Bid Threshold Raised

December 2014
Number 95

According to the California Department of Education Office of Financial Accountability and Information Services, the bid threshold, pursuant to Public Contract Code section 20111(a), for K-12 districts’ purchases of equipment, materials, supplies and services (except construction services) has been adjusted to $86,000, effective January 1, 2015. This represents an increase of 2.26% over the 2014 bid limit.

It is expected that in the near future the California Community Colleges Chancellor’s Office will announce a similar adjustment to the bid threshold for community college districts’ purchases of equipment, materials, supplies and services (except construction services), pursuant to Public Contracts Code section 20651(a).

The bid limit for construction projects remains at $15,000.

The bid thresholds for cities, counties and special districts are not affected by the bid limits discussed here.

Should you have any questions regarding these new limits or about bidding in general, please contact one of our eight offices located statewide. You can also visit our website, follow us on Facebook or Twitter, or download our Client News Brief App.

Written By

Ruth Mendyk
Partner
Fresno Office
rmendyk@lozanosmith.com

©2014 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.

OCR Issues New Guidance Regarding Single-Sex Classes

December 2014
Number 94

The U.S. Department of Education’s Office for Civil Rights (OCR) recently released new guidance on the requirements applicable to single-sex classes in federally funded educational programs. Title IX of the Education Amendments of 1972 generally prohibits discrimination on the basis of sex in federally funded schools. However, single-sex classes may be permissible when the requirements of the Department of Education’s Title IX regulations are met. OCR’s new guidance helps to navigate these complex and often amorphous regulations through a question and answer format that provides explanations, examples and recommendations.

Single-sex classes may be offered for contact sports in physical education classes, as well as in classes or portions of elementary and secondary classes that deal primarily with human sexuality. In addition to these two specific bases for single-sex classes, the Title IX regulations include a broad third category that permits non-vocational single-sex classes when several specific conditions are met. OCR’s new guidance focuses on this broad third category of permissible single-sex classes.

Single-sex classes under this third category must be based on an educational entity’s “important objective.” An “important objective” is an objective to either (1) improve student educational achievement through the entity’s overall established policies to provide diverse educational opportunities (“diversity objective”), or (2) to meet the particular identified educational needs of students (“needs objective”). Additionally, the single-sex nature of the class must be “substantially related” to achieving the educational entity’s important objective. OCR’s guidance provides explanations and examples that help to elucidate these somewhat abstract requirements.

For example, OCR explains that the required substantial relationship between the single-sex nature of the class and the entity’s important objective must be directly supported by evidence gathered and evaluated prior to offering the single-sex class. Additionally, OCR strongly recommends that educational entities articulate their justification for the single-sex class in writing prior to offering the single-sex class, and to preserve such documents. OCR explains that without this historical documentation, OCR will assume that the educational entity did not establish its justification prior to offering the single-sex class, unless it can be proven otherwise.

If a single-sex class has a valid important objective and the single-sex nature of the class is substantially related to that objective, then the educational entity must: (i) implement that objective in an “evenhanded” manner, (ii) ensure that student enrollment is “completely voluntary,” (iii) provide a “substantially equal” coeducational class in the same subject, and (iv) conduct periodic evaluations to ensure ongoing compliance with the Title IX regulations. These implementation requirements are also explained in detail in the new OCR guidance, and OCR provides additional useful examples and recommendations.

OCR clarifies that “evenhanded” implementation includes providing equal educational opportunities and equally considering the relevant needs of both male and female students. Additionally, OCR advises that in order for enrollment to be “completely voluntary” parents or students must affirmatively opt into the class before they are enrolled. OCR recommends that the affirmative election to enroll be made in a signed writing. Additionally, because an uninformed decision may not be completely voluntary, OCR recommends that prior to enrollment parents and students have an opportunity to review the educational entity’s justification documents for the single-sex class to allow for a more informed enrollment decision. OCR also warns that enrollment cannot be completely voluntary if there is no “substantially equal” coeducational class offered in the same subject. OCR further notes that periodic evaluations are required at least every two years and must show that the single-sex nature of the class results in achievement of, or progress toward, the important
objective.

OCR’s new guidance contains detailed explanations and recommendations beyond those included here. While OCR’s guidance is restricted to Title IX compliance and other legal consideration may be required, the guidance is a helpful resource for understanding the complex Title IX regulations governing single-sex classes.

If you have questions regarding single-sex classes or related Title IX compliance matters, please contact one of our eight offices located statewide. You can also visit our website, follow us on Facebook or Twitter, or download our Client News Brief App.

Written By

Thomas Manniello
Partner
Monterey Office
tmanniello@lozanosmith.com

Tyler B. Dockins
Associate
Monterey Office
tdockins@lozanosmith.com

©2014 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.

Potential Felony Conflict of Interest? Attorney General Addresses Conflict of Interest Scenarios Involving Public Officers

December 2014
Number 93

The California Attorney General recently issued two opinions addressing the scope of California’s conflict of interest statute relating to public officers. These opinions discussed Government Code section 1090, which prohibits public officers from participating in public contract decisions if they have a personal financial interest in any contract. This prohibition applies to public officers including members of school boards, community college district boards, city councils, and special district boards. While Attorney General opinions are advisory and not binding, they provide guidance and insight as to how a court could interpret various issues.

In the first opinion, the Attorney General found that Government Code section 1090 prohibits a city from obtaining services or products from a business in which a city council member has a 50 percent ownership interest, even if the council member disqualifies herself from any purchasing decisions. The proposed transaction was squarely within the conduct prohibited by Government Code section 1090 because the council member had a financial interest in the business’ contracts. Therefore, the council member would be “financially interested” in contracts between the business and the city council. The Attorney General found that city staff are also prohibited from contracting with the council member’s business, absent independent authority. Additionally, Government Code 1090 applied despite the council member’s willingness to recuse herself and the lengthy history of business’ prior transactions with the city. Finally, a necessity exception did not apply even though the business was the only one of its kind within the city boundaries. The Attorney General noted that other businesses in the general vicinity could provide the same products and services and that the increased costs or inconvenience did not negate the conflict.

In the second opinion, the Attorney General addressed several questions stemming from one factual scenario. A community college district board trustee is a retired community college president receiving the same health benefits as the district’s current employees. The same trustee’s spouse is a tenured professor employed by the community college district. These facts gave rise to several questions regarding potential conflicts of interest.

With regard to the trustee’s spouse, the Attorney General found that the trustee could participate in collective bargaining related to his spouse’s employment as a tenured professor so long as (a) the spouse obtained the position more than a year before the trustee took office, and (b) the collective bargaining agreement does not promote, reclassify, or hire the spouse. In this instance, Government Code section 1090 applies since a collective bargaining agreement is a contract and a board member is “financially interested” when a contract controls the salary or terms of a spouse’s employment. Although Government Code section 1090 applies, an exception provides that an officer is not considered “financially interested” if the spouse is an employee of the public entity and the spouse’s employment existed for a least a year prior to the officer’s election or appointment. Here, the trustee’s spouse was an employee of the community college district and had held her position for more than a year prior to the trustee’s election. Therefore, this opinion makes clear that public officers may participate in collective bargaining agreements impacting their spouses if the agreement does not result in a new or different employment for the spouse and the spouse attained the position more than a year before the public officer takes office.

Addressing the trustee’s health benefits, the Attorney General held that the trustee may not participate in the process of renegotiating current employee health benefits, when the trustee was receiving the same health benefits. The Attorney General reasoned that the trustee could not participate because of the trustee’s personal financial interest in the level of current employee benefits. Here, there were no applicable exceptions from Government Code section 1090, including the “government salary” exceptions for a person receiving salary, per diem, or reimbursement for expenses from a government entity (this exception only applies to a public official’s employment with another government agency seeking to contract with the body with which the public official is a member). In this instance, the trustee’s interest in conserving district resources conflicted with his personal interest in greater health benefits. The Attorney General also pointed out that the board and district employees are on different sides of the collective bargaining agreement and have differing economic interests. Accordingly, the trustee was required to abstain from bargaining on this issue.

If you have questions regarding potential conflicts of interests or the Attorney General’s guidance, please contact one of our eight offices located statewide. You can also visit our website, follow us on Facebook or Twitter, or download our Client News Brief App.

Written By

William P. Curley III
Senior Counsel
Los Angeles Office
wcurley@lozanosmith.com

Frances M. Valdez
Associate
Petaluma Office
fvaldez@lozanosmith.com

©2014 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.

The Affordable Care Act “Employer Mandate”: Are you Prepared for 2015?

December 2014
Number 92

In 2015, the “employer mandate” of the federal Affordable Care Act (ACA) goes into effect. Under this mandate, large employers that do not offer ACA-compliant insurance coverage to full-time employees may be subject to penalties under section 4980H of the Internal Revenue Code, also known as an “assessable payment” or a “shared responsibility payment.” Employers will also need to start collecting relevant information in the 2015 calendar year in order to satisfy their Internal Revenue Service (IRS) and employee reporting requirements in 2016. This Client News Brief serves as a reminder of some of these upcoming requirements.

The Employer Mandate
The ACA requires “applicable large employers,” or employers with at least 50 full-time or full-time equivalent employees, to offer affordable, minimum value, minimum essential health care coverage to eligible employees and their dependents or risk paying penalties. The ACA includes two types of penalty calculations:

(1) Failure to offer coverage (26 U.S.C. § 4980H(a))

(2) Coverage offered is unaffordable or does not provide minimum value (26 U.S.C. § 4980H(b))

These penalties are triggered if one or more full-time employees receive a premium tax-credit or cost-sharing reduction for coverage through enrollment in California’s state-based “exchange”- Covered California. If an employee enrolls in an employer-sponsored minimum essential coverage plan, then the employee will not qualify for a tax-credit or cost-sharing reduction. Note that the ACA prohibits an employer from retaliating against an employee because he or she has received a tax-credit or cost-sharing reduction.

Currently, a full-time employee under the ACA is an employee that works an average of 30 or more hours per week or 130 hours per month. The ACA contains two methods to calculate hours of service for employees, including employees that work varying schedules:

(1) A monthly measurement period whereby an employer determines each employee’s status as a full-time employee by counting the employee’s hours of service for each calendar month; and

(2) A look-back measurement period whereby an employer determines an employee’s full-time status during a future period (“stability period”) based upon the employee’s hour of service in a prior period (“measurement period”).

The final regulations regarding the employer mandate, which were issued by the IRS on February 12, 2014, offer some transitional relief to employers for the 2015 plan year. For example,

 

  • Applicable large employers with 50-99 employees will not be subject to certain penalties for the 2015 plan year as long as they meet certain conditions.
  • Employers with 100 or more employees that offer ACA-compliant coverage to 70% of their full-time employees for the 2015 plan year will not be subject to a penalty for failure to offer coverage. Beginning in 2016, this number will rise from 70% to 95%. Note that this transitional relief for employers with 100 employees or more does not include relief from the penalties for offering coverage that is unaffordable or does not provide minimum value.

Additional forms of transitional relief included in the regulations address such issues as non-calendar year plans, offers of coverage to dependents, and offers of coverage in January 2015. To view the complete draft of the final regulations implementing employer shared responsibility, please visit the IRS Employer Shared Responsibility Web Page.

Reporting Responsibilities
The IRS will determine compliance with the ACA and assess penalties based on the information reported by the employer, individuals, and insurers in their relevant tax returns. If the IRS determines that an employer owes a penalty, the employer will receive notice and an opportunity to respond before any liability is assessed or demand for payment is made. The ACA contains three different provisions that establish annual reporting requirements for employers: sections 6051, 6055, and 6056 of the Internal Revenue Code. Section 6051 is currently effective for certain employers and sections 6055 and 6056 will be effective for coverage offered in the 2015 calendar year. The IRS also encourages employers to voluntarily comply with the reporting requirements for 2014.

  • Section 6051 requires employers that offer applicable employer sponsored coverage under a group health plan to report the aggregate cost of the coverage on its employees’ Form W-2s. Current transition relief limits this requirement to employers that filed at least 250 Form W-2s for the prior calendar year and offered medical benefits to their employees, at least until the IRS issues further guidance or regulations on this topic.
  • Section 6055 requires any entity, including self-insured employers, that provide minimum essential coverage to an individual during a calendar year to file an information return (Form 1095-B) and transmittal (Form 1094-B) with the IRS and a statement to the insured person. The IRS will use this information to determine under which months, if any, individuals were covered by minimum essential coverage for purposes of administering the individual shared responsibility provisions of the ACA.
  • Section 6056 requires applicable large employers to file an information return (Form 1095-C) and transmittal (Form 1094-C) with the IRS and a statement to the insured person regarding employer-offered health care coverage. Self-insured employers that are also subject to section 6056 may use the Form 1095-C to satisfy the return and transmittal requirements under section 6055 as a way to streamline the reporting process. The IRS will use the information reported by employers pursuant to section 6056 to administer the section 4980H penalties and the premium tax credit program.

On March 5, 2014, the IRS also issued final regulations regarding the employer reporting requirements, which included certain optional “alternative methods” for section 6056 information reporting to simplify the process for eligible employers. For example, an employer that offers affordable, minimum value, minimum essential coverage to at least 98% of its full-time employees will not have to indicate in the transmittal form how many of its employees are full-time per calendar month. This is known as the “98% Offer Method.” An employer must still file individual returns for each full-time employee.

In addition, the IRS has issued draft forms and instructions that address sections 6055 and 6056 information reporting. The IRS instructs reporters not to rely on the draft instructions for filing. However, the drafts are indicative of the information that the IRS will eventually require in the final forms and instructions. For draft forms and instruction, please visit IRS Draft Forms and Instructions, and enter in the relevant form number.

Important Steps to Take
The very first step an employer needs to take is to determine whether or not it is an applicable large employer under the ACA. If the answer to this question is “yes,” then the employer will need to determine precisely which employees qualify as full-time under the ACA, and what type of coverage the employer is offering to each individual employee and their dependents.

The ACA is a complex and an evolving overhaul of the health care system. There are many provisions beyond the scope of this Client News Brief that are not yet effective, or that indirectly impact employers. Employers should also keep in mind that changes involving health care coverage for its employees may implicate the bargaining process with an employer’s relevant bargaining units.

For assistance in dealing with ACA matters, please contact one of our eight offices located statewide. You can also visit our website, follow us on Facebook or Twitter, or download our Client News Brief App.

Written By

Karen Rezendes
Partner
Walnut Creek Office
krezendes@lozanosmith.com

Niki Nabavi Nouri
Associate
Walnut Creek Office
nnabavinouri@lozanosmith.com

©2014 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.