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More Required Time Off for California Employees

October 28, 2024 By Israel Samuels LLP Leave a Comment

In 2023, the California legislature expanded the state’s Healthy Workplaces Healthy Families Act of 2014 (HWHFA), primarily by providing more leave. This year, Governor Newsom signed bills into law that expand paid sick leave (PSL) protections.

Cal/OSHA has implemented heat illness standards, and, as a result, employees cannot be retaliated against for refusing to report to work in emergency conditions. Also, SB 1105 provides that agricultural employees who work outside may use PSL to avoid smoke, heat, or flooding conditions created by a local or state emergency, including when a worksite is closed due to these conditions.

SB 1105 and AB 2499 also expanded existing law that provides for using PSL where there is domestic violence, sexual assault, and stalking. It is now available to victims of “qualifying acts of violence,” i.e., conduct, or patterns of conduct that justify safe time, including when:

an individual causes bodily injury or death to another individual;
an individual exhibits, draws, brandishes, or uses a firearm, or other dangerous weapon, with respect to another individual; and
an individual uses or makes a reasonably perceived or actual threat to use, force against another individual to cause physical injury or death.

The HWHFA previously limited use of PSL for safe time to when an employee was a victim. The combination of SB 1105 and AB 2499 extends this category of leave to employees whose family members are victims as well. The HWHFA’s definition of “family member” was expanded to include a “designated person” of the employee.

AB 2499 extends existing rights to take time to obtain restraining orders, seek medical attention, obtain certain services or counseling and participate in safety planning for family members. It also creates new explicit rights to take time for relocation, enrolling children in a new school, obtaining legal services, participating in legal proceedings and obtaining childcare in connection with qualifying acts of violence.

The law also allows employees to use paid sick leave for time spent serving on a jury or a victim who takes time off to appear as a witness in court in compliance with a subpoena or court order.

The California Labor Code affords unpaid leave protections for jury duty, victims serving as witnesses in compliance with a subpoena or court order, and victims of domestic violence, sexual assault, stalking, or crimes. AB 2499 reformulates these protections under the umbrella of the Fair Employment Housing Act. This shift gives the Civil Rights Department (“CRD”) enforcement authority over violations of these protections and eliminates potential Private Attorneys’ General Act claims for such violations.

Additional changes include limiting the duration of leave employers with at least 25 employees must provide. A victim of a qualifying act of violence may take no more than 12 weeks of unpaid leave. If an employee’s family member is a victim of a non-fatal crime, and the employee takes leave for the limited purpose of relocating or securing a new residence and enrolling a child in a new school or childcare, the employee may take no more than 5 days of leave. When an employee’s family member is a victim of a non-fatal crime, the employee may take no more than 10 days of leave.

Absences that would also qualify under the Family and Medical Leave Act (FMLA) or CFRA must run concurrently if the employee is eligible.

AB 2499 also expanded eligibility for reasonable accommodations to include employees who are victims, or whose family members are victims of a qualifying act of violence to ensure the safety of the employee while at work.

Employers must inform employees of their rights under AB 2499 at the time of hire, annually, upon request, and if an employee provides notice that their family member is a victim as defined under the law.

The CRD will be developing a form that complies with these notice requirements before July 1, 2025—six months after the law goes into effect.

AB 2499 and SB 1105 go into effect in less than three months. Thus, employers should:

Review existing leave policies and practices to ensure compliance with the new laws, including related attendance, conduct, antiretaliation, and discipline policies and practices.
Train supervisory and managerial employees, and HR on the new requirements.
Develop a form to comply with the notice requirements to use in advance of the CRD’s development of a form.

If your business is confronted with an employee or employees seeking time off under these provisions, contact your employment attorney to discuss your rights and responsibilities.

The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.

LLPs May Not Have to Report under the Corporate Transparency Act

October 14, 2024 By Israel Samuels LLP Leave a Comment

There remains an unanswered question with regard to whether limited liability partnerships (LLPs) are required to report under the Corporate Transparency Act.

Legal scholars have argued that LLPs are not entities similar to a corporation or limited liability company since they are not “created by the filing of a document with the secretary of state or a similar office under the law of the State.” While an LLP is required to file with the secretary of state, it is an open question whether the filing creates a new entity or merely provides a type of status of an existing partnership.

Although there has been no guidance on the issue, the policy behind the Act is to provide law enforcement with beneficial ownership information to help preempt, discover, and punish misconduct occurring in business organizations. In light of this policy, the question is then whether Congress and Fin CEN intended reporting company status based on the concept of a legal entity or, instead, on the governmental recognition and regulation of an organization through a filing process that makes public a business firm and certain information about the firm.

It follows that, if the federal government desires to ensure that LLPs file reports under the Corporate Transparency Act, Congress needs to act to clarify the matter.

For the vast majority of LLPs providing the required information to the federal government should not be an issue and we recommend that they report under the Corporate Transparency Act. However, if your LLP has concerns about reporting or not reporting, discuss the matter with your business attorne

Time Off Work to Vote

October 7, 2024 By Israel Samuels LLP Leave a Comment

By law, California employers must allow employees time off to vote when it is needed. There is no set number of hours that the employer must allow an employee to be off work to vote. Instead, employers must provide employees with the time off work that is needed so that, when added to the employee’s available time outside work hours, employees will be able to vote. Up to two hours of the time employees take off work to vote must be paid by the employer.

Employers can require employees to take the time off work to vote at the beginning or end of the regular shift, whichever allows the most free time for voting and the least time off from work. Employers may also require employees to give at least two days’ advance notice of their need for time off work to vote. Such a policy should appear in the employment manual.

No later than October 26, 2024, employers must post written notice of 1 employees’ right to time off work to vote. The notice must be posted in a conspicuous place in the workplace, or in a place where it can be seen by employees as they come or go to their place of work. The Notice should also be emailed to remote employees. The Notice form in English is available at https://elections.cdn.sos.ca.gov/pdfs/tov-english.pdf. The Notice is also available in a number of foreign languages at https://www.sos.ca.gov/elections/timevote-notices.

Employers should permit employees time off to vote, when needed, any day in-person voting is available in the area, not only on November 5.

Each polling place is open from 7:00 a.m. through 8:00 p.m., unless extended by court order.

If you have questions concerning what your obligations are to provide paid time off for employees to vote, contact your employment attorney.

New Bill May Result in New Rules for Freelance Contracts

September 23, 2024 By Israel Samuels LLP Leave a Comment

A new bill currently on the Governor’s desk for signature or veto, “The Freelance Worker Protection Act” (SB 988), is designed to safeguard the rights of freelance workers in California. A freelance worker is defined as a “bona fide” independent contractor hired to provide professional services for $250 or more. This includes individuals or single-person organizations.

Key Requirements of the bill include:

Timely Payment: Hiring parties must pay freelancers by the contract’s due date or within 30 days of service completion if no date is specified.

Written Contracts: All agreements must be in writing, detailing services, compensation, and payment timelines. This contract must be retained for at least four years.

Protection Against Retaliation: Freelancers are protected from discrimination or adverse actions when asserting their rights under this law.

Enforcement and Remedies: Freelancers can take legal action if their rights are violated, with potential remedies including attorney’s fees, damages, and injunctive relief. Failure to pay on time triggers a penalty of twice the unpaid compensation.

Non-Waivable Rights: Any attempt to waive these rights is void and unenforceable.

If signed into law, the Act would apply to contracts entered into or renewed on or after January 1, 2025.

California business owners should watch for the Governor’s action on the bill and, if signed into law, have their attorney review their freelance contacts for compliance.

California Liquor Store Liable for Illegal Drug Sales Under Nuisance Law

September 16, 2024 By Israel Samuels LLP Leave a Comment

A California Court of Appeal, in People v. Freetown Holdings Co. has held a liquor store owner liable for nuisance based on the sale of illegal drugs on its premises.

Abdu Jamal Sheriff owned Holiday Liquor and deeded it to Freetown Holdings Company of which he was the sole officer and director. The People filed a Complaint against the store that described ongoing drug dealing and gang-related violence within and in front of the liquor store. The People’s documentation of these activities was extensive. The People moved for summary judgment and summary adjudication on its three count complaint that alleged violations of Health and Safety Code section 11570, et seq., (the drug house law), Civil Code section 3479, et seq., (the public nuisance law), and Business and Professions Code section 17200, et seq., (the unfair competition law). The Defendant opposed the motions contending there were triable issues of material fact. The Court granted the People’s motion for summary judgment and adjudication finding against the Defendant on each cause of action. It entered a final judgment and a permanent injunction requiring the store to take remedial measures, including hiring of guards, restrictions on operating hours, and an end to single-serving alcohol sales. The store appealed and contended its conduct did not constitute a nuisance.

The Court of Appeal held:

A possessor of land upon which a third person carries on an activity that causes a nuisance is subject to liability for the nuisance if it is otherwise actionable, and (a) the possessor knows or has reason to know that the activity is being carried on and that it is causing or will involve an unreasonable risk of causing the nuisance, and (b) he consents to the activity or fails to exercise reasonable care to prevent the nuisance.’

As a consequence, the liquor store was liable under state statute declaring places used for sales of illegal drugs to be public nuisances.

If you suspect illegal activity on your property, it is imperative that you consult with legal counsel so you can take measures to secure your property and not be held vicariously liable for the illegal conduct that may be occurring on your property.

Two-Year Statute of Limitation for Recovery of Erroneous Refunds

September 9, 2024 By Israel Samuels LLP Leave a Comment

The Ninth Circuit Court of Appeals held in United States of America v. Page, that the two-year limitations period to sue to recover an erroneous refund commences on the date the refund check is cashed, not when it is received.

In the case, Jeffrey Page received a $491,104.01 check from the IRS for his 2016 tax refund on May 5, 2017, and cashed it almost a year later on April 5, 2018. The refund check was sent to Mr. Page due to an error by the IRS and the IRS demanded the return of the money after the check had been cashed. Mr. Page returned $210,000.00 in response to the IRS’s demands but kept the remaining $277,641,01.

On March 31, 2020, the IRS sued Mr. Page for the balance in District Court. Mr. Page failed to answer, and his default was entered. The government moved for entry of a default judgment which the District Court denied because it believed the Complaint was untimely because the statute of limitations had been triggered when Mr. Page received the check and issued an order to show cause why the Complaint should not be dismissed with prejudice.

The government responded that it was the date that the check cleared, not the date of receipt, which triggered the statute of limitations. After limited discovery on the issue, the District Court rejected the government’s position and dismissed the case.

The government appealed and the Ninth Circuit reversed. It held the statute of limitations begins to run on the date of receipt of payment and thus, runs from the check cashing date.

If you issue or receive a refund that might be in error, consult with your legal counsel on how to best proceed.

Stock Options are not Wages under the California Labor Code

September 3, 2024 By Israel Samuels LLP Leave a Comment

In Shah v. Skillz, Inc., the California Court of Appeal held that stock options are not wages.

A stock option is a contractual right to buy company stock at a certain price regardless of whether the stock price increases. If the value of the stock increases, the option is more attractive since the person can buy the stock at a lower price and immediately sell the stock at a higher price. Labor Code section 200, defines “wages,” requires that “all amounts” paid as wages be “fixed or ascertained.”

In Shah v. Skillz, Inc., stock options were given to the employee, and the value of the stock increased. But before the employee exercised the options (i.e., before he bought the higher-priced stock at the lower-option price), he was terminated. The company terminated the employee’s stock options upon the employee’s separation. The employee sued, claiming, in part, he was deprived

1 of “wages” in the form of stock options when the company extinguished his options when he was terminated. The Court of Appeal disagreed, ruling that stock options are not wages because their value is contingent on external factors and speculative—that is, stock options are not amounts that are fixed or ascertained to become “wages” as defined by the Labor Code.

As a consequence of this ruling, California employers may lawfully terminate stock options at the time of separation without fear of waiting time penalties. However, this case does not change the rule that vested restricted stock/units cannot be forfeited upon separation.

If you are a California employer who is considering terminating an employee who has stock options or, if you are an employee with stock options who believes you may soon be terminated, discuss the matter with business legal counsel to formulate the best strategy for you.

Window Opens to Challenges to Federal Administrative Regulations

August 29, 2024 By Israel Samuels LLP Leave a Comment

For almost 40 years federal administrative agencies have experienced broad latitude in their interpretations of statutes passed by Congress. Due to “Chevron deference,” courts have routinely deferred to the agencies’ interpretation of an otherwise ambiguous statute.

Recently, however, the Supreme Court overruled its own opinion in Chevron (the case that gave rise to the principle of Chevron deference) in Loper Bright Enterprises v. Raimondo. The Supreme Court held that agencies have no special competence in resolving statutory ambiguities; courts do, and, therefore, the courts (not administrative agencies) must be the final authority when it comes to statutory construction.

By disavowing Chevron deference, the Supreme Court took power away from the executive branch in favor of the judiciary, thus exposing many agency regulations to a diverse range of potential legal challenges.

For employers, federal government regulations regarding COVID-19 leave, overtime pay, and non-compete agreements, are now at risk of reversal. Other regulations potentially implicated include those governing food and drugs, banking and finance, health care, environmental regulation, and taxes.

The new “Loper Bright Doctrine” does not automatically overrule any federal regulations. Potential attacks on the validity of different regulations will only arise if and when litigants interested in challenging their treatment by federal regulatory agencies take legal action.

If you or your business are subject to a federal regulatory interpretation of the law that you believe to be incorrect, discuss it with your business attorney. There may now be a window open to challenge the regulation in Federal Court.

Unconscionability May Not Be Enough to Prevent Enforcement of an Arbitration Agreement

August 19, 2024 By Israel Samuels LLP Leave a Comment

In Ramirez v. Charter Communications, Inc, the California Supreme Court held that courts cannot refuse to enforce arbitration agreements simply by finding that three or more provisions are unconscionable. Rather, courts must use a three-prong test to assess whether to remove or limit unconscionable terms and enforce the remainder of the agreement.

The employee in Ramirez signed an arbitration agreement at the outset of her employment. After she was terminated, she filed a lawsuit in court rather than in arbitration. The employer filed a motion to compel the case to arbitration. The trial and appellate court concluded that because there were multiple unconscionable provisions in the employment arbitration agreement, that the employer’s motion should be denied.

The California Supreme Court affirmed the lower court’s findings that the provisions were unconscionable. Despite affirming that the arbitration agreement contained unconscionable terms, the Supreme Court held that the existence of unconscionable terms does not render the agreement per se unconscionable. It explained that there is no bright line rule regarding the number of unconscionable terms in a contract that mandates that a court refuse enforcement of the contract. Instead, it set forth a three-prong test.

It held a court may liberally sever any unconscionable provision of a contract and enforce the rest when:

The unconscionable provision(s) are collateral to the main purpose of the contract;
It is possible to cure the unconscionability by removing or limiting the provision; and
Enforcing the remainder of the contract would be in the interests of justice.

Under the first prong, the court considers whether the main purpose of the contract is tainted by an unlawful purpose (e.g., creating a system that disfavors/disadvantages an employee’s claims and that favors/advantages an employer’s claims). If not, the unconscionable provision(s) are collateral.

Under the second prong, the court considers whether striking or limiting existing terms removes the unconscionability and whether the agreement contains a severance clause indicating the parties’ intent to have the court do so. However, if terms must be added to the contract to remove the unconscionability, the court should not enforce the contract.

Under the third prong, the court considers whether (1) severance of unconscionable terms condones an illegal scheme (e.g., whether severance creates an incentive for employers to draft one-sided agreements in the hopes that employees won’t challenge them, and if they do, that the court would fix the problems for them) and (2) if the agreement indicates a systematic effort to impose arbitration on an employee as an inferior forum that works to the employer’s advantage. If the answer is yes to either question, then in the interests of justice, the court should not enforce the agreement.

The case was remanded for further consideration in light of this three-prong test.

Ramirez v. Charter Communications, Inc. is a reminder to employers to ensure that their employment arbitration agreements are fair and balanced, and the decision clarifies the standard to determine whether courts can sever unconscionable (i.e., one-sided and/or illegal) terms.

If you use an arbitration agreement in your employment contracts or workplace, it is imperative to contact your business attorney to ensure the arbitration agreement will remain enforceable or needs to be redrafted.

Successor May Have Standing to Pursue Injunctive Relief for the Deceased

August 12, 2024 By Israel Samuels LLP Leave a Comment

In Saurman v. Peter’s Landing Property Owner, LLC, the California Court of Appeal for the Fourth District reversed a summary judgment and $98,852 sanctions awarded against a husband, a successor to a deceased wife who claimed Americans with Disabilities (“ADA”) Act, Unruh Act, and Disabled Persons Act violations.

In Saurman, the husband, a successor in interest of a disabled person, his wife, who was allegedly killed by an unlawful barrier in a place of public accommodation, sought to recover in a wrongful death lawsuit for alleged ADA violations, violation of state disability access laws, under the Unruh Civil Rights Act and the Disabled Persons Act (“DPA”) for injunctive relief. Summary Judgment was entered in favor of Defendants for lack of standing and reversed on appeal.

A successor in interest does not have standing in a federal court to bring an ADA claim for injunctive relief. However, the Appellate Court concluded whether a plaintiff has standing to commence an ADA claim in California state court is determined under state law. Here, the Appellate Court found standing in the husband because California Code of Civil Procedure section 377.30(a) expressly states:

A cause of action that survives the death of the person entitled to commence an action . .. passes to the decedent’s successor in interest.

The Unruh Act and the DPA allow plaintiffs to seek injunctive relief. In Saurman, the defendant restaurant and the defendant property owners did not dispute that the premises remained in the same condition as existed at the time of the wife’s fall. Thus, the Appellate Court determined that the husband had standing to seek injunctive relief against the restaurant and property owner.

Should your predecessor die with a claim against a California person or entity arising out violations of the law and you want to enjoin future violations so no one else is injured in the same manner, now there is precedent for doing just that. Seek competent legal advice before you proceed because there are procedural and substantive limits to what a successor can obtain.