Keep Your House(hold) in Order
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Keep Your House(hold) in Order

December 2013

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What do a Saudi princess, Nicholas Cage, and Sharon Stone have in common? They've all been on the wrong side of a lawsuit filed by their domestic employees.

Though wealthy individuals with household workers may not think of themselves as "employers," California certainly does. In fact, householders - well-heeled or not - must comply with a complex web of state and federal employment laws if they wish to prevent costly litigation and nasty publicity. And their attorneys should be ready to guide them.

Hiring the Help
To find the best candidate, it's essential for a prospective employer to ask the right questions during the interview process. Inquiring about protected characteristics - such as race, religion, national origin, age, sexual orientation, disability, marital status, or pregnancy - is illegal. However, it's good to ask for references, which will likely shed some light on the candidate and his or her work habits.

To ensure that the new domestic worker is hiding no scary skeletons in the closet, consider getting a background check. This should be done with the applicant's written permission - and using the appropriate consent forms. If prospective employers reject an applicant based on the results of a background check, they must provide the applicant with additional information, including details that enable the candidate to contact the investigating company for access to the information that has been gathered. (See Cal. Civ. Code § 1786.16.) In most cases, California employers are prohibited from checking the credit history of an applicant or employee. (Cal. Lab. Code § 1024.5.)

Document the Relationship
Once the employer has decided to hire someone new, the next step is to draft a short-form employment agreement. Unfortunately, even employment relationships that start out amicably don't always end that way, so it's important to have certain terms in writing to ward off ambiguity - and lawsuits. The most important element is an employment-at-will provision stating that either party is free to terminate the relationship at any time, with or without cause.

To deter employees from disseminating confidential information, the agreement should also contain a strong nondisclosure/confidentiality provision prohibiting them from speaking to anyone about private information gleaned during the course of the employment.

Finally, consider having the employee agree to privately arbitrate any claims arising from the job, to avoid a public airing of any potential unpleasantness.

Wages and Hours
Domestic employees in California are entitled to be paid at least the minimum wage - currently $8 per hour (but scheduled to increase to $9 next July 1 and then to $10 in 2016). (See Cal. Labor Code § 1182.12.) Employees who work overtime (more than 40 hours per week) are entitled to a wage premium, which varies depending on whether the household worker is a "live-in" or "live-out" employee. Under a law that takes effect next month, domestic workers who are personal attendants will be entitled to receive overtime. (Cal. Lab. Code § 1454.) Employees also are guaranteed at least one 30-minute meal break and two 10-minute rest periods per work day. (See Cal. IWC Order No. 15-2001.) The employer bears the burden of proving compliance with the law.

Paying a worker "under the table" is never a good idea. The employer may be liable for back taxes, significant penalties, and interest. (26 U.S.C. § 7201.)

Other laws govern the timing and manner of the payment of wages and vacation benefits. For example, employers are required to pay a terminated employee all wages, including any unpaid vacation, on the last day of work. (Cal. Lab. Code § 201.) And it is always wise to secure a release of liability in exchange for the payment of severance.

Doing It Right
In California, domestic employees can be integral members of the household, whether or not it's a high-profile one. Even though such relationships may be built on handshakes and implicit trust, if they go awry the financial and reputational repercussions can be significant.

When hiring domestic employees, clients should review these guidelines and consult counsel with expertise in these matters. Any employer who doesn't take appropriate protective steps may end up capturing headlines for all the wrong reasons - and whiling away the hours in a nearby courthouse.

Anthony J. Oncidi is a partner at Proskauer Rose in Los Angeles, where Jeremy Mittman is an associate.

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