Businesses won a round recently when the state Supreme Court affirmed “at-will” employment, which allows companies to fire employees without cause.
The case centered around Brook Dore, who in 1999 relocated to the Southern California office of Boston advertising agency Arnold Worldwide Inc.
Arnold ended Dore’s employment without cause in 2001. Dore sued, claiming he never was told he could be terminated without cause.
The company countered it did inform Dore in a written job offer that his employment was “at will” and that it “has the right to terminate your employment at any time just as you have the right to terminate your employment with Arnold at any time.”
A trial court sided with Arnold. But the Court of Appeal ruled that just because the company said it could terminate Dore at any time didn’t mean he could be fired without cause.
The Supreme Court overturned that opinion. It said the phrase “terminate your employment at any time” was unambiguous.
The case can be viewed as a victory for employers, said Louis Klein, co-chair of the employment group at Irvine law firm Jackson DeMarco Tidus Peckenpaugh.
But really the decision “reiterates what California law has been,” he said. “The wording they were looking at didn’t take it out of that realm.”
The takeaway for employers: be clear about at-will employment in employee manuals, offer letters and other documentation.
“It doesn’t take much time or effort to add words that make it clear that employment is at will,” Klein said.
Book vs. Tax Income
The state Legislature last week passed a bill requiring corporations to document the differences between their “book” and “tax” incomes and report both to the state Franchise Tax Board.
Many corporations report two sets of income: one to their shareholders (“book income”) and one to tax collecting agencies. Often, the figure reported to tax agencies is lower.
Democrat lawmakers and organized labor say this bill is crucial because it would alert state tax collectors to revenues that corporations are not counting toward their taxes.
Business groups oppose the bill, saying it adds cumbersome reporting requirements. They also note that the tax income figure often is lower because of depreciation, credits and other legitimate deductions allowed in the state tax code.
Gov. Arnold Schwarzenegger, who has in the past tended to side with business on tax issues, has until the last week of September to sign or veto the bill.
Rebate Ruckus
Manufacturers often run special rebates through stores that sell their products. They require the seller to reduce the price of the product and then rebate the retailer.
On a flat-panel TV that usually sells for $1,499, a store might be given a $100 rebate from the manufacturer. The store then charges the customer $1,399.
There’s a catch. In California, the storeowner is taxed on both the discounted price and on the rebate received.
Storeowners generally pass the total tax on to the buyer. So, on that TV sold in Orange County for $1,399, the customer is taxed on the original $1,499 price, to the tune of $116, instead of $108.
Some sharp consumers have noticed this and brought the issue up with store managers. Often, rather than fight the customer, the retailer eats the cost of the rebate tax.
Several years back, frustrated retailers petitioned the state Board of Equalization to re-examine its rebate rules. The agency finally is doing so with four proposals.
The key issue appears to center around whether the customer is informed about the details of the rebate.
If the customer knows how much the store is receiving in a manufacturer’s rebate before the tax is added on at the register, then two of the proposals call for the entire amount to be taxed.
Otherwise, only the reduced sale price charged by the retailer is subject to sales tax, not the rebate from the manufacturer, since the customer only knows the final retail price that he or she is paying.
The other two proposals would keep the current law under which both the discounted retail sales price and the manufacturer’s rebate are subject to sales tax. Retailers and the California Taxpayers Association both oppose this concept.
The Board of Equalization has set an “interested parties” meeting on the issue in September in Sacramento; the board itself is expected to take up the matter in November.
Making a Stink
The South Coast Air Quality Management District is cracking down on trash companies after years of complaints from residents about odors from recycling and waste transfer facilities.
Under a proposed rule set to be considered in September, operators of recycling and waste transfer facilities must submit an “odor management plan” to the air district or a waste regulatory agency and then take steps to reduce odors.
Steps could include covering trucks, more frequent sweeping or enclosing the entire site.
The rule would cover 48 existing facilities, unless the sites have drawn or plan to draw up an odor management plan to submit to regulators.
Facilities that aren’t within 1,000 feet of residential areas are exempted.
Many of the facilities targeted in the rule are owned and operated by two of the biggest trash hauling companies in the nation: Browning Ferris Industries and Waste Management Inc. Both companies participated in a “working group” that helped AQMD staff develop the rule.
Charles White, director of regulatory affairs for the western region at Waste Management, which serves much of Orange County, said once the proposal was amended to allow companies to demonstrate compliance by submitting an odor management plan to other solid waste regulatory agencies, his company had no major objections.
Fine is a staff writer with the Los Angeles Business Journal.
