Israel Samuels LLP

A Law Firm for Businesses

When COVID-19 Positive Employees Can Return to Work

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Near the end of July, the Centers for Disease Control and Prevention (CDC) updated its guidance regarding the discontinuation of home isolation for persons with COVID-19. The guidance provided:
For persons known to be infected with COVID-19 and symptomatic, isolation can now be discontinued if:

  • At least 10 days have passed since symptom onset;
  • At least 24 hours have passed since resolution of fever without the use of fever-reducing medications; and
  • Other symptoms have improved.

Prior CDC guidance recommended that at least 72 hours pass since the resolution of fever without the use of fever-reducing medication, and that respiratory symptoms improve before an infected person discontinue isolation.
These revisions, thus, shortened the suggested isolation period, but maintained the importance of self-monitoring for symptoms.

The CDC recommends a 10-day home isolation period for persons known to be infected with COVID-19 but asymptomatic.

The CDC no longer generally recommends a test-based strategy for discontinuing home isolation, except for the severely immunocompromised or to discontinue isolation earlier than the time-based guidelines. Previously, CDC recommended that one way to end isolation was to have two negative diagnostic tests, from samples taken at least 24 hours apart. However, numerous studies showed mildly ill people are almost never infectious 10 days after symptom onset (20 days for severely ill persons).

Under the new guidance, employers can choose to return their affected employees in accordance with the shortened isolation timeline, or they can still accept two negative COVID-19 tests. In some instances, producing two negative diagnostic tests could lead to the discontinuation of home isolation sooner than even the shortened timeline.

The new guidelines do not affect the recommended 14-day quarantine period for persons exposed to a known case of COVID-19, even if they never develop symptoms or test positive.

Now, we are heading into the sixth month since the pandemic reached the United States. As the economy re-opens it is extremely important for businesses to consult with their business and employment attorneys to assure compliance with all the new health and safety regulations for the sake of you, your employees and your and their families. Compliance with the guidance can also serve as a safe harbor for employers should an affected employee return to work and still unwittingly spread the virus.

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.

California Employers’ use of the new FMLA Certification of Health Care Provider Forms

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The federal Department of Labor has issued new Certification of Health Care Provider forms for an employee’s own serious health condition (WH-380-E) and to care for a family member (WH-380-F).

These forms are important to justify an employee’s request for FMLA and provide much more information than a simple doctor’s note. If you are an employer and do not require your employees to complete these forms for every FMLA leave, you should. However, when you do, if you are a California employer, you will need to modify the forms.

In California, employers are not permitted access to the underlying diagnosis, illness, impairment, or physical/mental condition due to the state’s Constitutional right to privacy. Employers shall clarify that the health care providers should not disclose such patient information or genetic information, which is also protected under California law.

The forms only reference FMLA. However, California also has the California Family Rights Act (CFRA). Thus, California employers must modify the forms to clarify that any leave granted in California is FMLA/CFRA, and not just FMLA.

The forms also do not specifically reference California’s Pregnancy Disability Leave laws. Thus, employers need to modify the forms to clarify that any overlap in leaves is properly designated.

These issues can be addressed in amendments to the forms or in a separate document. Contact your business attorney to assure your modifications accurately clarify the applicable California law overlays.

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.

A Reason to Incorporate in Delaware

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Most companies have no reason to incorporate in Delaware until they are large enough to go public. However, if you want to eliminate the rights of shareholders to inspect your company’s records you may want a Delaware corporation.

In Juul Labs v. Grove, a Delaware Court held that inspection rights are a matter of internal affairs, and therefore California Corporations Code Section 1601, which grants inspection rights to shareholders of California corporations and foreign corporations with headquarters in California, is invalid as applied to Delaware corporations.

Juul arose in the context of a private company that required shareholders to waive their inspection rights under Delaware law. The Court did not expressly determine if the waiver was valid.

However, it is inspection rights could be left a functional dead letter for both private and public companies.

This development may also have serious implications for the internal affairs doctrine. The limitations of the internal affairs doctrine have always been unclear. Delaware has always had a much broader view of the scope of the internal affairs doctrine than other states – particularly California – and this is not the first time Delaware has held that California’s corporate code is invalid as applied to Delaware entities.

It appears that California will never be able to weigh in on the issue of waiver of shareholder inspection rights by a Delaware corporation even if the corporation is entirely operated in California. As soon as a Delaware
company suspects that a shareholder plans to invoke its rights under California law, the company can now immediately file a declaratory action in Delaware. When the shareholder filed its own action in a California court, California precedent requires the California Court to stay its own proceedings in favor of the first-filed Delaware action.

In Juul the shareholder was required to make a demand for inspection under California law, which put the company on notice that of a potential shareholder dispute. The company immediately filed a declaratory judgment action in Delaware based on its contention that the company had a forum selection clause in its charter requiring that internal affairs disputes be heard in Delaware, and because inspection rights are governed by the internal affairs doctrine, any California court would be powerless to resolve the issue. The shareholder subsequently filed an action in California, but California stayed its ruling in favor of Delaware case.

The Delaware Court then held that inspection rights are part of internal affairs, California’s law did not apply, and no suit could be filed in California. It appears the Delaware Court’s holding is immune from attack in California courts, even though there is California precedent for the idea that Section 1601 does not deal with internal affairs.

If you are concerned about shareholders bringing actions against your Company, then Delaware might just be the best choice for the company’s state of incorporation, although, there are additional taxes and fees for a Delaware
corporation to do business in California.

Unsure what is best for your company, contact competent business legal counsel to explore all of your options.

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.

Should You Temperature Test Your Employees?

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Employers are obligated by law to protect workers and prevent the spread of COVID-19 in the workplace. Should an employer temperature test its employees as a potential safeguard? It depends . . . and there are several legal considerations to take into account.

Some states require employers in certain industries to temperature test workers before the start of their shift. The EEOC has recommended the use of temperature tests, and the CDC has encouraged companies to institute regular health checks, including temperature screening, to mitigate the spread of COVID-19. However, many jurisdictions and industries do not require temperature checks, so for many employers, it is optional.

Where not required, employers should consider whether temperature screening has any value. Individuals with COVID-19 may not exhibit symptoms, and individuals with higher temperatures may not necessarily be infected. In addition, the additional cost and legal and business may not make sense for some employers.

Employers who do temperature test will need to set clear guidelines on what constitutes a “fever.” The CDC defines a fever as 100.4°F or higher, but some states, like Delaware, have ordered that, for certain industries, any temperature above 99.5°F renders an employee ineligible to work.

Some companies test in a private setting within the office, although many take temperatures as employees enter the workplace. If temperatures are taken as employees enter the workplace, employers must consider how to maintain adequate social distancing between workers, as well as confidentiality and privacy concerns.

Some states, including California, require notice to employees before temperature testing can occur. Temperature testing also raises recordkeeping and privacy issues. Employers should maintain employee health data, including temperature checks, separate from personnel files and limit disclosure to a “need-to-know” basis. If the workforce is covered by a collective bargaining agreement, the testing may be subject to a duty to bargain. Even if testing is not covered by a collective bargaining agreement employer should consult with the unions.

If workers stand in long testing lines the waiting time may be compensable under state or federal law. Employers should consider staggering shift starts or having multiple temperature takers to avoid delays.

Temperature testing can be a useful return-to-work safety measure; however, employers need to decide whether it makes sense for their business and determine how to implement it. If you are considering implementing temperature testing protocols in your workplace, please discuss it first with your business attorney.

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.

Does Your Arbitration Provision Permit Non-Party Discovery?

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An interesting precedent was recently set by the Sixth Appellate District of the California Court of Appeals in Aixtron, Inc. v. VEECO Instruments, Inc. One of VEECO’S former employees, Miguel Saldana, went to work for VEECO’s competitor, Aixtron, Inc. VEECO initiated arbitration proceedings against Saldana with JAMS pursuant to the terms of a confidentiality agreement Saldana signed with VEECO based on allegations that Saldana had breached the contract, breached his duty of loyalty owed to VEECO as an employee, and converted VEECO’s confidential data for use by VEECO through data theft.

VEECO sought and received a pre-hearing discovery order from the arbitrator that permitted VEECO to serve a subpoena on Aixtron for VEECO’s business records. Saldana had opposed the order permitting the subpoena on the basis that the arbitrator did not have the authority or power to authorize or enforce the subpoena, the subpoena was overbroad and sought Aixtron’s confidential information.

When served with the subpoena Aixtron objected and, among its objections, it claimed the subpoena was “procedurally deficient” and refused to comply with the subpoena. VEECO moved for the arbitrator to compel Aixtron to respond to the subpoena. Aixtron argued the arbitrator lacked authority to issue and enforce nonparty discovery subpoenas since statutorily such subpoenas are only available in personal injury or wrongful death actions and there was no provision for discovery in the arbitration agreement. It also did not expressly incorporate the discovery rules set forth in California. The arbitrator granted the motion and ordered Aixtron to comply. Aixtron then petitioned the Superior Court for a Protective Order and re-hearing on the arbitrator’s discovery order. The Superior Court denied Aixtron’s Petition and Aixtron appealed.

The Appellate Court held, in part, that the discovery order exceeded the arbitrator’s statutory authority. The Appellate Court held that non-party discovery in arbitrations is generally limited and highly restricted by law and by the rules promulgated by JAMS. The Appellate Court found no authority for issuance of a discovery subpoena (although it did acknowledge an arbitration subpoena to produce at the arbitration proceeding would be valid) and reversed the Superior Court.

If any of your agreement contain arbitration provisions, it is time to contact your business attorney and determine whether they need to be modified to permit discovery from third parties prior to the arbitration hearing.

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.

What to Do If Your Employee Tests Positive For COVID-19

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A frequent question for businesses that open during the pandemic is what do we do if we have an employee who reports that they have tested positive for COVID-19? Cal-OSHA, recently issued guidance for employers on the specific topic of handling outbreaks in the workplace. That guidance can be found on Cal-OSHA’s website. Cal-OSHA advises that even a single positive case may quickly turn into an outbreak among employees. Due to the large variety of workplaces, Cal-OSHA recommends that employers contact and consult with their local health department to plan and coordinate their response.

Employers must still comply with Cal-OSHA reporting requirements and immediately report serious injuries, illnesses, or deaths in the workplace. According to Cal-OSHA this means employers should report all COVID-19 related inpatient hospitalizations and deaths even if it is uncertain that they are work-related.

Governor Newsom’s May 6, 2020 Executive Order provides, for workers’ compensation coverage purposes, that any case of COVID-19 contracted between March 19, 2020 and July 5, 2020 by an employee who works outside the home, is presumed to have occurred in the course of employment. This presumption is rebuttable (e.g. the employee lives with a non-employee who had COVID-19), but the employer does not get to decide whether or not the virus was contracted at work. The employer should give the employee a worker’s compensation form and let the insurance carrier determine coverage.

Employers should also consider:

  1. Informing coworkers who may have come into contact with the infected employee that an employee (maintain confidentiality of the employee’s identity to the extent practicable) has tested positive.
  2. Providing COVID-19 testing for other employees. If testing is required by the employer, the expense must be paid for by the employer, and the employees must be paid for the time they spend undergoing testing. Employees cannot be required to undergo COVID-19 antibody testing, – only testing for active infection.
    Where testing is not possible, employers should consider contact tracing to identify those who have had close contact with the infected employee, and advise those close contacts to quarantine at home for 14 days from their last known contact with the infected employee. If numerous employees were in close contact with an infected employee, employers should strongly consider closing the worksite temporarily and advising all employees to quarantine. “Close contact” means spending 15 minutes or more within 6 feet of a COVID-19 positive employee during their infectious period, which includes 48 hours before they became symptomatic.
    While at home, quarantined employees should monitor for any potential symptoms of COVID-19 (fever, shortness of breath, cough, loss of taste/smell, congestion/runny nose, sore throat, fatigue, chills, nausea/vomiting, diarrhea) and should be encouraged to get a COVID-19 test if they develop symptoms.
    The work area used by the infected employee(s) must be cleaned and disinfected (and such cleaning and disinfecting of the workplace should be done regularly).
  3. Employees who are still reporting to work should not share equipment (particularly equipment that comes into contact with the face or mouth, such as telephones and headsets), and employees must be reminded to follow safety protocols established by the CDF and local guidance (including wearing face coverings and social distancing. Employees should frequently be reminded not to report to work with symptoms.
  4. Employers must also follow current guidance on when it is safe to allow an employee who has tested positive for COVID-19 to return to work. The answer varies depending on whether the employee has symptoms or is asymptomatic. The answer also varies depending on whether COVID-19 testing is available and utilized. According to the CDC guidance, if an employee tests positive and has symptoms, the employee may return to the workplace either: (1) 72 hours after the employee is fever-free (without the use of fever-reducing medicine), AND respiratory symptoms (cough, shortness of breath) have improved, AND at least 10 days have passed since symptoms first appeared; OR (2) after the employee has tested negative for COVID-19 two consecutive times, at least 24 hours apart, and employee is fever-free (without use of fever reducing medicine) and any respiratory symptoms have improved.

If an employee tests positive but is asymptomatic, the employee may return to the workplace (1) after at least 10 days have passed since they tested positive if they still have not developed any symptoms; or (2) after the employee has two consecutive negative COVID-19 tests, at least 24 hours apart. Cal-OSHA advises that employers defer to their local health department on specific return to work criteria.

Any time an employee cannot work due to COVID-19 (testing positive, being ill with symptoms, or being quarantined due to close contact with an infected individual), the employer needs to be sure the employee is informed of paid time off rights and provided with applicable paid time off. This may include paid sick leave under the federal Families First Coronavirus Response Act (FFCRA) and/or state and local paid sick leave laws. The cities of San Francisco, Oakland, San Jose, Los Angeles, and Long Beach all have COVID-19 sick leave ordinances that supplement pre-existing paid sick leave and/or apply to employers who are not covered by the FFCRA. FFCRA provides up to 80 hours of paid sick leave to employees who work for private sector employers with less than 500 employees (or who work for a public employer).

If you are an employer with 50 or more employees and you have an employee who becomes seriously ill with COVID-19 (e.g. the employee is hospitalized), keep in mind that this could also trigger a lengthier entitlement to up to twelve weeks of unpaid leave under the FMLA/CFRA.

The workplace issues presented by the pandemic are formidable and change frequently. We recommend that you consult your business attorney about compliance before you re-open and any time an employee contracts, or is exposed to, the virus.

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.

DFEH Provides Free Online Sexual Harassment Prevention Training Courses

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California law requires all employers of 5 or more employees to provide 1 hour of sexual harassment and abusive conduct prevention training to nonsupervisory employees and 2 hours of sexual harassment and abusive conduct prevention training to supervisors and managers once every two years. The law requires the training to include practical examples of harassment based on gender identity, gender expression, and sexual orientation.

The California Department of Fair Employment and Housing (DFEH) now provides free online training courses on preventing sexual harassment and abusive conduct in the workplace so that employers can comply with California law.

Located at https://www.dfeh.ca.gov/shpt/, the training is offered in English, Spanish, Korean, Chinese, Vietnamese and Tagalog. Presently, only training for non-supervisory personnel is available. Sexual Harassment Prevention Training for supervisory personnel will soon be added.

We recommend that every employer ensure that their employees take this training. It is the law and failure to do so can result in administrative and civil liability. Contact your business attorney to assure that your sexual harassment training prevention program complies with California law.

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.

California Dept. of Insurance Implores Insurers to Fairly Investigate COVID-19 Business Interruption Claims

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The California Department of Insurance has found it necessary to admonish insurers that they are required to accept, forward, acknowledge and fairly investigate all business interruption insurance claims caused by the COVID-19 pandemic. The Department acknowledged that the COVID-19 pandemic has severely curtailed activities of policyholders in both personal and commercial lines, causing significant and widespread economic loss.

Business Interruption insurance is an optional coverage that may be purchased as part of a comprehensive multi-peril commercial policy, business owners’ policy, or on a standalone basis. Many small and large California businesses purchase Business Interruption insurance to protect against the loss of income and other losses caused by an interruption to the normal operations of the business.

Despite the Department’s on-going guidance to businesses statewide during the COVID19 pandemic, it has received numerous complaints from businesses, public officials, and other stakeholders asserting that certain insurers, agents, brokers, and insurance company representatives are attempting to dissuade policyholders from filing a notice of claim under its Business Interruption insurance coverage, or refusing to open and investigate these claims upon receipt of a notice of claim. Thus, the Insurance Commissioner found it necessary to issue a Notice to ensure that all agents, brokers, insurance companies, and other licensees accept, forward, acknowledge, and fairly investigate all business interruption insurance claims submitted by businesses.

The Department has notified all agents, brokers, insurance companies, and other Department licensees that they are required to comply with their contractual, statutory, regulatory, and other legal obligations, including but not limited to, the obligations set forth in the California Fair Claims Settlement Practices Regulations in connection with all California insurance claims including, but not limited to, Business Interruption insurance claims, event cancellation claims, and other
related claims filed by California businesses.

The Department Notice warns:

  • All insurers, insurance agents, brokers, insurance company representatives, and other Department licensees must accept any communication from the policyholder or its representative indicating that the policyholder desires to make a claim against a policy that reasonably suggests that a response is expected as a notice of claim. Upon receipt of a notice of claim, every Department licensee is required to transmit such notice of claim to the insurer immediately.
  • Upon receipt of a notice of claim, subject to certain exceptions, every insurer is required to acknowledge the notice of claim immediately, but in no event more than 15 calendar days after receipt of the notice of claim. If the acknowledgment of a claim is not in writing, a written acknowledgment of the receipt and date of the notice of claim must be made in the claim file of the insurer.
  • Failure of an insurance agent or claims agent to transmit a notice of claim to the insurer promptly will be imputed to the insurer, except where the subject policy was issued pursuant to the California Automobile Assigned Risk Program.
  • Upon receipt of a notice of claim, the insurer is required to provide the policyholder with the necessary forms, instructions, and reasonable assistance, including but not limited to, specifying the information the policyholder must provide in connection with the proof of claim and begin any necessary investigation of the claim. Thereafter, every insurer is required to conduct and diligently pursue a thorough, fair, and objective investigation of the reported claim, and is prohibited from seeking information not reasonably required for or material to the resolution of a claim dispute before determining whether the claim will be accepted or denied, in whole or in part.
  • After conducting a thorough, fair, and objective investigation of the claim, the insurer must accept or deny the claim, in whole or in part, immediately, but in no event more than 40 days after receipt of the proof of claim. The amount of the claim accepted or denied by the insurer must be clearly documented in the claim file unless the claim has been denied in its entirety.
  • If the claim is denied in whole or in part, the insurer is required to communicate the denial in writing to the policyholder listing all the legal and factual bases for such denial. Where the denial of a first party claim is based on a specific statute, applicable law or policy provision, condition, or exclusion, the written denial must include reference to and provide an explanation of the application of the statute, applicable law, or policy provision, condition, or exclusion to the claim.
  • Lastly, every insurer that denies or rejects a third-party claim, in whole or in part, or disputes liability or damages must do so in writing.

The Department also additionally admonished the insurance industry that no insurer, insurance agent, broker, insurance company representative, or other Department licensee shall dissuade policyholders from filing a notice of claim under its Business Interruption insurance coverage, or refuse to open and investigate such claims upon receipt of a notice of claim.

Insurers are giving heightened scrutiny to COVID-19 Business Interruption Insurance claims. If you intend to make such a claim, we recommend that you consult with legal counsel to discuss whether the claim is likely to be covered.

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.

Changes Made to Franchise Disclosure Document Renewals Due To COVID-19

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In light of the COVID-19 pandemic, California made recent changes to filing deadlines, fees and submission requirements for filing annual Franchise Disclosure Document (FDD) renewals. The California Department of Business Oversight announced the following:

  • Through June 30, 2020, the department will waive the additional $225 filing fee for franchise renewals that are filed after the franchise registration has lapsed.
  • The Department will accept documents filed on DocQNet that are signed electronically using e-signature software, such as DocuSign, in which case notarization of signatures will not be required.
  • The department is strongly urging that all filings made under the Franchise Investment Law (Corporations Code Section 31000 et seq.) be submitted electronically through the department’s self-service portal, DocQNet. For paper filings eligible for automatic effectiveness, the Department requests that filers acknowledge in their transmittal letter a waiver of automatic effectiveness to avoid the issuance of a stop order preventing automatic effectiveness in California and to acknowledge that their application will be made effective on the date designated by department order.

If you are a franchise owner contact your legal counsel to assist with this year’s filings. Many dates and procedures have changed, and updates are occurring on an almost daily basis.

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.

A SPECIAL MESSAGE FROM ISRAEL & SAMUELS LLP

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Israel & Samuels LLP stands in solidarity with those grieving the murders of George Floyd, Ahmaud Arbery, Breonna Taylor, Miles Hall and countless other Black Americans across this country who are being killed by police violence and subjected to systemic injustice. We demand action now to end the vicious cycle of racial inequality. We must have a legal system where everyone — and every community — is afforded dignity and respect; where “protect and serve” in law enforcement is a universal mandate, free of police brutality. We believe that being a leader in the community means speaking up against injustice and victimization and that getting help for those who need it will ensure a just future for everyone. We urge you to join us in taking action now against racism, inequality, and police brutality. Here are a few ways that you can help:

  1. Seek out and support organizations whose primary mission is to end systematic injustice, police violence, and racial inequality, including:
  2. Educate yourself, your family, and friends about the issues of racial inequality and police violence. Read articles and books to understand the experience of people of color, and the history of racial injustice in our country.
  3. Vote your values. Systemic change can only happen when we, as voters, elect representatives who will translate our demands for justice into laws and practices.

While solving systemic injustice is difficult, it is not impossible. The only way we can get there is by working together. Don’t be silent. Be a part of the solution.
Thank you for your continued support. We hope everyone is safe and healthy.

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.

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