DFEH Releases Guidelines on Anti-Harassment Policies, Training and Notice Regulations

June 2017
Number 33

The Department of Fair Employment and Housing (DFEH) recently released a Workplace Harassment Guide that includes recommended practices to enable employers to comply with California Fair Employment and Housing Act (FEHA) regulations aimed at preventing, investigating and addressing workplace harassment. DFEH also issued guidance and a poster related to identifying and addressing sexual harassment in the workplace.

Effective April 1, 2016, California employers became subject to new regulations under FEHA which prohibit workplace discrimination and harassment. The new anti-harassment regulations require employers to adopt and distribute written policies on unlawful harassment, including how complaints of prohibited conduct should be filed. The new regulations also require employers to provide trainings on prohibited harassment, discrimination, and abusive conduct. (For more details regarding these FEHA regulations, see 2016 Client News Brief No. 30.)

DFEH’s Workplace Harassment Guide provides valuable guidance on what employers can do to ensure an effective anti-harassment program and provides recommended practices for conducting workplace investigations. The guide’s recommendations include:

  • If an employer receives a report of harassment, including an anonymous complaint, the employer should give the complaint “top priority” and determine if the complaint may be resolved informally or if a formal investigation is necessary.
  • Investigations should be fair and should include:
    • A thorough interview with the complainant, preferably in person;
    • An opportunity for the accused to respond and tell his/her side of the story;
    • Interviews of relevant witnesses and a review of relevant documents; and
    • A conclusion based on the information collected, reviewed and analyzed.
  • Employers can only promise limited confidentiality of the complaint, in part because the identity of the complainant can often be determined based on the allegations. Also, it is rarely appropriate for an employer to fail to investigate a complaint because an employee asks their employer to keep the complaint confidential.
  • Whether employers may direct employees to not discuss a pending investigation is a complicated issue. Employers should consult with legal counsel prior to giving such a directive. (For the Public Employment Relations Board’s determination on “no contact” admonitions, see 2015 Client News Brief No. 3.)
  • Investigations should be started and conducted promptly. Further, investigations should be fair, thorough, and conducted by a neutral investigator. Employers should also consider whether the investigator will be publicly perceived as unbiased.
  • An investigator can reach a reasonable conclusion in a “he said/she said” situation based on an assessment of witness credibility.
  • Investigators should document witness interviews, steps taken in the investigation and findings made.
  • Investigators should make findings of fact (not legal conclusions) based on a “preponderance of the evidence” standard. “Preponderance of the evidence” means that it is more likely than not that the alleged conduct occurred.
  • Misconduct should be addressed through remedial measures. Remedial measures recommended by DFEH include training, verbal counseling and discipline.
  • Retaliation can occur at any time, and complainants and witnesses must be protected from retaliation.

In addition to DFEH’s guidance, school and community college districts should be mindful of their own policies and procedures for conducting investigations, which may include specific timelines and investigation procedures, as well as applicable collective bargaining agreements.

Lozano Smith has a team of attorneys experienced in conducting investigations of complaints, including employee and student complaints alleging discrimination and harassment. For more information, please contact the authors of this Client News Brief or an attorney at one of our nine offices located statewide. You can also visit our website, follow us on Facebook or Twitter or download our Client News Brief App.

Written by:

Stephanie M. White

Associate

©2017 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

Appellate Court Orders Publication of Lease-Leaseback Decision, Making it Binding Precedent

June 2017
Number 32

On May 31, 2017, the First District Court of Appeal ordered publication of its decision in California Taxpayers Action Network v. Taber Construction, Inc. et al.(2017) 12 Cal.App.5th 115 (Taber), which upholds the validity of a lease-leaseback arrangement. This reversed the court’s initial decision not to publish the case. Publication of the Taber decision means that it serves as citable precedent upon which school districts and others may now rely.

In Taber, the Court of Appeal reviewed the validity of a lease-leaseback arrangement that was challenged on the grounds that it did not comply with Education Code section 17406, the lease-leaseback statute covering school districts. Agreeing withMcGee v. Balfour Beatty Construction, LLC (2016) 247 Cal.App.4th 235 (McGee), which was recently decided by the Second District Court of Appeal, the Taber court declined to follow the lease-leaseback holding ofDavis v. Fresno Unified School District (2015) 237 Cal.App.4th 261 (Davis) and to read Davis’ “genuine lease” and “financing” requirements into the lease-leaseback statute. On the other hand, the Taber court did agree with both Davis andMcGee that allegations that a lease-leaseback contractor acted as an officer or employee of the school district when performing pre-construction services was sufficient to allow a conflict of interest cause of action under Government Code section 1090 to proceed to trial. (For further discussion of the Taber decision, see 2017 Client News Brief No. 23.)

While the Taber decision represents the second appellate court ruling that specifically repudiates the holding of Davis, it does not overrule that case, as one Court of Appeal cannot overturn the ruling of another. In the event a lease-leaseback challenge is brought in state court, a trial court has the option of applying McGee,Taber or Davis. A trial court, however, will ordinarily follow an appellate opinion from its own district even though it is not bound to do so, meaning that trial courts in the First and Second Appellate Districts (generally, the greater San Francisco and Los Angeles areas) may be more inclined to follow Taber and McGee, respectively, while trial courts in the Fifth Appellate District (generally, the Central Valley) may be more inclined to follow Davis. Until and unless the California Supreme Court weighs in, uncertainty may remain.

If you have any questions about the legality of lease-leaseback and which appellate court decision may apply to your project, or about other project delivery methods, please contact the authors of this Client News Brief or
an attorney at one of our nine offices located statewide. You can also visit our website, follow us on Facebook or Twitter or download our Client News Brief App.

Written by:

Travis E. Cochran

Associate

©2017 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

Public Entities Must Proceed with Caution When Preparing an Addendum to a Negative Declaration

June 2017
Number 31

A California appellate court has held that a public entity violated the California Environmental Quality Act (CEQA) by preparing an addendum to a mitigated negative declaration. In Friends of the College of San Mateo Gardens v. San Mateo County Community College District (2017) 11 Cal.App.5th 596, the court found that proposed changes to the District’s original facilities project might have a significant effect on the environment, requiring further analysis, rather than use of an addendum.

The California Environmental Quality Act

Under CEQA, a public agency generally conducts an initial study to determine if a project may have a significant effect on the environment unless an exemption applies. If the initial study shows that there is no substantial evidence that the project may have a significant effect on the environment, CEQA requires the agency to prepare a negative declaration. Alternatively, if the project has potentially significant environmental effects but these effects will be reduced to insignificance by mitigation measures, CEQA requires the agency to prepare a mitigated negative declaration. Projects where the environmental effect cannot be reduced to insignificance by mitigation measures require an environmental impact report (EIR).

In the event an agency modifies a project after a negative or mitigated negative declaration has been adopted, CEQA outlines subsequent review provisions that apply so long as the original declaration is relevant. These provisions require the agency to prepare a subsequent negative or mitigated declaration or subsequent EIR depending on certain circumstances. The guidelines also allow the agency to prepare an “addendum,” rather than a subsequent negative or mitigated negative declaration, if there are only “minor technical changes or additions.” Such addenda have more limited analysis and do not reopen public comment opportunities. Alternatively, if the modifications are such that the original negative or mitigated declaration is no longer relevant, the public entity must start over by conducting a new initial study.

Background

The San Mateo County Community College District (District) adopted a facilities master plan proposing nearly $1 billion in new construction and facilities renovations that involved demolition of certain buildings and renovation of others. In order to comply with CEQA, the District published an initial study and mitigated negative declaration analyzing the physical environmental effects of implementing the plan’s proposed improvements in 2006. However, after the District failed to obtain adequate funding for its original plan, it added one building to its demolition list and removed two others. As a result of these changes, the District prepared an addendum to the 2006 mitigated negative declaration.

The proposed changes to the plan prompted complaints by a number of students and faculty which ultimately led to a lawsuit challenging the addendum. (Friends of College of San Mateo Gardens v. San Mateo County Community
College Dist.
(Sept. 26, 2013, No. A135892) [nonpub. opn.].) The community members expressed concern that the proposed changes would eliminate a portion of an existing garden making up one-third of one percent of the total landscaped and open space on campus. The court concluded that the proposed changes constituted a “new” project, meaning that new CEQA review was required. However, the California Supreme Court disagreed and remanded the case with
additional instructions. (Friends of College of San Mateo Gardens v. San Mateo County Community College Dist. (2016) 1 Cal.5th 937.)

On remand, the appellate court found that substantial evidence supporting the District’s original mitigated negative declaration was still relevant and agreed with the District’s determination that CEQA’s somewhat more limited subsequent review provisions were applicable. However, the court concluded that the District did not properly comply with its obligations under those provisions. The court considered testimony from community members regarding the project’s aesthetic value to be substantial evidence that the project might have a significant environmental effect, rendering the proposed changes more than “minor technical changes or additions,” and therefore requiring more than the adoption of an addendum.

Takeaway

The lesson from this case is that, when modifying a project after a negative or mitigated negative declaration has been adopted, public entities should be very cautious when deciding whether to prepare an addendum or adopt a subsequent or supplemental negative declaration or EIR. Although courts give public entities deference when deciding whether to proceed under CEQA’s subsequent review provisions so long as there is evidence that the original negative or mitigated declaration remains relevant, the decision to prepare an addendum (rather than a subsequent or supplemental negative declaration or EIR) is reviewed with much more scrutiny. As we learn from San Mateo Gardens, even complaints about aesthetics from community members could be enough evidence for a court to conclude that modifications to a project may have a significant environmental effect, requiring further review. No matter what subsequent review process is selected, it is important to ensure that the rationale is well-documented in the administrative record in order to best defend the public entity’s decision.

For more information about the California Environmental Quality Act, please contact the authors of this Client News Brief or an attorney at one of our nine offices located statewide. You can also visit our website, follow us on Facebook or Twitter or download our Client News Brief App.

Written by:

Anne L. Collins

Partner

©2017 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

Bond Insurers on Credit Watch

June 2017
Number 30

On June 6, 2017, S&P Global Ratings (S&P) placed two of the three active municipal bond insurers, Build America Mutual Assurance Company (BAM) and National Public Finance Guarantee Corp. (NPFGC), on credit watch with negative implications.

S&P intends to review the insurers and may adjust their assigned rating based on their competitive strengths or weaknesses relative to their peers. S&P stated that its review may lead to a downgrade of BAM or NPFGC. S&P is of the view that the competitive position of BAM and NPFGC may be sufficiently weaker within the industry than Assured Guaranty Ltd. and its operating subsidiaries, making greater rating differentiation appropriate among the municipal bond insurers. S&P expects to complete its review within the next three months, per its statements given in a research update report issued on June 6, 2017.

What this means for you : Issuers of municipal bonds should review their outstanding bonds to determine if any are insured by BAM or NPFGC. If S&P moves forward with a rating downgrade of BAM or NPFGC, the downgrade is treated as a “material event” under SEC Rule 15c2-12 and, accordingly, must be reported as part of an issuer’s continuing disclosure obligations for any bonds insured by the downgraded insurer.

If your agency has outstanding bonds insured by either BAM or NPFGC and you have any questions regarding continuing disclosure compliance, please contact the authors of this Client News brief or an attorney at one of our nine offices located statewide. Lozano Smith serves as bond and disclosure counsel to school districts, community colleges, and other public agencies throughout California and would be happy to provide guidance regarding these developments. You can also visit our website, follow us on Facebook or Twitter or download our Client News Brief App.

Written by:

Daniel Maruccia

Partner

Sean B. Mick

Associate

Jennifer Grant

Associate

©2017 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

Federal Court Upholds Texas School Board’s Practice of Student Invocations at School Board Meetings

June 2017
Number 29

A federal appeals court recently upheld a Texas school district’s practice of permitting students to deliver a religious invocation at the beginning of governing board meetings. ( American Humanist Association et al v. Birdville Independent School District et al (5th Cir. 2017, Nos. 15-11067, 16-11220) ___ F.3d ___ (Birdville). While noteworthy, the opinion is not binding on public agencies in California, where a separate ruling on religious invocations at governing board meetings issued by a California-based district court is now being reviewed by the Ninth Circuit Court of Appeals.

In Freedom from Religion Found., Inc. v. Chino Valley Unified School Dist.Bd. of Ed (C.D. Cal. Feb. 18, 2016, No. 5:14-cv-02336-JGB-DTB) (Chino Valley ), the court ruled that a California school district board violated the Establishment Clause of the U.S. Constitution when it adopted a policy allowing a local clergy member or board member to deliver an invocation before each board meeting. The court also held that board
members citing Bible passages during board meetings in the presence of student board members constituted unlawful school prayer. ( See 2016 Client News Brief No. 20.)

In Birdville, two students opened each board meeting. One student led the Pledge of Allegiance and Texas pledge, while the other delivered “some sort of statement,” which often included an invocation. From 1997 through February 2015, the student comments were called “invocations,” but were dubbed “student expressions” after the District received a complaint from a former student and member of the American Humanist Association (AHA) that the invocation violated the Establishment Clause. The group later sued, claiming that the student invocation amounted to unconstitutional school prayer.

A federal district court ruled in favor of the District, holding that a legislative prayer exception developed by the United States Supreme Court in 1983 applied to the invocation. (See Marsh v. Chambers (1983) 463 U.S. 783.) The Fifth Circuit Court of Appeals agreed, holding that board members, and not the audience at board meetings, were the principal audience for the invocations and that students’ presence at the meetings did not make this a school prayer case because the invocation was delivered during the ceremonial portion of the meeting and was not directed at them. The court also rejected plaintiff’s argument that the District’s invocation policy lacked a “unique history,” noting that at least eight states have some history of opening prayers at school board meetings.

In Chambers, the Supreme Court upheld a chaplain’s invocation because “[t]he opening of sessions of legislative and other deliberative public bodies with prayer is deeply embedded in the history and tradition of this country.” More recently, the Supreme Court extended the legislative prayer exception to city council meetings, so long as the principal audience is the “lawmakers themselves” as opposed to members of the public in attendance and the prayer does not “denigrate nonbelievers or religious minorities.” (See Town of Greece v. Galloway (2014) 134 S. Ct. 1811.)

The court also acknowledged two pre-Galloway cases where school district board meeting invocations were determined to be unconstitutional school prayer. In those cases, the courts held that invocations at school board meetings were not covered by the legislative prayer exception because school board meetings are inextricably linked with the public school system. However, in those cases, the school boards had at least one student member or their meetings were attended by student representatives in their formal role as student government representatives, neither of which was the case in Birdville.

It is not yet clear whether this decision will be appealed to the Supreme Court.

Once issued, the Ninth Circuit’s opinion in Chino Valley will likely set the framework for the legality of invocations at California school board meetings. That ruling, which Lozano Smith is monitoring closely, is anticipated within the next year.

For more information on the Birdville ruling or invocations at school board meetings in general, please contact the authors of this Client News Brief or an attorney at one of our nine offices located statewide. You can also visit our website, follow us on Facebook or Twitter or download our Client News Brief App.

Written by:

Kyle A. Raney

Associate

©2017 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

High Court Declines to Review Ruling on Cash in Lieu Payments

June 2017
Number 28

The United States Supreme Court has denied review of a Ninth Circuit Court of Appeals ruling that cash payments made to employees in lieu of benefits must be included as pay when calculating their overtime pay rate under the Fair Labor Standards Act (FLSA). On May 15, 2017, the Court denied the City of San Gabriel’s petition for review of Flores v. City of San Gabriel (2016) 824 F.3d 890 (Flores), allowing the decision to remain legal precedent.

Flores provides narrow interpretations of exemptions to the FLSA when calculating an employee’s “regular rate of pay” and a broad definition of what constitutes an employer’s “willful” violation of the FLSA. This ruling also highlights the importance of employers carefully reviewing all payments made to employees to determine if the payments must be included in calculations of the employee’s regular rate of pay for purposes of overtime.

In Flores, a group of police officers sued the City of San Gabriel (the City) for overtime pay they said they were owed under the FLSA. The City had a flexible benefit plan which allowed employees to forego medical benefits if they had alternative coverage. Employees who made this election received the unused portion of their benefit allotment as a cash payment added to their regular paycheck. The police officers argued that the City should have included these payments when calculating their overtime pay rate. The officers also argued that the City’s violation of the FLSA was “willful” and thus triggered an extension of the two-year limit on back pay that could be recovered.

Under the FLSA, an employer must pay its employees overtime compensation of one and one-half times the “regular rate of pay” for any hours worked in excess of 40 hours in a seven-day work week. An employee’s “regular rate of pay” must include all remuneration for employment paid to, or on behalf of, the employee, unless the payment is excluded as set forth in the FLSA. The FLSA allows employees to sue for unpaid wages owed to them within a two-year statute of limitations for claims unless an employer’s violation of the law was “willful,” in which case the statute of limitations is extended to three years.

The Ninth Circuit held that the City’s cash-in-lieu of benefits payment may not be excluded as exemptions to the FLSA and therefore must be included in the calculations of the plaintiffs’ “regular rate of pay,” rejecting the City’s argument that the cash-in-lieu benefits were exempt because the payments were not tied to hours worked or amount of services provided by the plaintiffs. The court reasoned that the City’s interpretation contradicted a regulation implementing the FLSA which provides that a payment may not be excluded from regular rate of pay if it is generally understood as compensation for work, even though the payment is not directly tied to specific hours worked by an employee. The court further determined that the FLSA exemption did not apply because the unused benefits were paid directly to the employees and not a “trustee or third person.”

The court also deemed the City’s violation of the FLSA “willful,” saying that the City did not put forth any evidence of any actions it took to determine whether its treatment of cash-in-lieu of benefits payments complied with the FLSA, despite full awareness of its obligation to do so. (For more details on the decision, see 2016 Client News Brief No. 47.)

The court’s narrow interpretation of the FLSA exceptions for calculating “regular rate of pay” could have a significant impact on the way agencies pay employees and provide benefits. This interpretation of the FLSA means that employers must be cautious when offering cash-in-lieu of benefits payment programs to employees because of the consequences such offers may have on overtime payment calculations.

The broad interpretation of what constitutes an employer’s “willful” violation of the FLSA requires employers to be proactive when even the slightest possibility of violating the FLSA arises. The ruling emphasizes the importance of conducting and documenting regular review of payments made to employees and a determination of whether they must be included in the employee’s regular rate of pay for purposes of overtime. Determining whether a specific payment fits into one of these statutory exclusions and is therefore properly excluded from the regular rate of pay involves a highly fact-specific analysis. To that end, case law, regulations and the Department of Labor provide extensive guidance regarding how specific forms of common arrangements are treated under these exclusions, and legal counsel should be consulted as needed during an analysis of whether a particular payment should be included in the regular rate of pay.

For more information on the Flores case or FLSA claims in general, please contact the authors of this Client News Brief or an attorney at one of our nine offices located statewide. You can also visit our website, follow us on Facebook or Twitter or download our Client News Brief App.

Written by:

Jayme A. Duque

Associate

©2017 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

Attorney General Sessions Defines Federal Funding Subject to Withholding Due to Sanctuary Policies

June 2017
Number 27

U.S. Attorney General Jeff Sessions provided clarity on which federal funding would be subject to a withholding for implementing “sanctuary” policies that direct employees to refuse to communicate with, or frustrate communication of immigration status information to, Immigration and Customs Enforcement (ICE) as required by federal law.

On May 22, 2017, the Attorney General issued a memorandum regarding one of President Donald J. Trump’s executive orders that would withhold federal funds from “sanctuary jurisdictions.” The executive order, issued on January 25, 2017, charges the U.S. Attorney General and Secretary of the Department of Homeland Security with ensuring that “sanctuary jurisdictions” are not eligible for federal grants, except as deemed necessary for law enforcement purposes. While the order defines “sanctuary jurisdictions” as those that refuse to comply with 8 U.S.C. § 1373 – which prohibits government entities from restricting or creating policies restricting agencies from communicating immigration status information with ICE – it does not spell out the types of government agencies that will be considered “sanctuary jurisdictions” or the types of grants subject to a potential withholding.

The Attorney General’s memorandum narrows the scope of the executive order to apply only to “federal grants administered by the Department of Justice or the Department of Homeland Security, and not to other sources of federal funding.”

This memorandum follows a recent decision out of the federal district court for the Northern District of California, which had granted a preliminary injunction halting execution of the executive order’s enforcement provision. In separate lawsuits, both San Francisco and Santa Clara counties challenged the executive order’s enforcement provision as unconstitutional. (County of Santa Clara v. Trump, No. 17-cv-0574-WHO; City and County of San Francisco v. Trump, 17-cv-0485-WHO.) The order’s lack of specificity, and President Trump and his administration’s statements, sowed fears among cities, counties and school districts that their policies could result in the loss of millions of dollars of federal funding for everything from law enforcement to special education programs and health care subsidies.

The court agreed with the counties’ argument that the executive order was unconstitutionally vague and did not provide any notice or opportunity for local jurisdictions to provide input. The court agreed that the executive order is unconstitutional because the President lacks the authority to place new conditions on federal funds. The court also held agreed that any conditions for receipt of federal funds must be unambiguous and timely made.

The court drew inferences about the scope of the executive order from the public comments made on television and in press briefings and conferences from the President; his press secretary, Sean Spicer; and Sessions. In particular, the court considered a quote from the President saying he would use “defunding” as a “weapon” so that sanctuary cities would change their policies. In issuing the injunction, the court ruled that these statements erased any doubt that this was a threat of major cuts to federal funding, and that it has caused budget uncertainty within the plaintiff counties. The Attorney General’s memorandum appears to be in direct response to these inferences and significantly limits the risk of implementing these sanctuary laws and policies.

The memorandum and court decision mean that, for now, the federal government may not withhold federal funding from any sanctuary jurisdiction based on the executive order, except for those with federal grants through the Department of Justice or the Department of Homeland Security that had already contained requirements to comply with 8 U.S.C. § 1373. This likely means that many school districts are not intended to and would not be subject to a withholding of federal funding under this executive order.

However, the memorandum states the Department of Justice will continue to point out actions taken by state and local public agencies who are undermining “our lawful system of immigration or to take enforcement action where state or local practices violate federal laws, regulations, or grant conditions.”

The memorandum comes as state legislators consider laws that seek to protect immigrants and limit the state and local role in enforcement and both state and local government agencies seek to reassure immigrant communities. On April 3, 2017, the California Senate passed and forwarded to the state Assembly a “sanctuary state” bill, Senate Bill (SB) 54, which bars state and local law enforcement agencies from using their resources to conduct immigration enforcement activities. Notably, state and local law enforcement would be prohibited from asking about immigration status and would not be allowed to give ICE access to interview individuals in custody. A related, bill, SB 6, would provide money for legal services for undocumented immigrants.

As we await further guidance, regulations and case law regarding the impact sanctuary policies may have on federal funding, Lozano Smith encourages public agencies to discuss drafting or revising sanctuary or safe haven laws and policies with legal counsel in order to ensure compliance with federal law.

For more information on the executive order, the district court’s decision or adopting compliant policies, please contact the authors of this Client News Brief or an attorney at one of our nine offices located statewide. You can also visit our website, follow us on Facebook or Twitter or download our Client News Brief App.

Written by:

Joshua Whiteside

Associate

©2017 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.