California Public Agency Labor & Employment Blog

California Public Agency Labor & Employment Blog

Useful information for navigating legal challenges

Governor Brown Signs New Vaccination Bill, SB 277, Into Law

Posted in Education, Legislation

Breaking-News1.jpgThis blog post was authored by Stephanie Lowe and Alysha Stein-Manes

On Tuesday, June 30, 2015, Governor Brown signed into law a bill designed to require that California schoolchildren are fully vaccinated, regardless of their parents’ personal or religious beliefs.  The bill applies to children enrolled in public or private day care, public school districts, and private schools.  The law takes effect January 1, 2016, but its provisions will not be implemented until July 1, 2016.

Existing Law

Currently, public schools are prohibited from admitting children who are unvaccinated against specific diseases unless they are exempt for medical reasons or personal beliefs of their parents.  For an exemption to take effect, parents must receive information from a health care provider about the benefits and risks of immunizations and sign an affidavit attesting to their personal beliefs.  The form and affidavit provided by the California Department of Public Health may be accessed at: http://omsd.omsd.k12.ca.us/departments/lss/health/Health%20Forms/Forms/AllItems.aspx.

New Law

SB 277 largely eliminates the religious and personal beliefs exemptions.  California now becomes only the third state (along with Mississippi and West Virginia) that does not allow a religious exemption.  It is one of 32 states that do not allow some type of philosophic exemption.  To address concerns about student’s access to education, which in California is a constitutional right, the bill exempts pupils in a home-based private school and students enrolled in an independent study program who do not receive classroom-based instruction.  The new law also does not prohibit a student who qualifies for an individualized education program (“IEP”) from accessing special education and related services required by his or her IEP.  It also provides a limited exception for children who, prior to January 1, 2016, submitted a valid personal belief affidavit.  Those students may continue attending public or private school until, beginning July 1, 2016, they have enrolled in the next “grade span.”

Questions and Answers Regarding the New Law

Q:        What is the definition of a “grade span?”

A:        “Grade span” is defined as (A) birth to preschool; (B) kindergarten (including transitional kindergarten) and grades 1 through 6; and (C) grades 7 through 12.  (Health and Safety Code section 120335(g).)

Q:        How does SB 277 affect current students with personal belief affidavits?

A:         A current student with a personal belief affidavit filed prior to January 1, 2016, will be allowed to remain enrolled in school without being fully immunized until he or she begins the next grade span.  Upon beginning the next grade span, the student’s personal belief affidavit will no longer be valid and he or she will need to be fully immunized.

Q:        As of July 1, 2016, may schools choose to allow students to begin the new school year even if they had not submitted a personal belief affidavit before January 1, 2016?

A:         No.  As of July 1, 2016, public schools must comply with the new law.  Schools cannot accept personal belief affidavits filed on or after January 1, 2016.

Q:        May schools choose to require parents to vaccinate their children before the law takes effect or at times other than a change in grade span even if a valid personal belief affidavit is on file?

A:         Probably not.  The statutory language and legislative intent likely would not favor that approach.

Q:        When must students who are not exempt for health reasons be vaccinated?

A:         So long as a student has a valid personal belief affidavit on file before January 1, 2016, the vaccinations must only be up-to-date when a student begins a new grade span.  For example, if a fifth-grade student has a valid personal belief affidavit on file, he or she would not need to provide evidence of vaccinations until seventh grade.  If a student in the seventh grade has a valid personal belief exemption on file, that student is exempt from the new vaccination requirements through the 12th grade.

Students who do not have a valid personal belief affidavit on file before January 1, 2016 must be fully vaccinated for the vaccinations required at their age level prior to beginning the new school year.

Q:        What if a student with a valid personal belief affidavit on file enrolls at a new school or in a new school district?  For example, what if a seventh-grade student started at a new high school in ninth grade?

A:         A seventh grade student who has a personal belief affidavit on file before January 1, 2016 and who starts at a new high school in ninth grade would not be starting a new grade span and would still be covered by the personal belief affidavit through 12th grade.  However, students who transfer to or start at a new school at a time that coincides with a change in grade span must be fully immunized prior to the beginning of the school year.  For example, a personal belief affidavit for a sixth grade student will no longer be valid when the student transfers to a school in the seventh grade and the student will need to be fully immunized prior to admission into the seventh grade.

In regards to transferring between school districts within California, the SB 277 provides that a student who has submitted an affidavit for at a private or public elementary or secondary school, day care center, nursery school or other child care institution will be allowed to enroll in “any” private or public elementary or secondary school or other child care institution “within the state until the pupil enrolls in the next grade span.”  Absent further guidance, we interpret this to mean that if a student with a personal exemption affidavit on file in one school district moves to another school district, that personal exemption affidavit will be valid in the new school district.

For example, the parents of a second grade student who attends District A filed a personal belief exemption before the student entered kindergarten back in 2013.  On July 1, 2016, right before the student is supposed to enter the 4th grade, the student’s family moves to a home located in District B’s boundaries.  District B must honor the student’s personal belief affidavit until he enters the 7th grade.

Q:        What if a doctor provides a medical exception for a student but the school does not believe the doctor?

A:         SB 277 does not provide guidance regarding challenging the validity of a licensed physician’s written statement providing that the child’s medical condition or medical circumstances are such that immunization is not considered safe.  Presumably the Department of Public Health will issue guidance.

Q:        Does the law affect special education rights?

A:         No. SB 277 provides that the new law does not prohibit a student who qualifies for an IEP from accessing any special education and related services required by his or her IEP.

The statutory language creates a special exemption for students with IEPs.  For example, a student with an IEP entering the 7th grade, who does not have a medical exemption affidavit and is not fully vaccinated after July 1, 2016, cannot be excluded from any classroom instruction if the instruction is part of his or her IEP.  Thus, if that student is in a regular classroom for 90% of the school day, but in a special education classroom for the remaining 10%, the District cannot exclude the student from either classroom.

An argument can be made, however that a special exemption for students with IEPs runs counter to SB 277’s legislative intent in that it permits unvaccinated students to enter classrooms and place other students at risk.  Such a risk is likely heightened when students with IEPs enter a classroom with other special needs students who may have weakened immunized systems due to their own disabilities.

The creation of an exemption for special needs students with IEPs, however, makes sense from a legal standpoint given that federal law requires school districts to provide qualified students with IEPs and does not include any immunization exemptions.  The legislature likely included this exemption so that SB 277 does not conflict with federally mandated requirements.

The Department of Public Health has indicated that it will issue further guidance on SB 277.  Until the Department of Public Health issues further guidance, it is our recommendation that Districts do not deny any IEP services to qualified students.

Q:        What if a child has not been vaccinated and the school believes he or she has been exposed to a disease covered by the vaccination laws?

A:         A school may temporarily exclude the student from school until the local health officer is satisfied that the child is no longer a risk of developing or transmitting the disease.  (Health and Safety Code section 120370).

Q:        Does the law affect adults?  For example, can schools require teachers to be vaccinated?

A:         No.  The law only affects children.  There are other laws that cover adults in the health care and other industries, but teachers and others who work at schools are not covered by this law.  Requiring school employees to be vaccinated may expose schools to claims of invasion of privacy, disability discrimination, and other claims.

Q:        Will this law be challenged?

A:         Opponents of SB 277 have vowed to contest it in court and to overturn it by referendum.  Absent a court order or new law, SB 277 will take effect January 1, 2016 and need to be implemented as of July 1, 2016.

SB277 amends Sections 120325, 120335, 120370, and 120375 of, and adds Section 120338 to, and repeals Section 120365 of, the Health and Safety Code.

If you have any questions about this issue, please contact our Los Angeles, San Francisco, Fresno, Sacramento, or San Diego office.

 

U.S. Supreme Court Agrees to Hear Case Regarding the Constitutionality of Compulsory Union Fees

Posted in Education, Labor Relations

US-Supreme-Court_2.jpgOn June 30, 2015, the Supreme Court of the United States agreed to hear an appeal in Friedrichs v. California Teachers Association to answer the question of whether compulsory “agency shop” fees violate the First Amendment.  An “agency shop” arrangement requires non-union member employees to pay compulsory fees as a condition of employment even if the employees decide not to join the union.  Currently, approximately twenty-five (25) states provide its teachers and other workers with the choice of whether or not to pay union fees.

The California Government Code provides that a union may become the exclusive bargaining unit representative for public school employees by certifying that a majority of the employees in the unit wish to be represented by the union.  (Gov. Code, section 3544, subd. (a).)  After becoming the exclusive bargaining unit, the union may establish an “agency shop” arrangement whereby all employees “shall, as a condition of continued employment, be required either to join the recognized employee organization or pay the fair share service fee.”  (Gov. Code, section 3546, subd. (a).)  However, the agency fees must be limited to activities “germane” to collective bargaining.   (Gov. Code, section 3546, subd. (b).)  California law requires unions to estimate the portion of expenses that do not fall into these germane activities, or non-chargeable fees, and send a notice to non-members setting forth the non-chargeable fees to which non-members may opt-out by requesting a rebate or fee-reduction for that year.  (Gov. Code section 3546, subd. (a); Cal. Code Regs., tit. 8, section 32992, subd. (a).)

Rebecca Friedrichs, a California teacher, along with her co-plaintiffs and appellants, represented by the Center for Individual Rights, opted out of union membership.  They filed a suit against their local unions, the National Education Association, and the California Teachers’ Association arguing that compulsory union fees violate their rights to freedom of speech and association under the First and Fourteenth Amendments of the U.S. Constitution.  They further argue that the “opt-out” procedure to receive non-chargeable fee rebates (as opposed to an opt-in procedure where the non-union members affirmatively agree to pay these non-chargeable fees) violates these same rights.  They contend these procedures take away their rights to decide whether to join and pay dues to an organization that purports to speak on their behalf.

In asking the Court to decide whether their First Amendment rights are violated under the current law, plaintiffs ask the Supreme Court to overrule its 1977 decision in Abood v. Detroit Board of EducationAbood held that (1) insofar as service fees were used to finance expenditures by the union for collective bargaining, contract administration, and grievance purposes, agency shop clauses in bargaining agreements were valid and (2) First Amendment principles prohibited unions and boards of education from requiring any teacher to contribute to support an ideological cause the employee might oppose, as a condition of employment.  However, the Supreme Court deferred determining whether the Abood unions violated the First and Fourteenth Amendments because the union had instituted an internal policy which permitted dissenters not to pay dues for certain political activities.  The Supreme Court thus rejected the argument that the only funds unions could require non-members to pay were those funds that non-union members affirmatively consented to pay.

The Federal trial court that first heard Friedrichs upheld current agency shop fee laws under Abood and other Ninth Circuit Court of Appeals precedent, which held that the First Amendment does not require an “opt in” procedure for non-union members to pay equal fees as union members.  However, the District Court did not engage in an in-depth discussion of plaintiffs’ claims.  The trial court simply determined that these prior cases foreclosed plaintiffs’ claims.  On appeal, the Ninth Circuit found that the plaintiffs’ claims were foreclosed under current Supreme Court and Ninth Circuit precedent and did not go into a discussion of the merits of the claims.

That the U.S. Supreme Court granted review to hear arguments despite Abood, raises doubt as to its validity.  A Supreme Court decision reversing the Ninth Circuit’s decision could destabilize unions; union members could use threats of opting out of union membership as a way to influence which internal grievances the union supports; and membership and revenues could decline.

The Supreme Court will likely hear oral arguments in the Fall of 2015 and is not likely to issue a decision in Friedrichs v. California Teachers Association until late June of 2016.  We will continue to monitor this case and update you as it proceeds.

Conducting Effective Workplace Investigations Is Essential To Minimizing The Risk Of Liability On A Failure To Prevent Harassment Claim

Posted in Employment, Workplace Policies

Magnifying-Glass.jpgUnder Title VII and the Fair Employment and Housing Act (“FEHA”), the employer has an affirmative obligation to take all reasonable steps necessary to prevent harassment, discrimination, or retaliation.  In order to comply with this obligation, employers must investigate all complaints of harassment, discrimination, or retaliation.  If an employer receives a complaint, failing to investigate at all or failing to conduct an appropriate workplace investigation could lead to liability on a failure to prevent harassment claim.  Importantly, the Department of Fair Employment and Housing, the agency which enforces the FEHA, may prosecute an alleged failure to investigate as an independent violation, even where there is no legally actionable claim of harassment.  An employer’s ability to defend its position that it has taken all reasonable steps to prevent harassment will depend heavily on the quality of the underlying investigation.  For these reasons, it is imperative that employers:

  1. Promptly and thoroughly investigate all claims of harassment, discrimination, or retaliation.
  2. Document the investigation. This includes documenting the methodology the investigator used during the investigation, the investigator’s factual findings, credibility determinations, and any conclusions reached.
  3. Take prompt and effective remedial action if warranted.

The sufficiency, thoroughness, and fairness of an employer’s workplace investigation are very commonly challenged in subsequent litigation.  Failure to take any of the three steps above could significantly compromise an employer’s ability to defend itself on a failure to prevent harassment claim.

  1. Prompt and Thorough Investigation

The investigator chosen should be impartial and well-trained in workplace investigations and follow all the employer’s policies and procedures to ensure an appropriate and fair investigation.

While most employers are aware of the obligation to investigate harassment claims, one common pitfall is failing to initiate or complete an investigation in a timely fashion.  The investigation should ideally start within a matter of days of the receipt of the complaint (if one is filed) or of when the employer otherwise becomes aware of possible harassment or other alleged misconduct.  If an investigation is delayed, then memories may fade, evidence may disappear, and the employer may be accused of failing to take all reasonable steps to prevent harassment.

Sometimes an employer may start the investigation promptly, but not complete the investigation in a reasonable amount of time.   This could happen for any number of reasons including for example, witness unavailability, a change in HR staff, or change of an outside investigator that delays the completion of the investigation.

How long an investigation should take is a fact-driven analysis and can vary greatly depending on many things, including the nature and extent of the claims being investigated, and the number of subjects, witnesses, and documents involved.  The important thing is that the employer should be mindful of the duty to initiate and complete the investigation promptly, monitor an investigation’s progress, and work towards expeditiously completing the investigation.  For example, if a staff member in charge of conducting investigations leaves the employer on short notice, the status of his or her open investigations should be reviewed and reassigned immediately and not allowed to languish unattended.   If there are specific reasons for delay out of the employer’s control, such as unavailability of witnesses, those reasons should be well-documented so that they may be explained later if the sufficiency or promptness of the investigation is challenged in subsequent litigation.

  1. Document the Investigation

The investigator should provide a written report on the investigation.  The report should include all documents reviewed, all witnesses interviewed, all credibility determinations made, and all factual findings and conclusions reached by the investigator.

If the investigator fails to interview key witnesses or review key documents, or if the report fails to identify the witnesses and documents the investigator considered in reaching his or her conclusions, then the thoroughness and fairness of the investigation may be compromised.

  1. Prompt and Effective Remedial Action

Finally, once the investigation is complete, if the investigation findings reveal that harassment in violation of the employer’s policy occurred, the employer must take corrective action that is reasonably calculated to end the current harassment, and to prevent future harassment of its employees. Appropriate corrective disciplinary action against the offending employee is always required.  Keep in mind that when imposing discipline on public employees, the employer must follow appropriate statutory, regulatory, or collectively-bargained procedures.  Otherwise, the employer could be liable to the disciplined public employee.

Case law, as well as my experience as an employment attorney, has shown that employers who follow the three steps above are much more likely to successfully defend against a failure to prevent harassment claim.

Clean-Up Legislation for California’s New Paid Sick Leave Law is Forthcoming in Early July

Posted in Legislation

Breaking-News1.jpgThis post was authored by Gage Dungy and Stephanie Lowe

INTRODUCTION

The California Assembly recently passed Assembly Bill 304—clean-up legislation for California’s new Healthy Workplaces, Healthy Families Act of 2014 (“Paid Sick Leave Law” or “AB 1522”) on June 22, 2015, with bipartisan support by a vote of 69-0.  The bill is now currently pending in the California Senate awaiting passage before being sent to Governor Brown for his signature.  AB 304 is designated as an “urgency” bill, which means that it will go into effect immediately upon Governor Brown’s signature.  Every indication is that AB 304 will pass in the Senate and that Governor Brown will sign it into law.

Unfortunately, due to legislative procedures in the Senate, AB 304 will most likely not be passed before the July 1, 2015 effective date of the new Paid Sick Leave Law.  Rather it is anticipated that bill will be passed and sent to Governor Brown at some point before the Legislature’s Summer Recess on July 17, 2015.

Despite this slight delay, we still think it is important to provide a summary of the changes that we anticipate AB 304 will make to the Paid Sick Leave Law based on the current bill text while many employers are preparing for the implementation of the Paid Sick Leave Law on July 1, 2015.

SUMMARY OF AB 304 AMENDMENTS TO THE PAID SICK LEAVE LAW

Based on its current amendments, AB 304 will amend the Paid Sick Leave Law as follows if passed by the Senate and signed into law by Governor Brown as expected:

  • Public Agency Retired Annuitants Are Excluded From the Definition of “Employee” (Labor Code section 245.5(a))

AB 304 will expressly exclude CalPERS and ’37 Act retired annuitants from being eligible to receive paid sick leave.  Previously, it was unclear whether the Public Employees’ Pension Reform Act of 2013 (“PEPRA”) prohibitions that precluded retired annuitants from receiving fringe benefits such as paid sick leave preempted such sick leave benefits provided by the Paid Sick Leave Law.  With AB 304 adding in this express exclusion for retired annuitants, employers will be able to confidently exclude retired annuitants from the benefits of the Paid Sick Leave law once it becomes law.

Keep in mind that between July 1, 2015, and the expected passage and signing into law of AB 304 at some point in early to mid-July 2015, it still remains unclear whether the Paid Sick Leave Law applies to CalPERS and ’37 Act retired annuitants.  As a result, public agencies will have to make a risk assessment about whether they want to apply the Paid Sick Leave Law to such retired annuitants during this short time period between July 1, 2015 and the expected effective date of AB 304 in early to mid-July 2015.

 

  • Clarifies the Paid Sick Leave Law Applies to an Employee Who Works In California “For the Same Employer” for 30 or More Days Within a Year (Labor Code section 246(a).) 

The Paid Sick Leave law allows employers to set a 30-day waiting period before employees are entitled to paid sick leave.  Prior to AB 304, it was unclear how employers were supposed to measure this 30-day eligibility period for employees who may have worked with other employers previously within a year.

AB 304 will amend Labor Code section 246(a) to clarify that the 30-day eligibility period applies to time worked “with the same employer.”  This will mean that the 30-day eligibility period begins for a new employee with the first date of employment with a specific employer.

 

  • Provides Alternative Accrual Methods of Paid Sick Leave (Labor Code section 246(b)(3)-(4).

In addition to the standard one hour of paid sick leave for every 30 hours worked accrual method, AB 304 also will add two additional alternative accrual methods under Labor Code section 246(b)(3)-(4) to allow alternative accrual methods that are not necessarily tied to hours worked, but yet accrued on a regular basis:

“(3) An employer may use a different accrual method, other than providing one hour per every 30 hours worked, provided that the accrual is on a regular basis so that an employee has no less than 24 hours of accrued sick leave or paid time off by the 120th calendar day of employment or each calendar year, or in each 12-month period.

(4) An employer may satisfy the accrual requirements of this section by providing not less than 24 hours or three days of paid sick leave that is available to the employee to use by the completion of his or her 120th calendar day of employment.”

Under the new accrual method in Labor Code section 246(b)(3), an employer can allow an employee to accrue paid sick on a regular basis through an accrual rate other than hours worked (e.g., per week, per pay period, per month, etc.) so long as the employee has accrued no less than 24 hours of accrued sick leave by the 120th calendar day of employment, or each calendar year, or applicable 12-month period.  The new accrual method in Labor Code section 246(b)(4) appears to allow an alternative frontload method for new employees that would allow an employer to provide no less than 24 hours or 3 days of paid sick leave for use by the completion of the 120th calendar day of employment.

Although we anticipate these new accrual methods will be a part of the Paid Sick Leave Law once AB 304 is passed, there has been very little analysis on their application to date and we anticipate further clarification from the Labor Commissioner in the near future.  Employers are cautioned to be careful about applying such alternative accrual methods once implemented by AB 304 absent further clarification from the Labor Commissioner.

 

  • Clarifies That Providing the “Full Amount Of Leave” Under the Frontloading or Lump-Sum Method Means the Employer Must Provide Three Days or 24 Hours at the Beginning of Each Year, Calendar Year, Year of Employment, or 12-Month Basis.  (Labor Code section 246(d))

Labor Code section 246(d) discusses the ability for an employer to frontload the “full amount of leave” to an employee at the beginning of each year to avoid having to deal with accruals or the potential of paid sick leave carryover from year to year.  Prior to AB 304, it was not clear what constituted the “full amount of leave” or the measurement of a “year.” AB 304 will amend Labor Code section 246(d) to provide: “The term ‘full amount of leave’ means three days or 24 hours.”  As a result, an employer only needs to frontload 3 days or 24 hours of paid sick leave to satisfy this method of compliance.  AB 304 will also clarify that providing paid sick leave at the beginning of the year means providing it at the beginning of each calendar year, year of employment, or 12-month basis as determined by the employer.

 

  • Modifies the Requirements for Existing Paid Sick Leave and PTO Policies to Comply With the Paid Sick Leave Law.  (Labor Code section 246(e))

Labor Code section 246(e) is the provision of the Paid Sick Leave Law that provides that employers who already have sick leave/PTO policies in effect need not provide any additional paid sick leave under AB 1522 if their current polices make paid sick leave available for the same purposes and conditions as AB 1522. Section 246(e) provides two options for compliance:

  • The first option merely provides that the existing sick leave/PTO policy satisfy the accrual, carry over, and use requirements of the Paid Sick Leave Law; or
  • For the second option, AB 304 will revise Labor Code section 246(e)(2) to include a “grandfather clause” for existing paid sick leave/PTO policies provided to a class of employees that were in effect prior to January 1, 2015. Under this option, the Paid Sick Leave Law will allow such grandfathered policies to continue going forward for both current and new employees in the class covered by such policies where their accrual method is different than one hour per 30 hours worked and instead provides at least one day or eight hours of paid sick leave/PTO within three months of employment and the employee was eligible to earn at least three days or 24 hours of paid sick leave/PTO within nine months of employment.  Any changes to a grandfathered paid sick leave/PTO policy that would lower employee accruals will lose the grandfathered status and all other AB 1522 accrual requirements would then apply.

The application of this new “grandfathered paid sick leave/PTO policy” clause will depend on the specific terms and conditions of any paid sick leave/PTO policies in effect prior to January 1, 2015.  Assuming this new provision is enacted under AB 304, we strongly recommend working with legal counsel to review its applicability.

 

  • Clarifies the Paid Sick Leave Law’s Provisions Regarding the Reinstatement of Paid Sick Leave Upon Rehire Within 12 Months (Labor Code section 246(f)(2).)

AB 304 will also provide some much needed clarification regarding an employer’s obligation to reinstate paid sick leave to an employee who is rehired within 12-months of separation by amending Labor Code section 246(f)(2) in two ways:

  • This section will be amended to clarify that the reinstatement of paid sick leave upon rehiring would be “subject to the use and accrual limitations set forth in this section.” The significance of this amended language is that an employer who provides a more generous paid sick leave benefit to its employees is not necessarily required to reinstate all unused sick leave accruals upon rehire.  Rather, an employer would only have to reinstate up to the accrual cap of 6 days or 48 hours of unused accrued paid sick leave for an employee who is rehired within 12 months of a separation of employment.Example:  Acme Employer allows employees to accrue up to 100 hours of paid sick leave.  Employee John Doe works for Acme and accrues 100 hours of paid sick leave.  John then separates from his employment with Acme and Acme rehires him within one year from his date of separation.  Upon John’s rehire, Acme is only required to reinstate 48 hours or 6 days of his paid sick leave.  Acme does not need to reinstate the full 100 hours of paid sick leave John had upon his separation of employment.
  • This section will also be amended to confirm that if an employer is not obligated to restore any sick leave or PTO to an employee who was rehired within 12 months of a separation of employment if such sick leave/PTO was cashed out and no longer exists.

 

  • Adds That if an Employer Provides Unlimited Paid Sick Leave or Unlimited PTO, the Employer May Provide Written Notice That Such Leave Is “Unlimited.”  (Labor Code section 246(h).)

Pursuant to Labor Code section 246(h), employers are required to provide written notice of the amount of paid sick leave an employee has available on either the employee’s itemized wage statement or in a separate writing provided on the designated pay date with the employee’s payment of wages.  For those employers that have policies which provide “unlimited” amounts of paid sick leave or PTO to employees, it was not clear how this requirement would be satisfied.

AB 304 will amend Section 246(h) to allow an employer with an unlimited paid sick leave or PTO policy to simply indicate the leave balance as “unlimited” on an itemized wage statement or written notice provided to the employee each pay period.

 

  • Clarifies How to Calculate the Rate of Pay for Paid Sick Leave Provided to Employees.  (Labor Code section 246(k))

AB 304 will amend Labor Code section 246(k) to clarify how an employer will calculate the rate of pay for paid sick leave provided to nonexempt and overtime exempt employees.  For nonexempt employees, Section 246(k) will be amended to provide two methods to choose from:

  • Calculating paid sick time for nonexempt employees in the same manner as the regular rate of pay for the workweek in which the employee uses paid sick time. This method is more appropriate for nonexempt employees who are paid a regular hourly wage.
  • Calculating paid sick time by dividing the employee’s total wages, not including overtime pay, by the employee’s total hours worked in the full pay periods of the prior 90 days of employment. This method can be used to determine the paid sick leave rate of pay for nonexempt employees who have varying rates of pay, are paid on a salaried basis, or are paid on a piecemeal or commission basis.

For overtime exempt employees, Section 246(k) will be amended to note that paid sick leave wages should be calculated in the same manner as the employer calculates wages for other forms of paid leave time.

 

  • Provides That an Employer Is Not Obligated to Inquire Into or Record the Purpose for Which an Employee Uses Paid Leave or Paid Time Off.  (Labor Code section 247.5(b))

AB 304 will add a new Subsection (b) to Section 247.5 to clarify that an employer is not required to ask about or record the purposes for which an employee uses paid sick leave or paid time off.  We believe that this addition to the law is to address the concern that if an employer provides an unrestricted PTO policy that could be used for Paid Sick Leave Law purposes (among any other purpose), an employer does not have to track which PTO days are for Paid Sick Leave Law purposes or not.

However, if an employer does not have an unrestricted PTO policy in place and is providing a more traditional paid sick leave policy, this revision to the law does nothing to change the right of an employer to require an employee to confirm that the use of paid sick leave meets one of the purposes provided for in the law.  Employers with more generous paid sick leave policies should also exercise this right to seek confirmation of the purpose for the paid sick leave to better track compliance with California’s Kin Care law (Labor Code sections 233-234), which requires employers to allow employees to use up to one-half of their annual accrued sick leave or PTO to care for a parent, child, spouse, or registered domestic partner.

CONCLUSION

While the Paid Sick Leave Law still raises a number of questions concerning its interpretation and will continue to do so beyond its effective date of July 1, 2015, AB 304 will help to clarify some of these issues as employers continue working to implement this new law.  LCW will provide updates on the status of AB 304 – including its expected passage by the California Senate and approval by Governor Brown – as soon as they happen.

If you have any questions about this issue, please contact our Los Angeles, San Francisco, Fresno, Sacramento, or San Diego office.

To receive these Special Bulletins on the day they are released, please send your email address to info@lcwlegal.com.

The Supreme Court Has Spoken: Federal Health Care Subsidies Are Available to Qualifying Individuals Nationwide.

Posted in Healthcare

Healthcare.jpgIn January, we reported that the Supreme Court of the United States granted review in King v. Burwell to decide whether under the Patient Protection and Affordable Care Act (ACA) the Federal Government could offer subsidies to individuals who purchase health insurance through federally-funded exchanges.  The ACA requires all Americans to have health insurance or pay a fine.  As an incentive for individuals to purchase health coverage, the ACA encourages states to create exchanges, or marketplaces, where individuals can shop for insurance. Federal exchanges operate in states that fail to establish their own exchanges.  California is one of fourteen states that created a state exchange, known as Covered California.  To make insurance affordable for low-income consumers, the ACA offers federal subsidies, or tax credits, to qualified individuals through the state and federal exchanges.  Approximately three-dozen states have federally-run exchanges with more than six million people receiving subsidies through these federal exchanges.

Yesterday, the Supreme Court ruled that ACA permits the Federal Government to provide subsidies to qualified individuals through both state and federally-run exchanges.  The Supreme Court’s holding answered the question of whether an ambiguous phrase in the law was to be interpreted to only permit the Federal Government to provide subsidies to individuals who bought insurance through “Exchanges established by the State,” but not available through the federally-run exchanges.

The Internal Revenue Service’s (IRS) ACA regulation says that subsidies are permitted in state and federally-run exchanges. The plaintiffs/appellants argued, however, that the plain language of the ACA, which reads that qualified tax payers may receive subsidies when enrolled in “[e]xchanges established by the State,” precluded subsidies for persons enrolled in federally-run exchanges.

The Supreme Court agreed with the IRS’ interpretation, finding that “Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them. If at all possible, we must interpret the Act in a way that is consistent with the former, and avoids the latter.”  Interpreting the statutory language to prohibit subsidies in federally-run exchanges would destabilize the individual insurance market, a central tenet of the ACA, and have disastrous economic consequences which Congress did not intend.

As California established a state-run exchange, this Supreme Court decision does not have direct implications for California.  However the June 25, 2015 decision could have long term impacts, including signaling that the ACA’s statutory language should not be interpreted in a way that diminishes individual rights’ to purchase affordable and minimum essential health care coverage.

Up in Smoke: Is Ross v. RagingWire Telecommunications, Inc. Still Relevant to Employers?

Posted in Employment

marijuana_legal_gavelIn the 2008 case Ross v. RagingWire Telecommunications, Inc., the California Supreme Court held that employers are not required to accommodate an employee’s medicinal marijuana use irrespective of the Compassionate Use Act of 1996 [Health & Safety Code section 11362.5], which provides that persons using marijuana under the care of a physician are not subject to criminal prosecution by the State.  The Court commented that the Compassionate Use Act does not grant marijuana the same status as a legal prescription drug and noted marijuana is illegal under federal law, and therefore cannot be “completely legalize[d] for medical purposes.”  The Court reasoned that, since the California Fair Employment and Housing Act [Government Code section 12940 et seq. “FEHA”] does not require employers to accommodate illegal drug use, the employer could lawfully terminate the employee for using medical marijuana.  How relevant is that decision to employers seven years later?  Considering the direction many states, including California, are taking regarding use and full legalization of marijuana, the decision may become less relevant than it was in 2008.

Although marijuana remains illegal under federal law, the approach the federal government is taking shows greater deference to states and their marijuana laws.  For example, in 2013, the U.S. Department of Justice (DOJ) basically abdicated its enforcement authority in states like Colorado and Washington (which have legalized recreational use), asked that the states create “strong, state-based enforcement efforts,” and noted that the DOJ “will defer the right to challenge their legalization laws at this time.”  In effect, the federal government said, “we surrender.”

The DOJ’s decision is important to states, and particularly employers, because disability advocates could use it to push marijuana into a protected category that would require employers to accommodate medicinal use.  It may take just one employee who is successful in a wrongful termination lawsuit to start the ball rolling towards an accommodation requirement.  Most state courts that hear the claims from medicinal marijuana users who have been fired for testing positive continue to rely on the fact that marijuana is illegal under federal law.  But, how long will this analysis hold up considering the number of states that are moving towards full legalization of marijuana and the DOJ’s deference to states to enforce its marijuana laws?

The practicalities of distinguishing between medicinal marijuana and other legal prescription drugs also contribute to the uncertainty of how the law may change for employers.  The reality is that an employer cannot terminate an employee because he has been prescribed pain medication, such as codeine.  Even more importantly, an employer may not necessarily be able to terminate an employee because he is under the influence of codeine while at work—it is going to depend on a number of circumstances, such as whether safety is a concern or work performance.

Many believe that placing medicinal marijuana in the same category as legal prescription drugs might not create the chaos that anti-marijuana proponents espouse.  An employee could test positive for codeine because it stays in the system for up to two days.  This, however, does not mean the employee was under the influence of codeine while at work.  The actual effect of codeine, depending on the dose, is only a few hours.  The discrepancy is apparent.  An employee could test positive for codeine but not be under the influence.  Should he be fired?  The same analysis can apply to medicinal marijuana.  The effects of marijuana may last a few hours, but the evidence of the drug (THC) could remain in the system for several days and as a long as a month.  In contrast to the situation with codeine, under existing law, an employee who is not under the influence of medicinal marijuana at work but tests positive for THC can be lawfully terminated.

Based upon the courts’ decisions in various states, medicinal marijuana is not protected because the federal government still considers it to be illegal.  The Colorado Supreme Court ruled on June 15, 2015, that an employee was lawfully terminated for testing positive for marijuana, but that case was brought under the theory of lawful off-duty conduct, not disability discrimination.  The argument against disability accommodation, however, may start to break down over time and employers could be forced to make difficult employment decisions.  Ross v. RagingWire Telecommunications, Inc. is still relevant to the extent the FEHA does not require an employer to accommodate an employee’s use of medicinal marijuana.  That case, however, could be subject to increased challenges as states continue to adopt laws that allow marijuana use.

Presently, there is a movement in California to put legalized marijuana on the ballot in 2016.  Considering California’s generous employee protections, it would not be surprising if California is the first to change course and allow employees to claim that medicinal marijuana use should be accommodated for employees with disabilities.  In the meantime, employers can continue to treat medicinal marijuana as an illegal drug that need not be accommodated in the workplace.

Special Wage and Hour Laws for Summer Employees: Are Lifeguards and Camp Counselors Exempt?

Posted in Wage and Hour

hourglass-small.jpg This Blog post was authored by Lisa Charbonneau

Many schools, colleges, and municipalities operate special programs and camps during the summer months.  Staffing these programs and camps frequently involves hiring temporary or “seasonal” personnel, such as lifeguards, camp counselors, swim instructors and boathouse attendants.  In recognition that many seasonal employees’ work days differ from that of the full-time, permanent employee, the law provides employers of such employees some exemptions to state and federal overtime and minimum wage requirements, if one of the following exemptions apply:

 California’s Organized Camp Exemption

If you operate what California law defines as an “organized camp,” your camp counselors may qualify for the “organized camp” exception to the California state minimum wage requirement.  This exception is set forth in California Labor Code section 1182.4.  To qualify as an “organized camp,” the camp must be accredited by or otherwise meet the minimum standards of the American Camping Association (click here to review the standards as of 2015).  In addition, the camp’s programs and facilities must have been established for the primary purpose of providing an “outdoor group living experience” for five days or more.  (Cal. Health & Safety Code §18897.)  The law does not currently define “outdoor group living experience.”  If both requirements are met, full-time camp or program counselors need only make a weekly salary of 85% of the state minimum wage for a forty-hour week, regardless of the number of hours worked.  Counselors who work less than 40 hours per week may be paid 85% of the state minimum hourly wage for each hour worked.  This exemption may be especially relevant for schools or municipalities with outdoor recreation facilities such as campgrounds or ranches.

Note that on May 22, 2015, the California State Senate passed SB 476, which, if passed, will expand the scope of the organized camp exemption (click here for more on the status of the legislative bill.)  In relevant part, the bill would eliminate the “outdoor” aspect of the “group living experience” requirement from the legal definition of organized camp and would amend the definition to explicitly include day camps. Assuming the bill’s wording remains the same, its passage into law would mean more camp employees would fall under this exemption.

The F.L.S.A.’s Recreational Establishment Exemption

In addition, employees employed by seasonal “recreational establishments” or organized camps may be exempt from the minimum wage and overtime requirements of the federal Fair Labor Standards Act.  (29 U.S.C. §213(a)(3).) To qualify for the exemption, the establishment must not operate for more than seven months in any calendar year, or the establishment’s receipts for any six months of the preceding calendar year cannot be more than one third of its average receipts for the other six months of the preceding calendar year.  (Id.) The term “establishment” means a “distinct physical place,” such as a summer camp, a golf course, a fairground, or a swimming pool.  This exemption may be especially relevant for municipal entities that operate seasonal pools and boathouses, or operate seasonal programs at distinct physical sites, such as a seasonal camp at a golf course or nature center.

Are You Sure Those Retirement Benefits Are Vested? A Cautionary Tale for Labor Negotiators

Posted in Negotiations, Retirement

Retirement-Sign.jpg

This blog post was authored by Danny Yoo.

Parents of young children can relate to when a child refuses to eat something they do not like; vegetables tending often to be the culprit.  When the child refuses, the parent will ask, “Why don’t you want to eat it?”  The inevitable response is, “Because I don’t want to!”  Rather than addressing the fallacy of circular logic, many times the parent will simply tell her that just because she doesn’t want to does not mean she doesn’t have to.

In County of San Luis Obispo (2015) PERB Decision No. 2427-M (click here for decision), two unions argued that they did not have to negotiate employee pension contributions because employees had vested rights to those contributions.  The Public Employment Relations Board (PERB) disagreed and held that the unions unlawfully refused to bargain because of their incorrect belief that their employees had vested rights.

The County of San Luis Obispo maintains its own independent retirement system, the San Luis Obispo County Pension Trust (Trust).  In 2011, the County requested to bargain with the San Luis Obispo Deputy County Counsel Association and the San Luis Obispo Government Attorneys’ Union (Unions) over employee contributions to the Trust due to increased pension costs.  The Unions rejected the County’s request and asserted that this was non-negotiable because bargaining would impair vested contractual right to specific contributions.  In fact, the Unions had a pending lawsuit against the County on this very issue.  The Unions’ negotiator claimed that the County was putting them in an “impossible position” because if they agreed to bargain, they may be making an admission that could be used against them in the lawsuit.

The County filed unfair practice charges against the Unions for refusing to bargain over the employee contributions, and PERB issued complaints (the complaints were consolidated for purposes of hearing).  In their answers, the Unions each admitted to having “refused to bargain” on the grounds that negotiations would impair vested rights.  The Administrative Law Judge and PERB held the Unions to what they admitted in their answers, i.e., that they had, in fact, refused to bargain.

In its opinion, PERB addressed the “threshold question” of whether there is a vested right.  PERB analyzed the Trust’s Plan and determined that there was no vested right to a continued employee contribution rate. Specifically, PERB stated that “the governing terms of the Plan do not clearly demonstrate a legislative intent to bind the County with respect to the amounts or distribution of employee contributions towards future retirement benefits.”

There are a few takeaways from this decision:

  • Because the answer to a PERB Complaint must be verified, what an agency puts in its answer will be held against it.  If there is a PERB charge or complaint filed against your agency, seek legal counsel before responding.  Here, PERB relied heavily on the Unions’ own admissions in their answers to a PERB complaint that they “refused to bargain” with the County.
  • PERB will make a determination on whether benefits are vested.  Most often, we see this issue litigated in court, as was the case here.  In this case, however, the ALJ and PERB decided to address this “threshold question” before getting to the issue of whether the Unions refused to bargain. Employers should also be aware that there continues to be litigation concerning whether PERB has jurisdiction in the first instance to determine if there exists Constitutionally-protected vested benefits.  Therefore, this issue remains unsettled.
  • If your agency is considering negotiating retiree benefits, first determine whether those benefits are vested.  As discussed in the bullet point above, PERB presently takes the stance that it can and will make a determination on the issue.  PERB could have decided differently and bound the County to an unfavorable decision.

To learn more about vested benefits and what your agency can do about them, please sign up for the LCW webinar “Understanding ‘Vested’ Pension and Other Post-Employment Benefits” presented by Frances Rogers and Michael Youril on June 23, 2015.  Click here for more information.

Court Clarifies that Lease-Leaseback Arrangements Must be “Genuine”; and Simultaneously Creates Split among the Courts of Appeal on the Requirement for Validation Actions

Posted in Education

ConstructionSunset.jpgIn September 2012, Fresno USD’s governing board adopted a resolution authorizing the execution of lease-leaseback construction contracts without competitive bidding.

The lease-leaseback structure permits builder-financed construction.  A school district leases real estate it owns to a construction firm for $1.00 per year and the contractor agrees to build new facilities on that real estate.  This gives the contractor sufficient property rights to “leaseback” the property, and serves as collateral the construction firm can use to obtain third-party financing.  Under the financing method, the school can pay the builder back, via the terms of a lease, which can last up to forty years.  Under Education Code section 17406(a)(1), a school district is exempt from the competitive bidding process otherwise required by Education Code section 17417 and the Public Contract Code.

Relying on Education Code section 17406(a)(1), the Fresno USD leased its project site to a contractor for $1 in rent with the contractor agreeing to construct facilities in accordance with the District’s plans and specifications in exchange for payments under a “Schedule of Lease Payments.”  The lease set out scheduled lease payments as “monthly progress payments” until project completion, at which point the District made final payment for all work, and the term of the lease ended.  The lease was in effect only during the construction of the school facilities; and the funds Fresno USD paid were solely for the construction services performed by the Contractor.

In November 2012, Davis, a local taxpayer, filed a lawsuit challenging Fresno USD’s lease-leaseback process.  In his lawsuit, he alleged failure to comply with the competitive bidding requirements.  He also alleged a conflict of interest by Contractor based on its participation in the planning and design of the project as a consultant to Fresno USD before the District awarded contracts for the project’s construction, and related legal theories.

Fresno USD and the Contractor filed demurrers, arguing that actions by other school districts to validate other, similar arrangements were routinely unopposed.  Courts in similar cases found that site leases, subleases, and pre-construction services agreements entered into by school districts pursuant to section 17460 were not subject to Public Contract Code requirements for award of construction contracts to the lowest responsible bidder.  The trial court sustained the demurrers, dismissed the suit, and entered judgment in favor of Fresno USD and the Contractor.

On appeal, the Court determined that the terms of Fresno USD’s contract with its builder was more akin to a traditional construction contract, and not a lease.  The payment schedule aligned with progress for construction services; whereas under a lease, payments are for a set time, such as monthly, during which the lessee occupies and uses the real property.  Not only was “leaseback” in effect only during the course of the construction, the school district did not occupy and use the new facilities as a “rent-paying tenant” for any set length of time.  Because the contractual arrangement was for “construction services” and not a true lease-leaseback as a method of financing, the Court determined that Davis had sufficiently alleged that Fresno USD had violated the competitive bidding requirements.  (Davis v. Fresno Unified School District)

In drawing this conclusion, the Court explained that the legislature’s primary purpose in enacting Section 17406(a)(1) was “to create a way for school districts to pay for construction over time and avoid the constitutional limitation on debt.”  (Davis)  The Legislature created the lease-leaseback exception to the competitive bidding process to encourage a new source of financing, and allow school districts, contractors, and third-party lenders to enter into “earnest negotiations” of the construction and financing arrangements “without the concern that the deal would be subsequently derailed by the competitive bidding process.” (Id. at p. 12)

With these underlying alternate-financing principles in mind, the Davis Court determined that Section 17406 applies only to “genuine or true leases,” though it did not go further in agreeing with the plaintiff that lease-leaseback arrangement should be restricted to situations where a school district does not otherwise have sufficient funds available to cover the cost of building.  (Id. at p. 17.)

To determine whether a lease-leaseback contract is a “true lease,” and not simply a traditional construction contract the Court will look to: (1) provisions in the contract that define who holds what property rights, and when those rights and interests are transferred between parties; and (2) the amount and timing of payments.  (Id. at 20)  To be a “true” lease in compliance with Section 17406(a)(1), a school district must actually use the newly constructed premises, as a tenant,during the term of the lease.”  (Davis – emphasis original)  The school district must use the building, and not another entity.

In addressing the conflict of interest claim, the Court found that Davis had alleged sufficient facts to allow the case to proceed on the conflict of interest claim.  The Court stated that whether Davis will prove this claim will depend on the evidence presented in the trial court.

In Los Alamitos Unified School District v. Howard Contracting, Inc., a different Court of Appeal determined that a public agency could “indirectly but effectively” self-validate an action (under Code of Civil Procedure sections 863, 860) by refraining from initiating a validation action.  The Court explained that an interested person may bring an action to determine the validity of the matter, but they must do so within 60 days.  (Code of Civil Procedure, sections 863, 860.)  If no interested person commences such action, and if the public agency does not initiate such action, within the 60-day period, the action becomes immune from attack. (Los Alamitos)Thus, the agency could “self-validate” an action, simply by doing nothing.

In a footnote to the Fifth District’s June 1, 2015 decision in Davis, the Court noted that Defendants “could have avoided this post-completion taxpayer challenge by bringing a validation action under Code of Civil Procedure section 860 prior to the construction of the project.”  (Davis  at p. 5)  This conflicts with the holding in Los Alamitos, which did not require a validation action to commence “prior to [] construction,” but within 60 days of the underlying action – in that case entry into the lease-leaseback agreement.

Because of the potential conflict between the 60-day inaction and resultant self-validation period described by Los Alamitos, and the “prior to [ ] construction” language articulated in Davis, this issue may be ripe for review by the California Supreme Court.

Davis v. Fresno Unified School District (2015) — Cal.App.4th —- [2015 WL 3454720]

Note: 

For a discussion of the Los Alamitos case, please see our October 2014 Education Matters article. We will follow this issue closely and keep you informed of further developments.

Tips from the Table: Avoiding Distractions During Negotiations

Posted in Labor Relations, Negotiations

We are excited to continue our video series – Tips from the Table. In these monthly videos, members of LCW’s Labor Relations and Negotiations Services practice group will provide various tips that can be implemented at your bargaining tables. We hope that you will find these clips informative and helpful in your negotiations.