for, or costs of, medical or physical examinations required by any law or regulation of federal, state or local governments or agencies thereof.”

In short, employees in California cannot be made to pay for pre-employment medical testing, which is exactly what the STD testing is within the adult content production business – a pre-employment test. Without a clean test no production company will or should hire a performer to perform in an adult production.

I realize that many performers in adult do not and refuse to consider themselves employees. Rather they wish, for whatever reason, to be called independent contractors. I can assure anyone reading this article that performers, for purposes of worker safety laws, are indeed employees and not independent contractors. Perhaps for tax purposes they may be independent contractors. It is possible to be an employee for worker safety laws but yet be an independent contractor for tax purposes.

Further, on January 1, 2012 additional laws went into effect in California making the “willfull misclassification” of employees as independent contractors even more dangerous for employers. Labor Code Section 226.8 imposes significant penalties ranging from a minimum of $5,000 to $25,000 for “each violation.” The civil penalties for one misclassified individual could be tens of thousands of dollars depending on the interpretation of “each violation” and the penalty imposed. Obviously, if Manwin does not take remedial steps to comply with California law in regards to the classification of employees they may face significant penalties as well as potential lawsuits under California’s Private Attorney General Act, which allows individuals to file lawsuits to enforce California law.

It is this author’s opinion that Manwin is starting to realize that the performers are indeed employees and are taking steps to comply with California law. Obviously, they are trying to set a precedent with the reimbursement of testing costs, however they still fall short of actual compliance with Labor Code section 222.5. Since the “Performer Subsidy Fund” requires a performer to sign up for the program instead of Manwin paying for the pre-employment testing outright.

None-the-less, Manwin is taking a step in the right direction when it comes to the treatment of performers, however, it is only a half step. At some point all production companies will have to address not only peformers’ testing costs but also the issue of workers’ compensation for on-set injuries.

If you would like to read more on the issue of workers’ compensation and porn production here is a two part interview I did for XBiz Magazine in 2007 … Part I and Part II

In future posts I will be covering the issue of workers’ compensation insurance and its application to porn production sets further.

August 8, 2012 0

The Condoms Have Arrived (Sort Of)

As you may remember from my article last summer for XBIZ World, I declared that the condoms were coming. That declaration was in reference to the position that Cal/OSHA had taken at the June 7, 2011, meeting in Los Angeles where a strong contingency of representatives of the industry turned out to battle their attempts to (further) mandate barrier protection use in the production of adult entertainment. It should be noted that technically, barrier protections are and have been mandated by California Code of Regulations, Title 8, Section 5193 for quite some time. However, the enforcement of such regulation has been spotty at best.

Based on the rather slow enactment of additional barrier protection regulation by Cal/OSHA, Michael Weinstein and the AIDS Healthcare Foundation decided to take their safe sex battle to a different receptive governing body, the Los Angeles City Council and Mayor Antonio Villaraigosa.

What Does The Act Require

On Jan. 23, Villaraigosa signed into law, the City of Los Angeles Safer Sex in the Adult Film Industry Act, hereby now requiring any production of adult content, within the limits of the City of Los Angeles, to use condoms for anal and vaginal sex while filming content involving penetration and ensuring that all ejaculate remains outside of a performer’s body. The act also requires all producers to be compliant with CCR Title 8, Section 5193, noted above.

Where Does The Act Apply (or doesn’t)

If you are not aware of the city limits of Los Angeles it may be easier to understand what cities the Act does not apply to. Remember this is a City of Los Angeles law and not a County of Los Angeles law. The Board of Supervisors of the County of Los Angeles has not (yet) adopted this law and therefore there are still numerous unincorporated cities in Los Angeles County where the act does not apply. Also, the act is not law within the 88 other incorporated cities in the County of Los Angeles.

For example Agoura Hills, Alhambra, Arcadia, Artesia, Avalon, Azusa, Baldwin Park, Bell, Bell Gardens, Bellflower, Beverly Hills, Bradbury, Burbank, Calabasas, Carson, Cerritos, Claremont, Commerce, Compton, Covina, Cudahy, Culver City, Diamond Bar, Downey, Duarte, El Monte, El Segundo, Gardena, Glendale, Glendora, Hawaiian Gardens, Hawthorne, Hermosa Beach, Hidden Hills, Huntington Park, Industry, Inglewood, Irwindale, La Cañada Flintridge, La Habra Heights, La Mirada, La Puente, La Verne, Lakewood, Lancaster, Lawndale, Lomita, Long Beach, Lynwood, Malibu, Manhattan Beach, Maywood, Monrovia, Montebello, Monterey Park, Norwalk, Palmdale, Palos Verdes Estates, Paramount, Pasadena, Pico Rivera, Pomona, Rancho Palos Verdes, Redondo Beach, Rolling Hills, Rolling Hills Estates, Rosemead, San Dimas, San Fernando, San Gabriel, San Marino, Santa Clarita, Santa Fe Springs, Santa Monica, Sierra Madre, Signal Hill, South El Monte, South Gate, South Pasadena, Temple City, Torrance, Vernon, Walnut, West Covina, West Hollywood, Westlake Village and Whittier do not have a similar law mandating condoms as a condition to receive a film permit. However, two cities in Ventura County, Moorpark and Simi Valley, are contemplating passing similar municipal laws.

Also, the act does not apply to the 144 unincorporated areas of Los Angeles County. The act is not law in Ventura County or any other county in California, at the time this article was written.

The act is law only in the City of Los Angeles. However, it is the law and must be adhered to if a production is going to occur at a location that is within the City of Los Angeles. If a production is outside the limits of the City of Los Angeles, then the use of barrier protection is not a required condition to securing a permit.

Who Is Required to Secure a Permit for Production ?

If you are going to produce a commercial shoot in any of the following areas; the County of Los Angeles, the City of Los Angeles, Diamond Bar, City of Industry, Lancaster, Palmdale or Southgate you must apply for a receive a permit through a non-profit organization called FilmLA Inc. (FilmLA.com). Other cities may have their own permit process so it is imperative that you check with each city’s permit department and remain compliant with those laws. However, for purposes of this article we will focus on productions within the City of Los Angeles.

Without or without condom, it should be noted that shooting a commercial production within the City of Los Angeles without a permit is considered a misdemeanor.

Since the fall of 2009, Section 41.20 of the Los Angeles Municipal Code (LAMC) makes it a misdemeanor offense for production companies to film without a permit. Since the then, the LAPD’s Contract Services Section Film Unit has made arrests and filed charges against film producers for Section 41.20 violations. Under Section 41.20, an unpermitted producer’s equipment can also be confiscated until the time of the court hearing to insure that the producer appears at the court. Obviously, if the producer is renting equipment by the day this could end up being more costly that the fine itself for failing to secure a permit. Needless to say, failing to secure a permit can not only end in heavy costs and fines but also jail time since a misdemeanor offense is punishable by incarceration for up to one year in jail.

What Is a Commercial Shoot ?

Under the City of Los Angeles Planning and Zoning Code section 12.22(A)(13), which requires all producers to secure film permits, it is safe to assume that every adult production would be considered a commercial shoot and thus would require film permit, even it occurred in the producer’s own home. The one area that is still somewhat gray is whether a webcam production would require a permit. And taking the act one step further, would a webcam show involving penetration between a husband and wife for commercial purposes require a permit and, if it occurs within the City of Los Angeles, a condom to prevent the exchange of bodily fluids between two married and consenting adults? This is one area of the law that has yet to be defined.

Do Content Trades Now Require Condoms?

The short answer is yes. As you may remember from some of my earlier articles about the condom law I had indicated that any attempt by Cal/OSHA to impose condoms would not apply to content trades. Cal/OSHA is a regulatory body that only has power over employment practices. A true content trade between performers would not involve employment issues and therefore Cal/OSHA had no legal authority to enforce condoms be used in that regard. However, now that condoms are no longer tied to the issue of employment, but rather as a condition of receiving a film permit, even a content trade would be considered a commercial shoot. Condoms would therefore have to be used on any hardcore production within the City of Los Angeles. As I noted above, the Act is so far reaching even a married couple in the privacy of their own home performing on web cam together may need a permit and a condom to stay compliant of the law.

Enforcement of the Act

Over the past several weeks I have received numerous phone calls from agents, producers, directors and even performers as to how the act will be enforced. At the time of writing this article that question remains unresolved and unanswered. Since the act has been signed into law by Mayor Villaraigosa there has been discussion about forming a committee to decide how to enforce the act. Within the provisions of the act there is a language that allows the City of Los Angeles, through its contracted agency, FilmLA Inc., to charge additional fees to pay for “inspectors to ensure compliance with conditions on film permits.”

Without going into a full analysis of First Amendment law, the act may be subject to a future legal challenge based on the its lack of content neutrality. Meaning that the city should not be able to impose a tax, which is what these additional fees may in fact be, based solely on the adult nature of the productions. This is still an area of law that is in flux though.

For argument’s sake, let’s assume that the law is not challenged. The obvious question is how will the city ensure compliance? While it is not known at this point how compliance will occur, my assumption will be that it will follow the same path that the Los Angeles Police Department used to ensure permit compliance in the past.

In past years I had been called to set several times by several different clients where a “bust” by LAPD was occurring. Previously, the San Fernando Valley vice unit of LAPD was responsible for policing and enforcing the permit law in regards to adult productions. Then, towards the end of 2007 Mayor Villaraigosa started a special unit that would target unpermitted productions, mainstream and adult. This unit comprised of uniformed and plain clothes officers.

Often the LAPD permit enforcement unit would work closely with FilmLA Inc., and perform spot checks on known shoot locations. FilmLA Inc., would provide shoot location information to the unit and a patrol car would be sent to drive by the location to check to see if there was any abnormal activity at the location, meaning, if someone was shooting at that location on that day without a permit. If they suspected that someone was shooting they would knock and ask questions and in some instances, when no one answered and they would jump a fence and/or gate to investigate.

While it is impossible to say with certainty whether this will be the way to enforce the act, I would suspect that it may be. Others have talked about requiring a nurse to be on all permitted sets as well to ensure compliance. There have been rumors that the City of Los Angeles will subpoena information from the agents and producers to learn the usual (unpermitted) adult production shoot locations. I doubt that this will happen but it is certainly a possibility. This type information has been subpoenaed in the past by Cal/OSHA from talent agents in the industry.

Penalties for Failure to Use a Condom

The actual law does not contain any information as to the possible penalties for shooting adult content within the City of Los Angeles with a permit and without barrier protection. I am sure that the committee previously noted will be setting the penalties associated with the act. As for shooting without a permit, those penalties have been previously noted. At this time, I do not know if there will be an enhanced violation for shooting adult content without a permit and without a condom.

It is the opinion of this author that it is just simply too early to begin to panic over this law. It does not appear that the city has yet formed the committee to devise the manner of enforcement or the penalties associated with it. There has been discussions of a March 5 date that the law will be implemented.

Hopefully, by then there will be more information released by the City of Los Angeles. I have talked with numerous people in the industry about their desire to move to Las Vegas, Miami or Phoenix to produce. It’s not necessary to leave Los Angeles to produce. Just based on the geographical limitations of the law, it is rather easy to produce around it.

As more information becomes available I will update this article. This author hopes that by the time this article is in print, the City of Los Angeles will have promulgated rules on to how to comply with this new law and the penalties involved for violating it. In my next article I will discuss those issues as well as tips on how to avoid being found in violation of the act.

July 30, 2012 0

The Condoms are Coming

http://www.xbiz.com/articles/137838/fattorosi

With words similar to those, Paul Revere ushered in a revolution that transformed the face of a nation. Similarly, on June 7, Cal/OSHA changed the shape of this industry’s future which might ultimately lead to a revolution in adult entertainment. I was able to attend the meeting and even tweeted the discussions from the meeting live via my Twitter account. As it has been reported, the turnout was strong with numerous industry people in attendance representing all aspects of the industry.

What was quite clear from the meeting was the absolute distrust the industry has for those on the Cal/OSHA Board that have drafted the proposed regulations. There were statements made during the meeting that Cal/OSHA was attempting to regulate the industry out of existence for moralistic and religious reasons or perhaps that the AIDS Healthcare Foundation, the Pink Cross Foundation and Cal/OSHA were in some way working together to drive the industry out of California.

I can certainly understand how many in the industry may feel this to be true, from my experience dealing with Cal/OSHA and state safety regulations, that is simply not the case. Cal/OSHA is attempting to bring this industry in line with numerous other industries that are regulated in regards to employee safety. Cal/OSHA actually feels that the proposed regulations are less intrusive and harsh than the current regulations. While the new regulations proposed by Cal/OSHA are yet to become law and may not for another year, it was clear from their meeting that condoms and other barrier protection methods are now required and are currently the law in porn.

Under the proposed regulations, barrier protection and condoms may not have to be utilized for oral sex scenes when certain requirements are met by the producers and talent. However, other than that one issue, barrier protection and exposure issues will change how adult entertainment is produced and consumed.

Unfortunately due to the heated nature of the meeting, not all issues could be covered and there are still numerous discussions that are necessary as to the most basic issues such as how to dispose of the used barriers, how to handle clothing used on set, record keeping requirements and employee training issues. This article will focus on the proposed regulations and want it means to producers and talent.

INDEPENDENT CONTRACTORS OR EMPLOYEES ?

One of the first issues to be raised during the meeting was that the proposed regulations only apply to employees and not independent contractors. Numerous performers and producers spoke up and attempted to declare themselves independent contractors and thus not bound by the regulations. Cal/OSHA did not directly address the IC vs. EE issue and merely referred the audience to the California Labor Code and existing case law.

Rest assured that for purposes of the proposed regulations, performers are indeed employees, even if only for a day, of the hiring studio. However, under the tax code, many of those same performers may actually be independent contractors. There are two different legal tests to determine employee status under the California Labor Code and the U.S. Tax Code. According to the Department of Industrial Relations of the state of California, the California Supreme Court has adopted the “economic realities test” as noted in S. G. Borello & Sons, Inc. vs. Dept. of Industrial Relations (1989) 48 Cal.3d 341. The economic realities test sets forth several factors for determining whether someone is an independent contractor or employee:

Whether the person performing services is engaged in an occupation or business distinct from that of the principal;
Whether or not the work is a part of the regular business of the principal or alleged employer;
Whether the principal or the worker supplies the instrumentalities, tools, and the place for the person doing the work;
The alleged employee’s investment in the equipment or materials required by his or her task or his or her employment of helpers;
Whether the service rendered requires a special skill;
The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision;
The alleged employee’s opportunity for profit or loss depending on his or her managerial skill;
The length of time for which the services are to be performed;
The degree of permanence of the working relationship;
The method of payment, whether by time or by the job; and,
Whether or not the parties believe they are creating an employer-employee relationship may have some bearing on the question, but is not determinative since this is a question of law based on objective tests.

Even where there is an absence of control over work details, an employer-employee relationship will be found if (1) the principal retains pervasive control over the operation as a whole, (2) the worker’s duties are an integral part of the operation, and (3) the nature of the work makes detailed control unnecessary. (Yellow Cab Cooperative vs. Workers Compensation Appeals Board (1991) 226 Cal.App.3d 1288).

There is little doubt that a performer would be determined to be an employee under the above noted tests. Several studios have already been fined by Cal/OSHA and to this author’s knowledge none have been overturned on appeal. Most recently, Hustler Video was fined over $14,000 by Cal/OSHA for the lack of barrier protection on set, lack of a blood borne pathogen plan as well as other infractions. According to an article on XBIZ.com on April, 5, 2011, Hustler plans on appealing its fine. However, there has been no recent news as to that particular case.

The only potential exception this author can see to the regulations is when performers coproduce a scene and trade content with each other. As long as there is no monetary compensation offered as payment for services, then more than likely, Cal/OSHA would not determine that a content trade situation to be employment.

Getting past the IC vs. EE argument, what does this mean for the industry and how will the proposed regulations effect content production in California on a daily basis?

Condoms for blow-jobs? First, the proposed regulations require condoms and/or barrier protection (dental dams) for all sex scenes where there is a possibility of an exposure by a performer to the bodily fluids of another performer. The only exception to this has been carved out for mainstream studios in so much that saliva has not been classified as a bodily fluid. The reason for this exception is probably apparent to everyone except Cal/OSHA.

The only exception to the condom/barrier rule is for oral sex scenes and only when both performers have a clean DNA PCR HIV test as well as clean gonorrhea and chlamydia test results within 14 days of the scene and have both been completely vaccinated for Hepatitis B and HPV.

It should be noted that the proposed regulations call for urine testing as well as throat and anal swabbing for gonorrhea and chlamydia for both male and female performers. It should also be noted that it takes a series of three injections over the course of six months for someone to be fully vaccinated for hepatitis B. Therefore, all performers should immediately seek hepatitis B vaccinations so as to insure they can continue to work once the proposed regulations actually take effect.

If a performer is not properly vaccinated or does not have a clean test, then condoms/barrier protection must be used at all times.

No more facials? The next question is — what about the money shot? According to the proposed regulations ejaculate cannot be placed into any orifice and or on any non-intact skin. In layman’s terms, cream pies, facials and/or swallowing will no longer be allowed. Ejaculate can only make contact with intact unbroken skin found on a performer’s breasts/chest, back, legs and feet. Obviously, any producer is still free to use non-harmful fake ejaculate to simulate real cum or squirting.

If for some reason, real human ejaculate or bodily fluids other than saliva does find its way onto broken skin and or an orifice — that would be considered an “exposure” and immediate medical attention must be provided and documented by the employer. Further, the employer must provide post exposure testing and all results recorded in accordance with Title 8 of the California Code of Regulations Division 1, Chapter 7.

Now that AIM is gone what’s next? So who’s going to be paying for all this testing, vaccinations, record keeping and medical treatment because of wayward money shots? According to the proposed regulations, all medical testing fees, treatment and record keeping requirements must be paid for by the producers and studios. Which producer, well that answer wasn’t so clear according to Cal/OSHA.

Basically, Cal/OSHA’s position is that the employers (studios and producers) can ban together to create cooperatives to negotiate with medical care providers and testing centers to bargain for the best price and therefore it will even out over the long run. Cal/OSHA assumes that all producers and studios will be “piggybacking” off each other’s tests. Further, these new additional costs cannot be passed on to the performers or talent agents. It is solely the responsibility of the employer to pay for these costs. On the bright side for the studios and producers, they will now be able to dictate exactly where talent will receive their testing from.

The condom police? So how is Cal/OSHA going to enforce these new regulations once they go into effect? Are they going to be sending Cal/OSHA’s cops in lab coats and environmentally friendly smart cars in droves to Porn Valley to peak in on everyone? The answer might be yes.

According to Cal/OSHA, enforcement will occur in two ways. The first and most obvious is because of an employee (performer) calling into Cal/OSHA’s offices and reporting a violation of the regulations. This alert will mandate an investigation by their offices. They literally have no choice and must open an investigation and look into the performer’s complaint. Thus, that is the easiest and quickest way to get Cal/OSHA knocking on your door. Be aware that a complaint by a performer can be made anonymously as well.

The second is what the Cal/OSHA Board referred to as a sweep. It is possible that they will send out a contingent of inspectors on a regular basis to do spot checks on studios and producers. At least the ones they can locate. In my previous experience I have seen Cal/OSHA perform “sweeps” on rare occasion and do not think that will be a likely occurrence. However, it may occur once the proposed regulations take effect just as a gentle reminder that compliance is mandatory.

You may be asking how can Cal/OSHA determine the difference between a disgruntled performer from a competitor or even a group such as AIDS Healthcare Foundation making an anonymous report. I don’t know how they can but Amy Martin from Cal/OSHA did indicate that they have been dealing with this very issue with other industries and have developed the ability to determine the difference. It should be noted that only a complaint from an actual performer mandates an investigation. All other complaints do not require an investigation and Cal/OSHA has the discretion to take no action on a report of a violation.

Vegas baby, Vegas! Finally, one last point that has been overlooked by other writers, is there a threat of federal regulation. Cal/OSHA made it very clear that before their proposed regulations can go into effect they must first be approved by the federal OSHA. Which means that, once approved by federal OSHA, these same regulations can be adopted by any other state. In essence, the discussions and the debate, the industry is currently having are extremely important since we may not get another chance to debate these issues.

It is this author’s opinion that once approved and adopted in California, these regulations will eventually be adopted and approved by other states. I would not be surprised to see a push for states such as Nevada, Florida and Arizona to pass similar legislation.

Viva la revolucion! The proposed regulations are over 17 pages long and are quite involved. I have only been able to touch briefly on some of the more important aspects of the proposed regulations. I strongly suggest that everyone read and digest the regulations and try to understand what they will mean to the future of not only California adult entertainment but in general the industry in the U.S.

Will these regulations cause the industry to pack it’s collective bags and find greener pastures elsewhere? Will it cause it to revert back to the pre-Freeman underground days of lore or will it simply cause the studios to treat the performers better and adopt the practices outlined? At this point, no one knows. Whichever it may be, certainly there is a revolution afoot.

July 30, 2012 0

Porn, Privacy, HIPAA – Redux

http://www.xbiz.com/articles/124370/fattorosi

In February, the AIDS Healthcare Foundation took their fight against AIM and the adult industry to the authorities of the federal Office for Civil Rights, a federal agency under the U.S. Department of Health and Human Services that enforces HIPAA, the California Office of Health Information Integrity enforcement Unit and Los Angeles County’s Health Facilities Inspection Division.

Rhett Pardon, of XBIZ, quoting AHF’s letter stated, “The authorization is essentially a waiver of privacy rights that is against public policy,” the letter said, citing Civil Code § 56.37. “Disclosures of testing results pursuant to such an invalid authorization would therefore appear to breach the actors’ privacy rights.”

The U.S. Department of Health and Human Services will now investigate whether AIM has violated California Civil Code § 56.37 as well as federal law. Jeffery Douglas, attorney for AIM, has stated that AIM’s HIPAA release has been vetted by experts in the privacy law and HIPAA and that AIM stands behind its release.

So what happens now and what does this mean to the industry and more specifically to performers and producers of adult content? If the investigation concludes that AIM’s release is too broad, their release may have to be rewritten, limiting who, how and for how long testing results may be disclosed. This may change how the industry handles the issue of testing between producers and performers. Access to testing results by producers may have to be blocked with only performers showing each other test results prior to shooting.

Performers themselves could share testing results with the producers though. There is no restriction on an individual’s rights to share their medical history or test results with whomever they wish.

Obviously, this issue will continue to evolve and everyone must stay informed as to how HIPAA may change how the industry does business. Cal/OSHA will be holding hearings later this month (June 29, 2010) as to the use of condoms on adult sets.

The original article “Porn, Privacy and HIPAA” was published in the summer of 2009 in XBIZ directly after the last HIV outbreak in the industry, however the issues covered in it remain relevant. The following are excerpts from that article.

Within HIPAA are confidentiality provisions of the Patient Safety Rule that prevent, in certain circumstances, the public disclosure of private healthcare information of a patient by a medical provider, health plan and health care clearing houses.

However, HIPAA does not apply to employers. The Privacy Rule does not prevent your employer from asking you information about your health if your employer needs the information to administer sick leave, workers’ compensation, wellness programs, or health insurance. However, if your employer asks your health care provider directly for information about you, your provider cannot disclose the information in response without your authorization.

It should be noted that if your private medical information is disclosed by a medical provider, that medical provider or their employee may face civil as well as criminal liability. A Los Angeles woman was indicted under the federal HIPAA privacy law for accessing the private medical records of celebrity patients at UCLA Medical Center and selling information obtained from those files to a national media outlet. The celebrities whose records were breached reportedly included actress Farrah Fawcett, singer Britney Spears and California first lady Maria Shriver.

The Privacy Rule allows medical providers, such as AIM, to disclose protected health information, without authorization, to a public health agency that are legally authorized to receive such reports for the purpose of preventing or controlling disease, injury, or disability. In this case, the Los Angeles County Public Health Department would be such an agency. Generally, medical providers are required to limit the protected health information disclosed for public health purposes to the minimum amount necessary to accomplish the public health purpose. Unfortunately, HIPAA prevents the public disclosure of those that are infected or who may have been exposed.

However, individual performers that might be afraid that they were exposed could still inquire into the identity of those exposed to determine if they if fact were. Private disclosure in the interest of public health may be allowable. Under the Privacy Rule, a medical provider may disclose protected health information to a person who is at risk of contracting or spreading a disease or condition if other law authorizes the covered entity to notify such individuals as necessary to carry out public health interventions or investigations. For example, a covered health care provider may disclose protected health information as needed to notify a person that (s)he has been exposed to a communicable disease if the covered entity is legally authorized to do so to prevent or control the spread of the disease.

However, performers must be careful about sharing what information they may learn. An infected performer that is “outted” by another individual can file a lawsuit under the common law theory of public disclosure of private facts. If a false report is made as to a performer’s HIV positive status, that performer may have a claim for false light. This is were the plaintiff is placed into a false light in the eyes of the public that may damage their career and cause emotional distress. Obviously, if someone mis-reports that a performer is HIV positive or even exposed to HIV that can cause great distress as well as the lost of a career. Damages for both public disclosure and false light could be extensive.

Overall, in an adult industry that lays its self open to all that consume its product, there is still a need for privacy within the industry.

July 30, 2012 0

Porn, Privacy and the HIPAA

http://www.xbiz.com/articles/113008/fattorosi

How can an industry that bears all to its consumers ever consider privacy to be a hot topic? The story of the possible infection spread rapidly throughout the community and even into mainstream press. I was personally contacted by Los Angeles’s Tribune affiliate KTLA for a quote after the reporters there picked up the story from the Los Angeles Times.

As I write this article, what did not make it into the press were the actual identities of the performers infected or exposed in this most recent outbreak.

Dr. Sharon Mitchell, director of the AIM Healthcare Foundation, declined to make the identities of those performers known, citing confidentiality issues.

What Mitchell was referring to was a rather unknown law within the industry, the Health Insurance Portability and Accountability Act of 1996 (HIPAA). Within HIPAA are confidentiality provisions of the Patient Safety Rule that prevent, in certain circumstances, the public disclosure of private healthcare information of a patient by a medical provider, health plan and health care clearing houses.

However, if your employer asks your health care provider directly for information about you, your provider cannot disclose the information in response without your authorization.

It should be noted that if your private medical information is disclosed by a medical provider, that medical provider or its employee may face civil as well as criminal liability.

Los Angeles woman was indicted under the federal HIPAA privacy law for accessing the private medical records of celebrity patients at UCLA Medical Center and selling information obtained from those files to a national media outlet. The celebrities whose records were breached reportedly included actress Farrah Fawcett, singer Britney Spears and California first lady Maria Shriver.

Many posters on adult message board GFY.com, as well as performers I talked to immediately after AIM reported the outbreak, indicated that they were not pleased that more information was not released. Several performers indicated that they felt as though it was their right to know since they could also become infected.

Unfortunately, until an outbreak such as this becomes a matter of public health, the information must remain confidential. The Privacy Rule allows medical providers, such as AIM, to disclose protected health information, without authorization, to a public health agency that is legally authorized to receive such reports for the purpose of preventing or controlling disease, injury or disability.

In this case, the Los Angeles County Public Health Department would be such an agency. Generally, medical providers are required to limit the protected health information disclosed for public health purposes to the minimum amount necessary to accomplish the public health purpose.

Unfortunately, HIPAA prevents the public disclosure of those that are infected or who may have been exposed.

However, individual performers that might be afraid that they were exposed could still inquire into the identity of those exposed to determine if they in fact were. Private disclosure in the interest of public health may be allowable.

Under the Privacy Rule, a medical provider may disclose protected health information to a person who is at risk of contracting or spreading a disease or condition if other law authorizes the covered entity to notify such individuals as necessary to carry out public health interventions or investigations.

For example, a covered health care provider may disclose protected health information as needed to notify a person that (s)he has been exposed to a communicable disease if the covered entity is legally authorized to do so to prevent or control the spread of the disease.

Other posters on GFY.com indicated that once a performer gained the knowledge of the identities of the infected and exposed individuals they should make it known to the rest of those in the industry.

Some even argued that this was allowable since HIPAA does not apply to individuals that do not have access to the medical records of those infected and or exposed. However, one must be aware that even though HIPAA may not prevent such a disclosure, there are common law torts that can result in a civil lawsuit if certain private facts are disclosed.

An infected performer that is outed by another individual can file a lawsuit under the common law theory of public disclosure of private facts. If a false report is made as to a performer’s HIV positive status, that performer may have a claim for false light.

This is where the plaintiff is placed into a false light in the eyes of the public that may damage his/her career and cause emotional distress. Obviously, if someone misreports that a performer is HIV positive or even exposed to HIV that can cause great distress as well as the loss of a career. Damages for both public disclosure and false light could be extensive.

Overall, in an adult industry that leaves itself open to all that consume its product, there is still a need for privacy within the industry. However, it is apparent that the manner in which this last situation was handled was not to the satisfaction of other performers, directors, agents and producers in the San Fernando Valley.

They felt as though they deserved to know which performers were actively infected and which were on the quarantine list so as to protect themselves. Immediately after the outbreak I talked with numerous performers. Some of which indicated that they would be either leaving the industry, no longer doing boy/girl scenes, or rethinking what sexual acts they will do from this point forward. Lack of information can breed resentment and doubt.

There is little doubt in this writer’s mind that sometime in the future, this issue will once again reappear.

How the industry handles it and what comes to light in the middle of a media storm will affect the industry’s ability to remain autonomous. There has been a push once again to regulate the industry through legislation and public policy. Failure to heed these warnings can result in the regulation of the industry by groups on a national level that do not have the industry’s best interest in mind.

July 30, 2012 0

Wages and Hours: Paying Overtime Correctly

http://www.xbiz.com/articles/109457/fattorosi

With the downturn in the economy, companies are often finding themselves laying off workers in order to save money and meet expenses. As I discussed in a previous article it is often necessary to let a portion of a company’s workforce go in order to cut overhead. With a reduction in force often overtime is necessary. In order to stay within federal as well as state employment guidelines, proper accounting has to be kept to ensure that overtime rates are properly paid. Failure to do so can result in litigation as well as penalties and interest on the unpaid back wages.

In California, nonexempt employees over the age of 18 and any minor employees not prohibited from working in the subject employment shall not be employed for more than eight hours in a workday or for more than forty hours in any workweek unless they are paid the appropriate overtime wages. For nonexempt employees any time beyond eight hours but less than twelve hours in any typical workday, that employee shall be paid at a rate one and one-half times their normal rate of pay. For any work performed in excess of twelve hours in a day that employee shall be paid at a rate equal to double the regular rate of pay. These rules are also typically true for all states within the United States.

There numerous exceptions to the overtime rule though. The main exception is for executive employees. Executive employees are defined as;

Whose duties and responsibilities involve the management of the enterprise in which he or she is employed or of a customarily recognized department or subdivision thereof; and
Who customarily and regularly directs the work of two or more other employees therein; and
Who has the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring or firing and as to the advancement and promotion or any other change of status of other employees will be given particular weight; and
Who customarily and regularly exercises discretion and independent judgment; and
Who is primarily engaged in duties, which meet the test of the exemption;
An executive employee must also earn a monthly salary equivalent to no less than two times the state minimum wage for full-time employment.

As an executive employee, that particular employee is not entitled to overtime wages. However, in order to meet the criteria of a managerial employee, one must be more than merely a supervisor of two or more employees. The managerial exempt employee must be in charge of the unit, not simply participate in the management of the unit.

There are other exceptions that may apply to your business, however, many are state specific and it is highly recommended that you speak with an attorney familiar with the employment laws of your particular state to stay informed of other exemptions to overtime laws.

One of the most misunderstood areas of payment of overtime laws by employers is whether overtime must be paid to salaried employees. The short answer is yes, depending on whether that employee is exempt or not. Obviously, executive employees that meet the above mentioned requirements are exempt from overtime laws whether they are paid hourly, commissions or salary or some combination thereof. Professional employees are usually exempt as well, i.e., in house attorneys and accountants. All employees, whether hourly or salary, must be paid overtime wages if they are not exempt and work over eight hours a day or forty hours per week.

This is usually where I see the most litigation as an attorney. Most companies realize that hourly employees that work in the warehouse should be paid overtime. Where most companies do not even realize that overtime needs to be paid is in regards to the salaried employees in the company’s offices. Usually what occurs is that a salaried employee is terminated and seeks legal counsel in regards to the termination. As part of the intake process the terminated employee learns that he/she should have been paid overtime but was not. This usually results in a complaint being filed with the labor board administrative court or with a civil court of law.

If a salaried employee needs to be paid overtime the most difficult question for most employers is how to calculate those overtime hours. If you are paid a salary, the regular rate is determined as follows:

Multiply the monthly remuneration by 12 (months) to get the annual salary.
Divide the annual salary by 52 (weeks) to get the weekly salary.
Divide the weekly salary by the number of legal maximum regular hours (40) to get the regular hourly rate.

In California, if the employee was not paid overtime correctly, according to Labor Code section 203, “the wages of the employee shall continue as a penalty from the due date thereof at the same rate until paid or until an action therefore is commenced; but the wages shall not continue for more than 30 days.” Thus, not only would the employer be liable for the back wages, but also an additional month of salary after the employee is no longer employed as a penalty against the employer. Obviously, this can be quite costly for the employer.

What if an employee decides that he or she should not be paid overtime wages? Perhaps, the employer is a small family run company and one of the employees decides that as a matter of sacrifice to keep their job and to help the employer during tough economic times, they will waive their rights to overtime wages. In California, even if they do so in writing, that does not mean that later that same employee, when terminated, cannot come back and make an overtime claim against the employer. An employee cannot waive their rights to overtime or even minimum wage.

It is imperative that employers understand wage and overtime laws so that they may protect themselves from post termination or lay off claims. Ignorance of the law or a lack of intent is not a defense to wage claims nor is it a defense that the employee volunteered and agreed to waive their rights to overtime. Improperly paying your employees is a ticking time bomb waiting to explode in regards to your employment issues. There have been numerous class action lawsuits filed against large institutional employers for failing to classify employee correctly. In tough economic times the instances of employment litigation usually increases as employees are laid off or terminated. Again, it is recommended that before an employee is terminated or laid off that all employers seek the advice and counsel of an experienced attorney in employment law.

July 30, 2012 0

The Hiring Process

http://www.xbiz.com/articles/108476/fattorosi

In my last article, we discussed the potential legal problems with terminating or laying-off employees. However, one of the best ways to prevent legal pitfalls is to screen and hire your employees well. Often termination issues can be resolved in the screening process.

Too often, employers do not avail themselves of the recommendations made by former employers. One of the best tools to determine whether a candidate would be a good fit for your organization is to ask that candidate’s former employer.

However, you do have to be careful in the types of questions that are asked. You can certainly ask if the former employer would recommend your candidate for the position they have applied for. You may also ask the former employer to describe the candidate’s skills in regards to the employment relationship. You may also confirm length of employment.

What you do not want to ask are questions about the candidate’s personal life, family, sexual orientation, health, issues with worker’s compensation claims or benefits, issues with any possible prior litigation against the former employer, as well as any information pertaining to the candidate’s religious, political or social views.

If you deny a candidate employment and that candidate does instigate a discrimination lawsuit, the less information you have in regards to the their personal life, health issues, as well as their views and prior history unrelated to their ability to perform the essential functions of the position offered the better for your defense of the matter. Now this is not to say, that you cannot look at your candidate and make a determination that they would not be a “good fit” within your organization. Obviously, personality can sometimes be more important that skills, depending on the job, for example, a sales position or even a receptionist’s position.

I do recommend that you do some basic background research as to your candidate though. If your candidate is in their twenties or thirties in age, it is more than likely that they may have a Myspace page. That page may be very telling as to that candidate’s personality. You can find out what music they listen to, what their favorite books are, what their favorite television shows are. You can also see who they are friends with in your organization and may even be able to read some of their blog posts.

Certainly, Myspace will not give you all the information as to someone personality. It can be a mirror into their lives. Obviously, this seems to contradict my previous comments on what you should know about your potential candidate. The difference is that you should not be asking a previous employer for potentially private information about a candidate, however, if that candidate has openly disclosed this information for the world to see on their Myspace page that is a completely different situation.

Obviously, an employer cannot discriminate in regards to the hiring of a potential candidate based upon a protected class such as race, national origin, religion, shade of skin color, age, sex, sexual orientation, pregnancy status, medical disability and or sometimes even English language skills according to case law interpreting Title VII (Civil Rights Act of 1964).

Questions pertaining to any of these protected classes would be highly improper during the interview process. As an employer interviewing a candidate you want to avoid question about religious holidays, what country they or their ancestors are from, how old the candidate is and whether they have any medical disabilities. And as difficult as it maybe, if your candidate does volunteer information about such topics, that information cannot be used to deny a position to them.

You would also be well advised to stay away from any questions dealing with drug use or drug dependency. Preemployment drug testing is still an emerging issue in the law. Even cities such as San Francisco have passed ordinances barring drug testing of certain employees or for certain reasons.

Therefore, it is highly recommended that before you decide to insert a pre-employment drug screening into you hiring process that you consult with a local attorney that is well versed in employment law. Asking someone to reveal their medical history as a condition to seeking employment is legally risky for the employer. Remember that your candidate may have to reveal their use of a doctor’s proscribed medication that could show up in their test results, thus revealing an underlying serious medical condition.

It certainly appears that an employer’s hands are cuffed when it comes to screening potential candidates. Realistically, that is certainly true when it comes into investigating more than their abilities to perform the job duties of the position they are applying for.

However, it is certainly recommended that you carefully review their resume for inconsistencies. Perhaps there is a gap in their resume where they did not appear to work for several years. Obviously you can inquire as to that issue. They may not have listed references. As stated earlier, you should talk to every reference listed. If for some reason your candidate did not list their last employer as a reference you can inquire as to why they were not listed as a reference.

It is also highly recommended that you require some sort of writing sample from your candidates in your employment advertisement. A writing sample can speak volumes about a potential candidate. You may also give the candidate several tests during the interview, i.e., typing tests, mathematical tests, spelling and grammar tests, as long as those tests will have a direct correlation to the job duties they will be performing. Further, those tests will have to be administered to each person interviewed.

July 30, 2012 0

Dealing With Your “Former”

http://www.xbiz.com/articles/106291/fattorosi

One of the most hotly litigated areas of law in hard economic times is employment law, and more specifically, the termination of employees. Often, based on the pure realities of the situation, companies must downsize in order to remain competitive. However, in order not to fall into a situation that could result in potential litigation with a terminated employee, basic employment laws and regulations must be adhered to.

Before one can discuss the termination of an employee, it is first important to define what an employee is. In California, Labor Code Section 3357 controls the issue of whether someone is an employee. However, this is a rebuttable presumption, and the actual determination of whether a worker is an employee or independent contractor depends on a number of factors.

In short the “economic realities” test adopted by the California Supreme Court in the case of S. G. Borello & Sons Inc. vs. Department of Industrial Relations (1989) 48 Cal.3d 341 has set forth the factors used to determined whether an one is an employee or an independent contractor. In regard to the economic realities test, the most significant factor to be considered is whether the person to whom service is rendered has control or the right to control the worker both as to the work done and the manner and means in which it is performed. If not, then the person may be considered an independent contractor.

Assuming that the person terminated is an employee, it is important to keep in mind that California is an “at will” employment state. This basically means that anyone can be fired at any time for any lawful purpose, if there is no employment contract. However, no one can be terminated based upon a protected class — race, color, religion, national origin or sex as well as age and disability. Disability also includes pregnancy.

If an employee is to be terminated for cause — meaning that the termination is based on performance issues of that employee — and the employee fits into one of the protected class, it is imperative that the employer document the performance issues completely before any such termination. Often, verbal warnings are not sufficient, and it is necessary to document the employee’s performance or insubordination issues well in advance of the termination. Without such written warnings employers can find themselves in a defensive position attempting to explain why the employee’s termination was not a result of discriminatory termination practices.

If the employee is to be terminated without cause and his/her termination is due to the economic business realities of the company’s current financial situation, it is more difficult to document the need to lay off the employee. It is recommended that, if possible, layoffs be conducted in groups and not of single employees. If a layoff occurs in group fashion, it will be easier for the employer to justify the layoff of anyone who might be one of the protected classes.

Now that the employer has terminated or laid off the employee, is the relationship concluded? The simple answer usually is no; even if the employee has been terminated for cause, the employer still might have to defend a wage, hour or overtime claim in front of the Division of Labor Standards and Enforcement. The former employee also might file a claim for unemployment insurance benefits.

How this next step proceeds usually depends on why the employee was terminated, how the employee was terminated and whether during the employment the employer properly classified and compensated the employee.

If the employee was terminated without cause and was laid off, they would be entitled to benefits through unemployment insurance. If the employee was terminated for cause, he or she still might file an unemployment claim; however, if the employer has documented the employee’s poor performance or insubordination, the claims can be challenged and often defeated in an administrative court.

If the employee was not properly paid for overtime, meal breaks or for their overall compensation, that employee can file a wage and/or overtime claim with the Labor Board or directly with a court of competent jurisdiction. If litigation does ensue, it often can be costly for the employer. Therefore, it also is imperative that employers keep accurate records and time slips during the employee’s term of employment. Again, as with any litigation, the most important aspect to remember is to document, document and document some more. Accurate time slips including break times are necessary to defend any claims of improper payment of wages.

A quick note about the classification of employees: Overtime at a rate of one and a half times their usual pay rate must be paid if an employee works more than eight hours per day, whether that employee reaches 40 hours per week or not. This is a recent change in the law. It use to be that overtime would not be due and owing to an employee until after that employee reached 40 hours worked in a calendar week. If an employee is a supervisor and has at least two other subordinate employees under their direct control, they can be classified as managers and not be paid overtime. Whether an employee is an hourly or salaried employee is immaterial to whether they need to be paid overtime.

It also is important to note that most states require that a terminated or laid-off employee be provided their last paycheck within a certain amount of hours and or days from the date of the separation. Therefore, it usually is advisable to provide the former employee with all wages due at the time of the actual notice of separation.

Obviously this article is not exhaustive as to the legal requirements involved with the termination and layoff of employees. Nor is it complete as to the classification of employees or payment of overtime wages. It is strongly recommended that any company seek the advice and counsel of both an attorney well-versed in employment law and a specialist in human resources.

Often, many of the problems with the termination of an employee can be solved in the hiring process. Knowing whom to hire and not hire often is the best defense against possible future claims and lawsuits. Choosing the right potential candidate(s) is a minefield that has to be navigated carefully. Just as with termination, discriminating against certain potential candidates can lead to claims of discrimination and potential litigation.

July 30, 2012 0