Female Director Quotas for Publicly Traded Companies

Posted by on Aug 31, 2018 in Newsflash | 0 comments

Recently, California legislators passed a bill which would require any publicly traded companies based in California to have female directors on their boards. If signed by Governor Jerry Brown, this bill will require those publicly traded companies based in California to add at least one female to their boards by the end of 2019. Additionally, those companies with a board of five or more directors must have two or three females added by the end of 2021. This law is modeled after several European countries’ laws which require publicly traded companies to have female directors. However, if passed, California will be the first state to have such a law on the books. (Currently, Massachusetts and Illinois have passed non-binding resolutions urging public companies to balance the gender representation on their boards.) Hannah-Beth Jackson (D), who represents Santa Barbara in the California state Senate told the Wall Street Journal that one-quarter of boards for publicly traded companies based in California are entirely male. This is “despite numerous independent studies that show companies with women on their board are more profitable and productive,” stated Jackson. The law does not require male directors to be removed from the board, but instead allows for the creation of an extra board seat to be filled by a female director. There are other issues which could present themselves if this law is passed, though. One such issue arises when a publicly traded corporation uses cumulative voting for directors. In those companies, whether shareholders will only be allowed to put a fixed portion of their votes towards male versus female directors is unclear. Presumably, companies will have to update their voting procedures to ensure compliance with this potential law. The California Chamber of Commerce has objected to this mandate, arguing it could violate the Equal Protection Clause of both the United States and California Constitutions. According to the Chamber of Commerce, if a company is put in the position of turning down or removing altogether a male board candidate in favor of a female candidate solely based on gender, the company may risk an Equal Protection violation suit. While this potential law is currently only being aimed at publicly traded companies, if passed and successful in operation, it may be expanded to private companies and those which are closely held. Similarly, if California is able to demonstrate the success of this type of law, other states may be inclined to follow...

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California Labor Laws Provide (Yet More) Protection For Employees

Posted by on Aug 30, 2018 in Newsflash | 0 comments

Douglas Troester was a Starbucks shift supervisor from mid-2009 to October 2010. Each closing shift required Troester to first clock out and then initiate the store’s “close store procedure” on a different computer which would transmit daily sales, profit and loss, and store inventory data to Starbucks’s corporate headquarters. Troester would then activate the store’s alarm, exit the store, lock the front door, and walk coworkers to their cars, as required by Starbucks’s policy. On some occasions, Troester would have to reopen the store for coworkers who had forgotten belongings inside or to bring in patio furniture mistakenly left outside. On average Troester spent four to ten minutes working after he had clocked out of his shift. After 17 months of employment, Troester filed suit against Starbucks for unpaid wages based on these off-the-clock tasks. Over the term of Troester’s employment, Troester worked about 12 hours and 50 minutes after clocking out. At $8 per hour, Troester alleged he was owed $102.67 in unpaid wages. While Troester believed he was owed this amount, Starbucks argued the few minutes of work performed after clocking out each shift was negligible, and therefore subject to the de minimis doctrine. Under the federal Fair Labor Standards Act, this de minimis doctrine applies to unpaid wage claims. However, Troester brought his suit based on California law. Until this decision, the Supreme Court of California had never before addressed whether the FLSA’s de minimis doctrine applied to unpaid wage claims brought under the California Labor Code. Addressing Troester’s claims, the Supreme Court of California found the de minimis doctrine does not apply. Under California labor laws, any and all work performed must be compensated by employers. Accordingly, employers cannot use the de minimis doctrine to their advantage by directing employees to perform certain tasks off the clock, even if they only take a couple of minutes to perform. The court addressed the California Labor Code’s commitment to “the small things.” For instance, the Labor Code requires employees to give their employers two 10 minute breaks for every four hours worked. The court had previously held even minor intrusions on these mandated rest breaks to be unacceptable. Even though Troester was working ten minutes or less after his shifts, because the Labor Code requires employees be compensated for “any and all” work performed these four to ten minutes required compensation. The court recognized these small increments of time would not add significantly to an employee’s paycheck, but also recognized that the $102.67 Troester had not been paid was enough to pay a utility bill, buy a week’s worth of groceries, or a cover a month of bus fares. Per the Court’s ruling, “What Starbucks calls ‘de minimis’ is not de minimis at all to many ordinary people who work for hourly wages.” Poor timekeeping methods will not excuse failing to properly compensate employees for their time worked, whether on or off-the-clock. The court held that today’s technological advancements allow employers to more accurately and efficiently track time worked (e.g., using handheld technology like smartphones or tablets, or through scanning RFID chips). Seemingly, the court expects employers to utilize this updated technology to ensure no employees are undercompensated. Although tracking employees’ time may now become even more time consuming and burdensome for employers, the court, in line...

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Navigato & Battin Hosts its 22nd Annual Opening Day at the Del Mar Races

Posted by on Aug 1, 2018 in Newsflash | 0 comments

On July 18, 2018, Navigato & Battin returned to Opening Day at the Del Mar Thoroughbred Club to host its 22nd annual client appreciation event. Clients and friends alike enjoyed mingling, food, and wagering on the races. Reflecting on the day, partner Dan Navigato said, “We have been hosting this event every year for a while now, and every year it is a great time when we are able to bring our clients and colleagues together for a beloved San Diego tradition.” Each year, we enjoy getting to see everyone outside of the business context at this event. Whether you attended this time or not, we look forward to seeing you there next...

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You Must Not Include Questions Regarding Criminal Records as Part of the Initial Employment Application Process

Posted by on Aug 1, 2018 in Newsflash | 0 comments

The old saying, “Don’t do the crime if you can’t do the time” may still hold true today, but does “the time” include the long-lasting effects on a person’s post-arrest or post-conviction employment prospects?  At least with respect to the initial application and employee-screening process, California says “No.”  Until recently, a person who has been convicted of a crime has often been required to disclose these convictions to potential employers as part of the application process (often by checking a box indicating his or her criminal conviction(s)).  This initial disclosure by a job applicant is almost always a deathblow, and the honest potential employee will find his application pushed immediately into the “no” pile without a further thought.  California has recently enacted a law to help these applicants by eliminating the prior conviction question from job applications, making it easier for applicants with criminal records to find jobs or at least make it through the initial round of application screening. As we discussed in some detail in our January 2018 newsletter, in 2017 California became the 10th state to adopt a “ban the box” law when Governor Jerry Brown signed AB 1008, the California Fair Chance Act, on October 14, 2017.  The new law took effect at the beginning of this year. Since January 1, 2018, the “ban the box” law has been in effect, applying to both government and private employers alike.  Under this law, which was enacted as an amendment to California’s Fair Employment and Housing Act, employers are banned from including the question “Have you ever been convicted of a crime?” and similar questions in their application forms.  The law was adopted after studies showed this question’s inclusion on job application forms improperly and unfairly discriminated against the one in three adults in California who have a criminal record.  According to this study, and perhaps not surprisingly, many employers who had applicants who had checked “Yes” in response to this question would immediately stop considering that applicant regardless of their other qualifications. While the new law does ban employers from inquiring about past criminal convictions during the application process itself, employers are not completely denied the opportunity to require disclosure of and consider a potential employee’s criminal record before hiring the applicant.  Under this legislation, once the employer makes a conditional offer of employment to an applicant, the employer may then ask about the applicant’s conviction record.  Additionally, at this point, the employer may run a background check which can include a criminal record search. Because the offer of employment is conditional, the employer may withdraw the offer based on the results of the background check.  Of course, there are limitations.  At the very least, an employer must consider: the nature and severity of any uncovered offenses; the amount of time between any conviction and/or time served and the present; and the nature of the job for which the applicant is applying.  For example, while an applicant who was convicted of insider trading, but has since served time, made the appropriate reparations, and has since remained a law-abiding citizen may be precluded from working at a financial institution, the previous conviction likely would not be a valid ground for refusing to offer the applicant a position at a fast food restaurant as a waiter or cook....

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Employment Arbitration Agreements Are Not for Every Business

Posted by on Jul 2, 2018 in Newsflash | 0 comments

Last month, we reported some good news for employers when the United States Supreme Court upheld the validity of employment arbitration agreements.  However, just because they are legal does not mean that they automatically make sense for every business.  In fact, a majority of small businesses may opt not to include arbitration provisions in their employment agreements. Properly worded arbitration provisions in employment contracts are generally favorable to employers because such provisions allow a business to avoid the bulk of employment-related class action lawsuits and allow a business to handle its internal disputes outside of the public eye.  As a business grows, class action lawsuits by employees alleging wage and hour violations and other improper treatment on a class-wide basis can be a major looming threat to the long-term viability of the enterprise.  Now that their general enforceability has been approved by the US Supreme Court, this class action avoidance aspect alone is often enough to make the decision on whether to include arbitration provisions a no brainer for large, established businesses.  However, just because a business can include an arbitration provision in its employment contracts does not mean that it always makes sense to do. Though avoiding class actions by employees can be a huge potential benefit, arbitration can come with some downside to a business.  First, an arbitrator is a private judge, and that private judge must be paid.  Arbitrators normally charge at least $500-$600 per hour (and often closer to $800-$1,000) for all time spent on a case, and in the employment context the employer is required to pay for all of the extra costs associated with arbitration which an employee would not have had to pay if the matter had been filed in court (meaning, basically, all arbitrator fees).  Thus, even a totally bogus claim may force an employer to pay thousands of dollars in arbitration fees. A case moves through arbitration at a much faster pace than most court cases, which can be a positive or a negative in any given situation.  Once an arbitration case is finished and a decision is made, it is normally a lot more difficult to have that decision reviewed by an appellate court.  While more private than court proceedings, arbitrations can result in judgments that do not seem correct as a matter of law but which an employer may be powerless to challenge on appeal.  This is obviously a very frustrating result. Moreover, in the seemingly never-ending whack-a-mole game between employee-side attorneys and their employer-side counterparts, employees have carved out claims relying on the California Private Attorney General Act (“PAGA”) from those matters which an employer may force into individual arbitration.  Without getting into the fine details of such claims or why they are exempt from being sent to individual arbitration, a PAGA claim can approximate many of the bad parts of a class action lawsuit for an employer whether or not there is a properly worded arbitration provision in the employer’s contract. The bottom line is that whether to include an arbitration provision in your employment contracts is not a “one size fits all” decision.  Like every decision affecting your business, it requires an analysis of the pros and cons of arbitration along with an analysis of the flow of your business to determine what types of...

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Briana Collings has joined the firm as an associate attorney

Posted by on Jul 2, 2018 in Newsflash | 0 comments

Navigato & Battin is pleased to announce Briana Collings has joined the firm as an associate attorney. Briana will focus on corporate formation, corporate governance, and civil litigation. Briana’s background in business includes a Bachelor of Arts degree in Economics from the University of Nevada, Reno, as well as a law degree with a Concentration in Business Law and Litigation from California Western School of Law. Briana’s interest in business began as she grew up watching her father operate his own small business in Carson City, Nevada. As a result of observing her father all those years, Briana has a unique insight into the behind-the-scenes of successfully running a small business, and believes this knowledge will allow her to better support the firm’s small business clients. Briana comes to the firm from the chambers of The Honorable Peter C. Lewis in the United States Federal District Court in El Centro, California, where Briana has served as a clerk. There, Briana has written lengthy opinions for Judge Lewis and provided extensive support during settlement conferences in civil cases. Briana is thrilled to be returning to San Diego to join Navigato & Battin. Briana attended California Western School of Law, and graduated magna cum laude. There, Briana served as an Associate Editor and Writer of the California Western Law Review Journal, as well as the Treasurer for the Student Bar Association. Upon graduation, Briana has become licensed to practice in both California and...

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The Supreme Court Sides with Companies on Arbitration Clauses in Employment Agreements

Posted by on Jun 1, 2018 in Newsflash | 0 comments

On May 21, 2018, the U.S. Supreme Court issued a groundbreaking decision, ruling that companies are permitted to use arbitration clauses in employment contracts to prevent workers from banding together to take collective legal action (class actions) over workplace issues.  The ruling stems from three consolidated cases that involved allegations of employers underpaying their workers. (Epic Systems Corp. v. Lewis, No. 16-258 (Chicago); Ernest & Young v. Morris, No. 16-300 (San Francisco); and National Labor Relations Board v. Murphy Oil USA, No. 16-307 (New Orleans).  Each of the workers’ employment contracts required that the employees resolve any disputes through arbitration instead of a court of law, and required that employees file their arbitration claims one by one rather than through a class action lawsuit. Previously, many state courts have ruled such provisions unenforceable because they discourage workers from bringing small claims against employers, on the theory that employees are much more likely to actually pursue a claim if the workers can spread the costs of litigation amongst each other.  Class actions also have the potential to reduce the risk of employer retaliation. However, writing for the majority, Justice Neil Gorsuch argued that if workers were allowed to band together to press their claims, “the virtues Congress originally saw in arbitration, its speed and simplicity and inexpensiveness, would be shorn away and arbitration would wind up looking like the litigation it was meant to displace.” Therefore, as the law now stands, employment agreements may include a mandatory arbitration provision that requires employees to bring their claims in arbitration separately instead of jointly.  While this is a huge win for employers, it is unclear how many employers will revert back to using such provisions in their employment agreements.  If you have any questions regarding this ruling, your employment agreements, or the arbitration process itself, the attorneys at Navigato & Battin are here to provide...

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Navigato & Battin Says Goodbye to Stephanie Sciarani

Posted by on Jun 1, 2018 in Newsflash | 0 comments

We are sad to announce that after nearly six years with Navigato & Battin, attorney Stephanie Sciarani will be leaving the firm to return back to her home state of Nevada. During her time with the firm, Stephanie specialized in assisting our corporate clients with entity formation, drafting various agreements, advising on employment issues, and participating in all facets of litigation. Of her time with Navigato & Battin, Stephanie said: “I could not be more appreciative of my opportunity to begin my career at a firm that always puts its clients’ interests first. The mentorship I received from Dan, Mike and Travis has been invaluable and will influence me for the rest of my career. I will greatly miss working with all of the firm’s wonderful clients but look forward to seeing how the companies continue to grow.” Stephanie will be working as an Assistant General Counsel at Blockchains LLC, a start-up located in Reno, Nevada.  We wish Stephanie the best of luck in her new endeavor.  While she will be missed, we are committed to making the transition smooth for our clients and will be announcing the newest addition to the firm in next month’s...

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The California Supreme Court Adopts a New Test for Classifying Workers

Posted by on May 1, 2018 in Newsflash | 0 comments

For years, California and other states have gradually restricted employers’ ability to classify workers as independent contractors.  California tends to frown upon classifying workers as independent contractors since independent contractors do not receive the same protections under labor laws as employees and, perhaps more importantly to the state, do not generate the same tax revenue as employees.  For example, independent contractors do not get meal and rest breaks, they are generally not subject to wage and hour laws, and they are not protected under federal employment laws such as Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Age Discrimination in Employment Act, or the Family Medical Leave Act, among others. For the past 30 years, California has used the Borello standard when classifying independent contractors, which primarily relied upon whether the hiring company had the right to control the manner and means by which the worker performs the work.  Additional factors considered under the Borello test included: the degree of skill required to perform the work, the method of payment, and whether the services being performed for the company are part of the company’s regular scope of business. On April 30, 2018, the California Supreme Court issued its unanimous ruling in Dynamex Operations West, Inc. v. Superior Court of Los Angeles, changing the above rule, and making it even harder for employers to classify workers as independent contractors.  The case was brought by drivers of a package and document delivery company, Dynamex Operations West, who alleged that the company misclassified them as independent contractors in order to avoid paying wages and benefits.  After a lengthy opinion, the court adopted a new test for classification. The New Test for Worker Classification The new test adopted by California presumptively considers all workers to be employees and only considers workers to be properly classified as independent contractors if all three of the following prongs of the test are satisfied: The worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact; and The worker performs work that is outside the usual course of the hiring entity’s business; and The worker is customarily engaged in an independently established trade, occupation or business of the same nature as the work performed for the hiring entity. As an example, the court stated that a plumber hired by a retail store to repair a bathroom leak would not be performing work that is part of the store’s usual business and would therefore be considered an independent contractor of that store.  However, seamstresses sewing at home using materials provided by a clothing manufacturer would probably be considered employees of the manufacturer. This latest ruling is yet another stern reminder to California businesses that they must take care in classifying their workers.  If you need assistance in properly classifying workers, the attorneys at Navigato & Battin are here to offer help.  In particular, if you have independent contractors who perform tasks for your business on a regular basis or which fall within the scope of your primary business focus, it is essential to have an experienced attorney review the relationship to ensure that you are properly classifying the...

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Does Your Business Website Need a Privacy Policy?

Posted by on May 1, 2018 in Newsflash | 0 comments

Chances are if you are doing business in 2018, your company has some sort of online presence.  It is important to remember that there are regulations that businesses must comply with when operating a website.  In particular, many businesses need to have written privacy policies under California’s Online Privacy Protection Act (the “Act”). The Act applies to any person or company whose website or mobile application collects “personally identifiable information” from California consumers who use or visit the website.  This includes websites which require individuals to enter a username, password, email address, physical address, phone number, social security number, or any other identifiers that could permit the user to be contacted either physically or online.  If the website does collect such information, the website must feature a conspicuous privacy policy stating what information is collected and with whom it will be shared.  The law also requires that the operator of the website comply with the listed privacy policy. In the event your company collects “personally identifiable information,” you need to ensure that your website is compliant with the requirements of the Act.  Compliance under the Act requires the privacy policy to: Be conspicuously posted on the website. This may be done by putting the policy on the website and/or providing a link to the policy on the website; Identify the effective date of the privacy policy; Provide a list of the categories of personally identifiable information collected; Provide a list of the categories of third parties with whom the operator may share such personally identifiable information; Provide a description of the process, if any, by which the consumer can review and request changes to the personally identifiable information collected; and Provide a description of the process by which the operator notifies consumers of any material changes to the privacy policy. The Act additionally requires privacy policy disclosures for tracking of visitors on websites and by online services, defined as “the monitoring of an individual across multiple websites to build a profile of behavior and interests.”  To comply, a privacy policy is required to: Disclose how the website responds to Do Not Track signals from web browsers; Disclose whether third parties may collect visitors’ personal identifiable information on a website; and Provide a conspicuous hyperlink within the privacy policy to an “online location containing a description, including the effects, of any program or protocol the operator follows that offers the consumer that choice.” If your company needs assistance in drafting a website privacy policy, the attorneys at Navigato & Battin are experienced in creating policies that comply with California and federal...

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