In mid-October, the IMC consultant group enjoyed their first dedicated webinar, given by Joel Greenwald, a noted labor and employment law attorney. Many thanks to Lisa Jacobs for organizing this event.

From the labor law perspective, Greenwald focused on ensuring that consultants are "in the know” on current employment law guidelines, while recognizing that laws vary at the federal, state and municipal level.

Greenwald wanted to be sure that we are all clear on what constitutes an "Independent Contractor” and what makes someone an employee. It seems clear that in spas, most of the time all of the staff are part-time employees, and do not qualify for IC status. The factors he uses to determine this are control and economic reality. Control is a reflection of the ability of the person to determine their own hours, supply their own equipment, wear what they like, etc. Economic reality means, do they work for a variety of other spas, or just one or two in particular. IC status can be popular as it helps both person and employer to avoid payroll taxes; however, if an IC who is really a part-time employee should bring suit for wrongful termination, they are likely to succeed, and the business is liable for both their own and the plaintiffs attorney fees.

In a general review of employment law, Greenwald reminded us of what we can and can’t ask during interviews, how to handle disability issues, getting references, and doing background checks. He recommended background checks for all final-round candidates. HR files should be kept locked up, and electronic copies for backup are a good idea. He recommends exit interviews, with at least two company staff members present. Greenwald also reminded us that we all work in "hire at will” and "fire at will” situations, but that is not a reason to make an irrational termination. All terminations should be moral, fair, and accompanied by backup documentation.

Greenwald informed us that courts are beginning to recognize non-competes and non-solicitation agreements as more important than they have in the past. If they are written and crafted in the right way, with small geographic scope and modest time period restraints, they can be enforced. Non-solicitation agreements prohibit the employee from taking other employees, or clients they’ve gained while working for you, with them if they leave, but they are able to take clients they may have brought to the spa with them. Of course, non-competes are not allowed in California, but non-solicitation agreements are.

Pay practices were also reviewed, and prompted the most questions from us. Greenwald has a separate website, overtimeadvisor.com, which has a blog on which he covers this topic. In general, "exempt” employees are those who have a salary of at least $455 per week, and have "impactful employment” with the company; i.e. management staff. "Non-exempt” employees refers to everyone else, and federal law mandates time and half pay for hours worked over 40 within one week. Additionally, California mandates time and a half on a daily basis for shifts over 8 hours, and double-time over 12 hours.

An important distinction needs to be made on what constitutes comp time or oncall work. The law varies from state to state, but generally, if they are in your facility, they are working.

An excellent topic that was covered was the issue of compensation conversions, which most of us have been involved in recently! Questions were asked about whether there was legal exposure for owners or consultants when pay rates are changed, but Greenwald said that an offer letter is not an enforceable agreement. In fact, having employees sign something of this sort when they are hired can be viewed as a guarantee, which they are not. However, if lawsuits are threatened, it is best to have a labor attorney review the salient facts.