Legal News & Tips

CA Workers’ Comp Costs: Highest in USA!

December 11, 2014 By Israel Samuels LLP Leave a Comment

A recent study by the Oregon Department of Business and Consumer Services discloses that California employers pay the highest workers’ compensation costs in the nation – by a wide margin.

The study revealed that California employers pay 188% more in workers’ compensation costs than the national median and 33% more than the second most expensive state (Connecticut).

Some of the reasons:

California has among the highest medical costs per WC claim;
California’s rate of work injury claims per 1,000 workers is 46% higher than the national median;
California has a higher-than-average rate of “permanent disability” claims and an increase in claims involving cumulative trauma and those filed post-employment;
California’s system generally is more expensive to run because of higher-than-average litigation rates and complex administrative features;
…and more.

In 2012, the California Legislature “reformed” the workers compensation system by providing employers with new tools intended to reduce costs, decrease litigation, stem abuses, speed up the claims administration and make delivery of benefits more efficient. The projected “savings” from these measures were supposed to be applied toward reducing employer premium costs, but instead were misdirected to provide injured workers with nearly $1 billion in benefit increases.

It is clear that there is more work to be done in order to bring California’s workers’ compensation costs in line with what employers pay in other states. Until a wide variety of such changes are made, California is likely to prove to be a difficult state in which to “do business” in a cost-effective manner.

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.

Obligations to Disabled Employees

December 8, 2014 By Israel Samuels LLP Leave a Comment

It is difficult for even the most diligent employer to know precisely the boundaries of the obligation to accommodate disabled employees. A recently unpublished court of appeal decision – Swanson v Morongo Unified – illustrates this point.

Swanson, an elementary school teacher, had recently been treated for breast cancer. She asked to be assigned to teach 2nd grade, as she had recently done, instead of being assigned to work with 5th graders. She contended that her fragile health made it difficult to do the added work a new assignment entailed.

But the school district assigned someone else to teach 2nd grade and assigned Swanson to teach kindergarten. She had not taught kindergarten in 30 years and expressed concern that, since the cancer treatments depleted her immune system, it would be dangerous for her to work with kindergarteners and the various illness they carried. The school district, however, refused to change the assignment.

Swanson sued claiming the district failed to accommodate her disability. The district argued that it fulfilled its obligation to offer reasonable accommodation, even if it wasn’t Swanson’s preferred accommodation.

While the trial court granted the employer’s summary judgment motion, the appellate court reversed, saying that the district violated the Fair Employment and Housing Act (FEHA) by not giving Swanson preference for the 2nd grade position and not going far enough to find a workable accommodation.

Here are some important reminders flowing from this case.

Disabled employees get preference for open positions, as long as they’re qualified and it doesn’t violate an established seniority system. This is true even if a non-disabled candidate may be more qualified.
In the vast majority of cases, an employee will be viewed more sympathetically than an employer. If the employee is a cancer survivor, that advantage can be huge.
The obligation to reasonably accommodate a disabled employee is an ongoing one. If an accommodation proves ineffective, the employer needs to resume the interactive process to identify other possible accommodations. Getting qualified legal guidance on this process is a lot cheaper than getting sued.

If there is any doubt in your mind as to whether a particular accommodation should be provided, your best action will invariably be to provide the requested accommodation.

“Wage Theft”

December 4, 2014 By Israel Samuels LLP Leave a Comment

“Wage Theft” is the term used now for employers who fail to understand all the nuances of California’s ridiculously complicated payroll laws. Mischaracterize an employee as an independent contractor (an issue state agencies can’t even agree on) and you’re labeled as a “wage thief.” Miscalculate an employee’s regular rate of pay? Ditto.

The “Wage Theft Protection Act” requires that all non-exempt, non-union employees be given a specific form at the time of hire. The DLSE has just updated that form to include information about paid sick leave. For your convenience, we’ve attached an updated copy of the new DLSE form to this issue of Business Briefs. You should start using it by January 1, 2015. http://www.dir.ca.gov/DLSE/Publications/LC_2810.5_Notice_%28Revised-11_2014%29.pdf

Paid Sick Leave

December 1, 2014 By Israel Samuels LLP Leave a Comment

California is now the second state in the nation to implement paid sick-leave state wide (Connecticut is the other). However, the Healthy Work places, Healthy Families Act of 2014 (“HWHF”) will not take effect until July 1, 2015, giving employers some time to plan ahead.

The HWHF is very broad in scope. It covers all employers regardless of size, with limited exceptions for union employees, construction employees, and providers of in-home support services. There is no small employer exception.

The union exception is limited to employees covered by collective bargaining agreements that expressly provide for: (1) wages, hours of work, and working conditions of employees; (2) paid sick days (with final and binding arbitration for disputes arising from sick days); (3) pay premium wages for all overtime hours worked; and (4) a regular hourly rate of not less than 30% more than the state minimum wage.

Like the San Francisco sick leave ordinance, the HWHF requires employers to accrue sick pay at a rate of “not less than one hour per every 30 hours worked.” The accrual begins on either the first day of work, or as of July 1, 2015 when the law becomes effective, whichever is later. For a full-time employee working 2080 hours per year (or a salaried employee), that would be 69.33 hours (8.66 days) per year.

Employees will be able to use that accrued sick time after 90 days of employment. Accrued sick leave can be limited to six days (48 hours) total, and an employer can limit carryover to three sick days (24 hours) each year.

Sick days can be used for the employee or a family member (defined as parent, child, spouse, registered domestic partner, grandparent, grandchild, or sibling). Time off can be used for illness or preventative care.

Employers with paid sick leave or paid time off policies do not need to change anything if their current policy:

Makes available an amount of leave that may be used for the same purposes as the new law (i.e. sick/family sick); and
Satisfies the accrual, carry over, and use requirements of HWHF; or
Provides for no less than 24 hours (3 days) of paid sick leave, or equivalent paid leave or paid time off per year.

There will be more to come on HWHF. We have a feeling the devil will be in the details. Get out your aspirin!

Oral Contracts: Are They Valid?

November 24, 2014 By Israel Samuels LLP Leave a Comment

It is surprising how many people think oral agreements are not valid or enforceable.

The correct answer is that oral contracts are entirely valid and enforceable, unless made invalid by a particulate statute or regulation.

Of course, a problem that can easily arise is figuring out what the terms are for a particular oral agreement, if the parties later disagree about what they initially agreed were the terms. Countless lawsuits, often very costly, have addressed the issue. A word to the wise: oral agreements are not recommended for situations involving (among other factors) considerable risk or financial exposure, or where they are expected to remain in effect for a long period of time, or where there are multiple or varying parties.

And what about those contracts requiring a written form? What are they? The starting point is referred to as the Statute of Frauds, that every state in the Union has adopted in one form or another (but not identical).

The Statute of Frauds is a descendant of multi-hundred year-old English common law, from which much of our state law in the U.S. was descended. In California, the Statute of Frauds appears in Civil Code §1624, and invalidates certain contracts “…unless they, or some note or memorandum thereof, are in writing and subscribed by the party to be charged or by the party’s agent”. The law’s list of such contracts which must be in writing includes those that:

May not be performed within a year.
Guarantee someone else’s debt, with some exceptions.
Are leases for more than one year.
Are for the sale of real property or an interest therein.
Are agreements to retain someone as an agent to buy or sell real estate for you, or lease it for you for more than one year.
Are agreements that by their terms are not to be performed during the life of the promisor.
In most circumstances, are a mortgage or deed of trust.
Are a loan or grant of credit for more than $100,000, with certain exceptions.

In addition, other laws may define specialized situations in which a written agreement is required. For instance, the Uniform Commercial Code has such requirements for certain types of materials purchase agreements.

But what’s a “writing” that meets legal requirements? Is an unsigned email sufficient to create a binding legal contract? It’s an interesting question, with a complex answer. In California, that issue is addressed in the Uniform Electronic Transactions Act, beginning with Civil Code §1633.1. We’ll provide more information about that next month.

Business Contracts

November 17, 2014 By Israel Samuels LLP Leave a Comment

Your business lives or dies based on its contracts. With whom do you have business contracts?

Employees
Independent Contractors
Suppliers
Customers
Advisors
Landlord/Tenants
Government at a wide variety of levels

And that’s only a partial list.

As an astute business owner, manager or entrepreneur (which is why you’re reading this newsletter! ), you know that it pays to understand “contract law” as a guide to your contractual relations with others.

Sure, if a contract is complex and involves a lot of legal issues, you’ll probably ask your lawyer to draft it for you. But whether you do that, or pick up a “standard form” you came across a few years ago, you should not unconditionally accept what you read or are told. As with many areas of business activity, your understanding of “what’s behind the curtain” can help you enter into appropriate, effective and enforceable contracts that help your business grow in a profitable and productive manner, and also often serve to limit exposure and potential liabilities associated with certain types of contracts.

So, from time to time we’re going to bring up various “contract issues” here in Business Briefs, to help increase your knowledge base and familiarity with contract law. We would also welcome your questions about “contract law”. If they’re of a general nature, and raise an issue that we think many of our readers might also find interesting to learn more about, we will attempt to answer them.

Firing Employees Who Criticize Your Company

November 10, 2014 By Israel Samuels LLP Leave a Comment

Employers can sometimes lawfully fire employees for posting critical comments on social media (Facebook, etc.) about their company, even if limited to discussing only their own jobs, and even if the comments are posted on the employee’s own time and using their own computer system.

But that’s not always the case.

The National Labor Relations Act (NLRA) prohibits employers from penalizing employees acting as a group to try to improve the terms and conditions of their employment. Engaging in what the NLRA calls “protected concerted activity” applies to employees whether or not they are in a union.

In a recent case, the National Labor Relations Board (NLRB) ruled that employees of a sports bar who posted or “liked” Facebook posts that were critical of their boss were unlawfully fired because the posts constituted protected concerted activity. The posts were prompted when several employees discovered that they owed more in income tax than they expected. They discussed it among themselves in the workplace and then brought up the issue with the bar’s owner, who scheduled a staff meeting.

Before the scheduled meeting, an employee started a discussion on her personal Facebook page claiming the employer didn’t know how to prepare tax paperwork properly. Other employees, as well as customers of the bar, participated in the obscenity-laced discussion. The bar owner found out about the discussion and fired one of the employees who had posted in the discussion, saying she wasn’t “loyal enough.” The owner also terminated an employee who had merely “liked” one of the posts.

The NLRB said the posts were protected concerted activity because they involved four current employees and were part of a discussion that had started in the workplace as a complaint about the owners’ tax-withholding calculations. The NLRB ordered the bar to reinstate the employees.

As a common theme we ask readers who employ others to check with your attorney before you terminate an employee for social media conduct.

Three out of four employees access social media every day on personal devices while at work. Fewer than 50% have a social-media policy that applies to employees outside of work. Providing employees with social-media training is becoming increasingly important, but if you decide to embark on this journey of figuring out what “social-media training” is, be sure to first load up on a good dose of common sense!

Holiday Parties: Minimize Your Risk

November 3, 2014 By Israel Samuels LLP Leave a Comment

Every year about this time we warn our readers to be very cautious about serving alcohol at company holiday parties. Employers can be liable for an employee’s drunk-driving accident, even if the accident occurs after the work function is over. Here is a reprint of a pertinent California case we discussed last year.

An employee, Michael Landri, made it home safely from an office holiday party but went out later that night and drove his vehicle while still intoxicated from the party. Unfortunately, the employee killed another driver in a high-speed crash. Purton v. Marriott International, Inc., (2013) 218 Cal.App.4th 499.

In December 2009, Marriott Del Mar Hotel held its annual holiday party for employees and management as a “thank you” for their work. The party was held at the hotel. Marriott planned to serve only beer and wine and to provide two drink tickets to party attendees. Attendance at the party was voluntary. Even though only beer and wine were supposed to be served, the general manager for the restaurant was bartending the party and had a bottle of whiskey brought to the bar from the hotel’s liquor supply. The general manager filled Landri’s flask with whiskey on at least one occasion (maybe more), shared shots with him and served whiskey to other guests.

The manager also shared another bottle of hard alcohol with guests. She testified that “historically there has been a lot of drinking and not a lot of control at these types of [employee] parties.” In addition, the assistant general manager of the hotel (the second-highest-ranking hotel employee) saw Landri using the flask and shared shots of alcohol with him and another employee.

Landri left the party with some co-workers and testified that he “believed” he didn’t drive home, and that his co-workers drove him. He did not drink any more after leaving the hotel party. After being home for about 20 minutes, Landri decided to drive a drunk co-worker home. While doing so, he rear-ended a car at more than 100 miles per hour, killing the driver of the other car. Landri’s blood alcohol level at the time of the accident was 0.16. Landri pled guilty to gross vehicle manslaughter while under the influence and received a six-year prison sentence.

The parents of the deceased driver sued Landri and Marriott for wrongful death. Marriott argued that it could not be liable for Landri’s actions because he was engaged in purely personal conduct when he left home after first arriving there safely. Marriott also argued that Landri’s travel was unrelated to work. Generally, employers are not liable for the wrongful acts of employees that occur outside of the employment relationship.

The court disagreed because the consumption of alcohol that eventually led to the accident was employment related, and the intoxication itself occurred during the scope of the employment. The court ruled that an employer can be liable if the activities that caused the employee to harm others were either:

Undertaken with the employer’s permission and were of some benefit to the employer; or
A customary incident of employment.

The court found that this was the case. According to the court, Marriott could not “ignore the fact that it created the risk of harm at its party by allowing an employee to consume alcohol to the point of intoxication.” Liability, according to the court, continues until the risk that was created within the scope of employment “dissipates.” In other words, in the case of alcohol consumption related to work, the employer is potentially on the hook until the employee sobers up.

Employers should consider whether they should serve alcohol at company functions given the risk of liability. Alcohol can create other problems at office parties, such as unprofessional conduct or sexually harassing behavior. As the court noted, the only way to completely eliminate the risk of harm to others and the risk of potential liability is to forbid alcohol at company functions entirely.

If alcohol is served, several measures should be in place to lessen the risk. The court also offered suggestions for lessening the risk of liability for those companies that still choose to serve alcohol:

Create and enforce a policy that prohibits employees from sneaking alcohol into a party
Enforce a drink ticket policy
Serve drinks for a limited time period
Serve food

Other suggestions to limit risk include:

Providing designated drivers or cab fare
Holding the event off-site and using experienced bartenders
Making sure that there are non-drinking individuals monitoring the situation
Close the bar well before the event ends
Reminding employees of company expectations

As always, the ultimate decision is in your hands.

Email Tips

October 27, 2014 By Israel Samuels LLP Leave a Comment

It’s to your benefit if both you and your correspondents adopt “email habits” which facilitate efficient and timely attention to the topic or request of an email. You can’t control how others handle this, but by setting a good example, you may encourage others to follow your lead.

An effective way to do this is to make sure the title (SUBJECT) of your emails is helpful and not misleading. This includes changing the title of the email title to better reflect the purpose of your most recent response.

Here’s an example of a sequence (thread) of emails involving just two people. Each new email’s title helps the recipient to identify the topic or purpose of each new communication. Alternatively, imagine what this same thread would look like if the SUBJECT stayed unchanged and the thread grew to 5 of 7 or 10 emails, all with the same identical SUBJECT as the first in the following list, over a period of a few days.
SUBJECT: Draft Lease Contract from Landlord
Client’s RESPONSE: Objections to Draft Lease Contract V1
Broker’s RESPONSE: Landlord’s Proposed Changes, Lease Contract V2
Client’s RESPONSE: Proposal for Arbitration: What Is Your Opinion?

The possibility of miscommunication when a particular response involves other newly-added recipients who may be asked to provide some response or take some action, can compound the possibility of error or misunderstanding.

You might argue that you can get the same benefits simply by being sure your emails are sorted in date sequence. We disagree, a date-sorted list can be helpful, but it doesn’t separate the wheat from the chaff, by identifying which emails really involve a “change of topic” rather than merely say “I’ll get back to you tomorrow” or “Thank you for your response, my client will respond within a week.”

Selling Your Business (?)

October 20, 2014 By Israel Samuels LLP Leave a Comment

Is your business for sale?
The likelihood that your answer will someday be “yes” is very high.

There are many unexpected and unforeseeable events that can lead to such a need, not the least of which is your own premature death well before any age or illness-based motivation.

Larry Israel not only has “legal experience” assisting clients in preparing for and carrying out a business sale — he also had been the buyer or seller where his own money was at stake, whether because he was majority owner of the company, or was an influential stakeholder with a substantial equity interest.

Think about it: an hour or two spent together in a quiet restaurant for lunch may help you gain an improved understanding of whether there is appropriate action you might want to take now, or whether it’s reasonably “safe” to let the topic slide for another year or two, or more.

Call Larry today, at 925-648-7582, and arrange to get together with him. You may learn if “an ounce of prevention is worth a pound of cure,” or alternatively if your circumstances don’t warrant any specific preparatory actions at this time.