You Be the Judge

Employee Loans

Your company has loaned an employee $2,000 for personal use. When he was laid off, the company deducted the balance due ($1,000) on the loan from his final paycheck.


This is not legal. Under California law, an employee must be paid all wages final wages "without abatement or reduction." By illegally deducting the loan balance from the final pay, at a minimum the employer will be exposed to Department of Labor Waiting Time Penalties of up to 6 weeks wages.

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New Employment Laws for 2012

It's important to keep current with the continually evolving field of employment law. Here's a preview of some upcoming changes in employment law for next year.

Commissioned Employees: All employers must provide a written Commission Agreement to commissioned employees setting forth the terms of the commission.  The employee must also be provided with a copy of the agreement.  (Effective January 1, 2013) 

Independent Contractors: Be extremely careful in classifying any workers as “independent contractors.”  An employer who knowingly misclassifies an employee is subject to fines of up to $25,000 per occurrence, plus attorney’s fees. The term “knowingly” might also mean that the employer “should have known,” so be extremely careful when using independent contractors, especially if you have or have had an employee performing similar work.  

Consumer Credit Reports: If you have been obtaining Consumer Credit Reports on all new employees, you will have to change your procedures.  The new law restricts the use of such reports to certain enumerated positions.  In particular, it does not allow for the use of CCR’s for employees who do not routinely handle at least $10,000 in cash or those who merely have access to expensive equipment. 

Pay Notice: Employers must provide new hires with the following pay information: 

  1. Pay rate and basis (e.g. hourly, etc.) AND the overtime rate 
  2. Any deduction for meals or lodging
  3. The regular payday
  4. The name of the employer AND any dba ("doing business as") names
  5. The physical address and phone number of the firm's main office, and the mailing address (if different)
  6. The name, address, and phone number of the firm's Workman's Compensation carrier

Employers must notify employees of any changes to this information within 7 days unless reflected directly on the wage statement.

Paid Medical Insurance During Pregnancy Disability Leave:  If your company provides group health insurance, you are required to pay the employer’s portion of the premiums for up to 16 weeks for an employee disabled by pregnancy or childbirth.  Previously,  only employers with 50 or more employees had to provide coverage, and for only the 12 weeks of Family Medical/California Family Rights Act Leave.  This requirement applies to all employers, regardless of the number of employees or the length of service of the pregnant employee.