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Employer Security Screening Is Compensable Time

February 24, 2020 By Israel Samuels LLP Leave a Comment

Does your business screen employees and their personal belongings as they enter or exit your workplace? Do you pay your employees for the time they spend subjected to these screenings? If you do screen and you do not compensate employees for that time you have violated the wage and hour laws of the State of California.

The California Supreme Court in Frlekin v. Apple Inc. recently granted the request of the United States Court of Appeals for the Ninth Circuit to decide whether time spent on the employer’s premises waiting for, and undergoing, required exit searches of packages, bags, or personal technology devices voluntarily brought to work purely for personal convenience by employees was compensable as “hours worked”? The Supreme Court concluded it did and that its decision applies retroactively.

Employers should immediately take steps to assure that the time their non-exempt employees spend in entrance and exit screenings is, and has been, compensated. This may require employees to check in prior to the screening and check out after screenings are complete. It also may require review of time it previously took employees who were not compensated for such entrance and exit screening now pay them for such time. We recommend that you consult with your company’s legal counsel to assure proper payment is made and notices and procedures are in place to avoid hefty penalties and interest for failure to pay all wages due your employees.

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.

The How and Why of LLC Dissolution

February 17, 2020 By Israel Samuels LLP Leave a Comment

The dissolution of an LLC requires early consideration for business, tax, and legal reasons. Dissolution is often essential to a business exit strategy, to a business restructuring, and to make a business more attractive to buyers.

There are many reasons for formally dissolving an LLC. However, it should not ordinarily be to escape liabilities from lawsuits, contracts or potential claims.

Article 7 of the California Revised Uniform Limited Liability Company Act (“CRULLCA”), Sections 17707.01 to 17707.09 sets forth the statutory procedures to be followed for the dissolution and termination of California limited liability companies.

Section 17707.01 sets forth the events upon which dissolution will or can occur, while Section 17707.02 provides a simplified process for dissolving an LLC that has not conducted any business. There is a procedure under Section 17707.03 for an LLC manager or member to petition the court for a judicial decree dissolving an LLC. that provides a mechanism by which the non-petitioning members can avoid judicial dissolution.

The authority and compensation of the person or persons winding up the affairs of an LLC is set forth Section 17707.04 and the order in which the LLC assets may be distributed during winding up of the LLC is set forth in Section 17707.05. Under this Section an LLC must first pay off or adequately provide for all its known debts and liabilities owed to non-members before making distributions to members.

A canceled LLC (one that has filed a certificate of cancellation as the final step in dissolution) under Section 17707.05 continues to exist for certain purposes, such as distributing assets previously omitted in the winding-up process. The
Section also permits a lawsuit against or by an LLC to continue after the LLC is canceled.

Causes of action against dissolved LLCs may still be enforced under Section 17707.07 which provides for a means of recovery against the assets that have been distributed to members upon dissolution. It also sets forth the limitation period in
general for lawsuits against dissolved LLCs, and an exception for quiet title actions.

The filing requirements with the Secretary of State in the process of dissolution begins with the filing of a certificate of dissolution and ends with the filing of a certificate of cancellation. Section 17707.08 permits an LLC to skip the filing of the certificate of dissolution and file only the certificate of cancellation upon completion of winding up if all its members vote for dissolution.

LLC members may revoke a filed certificate of dissolution and continue the business of an LLC in several circumstances. These are set forth in Section 17707.09.

How, why and when an LLC is to be dissolved should be clearly set forth in the operating agreement. Otherwise, expensive litigation may be required to dissolve the LLC. Proper guidance from attorneys and tax advisers in planning and carrying out the process of dissolution is critical, to avoid unintended tax consequences and surprise liabilities years after the LLC is dissolved.

Does Your Website and Data Gathering Comply with the CCPA?

February 10, 2020 By Israel Samuels LLP Leave a Comment

The California Consumer Privacy Act (CCPA) became effective on January 1, 2020 and enforcement by the Attorney General is scheduled to start on July 1, 2020? Do your business practices, and most importantly, your website, comply?

The CCPA created new consumer rights relating to the access to, deletion of, and sharing of personal information that is collected by businesses. It requires the Attorney General to solicit broad public participation and adopt regulations to
further the CCPA’s purposes. The proposed regulations, expected to be published before July 1, 2020, will establish procedures to facilitate consumers’ new rights under the CCPA and provide guidance to businesses on how to comply.

There is no specific language required by the CCPA, at least not yet, but it requires the owner to disclose its particular data collection, sharing and privacy policies. The CCPA also requires certain disclosures and a clear way to immediately
opt-out. The language of the disclosures on a website will vary if the website also solicits or receives traffic from the EU as the EU has additional requirements.

A suggestion by many website designers is a pop-up disclaimer, such as:

This website or its third-party tools process personal data (e.g. browsing data or IP addresses) and use cookies or other identifiers, which are necessary for its functioning and required to achieve the purposes illustrated in the cookie policy. In case of sale of your personal information, you may opt-out by using link “Do Not Sell My Personal Information”. To find out more about the categories of personal information collected and the purposes for which such information will be used, please refer to our “Privacy Policy”. You accept the use of cookies or other identifiers by closing or dismissing this notice, by clicking a link or button or by continuing to browse otherwise.

The CCPA requires that there be the ability to code the links to act to permit opt-out and that there be a Privacy Policy linked with terms of service. There are many internet solutions that will set this up for you, such as https://www.iubenda.com/en/ that provide the code and programming solutions necessary to integrate CCPA disclosures as well as EU compliance.

As far as the law around such disclosures, businesses are required to disclose data collection and to implement a method of receiving consent or facilitating its withdrawal. Failure to adhere to these laws can result in hefty fines, lead to litigation and negatively affect the credibility of the website or app.

If you operate a website you or your service provider likely gather data. It does not matter if you never use it. The CCPA is likely to apply. Make sure you can comply with a compliant website developer and oversight by your business legal counsel.

Non-Compete Agreements Valid During Employment

February 3, 2020 By Israel Samuels LLP Leave a Comment

Recent cases have called into question whether non-competition provisions in employment agreements are enforceable in California. California Courts have found non-competition provisions invalid and unenforceable as violations of Section 16600 of the Business and Professions Code, even if narrowly drawn, unless they fall within the applicable statutory exceptions of sections 16601, 16602, or 16602.5, when these provisions were sought to be enforced post-employment.

In the California Second Appellate District case of Techno Lite, Inc. v. EMCOD, LLC, decided this January, two former employees of Techno Life, Inc. tried to get the Court to extend the prohibition against non-competition agreements to their competition with their employer during employment. The employees based their argument on the text of Section 16600:

Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.

There are statutory exceptions in sections 16601, 16602 and 16602.5 for noncompete provisions relating to sales of businesses, dissolutions of partnerships or dissociations of a partner from a partnership, and a dissolution of a limited liability company or a termination of a member’s interest in a limited liability company.

The appellate court rejected the employees’ argument. It found that Section 16600 has been interpreted by courts to strike down noncompete provisions in employment contracts that apply post-employment, not during employment, and that no public policy would be served by permitting an employee, while employed by the employer, to violate the duty of undivided loyalty by competing against the employer. The court concluded that section 16600 “is not an invitation to employees to bite the
hand that feeds them.”

How Irrevocable Licenses Are Revoked

January 27, 2020 By Israel Samuels LLP Leave a Comment

Property line fences that are not on the property line, and usage of roads and trails by property owners that are not entirely on the property owner’s property, lead to many real property disputes in California. Often these disputes are settled pursuant to an agreement whereby the encroaching party is granted a license to continue their use of the encroachment, road or trail.

Unlike covenants that run with the land, such as easements, a license is a personal right and confers no interest in land: It merely makes lawful an act that otherwise would constitute a trespass. A license may become irrevocable by the grantor if the licensee makes substantial expenditures of money or labor in the execution of the license. If the licensee makes such expenditures the license will be considered irrevocable for a period sufficient to enable the licensee to capitalize on his or her investment.

However, as illustrated in the recent Appellate Court opinion in Gamerberg v. 3000 E. 11th St., LLC, decided by the California Second Appellate District, an irrevocable license may be revoked by operation of law. In Gamerberg, a bona fide purchaser for value of the licensor’s property was never made aware of the irrevocable license that had been granted to his neighbor by his predecessor in interest to use two parking spaces on the property and the license agreement had not been recorded. The licensee also sold its property. However, the licensee did advise the purchaser of the existence of the license agreement. The licensor’s successor in interest refused to permit the licensee’s successor in interest to utilize the parking spaces as set forth in the license agreement. The Appellate Court held a subsequent purchaser with notice cannot revoke the license, but, a bona fide purchaser without notice receives the land free of the irrevocable license. To the extent an irrevocable license functions as an easement, it must be recorded to bind subsequent purchasers without actual notice.

Based on these holdings, the granting of an irrevocable license that is not recorded can be a significant tool to resolve real property disputes during the parties’ ownership of the properties and lifetimes. It may also permit a subsequent purchaser without knowledge of the license to take the property free of the license.

If you are involved in a property line or usage dispute, check with your legal counsel to see if an unrecorded irrevocable license is the right solution for resolution of your dispute.

Employers Required to Have Injury and Illness Prevention Programs

January 20, 2020 By Israel Samuels LLP Leave a Comment

The requirement that employers have documented Injury and Illness Prevention Programs (IIPP) has been around since 1991. However, many California employers do not have an IIPP. Cal/OSHA issues more citations under the IIPP standard than any other standard. During a Cal/OSHA inspection, one of the first documents asked for is the IIPP. Failure to have one can carry a penalty for the employer of up to $25,000. All employers with establishments in California, regardless of size or industry, are subject to the IIPP requirement.

An IIPP is a written workplace safety program meant to protect employees. Cal/OSHA requires that an IIPP include eight essential elements:

Responsibility
Compliance
Communication
Hazard Assessment
Accident/Exposure Investigation
Hazard Correction
Training and Instruction
Recordkeeping

A general safety and health program may not qualify as an IIPP unless it’s a written program that explicitly covers these eight elements.

To be effective the IIPP must fully involve all employees, supervisors, and management, identify the specific workplace hazards employees are exposed to, correct identified hazards in an appropriate and timely manner, and provide effective training.

Before Cal/OSHA comes to your workplace consult with your attorney, officers, and managers and ensure that your business has a workable IIPP.

Employee Protections for Uniformed Service Personnel

January 13, 2020 By Israel Samuels LLP Leave a Comment

The Uniformed Services Employment and Reemployment Rights Act (USERRA) prohibits employers of all types and sizes from discriminating against applicants and employees based on uniformed service, which includes service in the Army, Navy, Marine Corps, Air Force, Coast Guard, the Guard and Reserve components of military services, and the Commissioned Corps of the Public Health Service. The law grants strong reemployment rights and protections for service members returning to their civilian jobs.

Both voluntary and involuntary service are protected. Therefore, employers are must recognize and handle all uniformed service absences in the same manner, regardless of how an employee ended up performing the service. It is irrelevant whether an employee “volunteered” or “signed-up, or instead was “called-up,” “tasked,” “ordered” or otherwise “involuntarily deployed.”

Employees do not need to obtain permission or approval from their employers before departing to perform qualifying uniformed service. It is irrelevant whether an employer finds the employee’s absence to be unreasonable in terms of duration, frequency or timing. Although service members must provide “advance notice” unless military necessity prevents

such notice or providing notice is otherwise impossible or unreasonable. USERRA does not dictate how far in advance notice must be given, however, regulations strongly recommend that the Dept. of Defense provide advance notice to civilian employers at least 30 days prior to departure for uniformed service when it is feasible to do so. Advance notice “may be informal” and can be either verbal or written. Employee handbooks and leave policies cannot impose more onerous obligations than USERRA does with respect to advance notice of an absence or its particular format.

Employers may not require written orders or any other official documentation concerning the employee’s uniformed service prior to the employee’s departure from work. The only time an employer is permitted to require documentation supporting the employee’s uniformed service is where an employee’s “period of service exceeded 30 days” and the employee seeks reemployment with the employer. Thus, employees are not required to notify their employers at the time they depart for military service whether they intend to seek reemployment upon their return from service. In fact, an employee can tell his or her employer that he or she does not want to seek reemployment upon return and then have a change in heart. Even then, the employee does not forfeit the right to reemployment.

Where an employee is absent for 31 days or more and seeks reemployment upon return, an employer is permitted to request official documentation to establish: (1) that the employee’s reemployment application is timely under the law (different time periods apply depending on the duration of the absence); (2) that the employee has not exceeded the five-year cumulative limit on covered service (note: neither the regularly-scheduled Guard and Reserve “drill” each month nor the typical two-week “annual tours” count toward the five-year cap on covered service); and (3) the employee’s separation or dismissal from uniformed service was not disqualifying (e.g., it was not dishonorable or under other than honorable conditions.

Upon reemployment of an employee, when qualified uniformed service is completed, the employer must place the employee in the same position or as nearest to the original employment position as possible if the same position does not exist. He or she may also be entitled to an “escalator position” – “a job position that he or she would have attained with reasonable certainty if not for the absence due to uniformed service.” The employee must be reemployed in a position that reflects “with reasonable certainty the pay, benefits, seniority, and other job perquisites, that he or she would have attained if not for the period of service.” This principle applies to both automatic/non-discretionary bonuses, promotions and benefits as well as those involving discretionary or performance-based promotions.

Where it is difficult to measure an employee’s performance for pay or promotion purposes due to the duration or frequency of absence(s), employers may consider their employees’ military performance evaluations, ratings and reviews. USERRA is construed very broadly in favor of the employee/military member, and the escalator principle will always apply when ascertaining where an employee should be in the company’s bonus plans or promotion schedule. A best employment practice would require asking employees who have been performing service if they would like to submit their service evaluations, ratings and reviews for the employer to consider.

If you have employees that provide military service, it is essential that you discuss with your HR and legal counsel how to plan to continue business operations in the event they are called to duty.

2020: A New World for California Employers

January 6, 2020 By Israel Samuels LLP Leave a Comment

The new decade has brought with it a multitude of new employment laws that affect every employer operating in California. Here are some of the most significant new laws that will have a definite effect on California businesses and employment:

Extended Deadline to File Complaints with the DFEH

Until this year an employee alleging harassment, discrimination, or other claim under California’s Fair Employment and Housing Act (“FEHA”) had one year from the alleged act to file a complaint with the Department of Fair Employment and Housing (“DFEH”), and then one year from receipt of a Right to Sue Notice to file a lawsuit.

As of January 1, 2020, California employees will now have three years to file a charge alleging discrimination, harassment and retaliation. Now, it could take four years or more from the time a claim is filed with the DFEH before the potential lawsuit is filed. Therefore, some employers may now face claims for the first time three years after an employee no longer works for them and another year or more before the claim first makes it into Court.

No-Rehire Provisions Prohibited in Settlement Agreements
Many employers settle claims with employees pursuant to settlement agreements and, until January 1, 2020, some would make it clear that the employee was ineligible to be rehired by the employer and its affiliates. Now, agreements to settle employment disputes may not contain provisions prohibiting, preventing, or otherwise restricting an “aggrieved person” from obtaining future employment with that employer, or any parent company, subsidiary, division, affiliate, or contractor of the employer. Any such provision contained in a settlement agreement created on or January 1, 2020 will be void.

An “aggrieved person” is anyone who has filed a claim against his/her employer in court, before an administrative agency, in an alternative dispute resolution forum, or through the employer’s internal complaint process. Thus, the prohibition against no re-hire provisions may not apply to a standard severance or separation agreement if the company is not resolving a specific claim filed by the employee.

Employee Sexual Harassment Training Requirements
Employers with 5 or more employees have until January 1, 2021 to comply with new anti-harassment training requirements. By that date, supervisory employees must receive at least two hours of anti-harassment training and non-supervisory employees must receive one hour of training. Employees must also receive “refresher” training every two years thereafter. New employees and current employees who become supervisors must receive the training within six months of assuming a new or supervisory position.

Mandatory Employee Arbitration Prohibition
As of January 1, 2020, employers cannot require employees or applicants to waive a right, forum, or procedure for a violation of the California Fair Employment and Housing Act (FEHA) or the Labor Code as a condition of employment, continued employment, or the receipt of any employment-related benefit. The new law also prohibits employers from threatening, retaliating or discriminating against, or terminating employees or applicants because they refused to waive any right, forum, or procedure. An award of reasonable attorney’s fees to a prevailing plaintiff enforcing their rights under the Labor Code is now permitted.

The new law does not apply to post-dispute settlement agreements or negotiated severance agreements.

Only mandatory waivers entered into after January 1, 2020 are not affected by the new law.

Enforcement of the new has been enjoined by a federal court. on the grounds that it may be preempted by the Federal Arbitration Act. On December 30, 2019, a federal court granted plaintiffs’ request for a Temporary Restraining Order, and, for now, California has been prevented from enforcing the law. This may change rapidly as the preemption challenge works its way through the Courts. We will continue to update our readers on this issue.

Failure to Timely Pay Arbitration Costs and Fees
Employers enforcing employment-related arbitration agreements must now pay the fees or costs required to initiate and/or continue an arbitration proceeding within 30 days after the due date. Failure to timely pay constitutes a material breach of the arbitration agreement and a waiver of the employer’s right to compel arbitration.

Employees or Independent Contractors
California now requires the application of the rigid ABC test for independent contractor classification to all claims under the California Labor Code, Unemployment Insurance Code, and wage orders of the Industrial Welfare Commission, with limited exemptions for certain occupations and industries. Under the ABC test, a worker is an employee unless the hiring entity can prove all of the following: (A) the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract and in fact; (B) the worker performs work that is outside the usual course of the hiring entity’s business; and (C) the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.

The Attorney General and city attorneys of cities with populations greater than 750,000 may seek injunctive relief to prevent the continued misclassification of workers. The risk and potential liability for independent contractor misclassification, has also increased and includes a range of civil penalties and potential personal and criminal liability.

Some occupations and industries are exempted from the ABC test if the hiring entity can prove the specific requirements for exemption. If the exemption applies the hiring entity must determine classification under the Borello test which focuses primarily on whether the alleged employer controls or has the right to control the manner and means of the work.

2020 Leave Laws
A host of new employee leave laws became effective January 1, 2020:

Organ Donation Leave
Now, in addition to the 30 days of existing paid leave to donate an organ, employers must also provide an employee with up to 30 business days of unpaid leave in a one-year period.
Expanded Paid Family Leave
Effective July 1, 2020, Paid Family Leave benefits will be extended from six weeks to eight weeks (which may be claimed within a 12-month period). Employees may apply for Paid Family Leave benefits when taking time off work to (a) care for a seriously ill child, spouse, parent, grandparent, grandchild, sibling or domestic partner, or (b) bond with a minor child within one year of birth, adoption or foster placement.

Other New Laws Affecting Employers

Recovery of Civil Penalties for Unpaid Wages
Employees are now authorized to directly recover from their employer a penalty owed for failure to pay wages as a statutory penalty through a hearing under Labor Code Section 98 (a “Berman Hearing”).

The law removed the Labor Commissioner’s ability to recover unpaid wages through an independent civil action and transfers that option directly to the employee. It also allows the employee to seek the penalties in multiple forums – through a Berman Hearing or enforce a civil penalty through PAGA, but not both.
Occupational Injuries and Illnesses Reporting
Employers are now permitted to report by telephone or email of occupational injuries and illnesses to Cal/OSHA. However, an employer’s ability to report by email to when a serious occupational injury, illness, or death occurs must now be made
through an online mechanism established by Cal/OSHA. Until Cal/OSHA makes the online mechanism available, employers are permitted to make the report by email.
Lactation Accommodations
Since 2018, employers have been required to “make reasonable efforts” to provide an employee who wishes to express milk in private with an area that is not a bathroom and is in close proximity to their workspace. Employers, under certain circumstances, may provide a more temporary lactation location due to operational, financial, or space limitations.
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Effective January 1, 2020, an employer now has an affirmative responsibility to provide a lactation room or location for its employees who wish to express milk. Reasonable efforts are no longer sufficient.

The new law also requires the lactation room or location: (1) be shielded from view, and free from intrusion; (2) be safe, clean, and free of hazardous materials; (3) contain a surface to place a breast pump and personal items; (4) contain a place to
sit; and (5) have access to electricity or alternative devices. The employer must also provide access to a sink with running water and a refrigerator or cooling device to store milk.

An employer in a multitenant building or multi-employer worksite, if it does not have the ability to provide one, may provide a lactation location that is shared among multiple employers within the building or worksite. If an employer has fewer than 50 employees and demonstrates that providing a lactation room or location (other than a bathroom) would impose an undue hardship, it must still make reasonable efforts to provide employees with a private lactation location.

A denial of reasonable break time or adequate space to express milk will be treated as a Labor Code violation for which an employee may file a complaint with the Labor Commissioner. Employers are prohibited from discharging, discriminating, or retaliating against an employee for exercising their right to lactation accommodations.

Employers are now required to develop and implement a lactation accommodation policy that includes information about the employee’s right to request accommodations, the process for making requests, the employer’s obligation to respond to requests, and the employee’s right to file a complaint for violation of their right to accommodation. This lactation accommodation policy must be distributed to new employees upon hiring and to employees who make an inquiry about or request parental leave.
Hairstyle Discrimination
Effective January 1, 2020, the definition of “race” under FEHA includes “traits historically associated with race,” such as “hair texture and protective hairstyles,” including, “braids, locks, and twists.” Discrimination based on hairstyle is now considered race discrimination.

With these rapid changes in California Labor laws it is imperative that employers proactively work with their business attorneys to assure compliance and promptly address issues that arise in the employment relationship.

Happy Holidays and Happy New Year from ISLLP

December 23, 2019 By Israel Samuels LLP Leave a Comment

Everyone here at Israel & Samuels LLP wishes all of our readers, families, and friends a joyous and wonderful holiday season and a successful 2020! We truly appreciate all of you and we look forward to providing dedicated legal services to our clients in 2020 and beyond. We also will continue to provide great tips and tools as our publication of Business Briefs rolls on. Happy New Year to all as we enter a new decade, the Roaring Twenties!

Sexual Harassment Training Requirements Guidance Released

December 16, 2019 By Israel Samuels LLP Leave a Comment

California’s Department of Fair Employment and Housing (“DFEH”) has updated its Employer FAQ guidance addressing the new sexual harassment prevention training requirements that are now set to go into effect on January 1, 2021. The law has been expanded to require harassment training from employers with five or more employees, and for supervisory employees and nonsupervisory employees. The training must be repeated once every two years.

The new guidance defines what is meant by the requirement that an employer must provide “effective interactive training.” Such training may include classroom training, computer-based training that is individualized and interactive, or a webinar
training taught in real-time. The guidance specifies additional requirements for each type of training.

The guidance also clarifies how the requirements apply to seasonal or temporary workers. Employers are not required to train employees “who are employed for fewer than 30 calendar days and work for fewer than 100 hours.” In addition, if a temporary employee is employed by a temporary services employer, the temporary services employer must provide training for the temporary employee.

The guidance also explains that employers do not need to train non-California employees, independent contractors, volunteers, or unpaid interns, but people falling within these categories must be counted in determining whether the employer meets the five-employee threshold for training.

Finally, the guidance states that if an employee has already received the training from a current, prior, alternate, or joint employer within the previous two years, the employee does not need to retake it, but the current employer must ensure that the training was completed. To verify “may require verifying compliance from the prior, alternate, or joint employer.” The employee must also read and acknowledge receipt of the current employer’s anti-harassment policy.

The guidance also addresses other miscellaneous questions, including questions about how to become a trainer, poster requirements, documentation, and payment for the training. For employers interested in training resources, the DFEH will have online training courses available by early 2020, and in the meantime, DFEH is offering a Sexual Harassment and Abusive Conduct Prevention Training Toolkit. Do not wait until next December to prepare for compliance. The time to talk with legal counsel about this is now.