CAL/OSHA Revises COVID-19 Prevention Emergency Temporary Standards

Posted by on Jan 6, 2022 in Newsflash | 0 comments

Effective January 14, 2022, the revised Cal/Osha COVID-19 Prevention Emergency Temporary Standards (“ETS”) will be updated to include important revisions to workplace rules related to an employee’s return to work after close contact with a COVID-19 positive individual. In addition to these revised requirements, employers must continue to follow public health orders on COVID-19. On December 13, 2021, the California Department of Public Health (“CDHP”) issued new guidelines requiring the use of face coverings by all employees when indoors, regardless of vaccination status. Employees who are exempted from wearing a face covering due to a medical or mental health condition or disability must physically distance themselves at least six feet from others and either be fully vaccinated or tested at least weekly for COVID-19. Revisions to the Return-to-Work Criteria The period of time before an employee can return to work after “close contact” or COVID-19 infection has been revised to be consistent with the current CDPH guidelines. The time frames will automatically update if CDPH updates its guidelines pursuant to the Governor’s executive order. Both vaccinated and unvaccinated employees must be excluded from the workplace for 14 days if they come in “close contact” with someone infected with COVID-19, even if they test negative. An exception is provided for fully vaccinated employees who do not develop COVID-19 symptoms if they do all of the following: (a) wear a face covering at the workplace for 14 days following the last date of close contact; (b) maintain six feet of distance from others at the workplace for 14 days following the last date of close contact; and (c) get a COVID-19 test three to five days after the close contact.  Close contact is defined as being within six feet of a COVID-19 positive case for a total of 15 minutes or greater in any 24-hour period. The revised temporary rules indicate that persons who had a close contact may return to work as follows: Employees who had a close contact but never developed any COVID-19 symptoms may return to work after 14 days have passed since the last know close contact unless one of the exceptions below applies: 10 days have passed since the last known close contact and the person wears a face covering and maintain six feet of distance from others while at the workplace, for 14 days following the last date of close contact; or 7 days have passed since the last known close contact; the person tested negative for COVID-19 using a polymerase change reactions (PCR) COVID-19 test with the specimen taken day 5 or later after the last known close contact; and the person wears a face covering and maintains six feet of distance from others while at the workplace for 14 days following the last date of close contact. Employees who had a close contact and developed any COVID-19 symptoms cannot return to work until all of the following conditions are met: At least 24 hours have passed since a fever of 100.4 degrees Fahrenheit or higher has resolved without the use of fever-reducing medications; and COVID-19 symptoms have improved; and At least 10 days have passed since COVID-19 symptoms first appeared. Employers are now required to make COVID-19 testing available at no cost and during paid time to employees who had close contact with...

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California Employers Should Update Their Form Agreements in Light of SB 331

Posted by on Jan 6, 2022 in Newsflash | 0 comments

SB 331, also known as the “Silenced No More Act,” went into effect on January 1, 2022, and broadens California Code of Civil Procedure section 1001. Prior to the enactment of SB 331, section 1001 prohibited confidentiality provisions in settlement agreements or non-disparagement agreements in civil actions and administrative complaints which included allegations of sexual assault, sexual harassment, or workplace harassment or discrimination based on sex. Now, with the enactment of SB 331, the prohibited confidentiality provisions apply to any workplace harassment or discrimination claims, not just those based on sex. This includes matters alleging discriminatory acts based on race, religion, national origin, gender, age and other protected characteristics as provided in California Government Code sections 12940 and 12955. The practical effect of this new law is that employers cannot prevent employees from discussing factual information surrounding unlawful acts of harassment or discrimination in the workplace alleged in a civil lawsuit or administrative charge. Employers may, however, still include provisions to maintain the confidentiality of the amount paid in settlement of the claim, and the parties may still agree to confidentiality in settlements of threated claims that have not been filed in court or with an administrative agency. SB 331 further prohibits non-disparagement agreements or other similar agreements that an employer may require an employee to sign as a condition of employment or continued employment that restrict an employee’s right to disclose factual information about unlawful acts in the workplace. SB 331 also applies to any agreement related to a current or former employee’s separation from employment. Any such separation agreement which is not made to resolve previously filed civil claims or administrative complaints must include provisions that: (a) inform the employee of his or her right to consult an attorney; and (b) provide a reasonable time period of at least 5 business days for an employee to consult with an attorney. An employee may sign such an agreement prior to the end of the reasonable time period only if the employee’s decision to do so is “knowing and voluntary” and is not induced by the employer through fraud, misrepresentation, or a threat to withdraw or alter the offer prior to the expiration of the reasonable time period, and so long as the employer does not provide different terms to employees who sign such an agreement prior to the expiration of such time period. A non-disparagement agreement or other agreement that restricts an employee’s ability to disclose information related to conditions in the workplace must include the following language: “Nothing in this agreement prevents you from discussing or disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that you have reason to believe is unlawful.” NavBat encourages employers to update their form agreements to ensure compliance with SB 331 and to reach out to NavBat to review and/or revise any form agreements containing provisions that may run afoul of the newly-enacted...

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Intentional Wage Theft Can Subject Employers to Criminal Penalties

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

California has adopted a host of new labor and employment laws that will become effective on January 1, 2022. One such new employment law can be found in the California Penal Code. Assembly Bill (“AB”) 1003 adds section 487(m) to the California Penal Code where “grand theft” will be defined to include intentional theft of wages, including gratuities, in excess of $950 from any single employee, or $2,350 in the aggregate from two or more employees. According to the California Department of Industrial Relations, wage theft is a form of fraud and occurs when employers do no pay workers according to the law. Examples of wage theft include paying less than minimum wage, not paying workers overtime, not allowing workers to take meal and rest breaks, requiring off-the clock work, or taking workers’ tips. The new law defines “theft of wages” as the intentional deprivation of wages, gratuities, benefits, or other compensation by unlawful means and with knowledge that the wages, gratuities, benefits, or other compensation are due to the employee. The term “employee” includes an independent contractor and the term “employer” includes the hiring entity of an independent contractor. Further, AB 1003 provides that the wages, gratuities, benefits, or other compensation may be recovered as restitution, but the new provision of law does not prohibit the employee or the Labor Commissioner from commencing a civil action to seek remedies provided for under the Labor Code. Lastly, the bill states that this new section of the Penal Code does not constitute a change in, and does not expand or limit the scope of conduct prohibited by, section 487. Employers and all hiring entities of independent contractors should ensure their compensation policies and procedures are compliant with the...

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Court of Appeal Provides First Published Opinion Addressing PAGA Manageability

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

In Wesson[1], the Second District Court of Appeal held that trial court judges have inherent authority to limit and even strike unmanageable Private Attorney General Act (“PAGA”) claims. The Court of Appeal held that: “(1) courts have inherent authority to ensure that Private Attorney General Act (PAGA) claims can be fairly and efficiently tried and, if necessary, may strike claims that cannot be rendered manageable; and (2) as a matter of due process, defendants are entitled to a fair opportunity to litigate available affirmative defenses, and a court’s manageability assessment should account for them.” The Wesson decision is the first time a California Court of Appeals addressed PAGA manageability and confirmed a trial court’s inherent authority to strike unmanageable PAGA claims. This case sets an important precedent for California employers by expressly subjecting PAGA claims to a manageability analysis. PAGA is simply a procedural statute allowing an aggrieved employee to recover civil penalties for Labor Code violations, such as overtime and rest and meal period violations, that otherwise would be sought by state labor law enforcement agencies. The plaintiff in this action was a former general manager (“GM”) of Staples who filed suit against his former employer, asserting representative claims under PAGA on behalf of himself and 345 other current and former GMs for Labor Code violations based on allegations that the employer misclassified its GMs as executives exempt from overtime pay and meal and rest periods. Staples argued that the Plaintiff and the other GMs represented in the PAGA action were properly classified as exempt pursuant to the executive exemption – meaning that Plaintiff and the other GMs were not entitled to overtime, meal breaks, or rest breaks. If an employer claims that an employee is exempt from overtime and rest and meal period requirements, the burden is on the employer to prove the exemption defenses applies. To validly assert the affirmative defense of exemption, Staples would have to prove, among other things, that each GM spent most of their time on managerial tasks, performing exempt job duties. Staples moved to strike the PAGA claims, arguing that it would be unmanageable to litigate its affirmative defense of exemption, which requires individual proof and not merely common proof. In other words, Staples would need establish the exemption as to each GM individually. The trial court found that Plaintiff’s trial plan did not address how the parties might litigate Staples’ affirmative defense – specifically how Staples’ GMs performed their jobs and the extent to which they performed non-managerial tasks. Noting the parties’ eight-year estimate of the time they would need to litigate the exemption defense, the trial court stated that “even cutting those estimates in half would result in trial lasting more than four years. A four-year trial involving witnesses and documents individually pertaining to each of the 346 GMs does not meet any definition of manageability.” The trial court concluded that the PAGA claim was unmanageable and granted Staples’ motion to strike the PAGA claim. While the Court of Appeal affirmed the trial court’s decision in this case, the Court of Appeal explained that “we do not hold that a PAGA misclassification case can never be managed through common-proof methods. However, Wesson’s lack of cooperation with the trial court’s inquiry in this regard stymied the court’s efforts to devise...

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OFAC Issues Updated Ransomware Advisory

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

On September 21, 2021, the Department of Treasury’s Office of Foreign Assets Control (“OFAC”) issued an Updated Advisory “to highlight the sanctions risks associated with ransomware payments in connection with malicious cyber-enabled activities and the proactive steps companies can take to mitigate such risks.” The Updated Advisory notes that in enforcement actions, it would consider those proactive steps to be “mitigating factors” against potential sanctions. This Updated Advisory follows on OFAC’s October 1, 2020 Advisory on Potential Sanctions Risks for Facilitating Ransomware Payments and provides additional guidance for companies that may make or facilitate ransomware payment. Ransomware is a form of malicious software or more aptly “malware,” designed to block access to a computer system to extort ransom payments from victims in exchange for restoring the victim’s access to its systems.  The Updated Advisory explains how ransomware attacks continue to increase in the U.S. with greater focus and sophistication. According to the FBI, there was a nearly 21% increase in reported ransomware cases and a 225% increase in associated losses from 2019 to 2020. Cyber actors have not only targeted private businesses but also governmental entities. The Updated Advisory emphasizes that the U.S. government “strongly discourages” victims from making ransom payments or paying extortion demands and recommends focusing on strengthening defensive measures to prevent and protect against ransomware attacks. The Updated Advisory stated that the reason the U.S. government continues to strongly discourage anyone from paying a ransom demand in a cyber-attack is because making a ransom payment does not guarantee that a malicious actor will reprovision a company’s access to data or refrain from further attacks against the company. OFAC further states that the availability of payments not only enrich malicious actors but also incentivize other malicious actors to perpetuate additional attacks. OFAC goes on to explain that ransom payments can be used to fund activities adverse to the national security and foreign policy objectives of the United States.  Importantly, OFAC highlights that U.S. law prohibits anyone from engaging in transactions, directly or indirectly, with individuals or entities on OFAC’s Specially Designated Nationals and Blocked Persons List (“SDN List”), or other blocked lists. Related to this point, the Updated Advisory reminds of OFAC’s authority to impose civil penalties for sanctions violations which is based on strict liability; meaning that a person subject to U.S. jurisdiction may be held civilly liable even if such person did not know or have reason to know that it was engaging in a transaction that was prohibited under U.S. law. While OFAC states that individuals or companies who pay ransom payments to blocked individuals or groups risk breaking the law, the Updated Advisory provides new guidance to those finding themselves in a position of making or facilitating payments. In the Updated Advisory, OFAC describes certain “mitigating factors” a company can take which OFAC may consider when determining an appropriate enforcement response to an apparent violation of U.S. sanctions laws or regulations. One of the mitigating factors OFAC will consider is whether a company implemented a risk-based compliance program to mitigate exposure to ransom demands by malicious actors on the SDN or another block list. The Updated Advisory recommends adopting guidelines contained in the Cybersecurity and Infrastructure Security Agency’s (CISA) September 2020 Ransomware Guide.  This resource provides guidance on the “meaningful steps” companies can...

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Mandated Retirement Plans for California Employers

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

Back in 2016, California passed legislation requiring employers with 5 or more employees to offer a qualified retirement plan or register with the state option: CalSavers.  CalSavers officially launched in 2019 as part of a phased rollout over a three year period. The first phase required employers with more than 100 employees to register, followed by those with more than 50 employees and lastly, employer with 5 or more employees. The most recent registration deadline of the program passed on June 30, 2021, which affected employers with more than 50 employees. Employers who missed this deadline should contact CalSavers and register as soon as possible to avoid penalties. Employers with 5 or more employees must register for CalSavers by June 30, 2022. CalSavers is a retirement savings program sponsored by the State of California. California implemented CalSavers to help ensure Californian workers have a path to financial security in retirement.  This program is designed to give employers an easy way to help their employees save for retirement without having to pay any fees or other costs. Importantly, employers have no fiduciary liability and minimal employer responsibilities. Employers can register through the CalSavers website (www.Calsavers.com) or file an exemption on the same site if they already offer a qualified retirement plan such as a 401(k). After registering, employers are required to add employees within 30 days of completing the registration. Employees will have the option to join or opt-out of CalSavers. If they join, a standard deduction of 5% from gross pay will be automatically deducted from their payroll with an annual automatic escalation of 1% until it reaches 8%. Employees, however, will also have the option to select their own contribution rate and rate of increase. The California Franchise Tax Board is empowered to fine noncompliant employers $250 per employee. After 180 days, the penalty increases to $500 per employee. Thus, it is important employers take steps to either adopt a private retirement plan and file for an exemption or register with...

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Court Rules Proposition 22 Is Unconstitutional

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

Millions of dollars were spent by rideshare and food delivery companies to ensure Proposition 22 (“Prop 22”) was passed by Californians last November 2020. This ballot initiative was passed by a wide margin and provided an independent contractor exception for “app-based” drivers. However, on August 20, 2021, a California Superior Court judge found the voter-approved Prop 22 unconstitutional and therefore, unenforceable. Prop 22 is a California ballot initiative that classified app-based drivers as independent contractors rather than employees. This measure was a direct response to Assembly Bill (AB) 5, which introduced stringent guidelines for classifying workers as independent contractors. As a result of AB 5, app-based drivers were generally not classified as independent contractors. Prop 22 was specifically designed to circumvent California employment law, and AB 5, by creating an exception for app-based drivers. California has been pushing for independent contractors to be classified as employees, arguing that workers with employment status receive more protections and benefits such as health insurance, sick leave, and minimum wage. Proponents of Prop 22 argue that an employee classification of app-based drivers will restrict the work flexibility offered to app-based drivers and that a majority of app-based drivers do not want to be classified as employees. The August 20th decision, written by California Superior Court Judge Frank Roesch, stems from a petition filed by labor union Service Employees International Union and a handful of app-based drivers requesting the court to hold Prop 22 unconstitutional. Petitioners, in support of their petition, argued that by exempting workers previously classified as employees from workers’ compensation, Prop 22 infringes on the Legislature’s plenary power to create a complete system of worker’s compensation. Judge Roesch agreed with the petitioners and said that Prop 22 in its entirety is unenforceable because it “limits the power of a future legislature to define app-based drivers as workers subject to workers’ compensation law,” rendering all of Prop 22 unenforceable. The judge, expressing his criticism of Prop 22, said it “appears only to protect the economic interest of the network companies in having a divided, ununionized workforce.” He went on to state that “a prohibition on legislation authorizing collective bargaining by app-based drivers does not promote the right to work as an independent contractor, not does it protect work flexibility, nor does it provide minimum workplace safety and pay standards for those workers.” Although companies like Uber, Lyft, and DoorDash received a major blow in their battle with the State of California over the independent contractor versus employee status of their respective  drivers, Prop 22 will remain enforceable law while Judge Roesch’s ruling is appealed to the Court of Appeals. There is a strong likelihood that this issue will eventually reach the California Supreme Court, who will be the final arbiter in this ongoing battle between ride share and food delivery companies and the State of...

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Merger-and-Acquisition Activity

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

It may be counter-intuitive in light of the world-wide pandemic we continue to experience but, like the housing market in the United States, the market for buying and selling businesses is robust in 2021.  One explanation for the increased amount of merger-and-acquisition activity is the near-zero interest rates.  Cheap money allows prospective buyers to finance purchase opportunities they otherwise would not be able to afford.  Another factor is the relatively high prices for equities.  Stocks are trading at record high ratios of price-to-earnings.  Private equity firms and the industry players they back are looking for places to put their money to work other than the stock market.  Whatever the reason, clients of NavBat have been happy participants. “We have seen a whirlwind of activity in 2021,” founding partner Dan Navigato reported.  “I have helped close 6 transactions in the last 6 months,” and the deals have ranged from the high six figures to the mid-eight figures.  Navigato adds, “I’m not the only one helping our clients buy and sell businesses.  Mike [Battin] has notched another 5 transactions this year.” The businesses that have been bought and sold are not limited to one or two industries.  Rather, the transactions the attorneys at NavBat have closed include businesses in the automotive sector, the professional services sector, the manufacturing sector, and the construction industry, to name a few. “Due to the increased demand, it is definitely a business seller’s market,” Navigato explains.  “It’s like nothing I’ve seen before in nearly 30 thirty years as an attorney.  Sellers are able to name their price, negotiate favorable payment terms, and limit their post-closing obligations and exposure.” If you or your company need assistance in buying or selling a business, contact the attorneys at Navigato & Battin.  They have the knowledge and experience to assist you in completing a smooth transition from the letter of intent stage to the...

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California Supreme Court Announces New Formula to Calculate Missed Meal and Rest Period Premiums

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

In a recent decision, the California Supreme Court provided no breaks for employers when it unanimously overturned a Court of Appeal decision that instructed employers to pay meal and rest period premium pay at the employee’s base hourly rate.  According to the California Supreme Court, the common practice of paying missed meal and rest break premiums at an employee’s base hourly rate violates California employment law.  In Ferra v. Loews Hollywood Hotel, LLC (2021) WL 2965438, the California Supreme Court held that meal and rest break premium pay must be based on the employee’s “regular rate of pay” as opposed to their base hourly rate.  The “regular rate of pay” includes all hourly wages and other nondiscretionary earnings (such as shift differentials, nondiscretionary bonuses, commissions, or other nondiscretionary incentive pay).  Importantly, the Court also held that its ruling applies retroactively. Background Under California Labor Code section 226.7(c), if an employer fails to provide an employee with a meal, rest, or recovery period, the employer must pay the employee one additional hour of pay at the employee’s “regular rate of compensation.”  The phrases “regular rate of compensation” and “regular rate of pay” were held to have different meanings by the California Court of Appeals.  The widely held interpretation was that the phrase “regular rate of compensation” used for meal and rest break premiums is just the employee’s base hourly rate, while the “regular rate of pay” is the rate utilized in the overtime context, which includes all nondiscretionary payments. The now-outdated interpretation made the calculation for meal or rest break premiums straightforward – simply one hour of pay at the employee’s base hourly rate. The California Supreme Court ruled that the two terms were a distinction without a difference and that the “regular rate of compensation” paid for meal and rest break premiums must be calculated in the same manner as the “regular rate of pay” used in calculating overtime pay. California Supreme Court Decision The defendant in this case, Loews Hollywood Hotel, LLC (“Loews”), employed plaintiff Jessica Ferra (“Ferra”) as a bartender.  Loews paid Ferra hourly wages and quarterly nondiscretionary incentive payments as compensation.  When an hourly employee was not provided with a compliant meal or rest period, Loews paid the employee an additional hour of pay according to the employee’s hourly wage.  Any nondiscretionary payments were not factored into the calculation of premium pay owed under Labor Code section 226.7(c). Ferra filed a class action suit against Loews alleging that Loews, by omitting nondiscretionary incentive payments from its calculation of premium pay, failed to properly pay her for noncompliant meal or rest breaks in accordance with her “regular rate of compensation.”  The trial court granted summary adjudication for Loews on the ground that calculating premium pay using the employee’s base hourly rate was proper.  The Court of Appeal affirmed, holding that “regular rate of compensation” and “regular rate of pay” are not synonymous, and that the premium owed to an employee for a missed meal or rest periods is one hour of the employee’s base hourly wage. After an exhaustive analysis of legislative history and statutory interpretation, the California Supreme Court concluded that “regular rate of compensation” is synonymous with “regular rate of pay.”  As a result, employers must pay meal and rest period premiums at a blended...

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California Court of Appeal Imposes New Restrictions on Criminal Background Checks

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

California employers should review their employment background check policies to ensure compliance with evolving California law.  A recent Court of Appeal ruling restricted the use of a date of birth and/or a driver’s license number to identify individuals in an electronic search of criminal court records. (All of Us or None v. Hamrick (2021) 64 Cal.App.5th 751.)  This ruling, if not successfully appealed to the California Supreme Court, will impose challenges on employers conducting background checks on job applicants and employees. This case revolved around California Rule of Court 2.507(c), which governs and specifies how a California state court’s electronic records are made available to the public.  This rule requires that courts provide remote electronic access to its electronic indexes.  This rule also requires courts to exclude specific information from such indexes, including defendants’ dates of birth and driver’s license numbers. The issue in the case was whether members of the public should be allowed to search Riverside County Superior Court’s electronic database to access court records and data linked to a criminal defendant by inputting a person’s date of birth or driver’s license number.  The plaintiffs alleged that by allowing members of the public to use an individual’s date of birth or driver’s license number as a data point to search the court’s criminal records, Riverside County Superior Court violated California Rule of Court 2.507(c). Riverside County Superior Court argued that because it did not disclose a person’s date of birth or driver’s license number, it was not in violation of the rule. The Riverside County Superior Court contended that only individuals with independent knowledge of such information could effectively use it as a search criterion to narrow their search parameters. Unlike the trial court, the Court of Appeal was not persuaded by Riverside County Superior Court’s argument that attempted to distinguish a “search” from a “disclosure” and concluded that allowing the public to search a court’s electronic index by inputting an individual’s known date of birth or driver’s license number constitutes a violation of California Rule of Court 2.507.  The Court of Appeal stated that “in authorizing such searches, defendants may reasonably be said to have failed to exclude date of birth and driver’s license number in the Riverside Superior Court’s index as is required, even assuming that defendants are not disclosing this information.” After examining the history of California Rule of Court 2.507, the Court of Appeal stated that “while defendants’ alleged practice undoubtedly facilitates public access to information, the rules’ history unequivocally establishes that the drafters of the rules of court governing electronic access to trial court records did not intend simply to maximize the public’s access to information. Rather the drafters sought to balance the public’s access to court records with the privacy concerns of those involved in criminal proceedings.” The court’s ruling as to how the public can access criminal records will present challenges for employers seeking background checks now that employers conducting background checks will be unable to narrow their searches by date of birth or driver’s license number. As a result, simply searching for the name of a particular applicant or employee may show the criminal history of someone else with the same name, leaving the employer with unreliable and inaccurate information. Employers are encouraged to carefully review federal, state, and...

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