Applying the different California Public Employees’ Retirement System (“CalPERS”) rules related to Temporary Upgrade Pay, out-of-class appointments, and non-reportable extra-duty pays can be unnerving.  For classic employees, compensation for appointments meeting the definition of Temporary Upgrade Pay are reportable to CalPERS and is included in pension benefits.  For out-of-class appointments, the Government Code establishes a 960-hour per fiscal year limit, regardless of whether the employee is a classic or new member.  Some compensation is reportable as Temporary Upgrade Pay and the hours are reportable as an out-of-class appointment.  Other appointments might meet the definition of Temporary Upgrade Pay but do not meet the definition of an out-of-class appointment. And, whether the employee is a new member subject to the California Public Employees’ Pension Reform Act (“PEPRA”) or a classic member might change the answer.

As discussed in more detail below, for classic members, where an appointment meets the definition of Temporary Upgrade Pay, but not out-of-class appointments, the compensation is reportable to CalPERS and included in the employee’s pension benefits.  However, the hours are not reportable for the purposes of the 960-hour limit on out-of-class appointments.  For a classic member, where an appointment meets the definition for Temporary Upgrade Pay and out-of-class appointments, the compensation is reported to CalPERS and included in pension benefits, and the hours are reported to CalPERS for the purposes of tracking the 960-hour limit for out-of-class appointments.  For new members, compensation for Temporary Upgrade Pay is not reportable to CalPERS for the purpose of inclusion in pension benefits, but the hours may be reported to CalPERS for the purpose of tracking the 960-hour limit if the appointment meets the definition of an out-of-class appointment.

Few items of special compensation reportable to CalPERS have caused as much confusion as Temporary Upgrade Pay.  CalPERS even had difficulty determining whether Temporary Upgrade Pay would be reportable for CalPERS new members after PEPRA was enacted.  Initially, CalPERS indicated in a circular letter that Temporary Upgrade Pay would not be reportable for new members who were subject to PEPRA.  CalPERS later reversed course and indicated that Temporary Upgrade Pay would be reportable for new members.  Finally, after a brief standoff with then-Governor Brown, CalPERS excluded Temporary Upgrade Pay from reportable compensation for new members under its final regulation.

Temporary Upgrade Pay is an item of “special compensation” that is reported to CalPERS for the purpose of inclusion in CalPERS pension benefits for classic members.  Under the applicable regulation, Temporary Upgrade Pay is defined as follows:

Compensation to employees who are required by their employer or governing board or body to work in an upgraded position/classification of limited duration.

In a 2014 Circular Letter, CalPERS noted that many agencies were incorrectly reporting certain assignments as Temporary Upgrade Pay.  Specifically, CalPERS takes the position that when an individual maintains the duties of their current position and takes on some or all of the duties of an upgraded position, the compensation for taking on the additional duties is non-reportable overtime.

For example, many agencies have “out-of-class” or “acting” pay in their MOUs that provide an employee with additional compensation for taking on a portion of the duties of an upgraded classification.  In some cases, multiple employees will split the duties of a higher position and receive additional compensation.  Under CalPERS’ interpretation, since the individual retains the duties of their current position, the compensation is not reportable to CalPERS for new or classic members.

To complicate matters further, on January 1, 2018, Government Code section 20480 went into effect. This new law places limits on certain out-of-class appointments, and provides for penalties on out-of-class appointments that exceed 960 hours in a fiscal year.  As with Temporary Upgrade Pay, an out-of-class appointment under the Government Code has a specific definition.  An “out-of-class appointment” is “an appointment of an employee to an upgraded position or higher classification by the employer or governing board or body in a vacant position for a limited duration.”  A “vacant position” is defined as “a position that is vacant during recruitment for a permanent appointment.”  The definition of “vacant position” excludes a “position that is temporarily available due to another employee’s leave of absence.”  If the appointment meets the definition of an out-of-class appointment, the hours must be reported to CalPERS in the my|CalPERS system, but the compensation is only reportable if the appointment meets the definition of Temporary Upgrade Pay and only if the employee is a classic member.

It would have been convenient for the definition of Temporary Upgrade Pay under the regulations and out-of-class appointments under the Government Code to have the same definition, but that would be too easy.  As the definitions above illustrate, an appointment might meet the definition of Temporary Upgrade Pay without meeting the definition of an out-of-class appointment.  For example, if a CalPERS classic employee is placed in an upgraded position while the permanent employee is on an extended leave of absence, assuming the technical requirements in the regulation are met as they relate to all items of special compensation, the compensation would be reportable as Temporary Upgrade Pay.  However, the appointment would be expressly excluded from the definition of an out-of-class appointment and the hours would not have to be reported in my|CalPERS for the purposes of tracking the 960-hour limit.  Similarly, if an individual serves in an upgraded position, but the agency is not recruiting to fill the position, the additional compensation may be reported as Temporary Upgrade Pay, but does not meet the definition of an out-of-class appointment.

With the mix of overlapping and divergent definitions for Temporary Upgrade Pay, out-of-class assignments, and non-reportable extra-duty pays, it is important to apply each definition separately to the appointment and compensation when reporting compensation as Temporary Upgrade Pay or reporting the hours for out-of-class appointments.  Agencies should also audit any out-of-class, upgrade pays, interim pays, acting pays and extra-duty pays to determine whether these pays are reportable as special compensation, and when they may meet the definition of out-of-class appointment for the purposes of tracking the 960-hour limit.

Want to learn more? Join us on Tuesday, September 17th for at the one-hour webinar “Is is Pensionable? Hybrids, Lump Sums, & Other Pensionable Compensation Challenges”  presented by Partner Laura Drottz Kalty. Register Today! And if you can’t attend the webinar, you can register to receive the recording so you don’t miss any important information!

This post was authored by Alysha Stein-Manes and Daniel Seitz

Remote surveillance is an area of expanding interest for law enforcement agencies.  Police departments continue to equip their sworn officers with body-mounted video cameras (“body cams”), and, in California, the Legislature has begun to regulate discoverability of body cam footage.  Agencies in California and across the country have also begun to deploy unmanned aerial systems (“UASs”), drones, and robots to assist in policing and surveillance efforts.  For example, one California agency recently began deploying a robot to survey public spaces when peace officers are not present.

Many UASs, drones, and robots can record audio and video and then wirelessly transmit the data to storage facilities.  Some agencies maintain their own data storage, while others contract with third parties.  In either case, these emerging surveillance methods and new sources of data represent a potential impact on agency relations—both with its employees and with the public.

Possible Effects on Bargaining

The purchase and use of remote surveillance equipment may represent a significant agency investment and may pose issues that affect the terms and conditions of employment for represented employees.  For example, equipment may require a onetime purchase or recurring subscription payments; portions of an agency’s budget that could have gone to hiring new officers may instead finance the remote surveillance equipment.  The equipment will need maintenance and repair.  Additionally, such equipment may require a trained operator or team of operators.  The agency will likely need to assign personnel to review any captured audio and video data.  If an agency uses such technology to patrol public spaces, it may raise questions of whether the equipment has replaced a bargained-for position or has impacted the availability of officer overtime hours.

If employers use remote surveillance equipment, they should address whether such usage is a mandatory subject of bargaining or whether decisions relating to their usage constitute a management decision.  California Government Code section 3505 requires employers to “meet and confer in good faith regarding wages, hours, and other terms and conditions of employment” with recognized employee organizations.  If remote surveillance equipment usage leads to a change in working hours, availability of overtime, changes in job duties, additional certification requirements, or other terms and conditions of employment, agencies should speak with their legal counsel about potential impacts on bargaining.  Agencies considering such equipment might also benefit from a more informal meet-and-consult or meet-and-discuss with their employee associations.  This would give the associations a chance to identify potential impacts and raise them before the employer-employee relationship suffers.

Susceptibility to Records Requests

Agencies should also recognize that audio and video data recorded by remote surveillance equipment, such as drones and robots, may be subject to disclosure under the California Public Records Act (CPRA).

With some exceptions, the CPRA requires public agencies to allow inspection of data (including audio and video recordings) that relates to government process or government business.  Currently, California law does not directly address agency drone or “robot” footage or audio recordings.  However, the California legislature has recently passed several bills governing oversight of law enforcement agencies that suggest data generated from such equipment will be subject to similar means of disclosure.

Specifically, as of January 2019, SB 1421 requires that agencies produce in response to a CPRA request a wide variety of records relating to officer-involved shootings, officer uses of force resulting in serious injury or death, certain instances of officer dishonesty, and instances of officer sexual assault against civilians.  Additionally, beginning on January 1, 2020, SB 978 will require law enforcement agencies to post “all current standards, policies, practices, operating procedures, and education and training materials” on their websites, if the information would otherwise be subject to a CPRA request.  A public agency considering whether to use drones, robots, or other remote surveillance equipment should work with legal counsel to identify what information may become discoverable through records requests under California law.

Privacy Considerations and Public Concerns

Remote surveillance equipment may present significant privacy concerns.  The U.S. Constitution and California law protect communications where there is a reasonable expectation of privacy.  This reasonable expectation is generally measured in terms of human ability (and limitations)—not machine specifications.  In Florida v. Riley (1989) 488 U.S. 445, 449-450, the Supreme Court of the United States held that “the Fourth Amendment simply does not require the police traveling in the public airways at an altitude of 400 feet to obtain a warrant in order to observe what is visible to the naked eye.” In Kyllo v. US (2001) 533 U.S. 27, 40 the Supreme Court held that police use of a thermal imaging device that was not in “general public use” without a warrant constituted a search under the Fourth Amendment and is presumptively unreasonable, even if it does not physically invade a private space.  While there is no current U.S. Supreme Court precedent addressing drone usage in similar contexts, these cases and others leave open the possibility that the U.S. Supreme Court could limit the usage of such remote surveillance equipment on Fourth Amendment grounds.

While the regulation of drones and similar devices remains an open question at the federal level, in California, Section 1708.8 of the Civil Code provides that a person is liable for “constructive invasion of privacy” when the person “attempts to capture” a visual image, sound recording or other “physical impression” while the person engages in a private, personal or familiar activity,” when using a device such as a drone.  The law further provides that any person who directs, solicits, actually induces, or causes another person to violate this law “regardless of whether there is an employer-employee relationship” is liable for invasion of privacy.  Section 632 of the California Penal Code requires all parties to consent to the recording of an otherwise confidential communication and defines “confidential communication” to include “any communication carried on in circumstances as may reasonably indicate that any party to the communication desires it to be confined to the parties thereto, but excludes a communication made in a public gathering.”  Exceptions would apply where agencies obtain valid warrants.

As agencies continue to consider whether they will employ the use of remote surveillance equipment to assist in their duties, it will be important for agencies to understand the capabilities of their remote surveillance equipment, understand the law regarding public employee bargaining rights, transparency, and privacy, and define the roles of such devices carefully.

On July 15, 2019, the Public Employment Relations Board (PERB) issued a decision in the case,  Association of Orange County Deputy Sheriffs v. County of Orange, PERB Decision No. 2675-M.  At issue in the case was whether PERB has jurisdiction to hear claims brought by employee organizations that represent peace officers as that term is defined in Penal Code 830.1, and whether the County was obligated to bargain changes to an ordinance creating an Office of Independent Review (OIR) that advised the Sheriff-Coroner on certain in-custody incidents and complaints against law enforcement personnel.  The Board held for the Association on the jurisdictional issue and for the County on the merits.  This decision is very significant as it provides a very clear holding from PERB that it believes that employee organizations (labor associations and unions) that represent only sworn peace officers (officers and sheriffs) can directly file unfair practice charges with PERB and that PERB has jurisdiction to adjudicate those charges.

The Jurisdictional Issue

During the relevant time period, the Association of Orange County Deputy Sheriffs (Association) was a bargaining unit composed of 1693 peace officers, as that term is defined in Penal Code 830.1, and 115 non-peace officers.  (Penal Code 830.1 defines persons who are peace officers to include deputy sheriffs and police officers.)

In 2008, the County passed an ordinance creating an OIR to advise the Sheriff-Coroner regarding in-custody incidents involving death or serious injury and complaints against law enforcement personnel.  In 2015, the County notified the Association of its intent to change its OIR ordinance to extend OIR authority to cover the District Attorney’s Office, among other changes.  The Association argued that the decision to change the OIR ordinance and the effects of the decision were matters within the scope of representation.  In December 2015, the County implemented changes to the OIR without meeting and conferring with the Association.  The Association then filed an Unfair Practice Charge (UPC) in June 2016.

As part of its response to the UPC, the County moved to dismiss, arguing PERB lacked jurisdiction to hear claims brought by 830.1 peace officers.  According to the County, section 3511 of the Meyers Milias Brown Act (MMBA) bars claims by persons who are peace officers as defined in section 830.1 of the Penal Code, as well as claims that impact Penal Code 830.1 peace officers.  The ALJ disagreed, relying on a 2015 PERB Decision that found the Board had jurisdiction over charges brought by employee organizations representing bargaining units that include, in whole or in part, persons who are peace officers.  Click here to read about that case.  The County then excepted to the ALJ’s ruling on jurisdiction and the matter was heard before the PERB Board.

After a lengthy discussion of statutory history and statutory framework, the Board affirmed the ALJ’s decision and rejected the County’s arguments, holding that PERB has jurisdiction over claims brought by employee organizations that represent or seek to represent bargaining units composed partially or entirely of Penal Code 830.1 peace officers.  In other words, while section 3511 of the MMBA prohibits natural persons who are peace officers pursuant to Penal Code 830.1 from filing claims with PERB, their Associations may do so.

The Obligation to Bargain Issue

The Board found for the County on whether the County had an obligation to bargain changes to its OIR ordinance that expanded the jurisdiction of the OIR, authorized the OIR to work with departments beyond the Sheriff-Coroner, and authorized the OIR to provide legal advice on non-law enforcement employee misconduct.  According to the Association, the changes to the OIR were within the scope of representation because legal advice provided by the OIR attorneys could influence disciplinary decisions, which, according to the Association, would affect the discipline process and disciplinary procedure.  Disciplinary procedure is a mandatory subject of bargaining under the MMBA.  The Board disagreed, finding the changes to the OIR ordinance only concerned management’s direction to its legal counsel for the performance of legal services, which is outside the scope of representation and the MMBA’s meet-and-confer requirement.  PERB drew a distinction between citizen review board procedures and advice of legal counsel, finding that the directions an employer gives its legal counsel about how to provide it with legal advice is so attenuated from the employment relationship that it is outside the scope of representation.  The Board concluded, “[u]ltimately, the OIR ordinance functions much like a contract for legal services and concerns only how OIR attorneys and staff will provide the County with legal advice; it does not change or have effects on the disciplinary procedure.”

What is Next

This decision is the first time that PERB has affirmatively held that it has jurisdiction to hear MMBA unfair practice charges brought by employee organizations that solely represent sworn peace officers as that term is defined at Penal Code section 830.1.  Whereas prior to County of Orange, employee organizations that solely represented peace officers as that term is defined in Penal Code section 830.1 were arguably limited to filing claims for alleged MMBA unfair practice charges in superior court, the County of Orange decision makes clear that those organizations may file such claims directly with PERB.  Unless County of Orange is successfully challenged in appellate court, agencies with police or sheriff departments will likely see an increase in PERB claims brought by police officer or sheriff employee organizations.

The Association of Orange County Deputy Sheriffs v. County of Orange (2019) PERB Decision No. 2675-M, may be found here.

Employers and employee organizations are often looking for new, creative ways to expand, streamline, or restructure employees’ health benefits.  Starting in January 2020, employers may offer two different health reimbursement arrangements (“HRA’s”) to their current employees.  Typically, employers offer HRAs for retirees through collective bargaining agreements but do not offer them for current employees because of restrictive HRA rules.  Under new rules issued on June 13, 2019, employees can benefit from two new types of HRAs, starting on January 1, 2020: Individual Coverage HRAs and Excepted Benefit HRAs.  Read on to learn more about these new HRA options and whether your agency might offer them through the collective bargaining process.

Overview: What is an HRA?

Employers may reimburse employees tax-free for qualified medical expenses through Health Reimbursement Arrangements.  Employers fund an account, which reimburses employees’ and their dependents’ qualifying medical expenses.

What are the new HRA options?

Employers may offer either an Individual Coverage HRA or an Excepted Benefit HRA to a class of employees – it cannot offer both options to the same group.

An Individual Coverage HRA has the following attributes:

  • Participants must enroll in individual health insurance coverage or Medicare.
  • The HRA can reimburse medical insurance premiums, medical care expenses, or both, without an annual limit.
  • Unused amounts will roll over into the next plan year.
  • Employees must be able to opt-out and waive future reimbursements each plan year.
  • Employees can participate in a Health Flex Savings Account and the Individual Coverage HRA.
  • Employers must offer the HRA to a minimum class size of employees on the same terms and conditions.

By comparison, an Excepted Benefit HRA offers the following:

  • Participants must have the opportunity to enroll in the employer’s group plan, but the participants are not required to enroll.
  • The HRA can reimburse medical care expenses, plus premiums for only excepted benefit coverage, like stand-alone dental coverage, up to $1,800 for the 2020 plan year.
  • Unused amounts will roll over into the next plan year.
  • The employer must offer the same benefit to all similarly situated employees.

Interested in learning more?

These new plans touch on a complex web of laws including tax, health and welfare, and labor laws.  In addition, please remember that changes to employees’ health benefits must be negotiated, and these new policies require a notice period before any negotiated changes would take effect.  If your agency is interested in learning more about these new HRA benefits, LCW is available to help assess your Agency’s long-term labor relations and benefits coverage strategies.

I know I’ve made some very poor decisions recently,

but I can give you my complete assurance that my work will be back to normal.

HAL 9000 – 2001 A Space Odyssey

Microchips for dogs and cats is nothing new.  Our fluffy friends have been receiving microchips for more than 30 years, resulting in happy reunifications of owners and lost pets.  The latest trend in microchipping moves beyond cats and dogs and on to the workplace—not because employees are getting lost but as a means to assess productivity and track efficiency, among other things.

In January 2015, the Swedish conglomerate Epicenter started offering employees implanted microchips in their hands that would permit them to open doors, log on to computers, or buy food and drinks. The Wisconsin company Three Square Market began voluntarily chipping employees in 2017, with roughly a third of the employees chipped by August 2018.

Since the United States has a history of striving to protect individual privacy rights, do these employee microchips have a viable future in the workplace?  Twenty states currently have laws concerning the use of microchips but only a handful of those laws directly address the employment context.  California Civil Code section 52.7 expressly prohibits a person, which includes business entities, from “requiring, coercing, or compelling” an individual to undergo subcutaneous implanting of an identification device.  The statute further forbids “the conditioning of any private or public benefit or care on consent to implantation, including employment, promotion, or other employment benefit.”  California law does not stop employers from asking employees to consent to microchipping, but the law also does not establish any particular guidelines for microchipping employees.

In 2019, Arkansas introduced legislation that specifically addresses the use of microchips in the employment context by outlining legal parameters for microchipping.  The legislation seeks to strike a balance between employee privacy and the value of microchips to employers.  The employee must give written consent to implanting the microchip and the employer must disclose all the information that it collects, among other requirements.  Importantly, the microchip cannot be a condition of employment.  The employer also must permit and pay for removal of the microchip upon the employee’s request.

While employees may recoil at the thought of being monitored through microchips, employers could reap notable benefits, such as assessing workplace efficiency and effectiveness.  Employers often use card swipe data in a variety of matters, such as monitoring employee entry and exit times from buildings.  This information often assists employers in disciplinary matters. Employee access card information, however, can be unreliable.  Employees easily could find ways to enter buildings without swiping a card, or could enter or exit with a group of people, without having to swipe their own card.  The microchip, however, offers greater and more consistent data collection.

With the rise of microchipping employees in Europe and advancements in technology, other states may follow Arkansas’ lead by creating specific employment laws to govern employee microchipping.  For the 2019/2020 California legislative term, the only microchip legislation introduced so far relates to dogs, cats and horses.  Despite California having one of the stronger laws on microchipping humans, future legislation may be likely if the employee microchip trend gains more interest from employers.  Without legal parameters in place, employers could develop their own policies and procedures for microchipping but should exercise caution to avoid violating existing law, as well as the appearance of coercion or retaliation.

On July 3, 2019, Governor Gavin Newsom signed into law a bill that extends California’s workplace and school discrimination protections to cover race-related traits, including hair.  SB-188 expands the definition of “race” under the Fair Employment and Housing Act and the nondiscrimination provisions of the Education Code.  Effective January 1, 2020, “race” will include “traits historically associated with race, including, but not limited to, hair texture and protective hairstyles.”  The law further specifies that “protective hairstyles” “includes, but is not limited to, such hairstyles as braids, locks, and twists.”  This change in the law includes protection from such discrimination against employees and students.

The bill was introduced by State Senator Holly J. Mitchell, and sponsored by a coalition comprised of the National Urban League, Western Center on Law & Poverty, Color of Change, and personal care brand Dove.  Effective January 1, 2020, it amends Government Code section 12926 and adds section 212.1 to the Education Code.

The bill appears primarily intended to prevent unequal treatment related to natural Black hairstyles.  The bill includes a legislative declaration that “Despite the great strides American society and laws have made to reverse the racist ideology that Black traits are inferior, hair remains a rampant source of racial discrimination with serious economic and health consequences, especially for Black individuals.”  The declaration also states that “Workplace dress code and grooming policies that prohibit natural hair, including afros, braids, twists, and locks, have a disparate impact on Black individuals as these policies are more likely to deter Black applicants and burden or punish Black employees than any other group.”

Although the bill specifically references Black hairstyles, the statutory changes it establishes may be more broad.  For example, under the new statutory language, it appears employers and schools are prohibited from discriminating based on any trait “historically associated with race.”  The parameters of this standard, i.e. whether a particular trait qualifies as “historically associated with race” will be subject to debate. In addition, although the findings and declarations speak to Black hairstyles, the new statutory language does not limit protection to African American individuals with traditionally Black hairstyles.  These types of issues will surely be the subject of litigation in court.

Employers should ensure their policies (including, but not limited to, anti-harassment policies, dress codes and grooming standards) are updated in accordance with this change of law going into effect January 1, 2020. In addition, supervisors should be  trained on the expansion of the definition of “race” in the Fair Employment and Housing Act and/or Education Code.

This Special Bulletin was authored by Eileen O’Hare-Anderson & Emanuela Tala

The Public Employment Relations Board (“PERB”) found that the Contra Costa Community College District (“District”) did not violate the Educational Employment Relations Act when it withheld copies of written discrimination complaints against two faculty members in advance of investigatory interviews.

In Contra Costa Community College District (2019) PERB Decision No. 2652E, PERB found that a union has a right to reasonable notice of the alleged wrongdoing before the investigatory interview, but the union does not have a right to a copy of the written complaint until after the initial investigatory interview is completed.

The District received two student complaints against two faculty members, and subsequently hired an attorney to investigate the complaints.  The District required the two accused faculty members to attend investigatory interviews.  The faculty members requested union assistance in connection with the interviews, and the union agreed to assist them.  The union then requested copies of the complaints prior to the interviews.  The District, through its attorney, informed the union that its policy was not to provide copies of complaints before an interview.  The District asserted the need to protect the integrity of the investigation and the complainants’ privacy rights as primary reasons for denying requests for copies of the complaints.

PERB held that the employer must provide reasonable notice of the alleged misconduct.  This must be timely and include sufficient information about the alleged wrongdoing “to enable a union representative to represent an employee in a meaningful manner during the interview.”  Whether an employer has met this obligation is a case-by-case determination.  However, “the employer has no obligation to provide the underlying written complaint until after the employer conducts an initial investigatory interview.”

Notice is timely if it gives the accused employee enough time to consult with his or her representative.  Notice is sufficient if it provides the accused employee and his or her representative with enough information about the allegations to allow for representation in a meaningful manner during the interview.

PERB also explained that after an investigatory interview, the employer may not deny the union’s request for information on the basis that a disciplinary meeting or proceeding falls outside the scope of the bargaining agreement or on the basis that the union has no duty of fair representation.

Similarly, the employer may not deny the union’s request for information by simply asserting a third party’s right to privacy.  PERB reaffirmed the rule that after the employer raises the legitimate privacy rights of a third party, such as a student, the employer cannot simply refuse to provide any information.  Rather, the employer must meet and confer in good faith to reach an accommodation of both the union’s and the accused employee’s right to obtain the information and the third party’s right to privacy.  Such accommodations could include redacting information that is not relevant, or entering into agreements limiting use of the information.

NOTE:  Employers must be careful in responding to requests for information, especially while investigations are pending.  Agencies should work with local counsel to navigate the requirements of this and other applicable laws.


This blog post was authored by J. Scott Tiedemann & Lars T. Reed 

On Thursday, June 27, 2019, Governor Newsom signed into law the new State Budget as well as accompanying budget trailer bills.  One of the budget trailer bills, Senate Bill 94, contains clean-up language for provisions added to the California Public Records Act by last year’s Assembly Bill 748.

AB 748, which we have discussed in previous blog posts, amended the Public Records Act, starting July 1, 2019, generally to require agencies to disclose video and audio recordings of “critical incidents” involving the use of force resulting in great bodily injury or the discharge of a firearm by a peace officer or custodial officer at a person.  Redaction and/or withholding of records is permitted to protect specified privacy interests.  Disclosure of a record can also be delayed for between 45 days up to one year, depending on the circumstances, if disclosure would undermine an active criminal or administrative investigation.

An agency can withhold a recording if its disclosure would violate privacy interests of a person depicted in the recording and if the person’s privacy cannot be adequately protected through redaction.  However, an agency must disclose the record to the subject whose privacy is sought to be protected (or to their legal representative).  The question addressed by SB 94 is when that disclosure must occur.  The question was raised because AB 748 included ambiguous language that could appear to require an agency to disclose a recording to a party whose privacy the agency sought to protect, even if the agency could otherwise withhold the record because it would undermine an active criminal or administrative investigation.

Under the original language of AB 748, the provision explaining how these provisions interact when they all apply was ambiguous:  as written, it would require the agency to disclose a recording to the party whose privacy is implicated while simultaneously (and inconsistently) permitting the agency to withhold the recording for between 45 days to a year to protect an active investigation.  SB 94 removes this inconsistency: it now only requires the agency to provide the requesting party with the estimated date for disclosure of the recording and allows the agency to withhold the record if certain conditions are met.

As a budget trailer bill, SB 94 took effect immediately upon the Governor signing the bill into law. As such, the cleaned-up language in SB 94 will already be in effect when the disclosure requirement under Government Code section 6254 begins on July 1, 2019.

This post was authored by David Urban

Cities, counties, special districts, public educators, and other government entities who invite public comment and contribution on their Twitter accounts, Facebook pages, websites, or other spaces on the internet might face liability for violating the First Amendment if they remove content posted by members of the public or block certain members of the public from participating.  The theory is that such virtual spaces function the same way as physical government spaces like a park reserved for public expression; under well-established principles, the government cannot prevent speech in such areas simply because it disagrees with the message.  Instead, in very general terms, the government must abide by rules it establishes for the forum, which must pass exacting judicial scrutiny.  The rules can include some content-neutral “time, place, and manner” restrictions or rules designed to satisfy sufficiently important interests with a sufficiently minimized impact on those who wish to express themselves in the forum.

Courts in recent years have tried to interpret how these rules — developed primarily for physical spaces — translate to the internet.  It is still unclear how they apply, or even whether they do, given how much of the internet, hardware and otherwise, is privately owned.  (The First Amendment almost always applies only to governmental actions not private individuals or businesses.)  Nevertheless, government agencies, and government officials including elected officials, have to pay close attention to this area of law if they wish to moderate public participation on their on-line forums.

No binding judicial precedent yet exists on these specific issues in California, and may not for some time.  The following three cases, from federal courts, provide clues to where the law is going.

1.) Davison v. Randall (4th Cir Jan. 7, 2019) – In this case, the U.S. Court of Appeals for the Fourth Circuit (covering Eastern states including Virginia, West Virginia, North Carolina, and South Carolina) held that the Chair of a County Board of Supervisors who created a Facebook page through which she conducted substantial county business had effectively created a “public forum,” and that she could not bar community members from participating. The Court first determined that the supervisor acted in her official capacity in operating the page. Among other things, the Court observed that in operating the page: “[Supervisor] Randall provides information to the public about her and the Loudoun [County] Board’s official activities and solicits input from the public on policy issues she and the Loudoun Board confront.”  The Court concluded that the page itself constituted a public forum.  It reasoned:

“[A]spects of the Chair’s Facebook Page bear the hallmarks of a public forum. Randall “intentionally open[ed the public comment section of the Chair’s Facebook Page] for public discourse,” inviting “ANY Loudoun citizen” to make posts to the comments section of the Chair’s Facebook Page—the interactive component of the page—“on ANY issues, request, criticism, complement or just your thoughts”. . . .

The Supervisor was thus liable under the First Amendment for blocking a member of the public from commenting on her County Chair Facebook page, after the individual criticized the Loudoun Board.

For public agencies and officials, this Davison case shows the risks in blocking users, or in removing publicly posted content on platforms used for official purposes.  Davison is not binding precedent in California, but courts in this state could choose to follow it.

2.) Knight First Amendment Institute v. Trump (2d Cir.) – this high-profile case is currently pending in the U.S. Court of Appeals for the Second Circuit (covering New York, Connecticut, and Vermont). The Court must decide whether President Trump’s Twitter page, @realDonaldTrump, constitutes a public forum and whether the President infringed the First Amendment rights of individuals he barred from his page. The individual plaintiffs, who are social media commentators, sued President Trump for blocking their access to his Twitter page allegedly because of the viewpoints they expressed.  Trump contends that his Twitter account pre-dated his tenure as President, and constituted a private platform not subject to First Amendment restrictions, based on the variety of ways (both personal and governmental) in which he used it.

The Trial Court determined that Trump’s Twitter account is, in fact, a public forum for First Amendment purposes.  First, the Court found it was effectively a government-run space.  The Court described that the President used the page to carry out the duties of his office, observing; “the @realDonaldTrump account has been used in the course of the appointment of officers (including cabinet secretaries), the removal of officers, and the conduct of foreign policy — all of which are squarely executive functions . . . .”  The Court went on to find the interactive part of the page, in which users had the ability to comment and exchange views, constituted a public forum.  The Court observed: “The interactivity of Twitter is one of its defining characteristics, and indeed, the interactive space of the President’s tweets accommodates a substantial body of expressive activity.”

The Court of Appeals heard oral argument in the appeal on March 26, 2019, and is expected to issue its decision soon.

For public agencies and officials, the Knight case will shed light on the circumstances under which social media accounts that host public comments will have to abide by the First Amendment, and will likely contain some discussion relating to when and how public agencies and officials can moderate comment when the First Amendment does apply.  Like Davison, the Knight case will not serve as binding precedent in California, but courts in this state may find its reasoning persuasive.

3.) Prager University v. Google, LLC (9th Cir.) — this case is currently pending in the U.S. Court of Appeals for the Ninth Circuit (covering Western states including California). It involves one of the most cutting-edge legal issues in First Amendment law: does the First Amendment in fact apply to privately run social media platforms? The case involves YouTube, which is a subsidiary of Google.  It is well-established law that the provisions of the U.S. Constitution like the First Amendment only restrict government conduct, not the conduct of private companies or individuals acting outside any government capacity.  Rare exceptions exist, however, for private organizations that engage in “state action” by taking on traditional governmental roles.  There is also a1946 U.S. Supreme Court case, Marsh v. Alabama, which held that a privately owned “company town” was subject to the First Amendment.  In that case, the Court held that a private company that controlled a whole town could not censor speech by having criminal sanctions imposed against those who entered the town to engage in expressive activity (in that case, Jehovah’s Witnesses who wished to hand out literature).

In this case, the plaintiff Prager University has argued that YouTube, under both the state action doctrine and the Marsh case, must abide by the First Amendment.  Prager is an educational nonprofit company and explains in its complaint that it is not an academic institution.  Its mission, according to its complaint, is to “provide conservative viewpoints and perspectives on public issues that it believes are often overlooked or ignored.”  To further its mission, Prager creates short educational videos which “espouse[s] viewpoints and perspectives based on conservative values.”  It posts its videos on YouTube.

Prager argues that YouTube discriminated against it based on viewpoint.  Prager did not allege any of its videos were completely removed from YouTube, but instead that based on viewpoint, some of its videos were “demonetized” and also censored in the form of an age restriction or exclusion from a Restricted Mode setting (a mode that the complaint describes facilitates access to the videos by certain types of users like schools).

The Trial Court rejected Prager’s contentions that YouTube’s platform presents any type of public forum governed by the First Amendment, including Prager’s contentions based on Marsh, and dismissed the complaint.  Prager appealed.  The Ninth Circuit will likely set oral argument to take place in the next several months.

The Prager case does not involve government agency-hosted social media, but it will constitute binding federal precedent in California, and will likely contain reasoning relevant to how governments operate social media.  For example, the Ninth Circuit could discuss how YouTube’s existing policies on restricting user videos and comments would fare under First Amendment scrutiny.  This could help government agencies structure their own policies.  The Ninth Circuit could also consider arguments that YouTube itself has its own institutional First Amendment right to curate the content it presents to users.  This treatment of private company speech could inform when and how public entities can use the corollary “government speech” doctrine to respond to claims of improper censorship on websites.

Prager has to contend with the overwhelming precedent against applying constitutional principles to private actors.  Indeed, just last week, on June 17, 2019, in Manhattan Community Access Corp. v. Halleck, the U.S. Supreme Court held that a private company hired by New York City to operate its public access channel (which the city was required to have under state law) was not a state actor subject to the First Amendment.  In an opinion by Justice Kavanaugh, the Court emphasized the general rule that the First Amendment free speech clause applies to government, not private actors; the Court observed “a private entity… who opens its property for speech by others is not transformed by that fact alone into a state actor.”

We have posted previously on how government agencies structure policies on social media: , and on the related topic of what happens when public employees themselves put content on social media in a way that can impact an agency: .  We will provide further information as the case law in this area develops.

This post was authored by Kevin J. Chicas.

It is not uncommon for public agencies to contract with another organization or company to provide temporary services to cover for vacant positions. A recent decision issued by the CalPERS Board of Administration (the “Fuller” Decision) illustrates why public employers should be careful about classifying someone as an independent contractor just because they are retained through a third-party agency.

Relevant Background

The public district employer lost their Finance Manager with only a 30-day notice that created an immediate need for an experienced interim Finance Manager while the district recruited to permanently fill the position.  In order to find a competent interim Finance Manager, the district contracted with the Regional Government Services (“RGS”), a joint powers authority that does not contract with CalPERS.  RGS has worked with over 200 local agencies since approximately 2002 to provide government agencies with temporary professionals who can perform duties and provide services critical to the agency.

The district entered into a contract with RGS which stated, among other things, that the relationship of RGS to the district was “that of an independent contractor and all persons working for or under the direction of RGS are its agents or employees and not agents or employees of [the] Agency. The Agency and RGS shall, at all times, treat all persons working for or under the direction of RGS as agents and employees of RGS, and not as agents or employees of the Agency.”  The contract also specified that the district did not have the ability to direct how services were to be performed, specify the location where services are performed, or establish hours or days for performance of services.  The district only had the right to direct the results of RGS’ services.

The contract with RGS then reflected the service to be provided by a “RGS Staff Position.”  The contract named Tracy Fuller as the “RGS Staff Position” to “perform the functions of  Interim Finance Manager as assigned” at an hourly rate of $90.00.  The contract indicated that RGS employees may perform services at the district’s offices or at other locations.

The district did not contract with Fuller.  RGS, however, had an employment contract with Fuller.  The contract between RGS and Fuller clearly referred to Fuller as an “employee” of RGS and that the employment is subject to termination at any time at the sole discretion of the RGS executive director.  Fuller’s performance and compensation were to be reviewed at least annually by the RGS executive director.

The district paid RGS directly for Fuller’s services and RGS paid Fuller, although it is not clear if Fuller herself received the full hourly rate that RGS charged the district.  The district also paid a housing allowance for Fuller.

Fuller previously worked with other CalPERS member agencies and retired within the CalPERS system prior to her employment with RGS. Fuller performed the functions of interim Finance Manager for the district for approximately eight months. The district, believing Fuller was an independent contractor (by and through her employment with RGS), did not report Fuller’s hours and compensation to CalPERS.  Throughout Fuller’s retention, the district actively sought to (and eventually did) hire a permanent Finance Manager replacement.

CalPERS staff conducted a membership and payroll audit of the district in late 2014. As part of this audit, CalPERS reviewed the working relationship between Fuller and the district.  CalPERS staff issued a report finding Fuller was not an independent contractor, but rather an employee of the district. Therefore, the district was required to enroll Fuller in CalPERS as an eligible employee. Also note, because Fuller was previously an active member of CalPERS, she was entitled to immediate membership if employed by any CalPERS employer, regardless of position, length of employment, or hours worked.

The Decision of the CalPERS Board of Administration

The district appealed the determination by CalPERS staff.  The appeal was heard by an administrative law judge (“ALJ”) from the state Office of Administrative Hearings who issues a proposed decision to the CalPERS Board of Administration.  The ALJ issued a proposed decision finding Fuller was a District “employee” under the Public Employees’ Retirement Law (PERL), which defines an employee as “[a]ny person in the employ of any contracting agency.”  (Gov. Code § 20028(b); See also, Gov. Code §§ 20069; 20502.)

In particular, the ALJ relied on several factors supporting Fuller’s status as a district “employee” including 1) the district ultimately had the right to control the manner and means in which Fuller accomplished her assignments; 2) Fuller ultimately reported to the district’s General Manager; 3) the district determined, issued and evaluated her particular work, not RGS;  3) the district described Fuller as a staff member in its board minutes; 4) RGS and the district’s independent contractor agreement provided for an option to extend the agreement on a month-to-month basis, past the specified four-month term; and 5) although the district paid Fuller indirectly through RGS, Fuller was still paid by the hour, not the job.

On September 28, 2018, the CalPERS Board of Administration (“Board”) adopted the proposed decision as the final decision of the Board.  In February 2019, CalPERS staff recommended that the Board designate the Decision as a “precedential decision.”  The Board may designate a decision as precedential if it contains a significant legal or policy determination of general application that is likely to recur. If the Board designated the Fuller decision as precedential it would have the same effect as Board-adopted regulations and relied upon by future litigants in administrative and court proceedings as legal authority.

In March and April of this year, stakeholders were invited to provide feedback to the Board.  The recommendation of designating the Decision as precedential was added to the agenda for the June 19, 2019 Board meeting.  However, at the time of this blog, the agenda item was pulled from the Board’s agenda for reasons that are not entirely clear. We do not have further information as to whether the Board will possibly consider the Fuller Decision at a future meeting.

Impact and Effect of Decision

Regardless of whether the Fuller Decision is designated precedential, it did not establish any fundamentally different interpretation of the law or new administrative policy.  The Board previously issued a precedential decision regarding the test employed to determine if the so-called independent contractor is truly an employee subject to active CalPERS membership.  (See In the Matter of the Application for CalPERS Membership Credit by Lee Neidengard (2005) CalPERS Precedential Decision No. 05-01.) That was the first precedential decision of the Board on this subject following the California Supreme Court’s decision in Metropolitan Water District v. Superior Court (Cargill).  The Cargill decision held that an “employee” eligible for CalPERS membership is determined by the common law employment test, particularly in the case of presumed independent contractors.

As the Board of Administration relied upon and followed Cargill in this recent Decision, it did not establish a new analysis regarding independent contractor determinations.  If anything, Fuller stands as a cautionary tale about how intently CalPERS reviews independent contractor relationships and how narrowly they construe the test for common law employment.

While the ALJ relied upon several factors in finding Fuller was a common law employee, certain factors may weigh differently in other cases, but these are factors that could potentially serve as red flags for future CalPERS audits.

As it was before Fuller, employers are strongly cautioned about believing a person providing service to the agency is an independent contractor simply because they are retained through an outside agency or company.  The test remains the same whether the public agency contracts directly with the individual or contracts with another agency for the services provided by the individual. The fundamental test being that a common law employment relationship exists if the principal controls the manner and means by which the individual performs his/her services.