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A Complicated California Issue California - Unemployment, Pregnancy, Termination

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  • A Complicated California Issue California - Unemployment, Pregnancy, Termination

    Here is a question with a lot of special situations:

    I am the Chef/Partner in a restaurant that is currently undergoing some changes. I own 15% of the business but my equity has not yet vested, so in essence I am an employee with the title of partner. The equity will vest when we have paid back our investors. Until then, the managing partner has control of the equity. I found out 3 days ago that the management company is being changed and that part of their agreement is that they will bring in their own chef and I will be let go at the end of this month or early in August. My other partners have known about this deal for months but I found out only last Thursday, and even then it was from someone in the general public. When I confronted my partners the truth came out. So now legally the new management company can come in and hire their own staff and potentially get rid of my current employees. The main issue I am having is not with me, though I am curious to know if I have any legal recourse, but with my sous chef. She is pregnant and was planning on going on maternity leave in mid-November (due date December 13). When the new company comes in they could theoretically offer her a much lower position at much lower pay and if she does not accept, it will be as if she is quitting and will not be able to collect unemployment. Also, she would lose her potential disability when the baby's birth gets closer. My question is, if I already know that I am being let go but I am still in charge of the business, could I terminate her employment so that she can collect unemployment? Is there any grey area because I know I will be replaced in a few weeks? Is there a reason her unemployment could be denied if/when it is challenged? Are my assumptions about her tenuous position with the new company correct? Thank you in advance for any help you can give, I really appreciate it.

    FYI There are 3 entities at play here:
    LLC#1: This LLC owns the liquor license and the building.
    LLC#2: This is the management company of the restaurant.
    LLC#3: The actual restaurant business that I will own 15% of. This is the only LLC that I am a partner of.

  • #2
    This is going to be a soft answer.
    - Tell your employee to not quit for any reason. She has no control over what the employer does or says but she does control her own actions. Do not take any actions (such as quitting) whose primary result is to hurt the employee and help the employer. The employee should shut up and do their job, give the employer no cause for termination. THAT is how she improves her chances for getting UI. Quitting is almost always a bad idea.
    - The problem with you firing the employee is that it is not likely that you personally will be the one later talking to UI. At what point you are no longer the employer's top dog, you no longer control what actions the employer takes. By trying to game the system to achieve a specific result, you risk having the employer point out to UI that you (on the employee's behalf) are playing games with the UI system. The employee's best defense is to have clean hands. Not a sure thing, but there are no sure things here. Both parties lie to UI, a lot, and UI tends to be skeptical about anything either/both parties tell them.
    - The state has some internal rules about what percentage of reduction of pay is treated as a constructive discharge. I have heard 20% cited, also some different numbers. My understanding is that the hearing officer (otherwise known as The Deity) has flexibility here, so it is not like there is a single magic number which ensures a positive result.
    - I am not a CA-SDI expert or expert on the other CA related pregnancy programs, but those may be more important as an issue then UI.


    Not your question, but for you personnally, have an attorney read your partnership agreement. Maybe you are a vanilla employee subject to federal/state labor laws and maybe not. This is a bad area to guess in.
    "Reality is that which, when you stop believing in it, doesn't go away".
    Philip K. **** (1928-1982)


    • #3
      Thank you so much DAW. I certainly don't want to "game the system" if it jeopardizes my sous chef. I do have a question, though. What is a vanilla employee? I cannot find any info on that at all. Thanks again.


      • #4
        I didn't delete many spam posts in the past hr. (7) but 5 were from this thread. I would close it (even though they will just post elsewhere) but the thread is just too new to close & the original poster came back with an additional question for DAW.
        Too often we underestimate the power of a touch, a smile, a kind word, a listening ear, an honest compliment, or the smallest act of caring, all of which have the potential to turn a life around. Leo Buscaglia

        Live in peace with animals. Animals bring love to our hearts and warmth to our souls.


        • #5
          Originally posted by philvis View Post
          . What is a vanilla employee?
          My phrase, not the government, so no surprise that you cannot find. Most employees are "vanilla" employees, subject to normal employee rules specified by statutory federal and state labor law. However there are exceptions, and some workers may or may not be employees under statutory law. Worse, some workers are legally considered employees for some purposes but not others. There is no rule that says CA-UI cannot consider you to be a non-employee even if IRS (for example) considers you to be an employee. Or visa-versa. Federal IRS and DOL and CA FTB and EDD use very different sets of statutory labor law, and differences in worker classification rules are fairly common.

          A worker who is a partner maybe is "non-vanilla". As previously stated, if you want to treated as an employee get an actual attorney to read YOUR agreement. Frankly anything I (or anyone else) says on your employee rights would be a guess because we have no read your agreement. I understand that point you tried to make in your post, but this assumes that the actual laws agree with you on the worker classification issue. I would not make that assumption.
          "Reality is that which, when you stop believing in it, doesn't go away".
          Philip K. **** (1928-1982)


          • #6
            Why one earth would you fire your pregnant sous chef now just in case the new owners/managers/company might possibly decrease her wages at some point in the future and she might maybe possibly feel that quitting was her best option rather than say, looking for another job? You are really jumping the gun and worrying about something that frankly, isn't your business. Assuming you even have the authority to fire this woman, what possible excuse are you going to use? Please tell me it isn't that she is pregnant. Even if you don't state that, there is nothing stopping her from filing a suit on that basis and I assure you she will not appreciate having to hunt for a new job while expecting, nor making the fraction of what she does now on unemployment. That isn't protecting her.

            Even if the new management or chef does let her go, or changes her pay, it simply isn't your battle to fight. For all you know they may decide she should be the new chef or deserving of a raise.

            As for yourself, you really need a lawyer to review any documents and agreements you have in place to determine what recourse if any you might have. This is not a DIY project nor is there a straightforward or simple answer.
            I post with the full knowledge and support of my employer, though the opinions rendered are my own and not necessarily representative of their position. In other words, I'm a free agent.