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Build And Rent A “Granny Flat?”

April 13, 2017 By Israel Samuels LLP Leave a Comment

There is no question that the Bay Area has a housing crisis. Affordable new home construction lags behind and the demand and rising home prices have priced out many first-time buyers. Statistics for the Bay Area show rents are about $4,170 per month for the median rental in San Francisco; home ownership is at a record low; and overcrowding is more than twice the national rate.

A new state law attempts to increase the housing supply in order to drive down rents. Known as the Accessory Dwelling Units (ADU) Law, it permits homeowners to build rental units on their property, whether through garage conversions, as a home attachment, or as a new, standalone structure. These type of rental units have colloquially been known as “granny flats.”

The ADU law removes many of the prior impediments to building granny flats, including prior costly barriers, such as exorbitant water and gas hookup fees, often put in place by local governments. However, the sheer cost of ADU design plans and construction — which could run up to $200,000 for a new unit — remain a deterrent to the construction of granny flats. Current laws do not permit future rental income to qualify someone for a mortgage loan. In light of the new law, mortgage companies are said to be working with lenders to create an ADU-specific home loan that will take future rental income into account.

Cities, however, still have the ability to regulate granny flats and this may ultimately thwart the new law from making a significant dent in the housing crisis. Cities are free to impose local zoning restrictions, including size and height restrictions.

Before you embark on that granny flat project contact your lawyer. The ADU law may make it easier to build that rental unit, however, it is also ripe for Not In My Backyard local regulation.

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.

Janitorial Employers Must Come Clean

April 10, 2017 By Israel Samuels LLP Leave a Comment

A new California law, The Property Service Workers Protection Act, seeks to protect janitors from sexual harassment and wage theft. Janitorial employers now must keep records that detail workers’ hours and pay rates and register with the state labor commissioner. The commission will make the list of registered employers publicly available through a database. The new law also requires the state to create a “sexual violence and harassment prevention training” program.

Janitorial employers now must maintain records for three years of the names and addresses of all workers, the hours they worked, and the wages they received. Yet, from a legal standpoint that still may not be long enough. It is suggested that janitorial employers actually keep such records for four years since the statute of limitations for unpaid wage claims in California is four years.

Starting July 1, 2018, the law requires janitorial employers to register each year with the state labor commissioner. To do so the employers must meet certain conditions, including proof of having any final judgments for unpaid wages. Information about janitorial employers will be accessible through a public database.

The state is now required to develop a sexual violence and harassment prevention training program for janitorial employers and their workers to be effective Jan. 1, 2019. The required training will be more extensive than the training required by California’s existing sexual harassment training law. Currently, supervisors at companies with 50 or more employees must receive this training every other year. The new law requires training for all janitorial employers regardless of size, and it requires that the training be done in person.

Violators of the registry requirements could face civil fines of up to $100 for every day that the business is unregistered—up to $10,000. The law provides that any business that contracts with an unregistered janitorial company could be fined $2,000 to $10,000 for an initial violation and $10,000 to $25,000 for a subsequent violation.

The definition of “employer” under the act could also capture nonjanitorial companies as it applies to “any person or entity that employs at least one employee and one or more covered workers” and that enters into agreements to provide janitorial services. Thus, a property owner might hire a management company that has one employee who predominantly does janitorial work. Under the act, the management company could be considered a janitorial employer subject to the new law.

In light of the new law, employers should review the nature of the work performed by their employees; consider adding language to their contract that they are not a janitorial services company within the meaning of the law and add indemnification provisions that make service providers liable for all misrepresentations with regard to janitorial services and janitorial employees.

This new law has a substantial and far reaching impact on service providers and those that contract with them. A complete review of your service provider contracts by qualified legal counsel is essential to be able to take steps to assure compliance with the act for the service provider and their customers.

What Are Your “Best Efforts?”

April 3, 2017 By Israel Samuels LLP Leave a Comment

Many business to business agreements require the parties to use their “best efforts.” However, in California there is no real definition of what “best efforts” entails. Rather, to date, such language has been defined by what it does not mean. The Court of Appeals in California Pines Property Owners Assn. v. Pedotti (2012) 206 Cal. App. 4th 384 struggled with the meaning and provided some parameters:

A best efforts clause, without more, does not create a fiduciary relationship.
Best efforts are to be construed in the context of the circumstances of the particular case.
A best efforts clause is to be reconciled with other provisions of the contract to the extent possible.
Best efforts does not mean every conceivable effort and does not require the promisor to ignore its own interests, spend itself into bankruptcy, or incur substantial losses to perform its contractual obligations.
Best efforts require diligence, but it is diligence within the bounds of reasonableness.
A promise to use best efforts should not be confused with a promise to act in good faith.

These general guidelines at least clarify that best efforts are not necessarily the same as a fiduciary relationship or good faith. California courts will look to the entirety of the contract to determine whether a promisor has used its best efforts. Ultimately, best efforts do not require the promisor to make unreasonable efforts. What is unreasonable, however, is a question for the Court or jury. If you have a contract that calls for best efforts, or are negotiating a contract where a certain degree of effort needs to be assured, check with your legal counsel. It may be in your best interest to specifically delimit what those efforts entail rather than rely on the nebulous nature of a best efforts clause.

Adoption and Enforcement Of Appropriate Dress Standards

March 27, 2017 By Israel Samuels LLP Leave a Comment

With summer just around the corner it is a good time to review your existing workplace dress policy. After all, no one wants to see your receptionist in a speedo or your salesperson in denim short shorts.

Therefore, with warmer weather approaching, here are a few things you should consider when establishing and enforcing dress policies:

The policy should be in writing. It does not matter whether the adopted policy is put in your employment manual, added as an addendum or set forth as a “stand-alone” policy. The salient point is put it in writing.
Know what your employees can be prohibited from wearing. California recognizes the necessity for employers to adopt dress and grooming standards based on business needs. These include safety in the workplace, fostering an atmosphere of professionalism, and adherence to accepted social norms or customs. Thus, it is generally permissible to ask that employees not wear the following:
- shorts
- crop tops, halter tops, tank tops and spaghetti straps
- “maxi” dresses
- sun dresses
- jumpsuits, rompers, or overalls
- T-shirts
- flip flops, sandals, and other casual footwear
- sunglasses
- hats

The EEOC will accept dress codes that apply to all employees within a certain job category, even if the dress code might conflict with some workers’ ethnic beliefs or practices. As one commentator has observed, “employers may require employees to leave their nose rings, tongue studs, and other body piercings at home.”

Dress codes can differentiate between men and women so long as the requirements do not affect employment opportunities. For example,an employer can preclude long hair on men but permit it on women. However, California law, with few exceptions, forbids employers from banning the wearing of pants, unless that ban applies to both genders.

Federal law does not recognize gender as a stand-alone category and instead identifies “gender identity, including transgender status” as types of sex discrimination. California’s interpretation of gender includes “gender identity and gender expression.” “Gender expression” in California relates to gender-related appearance and behavior whether or not it is stereotypically associated with the person’s assigned gender at birth. Thus, California law protects employees whose physical and behavioral characteristics are associated with a particular gender. Consequently, any dress code applicable to California employees must take into account this expansive definition.

California law also deviates from federal law in the area of religious dress and grooming practices. California law defines “religious grooming practices” as including “all forms of head, facial, and body hair that are part of the observance” of the individual’s religious creed while Federal law lacks this protection. California law also forbids segregating an employee to achieve a religious accommodation. Thus, an employee with a religious grooming practice does not have the option of accommodating that practice by moving employee away from customers and to a job that does not engage with the public.

If you want to adopt or enforce employee dress policies, check with your attorney to assure the language of your policies conforms with applicable law and is enforceable. Should the occasion arise to enforce the policy, again check with legal counsel to assure it can be enforced in the manner you contemplate.

You Probably Didn’t Waive Your Right To A Jury Trial Even If Your Contract Says You Did

March 20, 2017 By Israel Samuels LLP Leave a Comment

The California Court of Appeals for the First Appellate District has upheld the right to a jury trial in California even if the contract at issue proclaims a waiver of the right to a jury trial before a dispute ever arises.

In Rincon EV Realty LLC v. CP III Rincon Towers, Inc., the Appellate Court determined that a choice of New York law and a jury waiver in a construction project financing agreement were not enough to overcome California’s fundamental policy against pre-dispute contractual waivers of the right to a jury trial. The Court determined that under California law, the right to jury trial is “inviolate” and may only be waived in six different scenarios, which all apply only after a lawsuit is filed. Therefore, any pre-dispute agreement specifying that any lawsuit between the contracting parties will be adjudicated in a court trial, rather than a jury trial, is unenforceable.

Did you waive the right to a jury trial when you signed that agreement that says you did? Probably not, but check with your legal counsel.

Electronic Signatures Coming To Motor Vehicle Sales and Lease Contracts?

March 13, 2017 By Israel Samuels LLP Leave a Comment

To date, there has been no statutory authority that allows motor vehicle sales and lease contracts to be signed electronically. Last month AB 380 was introduced in the California Assembly.to amend sections of the California Civil Code to permit conducting such transactions by electronic means. Currently the Uniform Electronic Transaction Act (“UETA”) does not cover motor vehicle sales and lease contracts. As a result, at this time, such transactions must be conducted in person and cannot be conducted electronically. AB 380 would remove the exemption of motor vehicle sales and lease contracts from the UETA.

If enacted, the law would still not permit electronic signatures for certain transactions under the Uniform Commercial Code. For example, the creation and execution of wills, codicils, or testamentary trusts; for specifically identifiable text or disclosures in a record or a portion of a record that, by law, must be separately signed, including initialed, from the record; and any specific transaction described in § 17511.5 of the Business and Professions Code applicable to telephone solicitations would still require personal signatures.

As more transactions are memorialized electronically it is important for businesses to know whether their contracts are legally binding if the signatures are electronic. If you are a business owner and don’t know, check with your legal counsel before using services like Docusign to electronically subscribe your contracts.

Companies Must Separately Pay Non-Exempt Commissioned Employees For Breaks

March 6, 2017 By Israel Samuels LLP Leave a Comment

A California Court of Appeal has ruled that non-exempt commissioned employees must be paid separately and specifically for rest breaks and non-productive time. In Vaquero, et al. v. Stoneledge Furniture LLC, (Filed Feb. 28, 2017) Case No. BC522676, the Second Appellate District ruled that, at least under Wage Order 7-2001, applicable to the mercantile industry, employers must separately compensate non-exempt commissioned Employees for rest breaks and non-productive time. The United States Department of Labor Wage and Hour Division exempts employees who are paid commissions from being paid overtime only if the employee is employed by a retail or service establishment; and receives 1.5 times the applicable minimum wage for every hour worked in a workweek in which overtime hours are worked; and more than half the employee’s earning in a representative period consist of commissions. If all of these criteria are not met, then the commissioned employee is non-exempt.

The Plaintiffs in Vaquero were retail sales associates for a retail furniture company who filed a wage and hour class action for failure to provide rest periods in violation of California law and Wage Orders. The Court found that the employment agreements did not directly compensate the sales associates for meetings and rest breaks, and the employer did not account for them so the rate of pay applicable to each meeting and break could not be ascertained. Thus, it determined the employer had violated the Labor Code and applicable Wage Orders.

The Court did not address how to calculate the rate at which rest breaks must be paid to employees paid on a draw plus commission. Some idea of how the Court would address the manner of calculation can be found in Labor Code section 226.2 applicable to employees compensated by a piece-rate Section 226.2 requires employers to separately compensate piece-rate employees for rest, recovery and other nonproductive time at a regular hourly rate “no less than the higher of”: (1) the “average hourly rate”; or (2) the applicable minimum wage.

If you employ non-exempt commissioned workers we suggest that you consult with your legal counsel to be sure you are in compliance with these Labor and Wage laws so that you can make every effort to avoid having to appear before the Labor Board.

Cutting Down Your Neighbor’s Trees Can Be Costly

February 27, 2017 By Israel Samuels LLP 1 Comment

The consequences of cutting down or trimming your neighbor’s trees and shrubs without your neighbor’s prior consent (and get that consent in writing folks) can be legally and financially crippling. The full extent of the punitive nature of the law for trimming and cutting on your neighbor’s foliage is exemplified in the recent case of Fulle v. Kanani, (Cal. Ct. of Appeal Case No. B271240 (January 31, 2017).

In Fulle, Kanani, without his neighbor Fulle’s permission, hired workers to cut down the limbs and branches of six trees located on Fulle’s property. Fulle sued for trespass and negligence and sought damage for injury to the trees, restoration costs, damages for annoyance and discomfort, and enhanced damages under California Civil Code section 3346(a). Section 3346(a) gives the Court discretion to treble damages to compensate for the actual detriment from the “wrongful injuries to timber, trees or underwood upon the land of another.” The jury awarded Fulle $27,500 for damage to the trees, $20,000 for the cost of repairing the harm, and $30,000 for past annoyance, discomfort, loss of enjoyment of the real property, inconvenience and emotional distress. The trial court trebled Fulle’s economic damages, but declined to apply the multiplier to the award of damages for past annoyance and discomfort. Fulle appealed the failure to treble these damages.

The Court of Appeals held annoyance and discomfort damages resulting from injuries to trees may be doubled or tripled under the timber trespass statutes. It further held that where, as in Fulle, the jury finds willful and malicious conduct by the defendant, the trial court must award double damages and has discretion to award treble damages for annoyance and discomfort.

Consider this, if you want to trim your neighbor’s trees because they block your view – the total damage Kanani caused to the trees and the cost to restore them was $47,500. Based on the holding of the Court of Appeals, Kanani now faces the prospect of a judgment of $262,500 because he trimmed Fulle’s trees.

Seems to us Kanani would have gladly paid Fulle up to $47,500 for permission to cut her trees before he cut them and could have saved well over $215,000, when attorneys’ fees and costs are taken into account had he known this would be the outcome. We also speculate that Fulle would have been quite happy to receive less than $47,500 for someone to trim those trees properly. Suffice it to say we do not think they will be the best of neighbors any time soon. Just think, a negotiation through legal counsel before Kanani took unilateral action would likely have satisfied both of them without malice or ill will and may have cost less than the cost to trim the trees.

How Is It Signed? It Matters A Lot!

February 20, 2017 By Israel Samuels LLP Leave a Comment

One of the laws that dates back to England’s King Charles II is the Statute of Frauds. Generally, this law requires, among other things, that contracts that pertain to real property be in writing signed by the parties. Recently, the California Court of Appeals in Jacobs v. Locatelli, Cal. Ct. of Appeal Case No. H042292 (Feb. 8, 2017) had the opportunity to consider whether the Statute of Frauds barred enforcement of a real estate brokerage agreement signed by the broker and one of several owners of the property.

In Jacobs, the “owner” was defined in the agreement as “John B. Locatelli, Trustee of the John B. Locatelli Trust, et al.” Only Mr. Locatelli signed the agreement even though there were signature lines for five other owners. The owners argued that the Statute of Frauds operated to bar an action by the broker against them under the agreement. The Court of Appeals found the “real issue” to be the sufficiency of the broker’s allegation that Mr. Locatelli signed on behalf of the other owners, who formed a joint venture. The reference in the signature designation to “et al”, according to the reviewing Court, clearly meant “and others” in the context in which it appeared. Thus, the Court of Appeals remanded the case in order for the broker to introduce extrinsic evidence as to how Mr. Locatelli signed the agreement.

Imagine if you are one of the other owners who did not want to go forward with the deal and did not sign it only to find that Mr. Locatelli may be found to have signed it for you.

Pay attention to the signature lines on your agreements, even the designations for people and entities other than you who are designated to sign the agreement. If you have any doubt as to those designations or are concerned you could be bound by another’s signature, get legal counsel immediately. It is better to document your disapproval than rely on the lack of your signature on the agreement.

Unpaid Time Off For Elective Surgery?

February 13, 2017 By Israel Samuels LLP Leave a Comment

Must an employer provide leave to an employee so the employee can undergo elective or cosmetic surgery? The Family Medical Leave Act (FMLA) and California Family Rights Act (CFRA) provide qualifying employees with up to 12 weeks of unpaid leave for an employee’s own “serious health condition” that prevents the employee from performing their essential job functions. Elective surgery does not qualify as a serious health condition that would require protected medical leave, absent some complication.

Under both laws an employer may require medical certification of the employee’s serious health condition. If an employee refuses or fails to provide the certification, the leave request may be delayed or, potentially, denied. Under California law, however, an employer cannot ask for additional medical necessity information beyond the certification. Thus, while an employer cannot ask for the information, an employee may voluntarily share it with other employees or his or her medical provider. Once the employer has actual knowledge that the leave is requested for an elective procedure, then the employer may reject the leave request since the FMLA and CFRA do not cover leave for purely elective procedures.

There is one area where FMLA and CFRA leave may be appropriate that involves elective surgery – where a serious health complication arises out of or is discovered during the elective surgery.

If you have any question about whether or not you, as an employer, should permit an employee to take unpaid medical leave contact your attorney. The stakes of being wrong are too high and the leave laws too complicated to make the decision to deny unpaid leave without competent legal advice.