California has some specific regulations that relate to the employment relationship—and these should be clarified in employee handbooks or in written notices. There are also some laws that affect the employment relationship, and employers need to keep them in mind, even if they're not required in employee handbooks. Here are some examples, which will each be explored in further detail below:

• The at-will employment status
• Probationary periods
• Employee classification
• Independent contractor misclassification
• Wage Theft Prevention Act
• Commission clauses

Employee handbooks in California: Inclusion of at-will statement

"In California there is a presumption of at-will employment. That means that an employee can be terminated with or without notice even in the absence of just cause as long as the termination is not unlawful." Natalja Fulton explained in a recent CER webinar. A termination that is discriminatory (based on a discriminating against someone who is a member of a protected class) or retaliatory (retaliating for a protected action, such as whistleblowing or taking protected leave) would be unlawful.

Unlawful terminations aside, employment in California is considered to be at-will, and is not typically for a specified term. Just as the employee can be terminated with or without notice, employees can also resign with or without notice. While it is not legally-mandated, it is recommended that an at-will statement be either included in the employee handbook and/or in a separately-acknowledged document that is signed by the employee.

"You would want to make sure, if you do include this type of policy in your handbook, that only certain agents of a company can modify the at-will status." Fulton advised.

Employee handbooks in California: Inclusion of probationary periods

Probationary periods are allowed but not required in California.

"If you choose to do this and if you have a practice of a probationary period, it's recommended that you include this in your handbook. This provides notice to new employees of how long their probationary period is going to be, and how this would affect their benefits or seniority." Fulton advised.

Information on employee classification in California

In years past, we saw many lawsuits surrounding the alleged misclassification of employees as exempt from overtime pay. This issue of classification is again in the news, but this time over the misclassification of interns as unpaid instead of paid employees. The issue is problematic because a misclassification can cost thousands of dollars in back pay alone, let alone penalties.

While not legally mandated, it is a good practice to advise employees how they will be classified and why. Tell them whether they are:

• Exempt or non-exempt for the purposes of the FLSA
• A regular, temporary, or leased employee
• Full-time or part-time

Providing this information (separate from the employee handbook, since it is individualized) can avoid misunderstandings. It is strongly recommended to consult an HR expert or qualified employment attorney if you opt to provide this classification information to your employees because it can get very technical.

California independent contractor misclassification laws

A recent update added language to California Labor Code section 226.8 to expressly prohibit the "willful misclassification" of an employee as an independent contractor. "Willful misclassification" is defined as "avoiding employee status for an individual by voluntarily and knowingly misclassifying that individual as an independent contractor."

Doing this means the employer would avoid paying as much in income taxes and likely avoid a whole host of employee benefit expenses, such as health insurance premiums, 401(k) contributions, vacation pay, and more. The Labor Code update now directly prohibits this and provides higher penalties for the willful misclassification as opposed to accidental misclassification of employees.

California Wage Theft Prevention Act requirements

The Wage Theft Prevention Act, effective January 1, 2012, requires private employers to add a new document to their new hire package for each non-exempt employee. The written notice must include:

• The rate of pay (either per hour, shift, day, week, salary, piece, commission, etc.) and overtime rate
• Non-cash allowances if claimed as offset to minimum wage (such as meals or lodging)
• The regular payday
• The employer's name, including any "doing business as" names
• The physical address of the employer's main office or principal place of business, and a mailing address, if different
• The employer's telephone number
• The name, address, and telephone number of employer's workers' compensation carrier

If an employer makes changes to the information listed above, it must provide written notice of the changes to employees within 7 days.

Commission contract requirements for California employers

In a new law, which just became effective on January 1, 2013, employers must have a written commission agreement, signed by the employee, for any employee who is paid on commission.

"It's really creating more transparency with respect to how these employees are going to be paid." Fulton explained. It should include information on how the commissions are computed and paid, and should explain that the expired contract will prevail if no new one is entered into at the time of expiration.

The above information is excerpted from the webinar "Employee Handbooks in California: Important Updates, Drafting Tips, and Enforcement Guidance." To register for a future webinar, visit CER webinars.

Attorney Natalja Fulton is an associate in the San Francisco office of Lewis Brisbois Bisgaard & Smith LLP. Her practice focuses on employment litigation and employment counseling.