Court of Appeal Provides Important Guidance on the Use of Electronic Signatures

Posted by on Jul 1, 2021 in Newsflash | 0 comments

A recent California Court of Appeal decision provides important guidance for California employers who allow or require employees to execute arbitration agreements and other employment-related documents using electronic signatures.  In a time where employers are increasingly relying on technology to complete the onboarding process of new employees, this recent opinion touches directly on the validity and verification of digital signatures for not only arbitration agreements but also for various other forms and agreements new employees execute during their employment. In Bannister v. Marinidence Opco, LLC (2021) 64 Cal.App.5th 541, Maureen Bannister (“Bannister”) filed a wrongful termination action against her former employer, Marinidence. In response, the employer filed a petition to compel arbitration, and attached Bannister’s electronically-signed arbitration agreement. Bannister challenged the validity of the arbitration agreement, presenting evidence to the court that she never saw the agreement during the onboarding process and did not affix her electronic signature to the arbitration agreement. Moreover, Bannister provided evidence that the employer’s human resources team had instead signed the arbitration agreement electronically for her. As a result, the trial court denied employer’s petition to compel arbitration, finding that the employer failed to meet its burden to prove that Bannister actually signed (electronically) the arbitration agreement. The trial court therefore found the arbitration agreement unenforceable. The Court of Appeal affirmed the trial court decision. Civil Code §1633.9(a) governs the authentication of electronic signatures. It provides that an electronic signature may be attributed to a person if “it was the act of the person.” The “act of the person” may be shown in any manner, including a showing of the efficacy of any security procedure applied to determine the person to which the electronic record or electronic signature was attributable. For example, California courts have held that an employer may establish that the electronic signature was “the act of the person” by presenting evidence that a unique login and password known only to that person was required to affix the electronic signature, along with evidence detailing the procedures the person had to follow to electronically sign the document and the accompanying security precautions. In Bannister, the employer provided evidence that Bannister had to enter her social security number, a client ID, and pin code to access and sign the arbitration agreement. Bannister, in turn, argued that the employer also had access to that information and therefore could have signed the agreement for her. In light of this conflicting evidence, the court ruled that the employer failed to meet its burden to prove the existence of a valid and enforceable arbitration agreement. Employers should review their onboarding process to comply with the requirements of Civil Code §1633.9(a). When requiring an employee to sign an arbitration agreement electronically, the employer must take verifiable steps to ensure that only the employee to be bound by the arbitration agreement can sign the agreement. If you have any questions regarding the compliance of your onboarding process or would like to discuss the adequacy of the security measures you have or intend to put in place with respect to electronic signatures, please do not hesitate to contact...

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California Court of Appeal Affirms Summary Judgment in Favor of Owner on Claim of Individual Liability for Wage & Hour Violations

Posted by on Jul 1, 2021 in Newsflash | 0 comments

In a recent opinion[1], the California Court of Appeal for the Fourth Appellate District affirmed summary judgment in favor of an individual owner of a company who was personally sued for alleged wage and hour violations under Labor Code §558.1. Labor Code §558.1 provides that a natural person who is an owner, director, officer, or managing agent of an employer may be personally liable if that person, on behalf of the employer, “violates, or causes to be violated” certain wage and hour laws. In the Usher opinion, the trial court granted summary judgment for the owner, concluding as a matter of law that she was not liable under Labor Code §558.1 because the court found undisputed evidence that she did not participate in the determination to classify plaintiffs as independent contractors. The Court of Appeal affirmed and held: “The undisputed evidence in this case shows that the owner was not personally involved in the determination to classify plaintiffs as independent contractors, which purported misclassification forms the basis of their class and subclass allegations and their 10 causes of action; and that she also lacked sufficient participation in the operation and management of the company to create a triable issue of material fact that she caused the wage and hour violations.” Whether an individual such as an owner, director, officer, or managing agent of an employer is personally liable for misclassifying an employee remains a highly fact-intensive inquiry. Employers, however, should be aware of this basis for personal liability for violations of Wage & Hour laws. [1] Usher v. White (2021) Cal.App.4th, WL 2173167...

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Court Dismisses Spouse’s Lawsuit Based on COVID-19 Exposure in the Workplace

Posted by on Jun 2, 2021 in Newsflash | 0 comments

An employee’s wife sued her husband’s employer for negligence in an attempt to hold her husband’s employer responsible for her COVID-19 infection. The complaint alleged that the employee’s wife contracted COVID-19 as a result of her husband’s exposure to a COVID-19 outbreak at his workplace. The complaint further alleged that the husband’s employer was negligent by failing to provide a safe workspace which in turn caused both husband and wife’s infections. The couple sought damages for contracting the COVID-19 infection and the subsequent hospitalization. The United States District Court for the Northern District of California dismissed the suit, with prejudice, finding in part that California’s workers’ compensation statutes provide the exclusive remedy to the extent the employer may have any liability for the alleged harm. California’s workers’ compensation law provides that workers’ compensation is the exclusive remedy for an employer’s liability where an employee sustains an injury in the course of employment. Because both the employee and his spouse’s claims hinge on the allegation that he contracted COVID-19 at the workplace, the only available redress is filing a workers’ compensation claim rather than a lawsuit for negligence. The court also found that the spouse’s claims could be dismissed for the additional reason that the employer’s duty to provide a safe workplace does not extend to non-employees like her, where she contracted the virus away from employer’s premises. This dismissal, if not appealed successfully, should help to assuage employer concerns over possible lawsuits by employees or their family members alleging a COVID-19 infection due to employer’s negligence. Employers must, however, still comply with federal, state, and local health and safety...

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Court of Appeal Opinion Reminds Contracting Parties They Are Stuck with the Contract They Signed

Posted by on Jun 2, 2021 in Newsflash | 0 comments

The case entitled Coral Farms, L.P. v. Mahony (2021) 63 Cal.App.5th719 involved a dispute between three neighboring property owners that incurred varying damages due to a mudslide. The three parties sued and countersued one another for negligence and other claims related to water drainage. The parties eventually settled their dispute.  As part of the settlement, the owners agreed to perform mitigation and repair work on their own properties according to their own separate plans. The agreement was memorialized in a Settlement Agreement. The Settlement Agreement contained a “Final Approval” provision which stated: “Upon completion of the work, each party shall obtain a written report by the design engineer or geologist that the work performed is in substantial compliance with that Parties’ plan . . . and will provide a copy to all other Parties within 30 days of completion.” Subsequently, two owners sued the third owner. Those two owners alleged the third owner breached the Settlement Agreement because the work completed by the third owner was not in substantial compliance with their plan. But in a bench trial, the court found that the defendant owner complied with the contract, which merely required the owner to provide a copy of an engineer’s report stating their work was substantially completed in accordance with the approved plans (which, as noted above, the third owner did in fact provide). The Court of Appeal agreed with the trial court’s findings and observed that it is a well-settled rule that, when parties to a contract agree that the sufficiency of a party’s performance is to be decided by a third person (such as an engineer, in this instance), that third person’s decision is conclusive and binding on the parties in the absence of bad faith, fraud, or gross negligence. Per the Court of Appeal: “Courts are not in the business of rewriting ill-advised contract provisions. Plaintiffs were stuck with the contract they signed.” Plaintiffs attempted to argue that the Settlement Agreement “does not state that the report of each party’s design engineer is valid, or that it is conclusive, or that it is binding.”  The Court, while agreeing with that general statement, held that it is of no consequence. “The incorporation of current law into a contract is presumed and does not require a deliberate expression by the parties.”  The Court focused its attention on the “Final Approval” heading and held that under the facts of this case, the Court must presume Plaintiffs were aware of the conclusive consequences of the “Final Approval” provision in their fully integrated contract and the Court found that there is no evidence to the contrary. “In any event, even though the precise words may not be explicitly stated in the Settlement Agreement, the valid, conclusive, and binding nature of the “Final Approval” provision is apparent from the contract’s plain language.” This opinion is a helpful reminder for contracting parties to carefully review the language of their contracts and retain an experienced attorney who is familiar with the current state of the law to ensure the parties’ intentions are accurately set out in the contract and that they will be enforced in...

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California Recording Law Requires All Parties to Consent

Posted by on May 3, 2021 in Newsflash | 0 comments

California generally provides heightened protection for individual privacy rights. Consistent with protecting individual privacy rights, the California Supreme Court recently ruled that both parties and nonparties must get consent from everyone on a cellular or wireless telephone call before making a recording of the call. From a legal perspective, the most important question in the recording context is whether consent must be obtained from one or all parties to a wireless communication before recording it. Federal law and many state statutes from other states permit recording if one party to the telephone call or conversation consents. In California, however, not only is it a criminal offense to record a communication without consent of all parties, but it can also potentially give an injured party a civil claim for money damages. Individuals and businesses often have a need or desire to record telephone conversations that relate to their business dealings or customers. California law applies when you and the person you are recording are both located in California. Anyone in California who records telephone calls should know and understand California law on the subject, as even minor violations can carry significant consequences. In Smith v. LoanMe, Inc. (2021) WL 1217873, the California Supreme Court struck down a California Court of Appeals ruling which held that only third-party eavesdroppers needed to obtain consent to record a phone call.  The Court of Appeals had held that California Penal Code section 632.7 did not forbid one party in a call on a cellular or cordless telephone from recording the call without the other party’s consent. The California Supreme Court disagreed, holding instead that the statute applies to both active participants on the telephone call and non-participants alike. The facts giving rise to the case are rather succinct. LoanMe extended a loan to plaintiff’s wife, after which a LoanMe employee called a phone number provided by plaintiff’s wife. The employee reached plaintiff Jeremiah Smith instead. Plaintiff answered the phone on a wireless telephone and informed the employee that his wife was not home. The call was brief- lasting only 18 seconds. The LoanMe employee recorded the call but did not inform plaintiff that the call was being recorded. In September 2016, plaintiff filed a class action consisting of anyone in California whose calls on a wireless telephone with LoanMe were recorded without their consent by LoanMe within one year of September 2016. The complaint alleged that the recording of these calls violated California law. The trial court dismissed the action. The Court of Appeals ultimately concluded that California law prohibits only nonparty eavesdroppers from intentionally recording phone conversations. The California Supreme Court reversed the Court of Appeal ruling and allowed the class action to move forward. The Supreme Court reasoned that Penal Code section 632.7 is a general prohibition against the intentional recording of a covered communication without the consent of all parties, regardless of whether the recording is performed by a party to the communication or by someone else. While it is common business practice to inform incoming callers that the call may be recorded, businesses should also be mindful to implement this practice on outbound calls. Businesses should train employees to immediately inform the person answering the telephone that the call is being recorded and to obtain consent to continue to do...

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California Enacts Right of Recall

Posted by on May 3, 2021 in Newsflash | 0 comments

On April 16, 2021, Governor Gavin Newsom signed SB 93 into law, which law went into effect immediately. This new legislation enacts a “right of recall,” requiring certain employers to first offer employees laid off due to the COVID-19 pandemic available positions based on a preference system. The law applies generally to hospitality and maintenance-related employers- hotels, private clubs, event centers, and airport hospitality services as well as janitorial, building maintenance, and security services provided to office, retail and other commercial buildings. Covered Employees A “laid-off employee” under the new law is defined as an employee who was employed by the employer for 6 months or more in the 12 months preceding January 1, 2020 and was laid-off for a reason related to the COVID-19 pandemic. Employer Obligations Covered employers must make written job offers to “laid-off employees” for all job positions that become available for which the employee is qualified. Laid-off employees are deemed qualified under the law if the employee held the same or similar position at the time the employee’s previous employment with the employer terminated. The employer must deliver the offer “either by hand or to their last known physical address, and by email and text message” if the employer has that information. Laid-off employees have five business days to accept the offer. If more than one qualified laid-off employee accepts the job offer, the employer must rehire the “individual with the greatest length of service based on the employee’s previous date of hire,” (i.e., the employer must rehire based on seniority). In the event an employer declines to recall a laid-off employee on the grounds of lack of qualification, the employer must provide the laid-off employee a written notice of this decision within 30 days. The written notice must include a list of all employees hired for that position and state their length of service with the employer. Further, the written notice must include the employer’s explanation as to why the employee was not rehired. Employers must maintain records relating to rehiring laid-off employees for three years, “measured from the date of the written notice regarding the layoff.” These records must include, for each laid-off employee, the following information: (1) the employee’s full legal name; (2) the employee’s job classification at the time of the lay-off; (3) the employee’s date of hire; (4) the employee’s last known address; (5) the employee’s last known email address; (6) the employee’s last known telephone number; (7) a copy of the written notice regarding the layoff provided to the employee; and (8) all records of communications between the employer and the employee concerning offers of rehire. Penalties The Division of Labor Standards Enforcement (“DLSE”) has exclusive jurisdiction to enforce this law. A laid-off employee may file a complaint with the DLSE and DLSE is authorized to award the laid-off employee: (1) hiring and reinstatement rights; (2) front pay or back pay for each day during which the violation continues; and (3) the value of the benefits the laid-off employee would have received under the employer’s benefit plan. In addition, the DLSE may impose civil penalties of $100 for each employee whose rights are violated and liquidated damages in the amount of $500 per employee for each day the violation continues. The penalty and liquidated damages collected by the...

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EMPLOYERS MAY REQUIRE EMPLOYEES TO RECEIVE COVID-19 VACCINATION

Posted by on Apr 1, 2021 in Newsflash | 0 comments

The California Department of Fair Employment and Housing (“DFEH”) released guidance indicating that employers may require employees to receive an FDA-approved vaccination against COVID-19 infection so long as the employer does not discriminate against or harass employees or job applicants on the basis of a protected characteristic and provides reasonable accommodations related to disability or a sincerely held religious belief. While employers may mandate that employees receive vaccinations, employees have a right to object on the basis of disability or a sincerely held religious belief. If an employee objects to being vaccinated on the basis of disability, the employer must engage in an interactive process with and make efforts to reasonably accommodate the employee to address the employee’s disability-related reason for refusing to be vaccinated. However, DFEH indicates that an employer may exclude an employee from the workforce if the employer shows that the accommodations would result in an undue hardship to the employer, the employee is unable to perform the employee’s essential duties even with reasonable accommodations in place, or the employee cannot perform those duties in a manner that would not endanger the employee’s health or safety or the health and safety of others even with reasonable accommodations. Similarly, an employee that objects to receiving the vaccination on the basis of sincerely held religious beliefs or practices must receive reasonable accommodations, unless it would pose an undue hardship to the employer. According to DFEH’s guidance, when considering disability-based accommodations, an employer may consider whether the employee is able to work remotely or whether reasonable safeguards could be put in place at the worksite that would allow the employee to work without endangering the employee or others. DFEH also provides important guidance for employers in the event employees object to vaccination simply because they do not “trust” the vaccine. DFEH’s guidance indicates that employers are not obligated to provide reasonable accommodations to employees who object to getting vaccinated because they do not trust that the vaccine is safe. An employer’s obligation to provide reasonable accommodations is limited to employees who object to receiving a vaccination based on a disability or sincerely held religious belief. Lastly, employers may require employees to provide proof that they have in fact been vaccinated. DFEH’s guidance states that requiring proof of vaccination is not a disability-related inquiry, religious creed-related inquiry, or a medical examination. However, DFEH suggests that employers instruct employees to omit any medical information from such documentation because the documentation may contain disability-related information. Employers must remember to maintain all employee records of vaccination as confidential medical records, and to keep them separate and apart from other employment...

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California Introduces New COVID-19 Supplemental Paid Leave

Posted by on Apr 1, 2021 in Newsflash | 0 comments

On March 19, 2021, California Governor Gavin Newsom signed SB 95 into law, requiring many employers to provide employees with two paid weeks of supplemental COVID-19 sick and vaccination leave for 2021. SB 95 went into effect on March 29, 2021. The new law covers a broad range of employers, as it applies to employers with 26 or more employees. The prior supplemental paid leave law that expired on December 31, 2020, applied to employers with 500 or more employees. Further, the law applies retroactively to leave taken starting January 1, 2021, and is effective through September 30, 2021. Because the new law applies retroactively, employers must take immediate action to ensure compliance. SB 95 created new Labor Code section 248.2, which mandates that employers provide covered employees who are unable to work or telework for reasons related to COVID-19 with supplemental paid sick leave. This law entitles full-time employees to an additional 80 hours of supplemental paid sick leave. Employers cannot require a covered employee to use any other available paid or unpaid leave prior to using the supplemental leave provided by SB 95. However, employees do have the right to choose whether they want to use supplemental paid sick leave or some other paid or unpaid leave benefit that either the employer provides or the law requires. The reasons for which an employee may use supplemental paid sick leave are expanded from the prior version of the law as well. Employees who are unable to work or telework can use supplemental paid sick leave for the following reasons: Employee is subject to quarantine or isolation period related to COVID-19 as defined by federal, state, or local orders or guidelines. Employee is advised by a health care provider to self-quarantine due to concerns related to COVID-19. Employee is attending an appointment to receive a COVID-19 vaccine. Employee is experiencing symptoms related to a COVID-19 vaccine that prevent the employee from being able to work or telework. Employee is experiencing COVID-19 symptoms and seeking a medical diagnosis. Employee is caring for a family member who is subject to a quarantine or isolation order or guideline or who has been advised to self-quarantine by a health care provider due to concerns related to COVID-19. Employee is caring for a child whose school or place of care is closed or otherwise unavailable on the premises for reasons related to COVID-19. This law entitles full time employees to 80 hours of supplemental paid sick leave. An employee is considered full time if the employee is classified as full-time by the employer or the employee was scheduled to work, on average, at least 40 hours per week in the two weeks preceding the date on which leave is taken. For employees not considered full time under the law, the employee’s schedule and length of employment determine the amount of supplemental paid sick leave the employee is entitled to as follows: (1) an employee with a normal weekly schedule is entitled to the total number of hours the employee is scheduled to work for the employer over two weeks; (2) an employee with a variable number of hours scheduled to work is entitled to 14 times the average number of hours the employee worked each day for the employer in the six months preceding...

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Rounding Employee Meal Periods Violates California Labor Law

Posted by on Mar 1, 2021 in Newsflash | 0 comments

A few days ago, the California Supreme Court issued an opinion ruling that employers are not permitted to round an employee’s time punch for meal periods. (Donohue v. AMN Services, LLC, Cal. Supreme Court Case No. S253677.) Prior to this decision, several California appellate courts held that an employer is entitled to use a rounding timekeeping policy if the policy is “fair and neutral” on its face and it is used in a manner that will not result, over time, in failure to compensate employees for all the time they have actually worked.[1] The California Supreme Court, however, narrowed this rule and held that while employers are generally permitted to round an employee’s time punches at the start and end of an employee’s shift, employers are not permitted to round an employee’s time punches for meal periods in the same manner. Facts AMN Services, LLC (“AMN”) a healthcare services and staffing company that recruits nurses for temporary contract assignments, and which used an electronic timekeeping system that rounded time punches to the nearest 10-minute increment. For example, if an employee clocked out for lunch at 11:02 a.m. and clocked back in after lunch at 11:26 a.m., each of the employee’s time punches was rounded to the nearest ten minute increment, resulting in official time punches of 11:00 a.m. and 11:30 a.m., respectively. AMN used the rounded time rather than the actual punch time to determine compliance with meal periods. The plaintiff, a former employee, filed a class action lawsuit against AMN alleging various wage and hour violations, including claims for meal period violations. With respect to the meal period claims, plaintiff argued that AMN improperly rounded time punches for meal periods and thereby deprived plaintiff of premium wages for noncompliant meal periods. Procedural Background Both plaintiff and AMN filed motions for summary adjudication at the trial court level. The plaintiff argued that AMN’s rounding policy should not be applied to meal periods and that plaintiff was entitled to premium wages for noncompliant meal periods. AMN, relying on See’s Candy Shops, Inc. v. Superior Court, argued that AMN’s rounding policy of meal period times was lawful because it was facially neutral and, over time, resulted in the overcompensation of wages to employees. The trial court sided with AMN and ruled that AMN’s rounding policy complies with California law. The trial court reasoned that AMN’s rounding policy fairly compensated employees over time and that “the rationale behind allowing rounding for work time would be the same for meal break time.” The Court of Appeal affirmed the trial court decision and agreed with the trial court’s reasoning. The court held that the plain text of Labor Code section 512 and Wage Order No. 4, which govern meal periods, does not prohibit rounding. The court further explained that rounding “is a practical method for calculating worktime and can be a neutral calculation tool for providing full payment to employees” and that no case law suggests rounding does not apply to meal periods. California Supreme Court Analysis The California Supreme Court granted review and reversed the Court of Appeal judgment. The court addressed the following two questions: (1) whether an employer may properly round time punches for meal periods; and (2) whether time records showing noncompliant meal periods raise a rebuttable presumption for meal...

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Cybersecurity

Posted by on Mar 1, 2021 in Newsflash | 0 comments

We at Navigato & Battin have witnessed the damage and destruction an individual or small business endures as a result of computer fraud.  We asked our friends at Gallant Risk & Insurance Service to provide some insight to our clients about the risks and insurance available to guard against internet fraud.  Below is an article prepared by Gallant.  Cybersecurity and Private Risks  Most small and medium-sized business operations are not immune to a cyberattack.  In fact, the personal customer data and payment information that most small businesses collect and store makes the business as much a prime target for hackers as a large corporation.  According to recent surveys, 43% of all cybersecurity attacks are aimed at small businesses, and that number is likely to increase.  Likewise, 54% of businesses believe their businesses are “too small” to be targeted by cyber criminals and 83% of small businesses say they lack the money they would need to recover from a cyberattack or data breach. Financial Impact of a Breach:  If your business is the victim of a data breach, the financial costs incurred to resolve and recover from the event can be staggering. According to the Ponemon Institute, the average price for a small business to clean up after a breach is approximately $690,000, and this figure doesn’t take into account the loss of revenue. Some of the direct costs associated with a data breach include:   Notifying your customers that a breach has occurred; Conducting a forensic investigation to determine the source and extent of the breach; Fines and penalties imposed by the Payment Card Industry, Security Standards Council, payment card associations, and your facility’s own financial institution; Ongoing customer credit report monitoring and identity theft repair and, in some cases, costs associated with reissuing credit and debit cards to customers whose personal data was compromised; Upgrading or having to replace your compromised computer system, payment software and hardware, and server; and The often-required implementation of additional security monitoring services to ensure ongoing compliance with the Payment Card Industry Data Security Standards (PCI DSS).  Securing Cyber Insurance: Cyber insurance is a critical but often overlooked component of cybersecurity management for businesses covering both first- and third-party costs, as well as business interruption expenses, if a cybersecurity breach forces your business to shut down. The agents at Gallant Risk & Insurance Services are experienced and knowledgeable about cybersecurity insurance. If your business does not yet have cybersecurity insurance, please contact our friends at Gallant Risk & Insurance Service to secure a policy that is right for...

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