Lawmakers Okay Budget Bill Addressing Union Dues Collection and Communications about Membership Rights

June 2018
Number 29

California lawmakers have approved a budget trailer bill that imposes new obligations on public sector employers related to deducting union dues and fees from workers’ paychecks. Governor Jerry Brown signed Senate Bill (SB) 866 on the same day the United States Supreme Court barred the collection of mandatory agency fees that cover unions’ cost of providing services, which the Court deemed a violation of workers’ First Amendment free speech rights. (See 2018 CNB No. 27.)

The Governor signed the bill, which combines the language of several other pieces of pending legislation intended to protect public agency unions, on June 27, 2018. Like all budget bills, the provisions in SB 866 became effectively immediately.

Dues Processing

SB 866 would standardize dues processing requirements across public agency unions and would expand the requirements to include employees of the Judicial Council, and also public transit district employees who are not already covered by a specific collective bargaining law. The bill also covers municipal employees and both certificated and classified employees who work for public school and community college district employers.

SB 866 imposes explicit requirements on public agency employers and generally makes unions responsible for portions of the dues collection process. Specifically, the bill:

  • Authorizes employee organizations, bona fide associations and both current and retired public agency employees to request payroll deductions and requires employers to honor such requests.
  • Specifies that revocation of an authorization must be determined by the terms of the authorization and requires public employers to direct employee requests to cancel or change deductions to the employee organization.
  • Clarifies the period in which payroll deductions commence after the employee organization notifies the public employer that it has written authorization for the deductions.
  • Bars a public employer from requiring an employee organization to submit a copy of a written authorization before commencing payroll deductions, unless a dispute arises about the existence or terms of the authorization.
  • Requires unions to indemnify public employers against claims regarding dues deductions made in reliance on information provided by the union.
  • Permits public agencies to recover, from the dues and fees transmitted to unions representing most certificated K-12 staff and academic employees of community colleges, the actual reasonable cost of making the deductions. Fees transmitted to unions representing classified school and community college district employees must still be deducted free of charge.

New Employee Orientation

Additionally, the bill makes the date, time and location of new employee orientation sessions confidential. Under SB 866, only invited employees, union representatives and vendors contracted to provide services for the sessions may be given date, time and location information for orientation sessions. These new provisions are in furtherance of SB 119, which mandated union access to new employee orientation sessions and became effective on January 1. (See 2017 CNB No. 34.)

Employer Communication

The bill restates existing law that took effect January 1 that bars public employers from discouraging or deterring public employees or applicants from becoming or remaining union members and additionally prohibits public employers from discouraging or deterring employees or applicants from authorizing union representation or the deduction of union dues or fees.

SB 866 also subjects to the meet and confer process any mass communication regarding public employees’ right to support or join, or to refrain from supporting or joining, a union. If an agreement about the content of the communication is not reached, public employers must include a communication of “reasonable length” from the union representative with any communication they send regarding this right.

The Public Employment Relations Board (PERB) is granted jurisdiction for enforcing the bill’s provisions.

If you have any questions about SB 866, the new state budget or labor relations in general, please contact the authors of this Client News Brief or an attorney at 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:

Dulcinea A. Grantham

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.

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Overturning Longstanding Precedent, Supreme Court Rules that Non-Union Members Cannot Be Required to Pay Agency Fees

June 2018
Number 28

This news brief is intended for municipalities and special districts. For the Janus news brief intended for public school districts, including community colleges, click here.

In a 5-4 decision, the United States Supreme Court has held that non-union public employees may no longer be required to pay mandatory agency fees on the grounds that such fees violate the First Amendment. In so holding, Janus v. AFSCME reverses 40 years of legal precedent. Janus may be one of the most significant decisions to affect the labor relations landscape in decades and will have an immediate impact on public sector labor relations through the country, including California.

Background

Petitioner Mark Janus is a State of Illinois employee whose unit is represented by the American Federation of State, County and Municipal Employees (AFSCME). Janus refused to join AFSCME on the basis that he opposed many of the union’s positions in bargaining. Janus sued AFSCME, challenging the constitutionality of the state law permitting the union to collect fees from non-union members.

The Supreme Court held that permitting a union to collect agency fees from a non-member violates the First Amendment unless the employee clearly and affirmatively consents. The Court noted that requiring non-members to pay agency fees was akin to “forcing” public employees to “subsidize a union, even if they choose not to join and strongly object to the positions the union takes in collective bargaining and related activities.” The Court further stated that “[c]ompelling individuals to mouth support for views they find objectionable violates that cardinal constitutional command, and in most contexts, any such effort would be universally condemned.”

In ruling that non-union members could not be required to pay agency fees, the Supreme Court overturned Abood v. Detroit Board of Education, which was decided in 1977. Abood upheld public sector unions’ collection of mandatory agency fees from non-members, provided that the agency fees did not support unions’ political or ideological activities. In Janus, the Supreme Court has now made clear that unions can no longer collect agency fees from non-members for any purpose, unless the employee “clearly and affirmatively consents to pay” the agency fees.

In overruling Abood, the Court rejected the notion in Abood that mandatory agency fees were required to ensure “labor peace” (i.e., avoidance of conflict and disruption that would occur if employees were represented by more than one unit). The Janus Court noted that unions could be effective without mandatory agency fees, and that a union’s designation as the “exclusive representative” conferred many benefits, such as the exclusive right to speak for all employees in collective bargaining. Janus noted that a designation as exclusive representative “results in a tremendous increase in the power” of the union. Janus also noted that unions representing nonmembers even without collective agency fees furthered the union’s interests and not just the nonmembers’ interests because the union was able to keep “control of the administration of the collective-bargaining agreement.”

In rejecting the argument that not requiring non-members to pay agency fees would result in a “free-rider” system in which non-union members could enjoy the benefits of union representation without shouldering the costs, the Court noted that non-members could potentially be required to pay for certain union services, such as union representation in disciplinary proceedings.

Next Steps and Considerations for Public Agency Employers

1. Stop Agency Fee Deductions

The Court’s decision in Janus is effective immediately, meaning employees who are non-members cannot be charged agency fees. Accordingly, employers must stop deducting agency fees from the paychecks of public employees. Going forward, an employer may not deduct fees unless an employee clearly and affirmatively consents to the deduction before it is implemented.

SB 866 creates a layer of potential complication because it modifies the law to require public employers to rely on the representations of the union regarding an employee’s deduction authorizations. This likely leaves public agency employers with at least three potential options: (1) stop agency fee deductions immediately without communication with union leadership; (2) stop the agency fee deductions after providing a notice to union leadership as to the employees who the public agency believes to be agency fee payers and whose deductions will be halted with the July paycheck; or (3) stop the fee deductions after the union and public employer agree to the list of employees whose fee deductions will be halted, and rely on the new provisions of SB 866 requiring the union to defend and indemnify the employer in the event a fee payer brings suit to recover fees deducted subsequent to the issuance of the Janus decision.

To avoid future lawsuits, public agencies are encouraged to have their human resources and payroll departments work collaboratively with union leadership to identify employees who are agency fee payers and develop a strategy to ensure prompt compliance with Janus. For many public school district employers, working closely with their county office of education will be critical to accurately updating payroll records to ensure employees are no longer charged agency fees going forward.

2. Implement a Communication Plan

Public agency employers who have agency fee provisions in their union agreements should develop a communication plan to address the likely questions that will come from employees and unions in the days and weeks following this decision. Specifically, taking steps to identify a single point person to respond to questions regarding the impacts of the Janus decision will ensure cohesive and clear messaging and avoid the potential for managers and supervisors to inadvertently run afoul of laws prohibiting discouraging or deterring union membership. In developing these communication strategies regarding whether, and how, to communicate the Janus decision to employees, employers should remain neutral and mindful of applicable law, including SB 285, which prohibits employers from deterring or discouraging public employees from becoming or remaining members of a union, and SB 866, which restricts a public employer’s ability to communicate with employees about the Janus decision.

Specifically, under SB 866, any “mass communication” sent to employees or applicants concerning their rights to join or support or refrain from joining or supporting their union requires a meet and confer process with the applicable union. “Mass communication” means a written document, or script for an oral or recorded presentation or message, that is intended for delivery to multiple public employees” under the new Government Code section 3553(e). Any mass communication concerning the Janus decision will likely fall within this provision and requires the parties to attempt to craft a mutually agreeable content, or follow the alternate process of distributing two sets of mass communication: one from the employer and one from the union.

Public agency employers are further encouraged to provide an update on the case to their unrepresented managers and supervisors, along with governing board members, and to provide talking points in the event they are faced with questions about the Janus decision.

To assist our clients, we are developing a communication template. If you are interested in receiving this, please contact one of our offices.

3. Examine Collective Bargaining Agreements

After these immediate next steps are in place, in consultation with legal counsel, public agency employers should review their collective bargaining agreements to determine how the Court’s decision impacts current contract language, assess what articles are impacted by Janus, and determine whether any immediate action or negotiation is required.

While the Court’s decision may not immediately impact current dues-paying union members, some members could choose to opt out of union membership in the future as a result of the Court’s decision, in accordance with applicable collective bargaining agreements and membership agreement. To the extent membership in a union and attendant dues deductions are premised on an opt-out article or practice, wherein the employee is automatically in the union and automatically charged union dues unless he or she ops out, such provisions will need to be negotiated with the union to comply with Janus so that an employee clearly and affirmatively consents to union membership.

Related Bills

In addition to SB 866, please be aware that there are other bills pending in the California Legislature that address union dues and labor relations. Lozano Smith is tracking all of these pending bills and will provide updates if any are adopted by the Legislature and signed by the Governor.

Guidance Measures – Full Suite of Resources

Lozano Smith has partnered with leading associations and has also developed several training opportunities and resources to assist public agency employers in addressing new requirements and obligations. We invite you to download and register for any of the following:

  • Webinar:Join a panel of Lozano Smith attorneys for a live webinar on Friday, June 29. This interactive podcast will break down the Janus decision and SB 866 and offer a guide for implementation.Registration is open here.
  • Toolkit: Lozano Smith will be soon publishing an in-depth resource with answers to frequently asked questions, an implementation checklist, templates for communication, and more.

For assistance responding to the immediate and long-term impacts of Janus, please contact the authors of this Client News Brief or an attorney at 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:

Regina A. Garza

Partner

Meera H. Bhatt

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.

Supreme Court Rules Public Sector Union Agency Fees Are Unlawful

June 2018
Number 27

This news brief is intended for public school districts, including community colleges. For the Janus news brief intended for municipalities and special districts, click here.

Overturning a longstanding precedent, the United States Supreme Court has held in Janus v. AFSCME that public employees may not be compelled to pay mandatory agency fees, or “fair share” fees, to public-sector unions, because such fees violate the First Amendment.

The Janus decision will have a sweeping, nationwide impact on public sector labor unions. The Court’s 5-4 decision immediately affects laws in at least 22 states, including California, that currently allow public sector unions to charge and collect agency or fair share fees.

Background

Mark Janus is an Illinois public sector employee who sued the American Federation of State, County and Municipal Employees (AFSCME), arguing that a state law allowing the union to charge and collect fees from non-members violated his and other workers’ First Amendment rights.

The Supreme Court previously decided this issue in 1977 in the case of Abood v. Detroit Board of Education, then holding it was constitutional for public sector unions to collect agency fees from nonunion members to defray the cost of collective bargaining and other activities, provided nonunion members were not required to pay for a union’s political or ideological activities. The Court now holds in Janus that states and public-sector unions may no longer collect agency fees from nonconsenting employees.

The Court held that compelling employees to subsidize the speech of private speakers, including public-sector unions, violates the First Amendment, noting that “[c]ompelling individuals to mouth support for views they find objectionable violates that cardinal constitutional command, and in most contexts, any such effort would be universally condemned.”

Critically, “Neither an agency fee nor any other payment to the union may be deducted from a nonmember’s wages, nor may any other attempt be made to collect such a payment, unless the employee affirmatively consents to pay.” In anticipation of the ruling, California’s newly adopted Senate Bill (SB) 866, signed into law by the Governor on June 27, makes several changes regarding public employers’ deduction of union dues and fees. Among these is a requirement for public employers to rely on the representations of the union regarding an employee’s deduction authorizations. Given the Supreme Court’s holding, this provision of SB 866 potentially runs afoul of the First Amendment, as interpreted and applied in Janus.

Additional notable statements made by the Court in Janus include:

  • Unions can be effective even without agency fees, without which designation of a public-sector union as the exclusive representative still confers many benefits.
  • Representation of nonmembers, even without agency fees, furthers the union’s interest in keeping control of the administration of the collective bargaining agreement, since the resolution of one employee’s grievance can affect others.
  • Going forward, it would likely be unconstitutional for a public sector employer to adopt a collective bargaining agreement that discriminates against nonmember employees.
  • Individual employees who are not members of a union may potentially be required to pay for certain services of a union, such as representation at disciplinary proceedings.

Next Steps and Considerations for Public Agency Employers

1. Stop Agency Fee Deductions

The Court’s decision in Janus is effective immediately, meaning employees who are non-members cannot be charged agency fees. Accordingly, employers must stop deducting agency fees from the paychecks of public employees. Going forward, an employer may not deduct fees unless an employee clearly and affirmatively consents to the deduction before it is implemented.

SB 866 creates a layer of potential complication because it modifies the law to require public employers to rely on the representations of the union regarding an employee’s deduction authorizations. This likely leaves public agency employers with at least three potential options: (1) stop agency fee deductions immediately without communication with union leadership; (2) stop the agency fee deductions after providing a notice to union leadership as to the employees who the public agency believes to be agency fee payers and whose deductions will be halted with the July paycheck; or (3) stop the fee deductions after the union and public employer agree to the list of employees whose fee deductions will be halted, and rely on the new provisions of SB 866 requiring the union to defend and indemnify the employer in the event a fee payer brings suit to recover fees deducted subsequent to the issuance of the Janus decision.

To avoid future lawsuits, public agencies are encouraged to have their human resources and payroll departments work collaboratively with union leadership to identify employees who are agency fee payers and develop a strategy to ensure prompt compliance with Janus. For many public school district employers, working closely with their county office of education will be critical to accurately updating payroll records to ensure employees are no longer charged agency fees going forward.

2. Implement a Communication Plan

Public agency employers who have agency fee provisions in their union agreements should develop a communication plan to address the likely questions that will come from employees and unions in the days and weeks following this decision. Specifically, taking steps to identify a single point person to respond to questions regarding the impacts of theJanus decision will ensure cohesive and clear messaging and avoid the potential for managers and supervisors to inadvertently run afoul of laws prohibiting discouraging or deterring union membership. In developing these communication strategies regarding whether, and how, to communicate the Janus decision to employees, employers should remain neutral and mindful of applicable law, including SB 285, which prohibits employers from deterring or discouraging public employees from becoming or remaining members of a union, and SB 866, which restricts a public employer’s ability to communicate with employees about the Janus decision.

Specifically, under SB 866, any “mass communication” sent to employees or applicants concerning their rights to join or support or refrain from joining or supporting their union requires a meet and confer process with the applicable union. Any mass communication concerning the Janus decision will likely fall within this provision and requires the parties to attempt to craft a mutually agreeable content, or follow the alternate process of distributing two sets of mass communication: one from the employer and one from the union.

Public agency employers are further encouraged to provide an update on the case to their unrepresented managers and supervisors, along with governing board members, and to provide talking points in the event they are faced with questions about the Janus decision.

To assist our clients, we are developing a communication template. If you are interested in receiving this, please contact one of our offices.

3. Examine Collective Bargaining Agreements

After these immediate next steps are in place, in consultation with legal counsel, public agency employers should review their collective bargaining agreements to determine how the Court’s decision impacts current contract language, assess what articles are impacted by Janus, and determine whether any immediate action or negotiation is required.

While the Court’s decision may not immediately impact current dues-paying union members, some members could choose to opt out of union membership in the future as a result of the Court’s decision, in accordance with applicable collective bargaining agreements and membership agreement. To the extent membership in a union and attendant dues deductions are premised on an opt-out article or practice, wherein the employee is automatically in the union and automatically charged union dues unless he or she ops out, such provisions will need to be negotiated with the union to comply with Janus so that an employee clearly and affirmatively consents to union membership.

Related Bills

In addition to SB 866, please be aware that there are other bills pending in the California Legislature that address union dues and labor relations. Lozano Smith is tracking all of these pending bills and will provide updates if any are adopted by the Legislature and signed by the Governor.

Guidance Measures – Full Suite of Resources

Lozano Smith has partnered with leading associations and has also developed several training opportunities and resources to assist public agency employers in addressing new requirements and obligations. We invite you to download and register for any of the following:

  • Webinar: Join a panel of Lozano Smith attorneys for a live webinar on Friday, June 29. This interactive podcast will break down the Janus decision and SB 866 and offer a guide for implementation. Registration is open here.
  • Toolkit: Lozano Smith will be soon publishing an in-depth resource with answers to frequently asked questions, an implementation checklist, templates for communication, and more.
  • CASBO Workshop: The Northern Section Human Resources Professional Development Workshop Series will feature Dulcinea Grantham presenting a legal update exploring the impact of Janus. Registration is open here.
  • ACSA FAQ: Lozano Smith helped lead the development of a comprehensive overview specific to Janus and SB 866. This FAQ is available for download here.

For assistance responding to the immediate and long-term impacts of Janus, please contact the authors of this Client News Brief or an attorney at 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:

Dulcinea Grantham

Partner

Gabriela D. Flowers

Senior Counsel

Erin M. Hamor

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.

New Rules for Use of Federal Funds Effective July 1: Are You Ready?

June 2018
Number 26

New requirements for using federal funds become effective this coming fiscal year. The requirements apply to non-federal entities such as school districts, institutions of higher learning, and state and local governments.

In order to comply with the new rules, non-federal entities seeking federal funds may need to revise their board policies and administrative regulations, contract documents, and other internal procedures by the beginning of their 2018-2019 fiscal year. For school districts, the California School Boards Association has updated its sample Board Policy and Administrative Regulation 3230 to reflect the new rules.

Previously, the requirements for spending federal funds were governed by a series of Office of Management and Budget (OMB) circulars. In 2013, OMB issued new rules in a single, cohesive set of regulations: Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, (Uniform Guidance) published at 2 C.F.R. § 200 et seq. While federal entities were required to comply with the new requirements the following fiscal year, OMB gave non-federal entities a three-year grace period. The grace period expired in December, so non-federal entities’ purchasing procedures must be in compliance for their 2018-2019 fiscal year. For non-federal entities whose fiscal years begin on July 1, that deadline is less than two weeks away.

The Uniform Guidance requirements incorporate many rules from the old OMB circulars that may be familiar to those who have procured federal funds in the past. However, the Uniform Guidance also adds new requirements, most notably those requiring internal controls and documenting purchasing procedures. Some of the most important sections of the Uniform Guidance include:

General Purchasing Standards. This section establishes general rules for non-federal entities forpurchases using federal funds, including:

  • Maintaining written records of purchases that provide the rationale for the method of purchase, selection of contract type, contractor selection or rejection, and the basis for the contract price.
  • Maintaining written conflict of interest standards.
  • Monitoring contractors to ensure they perform to the standards of the contract.
  • Additionally, the entity must choose a contractor that is able to successfully perform under the agreement, with consideration given to the contractor’s integrity, record of past performance, resources and other factors.

Competitive Bidding Standards. Non-federal entities must put their contracts out to bid in a manner that does not stifle competition or give a certain contractor an unfair advantage. The entity must have written procedures for bidding which clearly describe the product or service to be purchased. If the entity has a list of prequalified persons, firms, or products, the list must have enough sources to ensure maximum free and open competition.

Five Methods of Purchasing

In addition to the rules for general purchases, the Uniform Guidance requirements provide five purchasing methods that non-federal entities are limited to when using federal funds. Many of these requirements already existed prior to 2013, but they have been relocated within the federal regulations and consolidated with the Uniform Guidance.

  1. Micro Purchases: A purchase using a simplified procedure, where the aggregate price does not exceed the Micro-Purchase Threshold set by 48 C.F.R. Subpart 2.1 (currently $3,500, though subject to change). The non-federal entity need not solicit competitive quotes if it considers a price quote to be reasonable. To the extent practicable, the entity must spread its micro-purchases equitably among the qualified suppliers.
  2. Small Purchase Procedures: A relatively simple and informal purchase procedure. The purchase price cannot exceed the applicable threshold, which can vary based on the type of agency. To use small purchase procedures, the non-federal entity must consider an adequate number of price or rate quotations.
  3. Sealed Bids: A formal advertising process in which the non-federal entity must publically solicit bids. The entity must open all bids at the same time, and a fixed price contract is awarded to the lowest responsible bidder. This is the preferred method for construction contracts.
  4. Competitive Proposals: A bidding process used when sealed bids are not appropriate.
    • Requests for proposals must be publicized and must identify all evaluation factors and their relative importance.
    • Requests for proposals must solicit an adequate number of qualified sources.
    • The non-federal entity must have a written method for evaluating proposals.
    • The entity must award the contract to the responsible firm whose proposal is most advantageous to the entity, taking all factors into account, including price.
    • For architectural and engineering services, the non-federal entity may select the most qualified competitor, regardless of price.
  5. Noncompetitive Proposals: A purchase when a non-federal entity seeks a proposal from only once source. The entity can only use a noncompetitive proposal when:
    • The item is only available from one source.
    • There is a public emergency that prohibits the delay that would result from a competitive bidding process.
    • Competition is determined inadequate after soliciting multiple sources.
    • The federal awarding or pass-through agency explicitly authorizes it.

The full text of the Uniform Guidance can be read here.

Takeaways

For non-federal entities whose upcoming fiscal year begins on July 1, the deadline to comply with the new Uniform Guidance rules is less than two weeks away. These entities should make it a priority to update their administrative policies if they intend to be eligible for federal funds. For school districts, the California School Boards Association has updated its sample Board Policy and Administrative Regulation 3230 to reflect the new rules. However, the samples are a framework rather than finished regulations, and may require additional language to ensure compliance.

For assistance in compliance with the Uniform Guidance requirements or questions about the Uniform Guidance in general, please contact the authors of this Client News Brief or an attorney at 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:

Kelly M. Rem

Partner

Jordan R. Fong

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.

Ninth Circuit Rules Employee’s Prior Salary Cannot be used as Basis for Wages

June 2018
Number 25

The Ninth Circuit ruled in Rizo v. Yovino that using an employee’s prior salary as a basis for establishing their initial salary is a violation of the federal Equal Pay Act.

The decision is based on a policy adopted by the Fresno County Office of Education, which determined a new employee’s initial salary by adding 5 percent to their previous salary. The Ninth Circuit found that this policy was impermissibly based on sex, in violation of the federal Equal Pay Act, because using previous salary to set new wages carries the risk of perpetuating a discriminatory wage disparity from the employee’s past employers.

Background

Aileen Rizo, the plaintiff in the case, was hired by Fresno County Office of Education as a math consultant after having been employed in Arizona as a middle and high school math teacher. Based on her low previous wages, Rizo was placed at step 1 of level 1 of the salary schedule. Several male math consultants, who previously worked in California, were hired after Rizo. Later, Rizo learned that she was being paid much less than her male counterparts and she filed a pay disparity complaint and subsequently sued the county office.

The federal Equal Pay Act prohibits paying female employees less than their male counterparts for similar work. There are four exceptions to this general rule, including when the difference in pay is based on a “factor other than sex.”

The county office argued that their policy was lawful because the wage difference was based on Rizo’s prior salary from Arizona, not because she is a woman, and therefore meets the catchall exception in the federal Equal Pay Act.

The Ninth Circuit disagreed, stating the Equal Pay Act’s catchall exception should not be used to continue sex-based wage disparities, counter to the primary purpose of the Equal Pay Act itself. The catchall exception should instead be read in light of the law’s surrounding context and legislative history to mean male and female employees can be paid differently based on a legitimate, job-related “factor other than sex,” such as the employee’s education, training, or experience. The Ninth Circuit also clarified that the decision would not prohibit continuing use of salary schedules, as long as an employee’s prior salary is not used to set an initial or promoted employee’s placement on the salary schedule.

This decision is consistent with Assembly Bill (AB) 168, which prohibits employers from asking job applicants for their salary history, as part of the Legislature’s effort to equalize reported discrepancies in pay between men and women. AB 168 went into effect on January 1, 2018. (See 2017 Client News Brief No. 68.)

If you have any questions about this case or need assistance revising your district’s salary schedule criteria, please contact the authors of this Client News Brief or an attorney at 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:

Michael E. Smith

Partner

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.

Supreme Court Opinion on Wedding Cake for Same-Sex Couples Provides Cautionary Tale for Public Entities

June 2018
Number 24

On June 4, 2018, the United States Supreme Court decided theMasterpiece Cakeshop v. Colorado Civil Rights Commission case in a 7-2 decision. While this case had the potential to provide new guidance on the complex intersection between the rights of LGBTQ+ individuals and the rights of individuals to religious freedom, Justice Anthony Kennedy’s opinion is narrow and leaves many questions unanswered. The Court’s limited ruling is largely based upon the underlying facts of the case and, more specifically, the comments made by two members of a hearing panel/adjudicatory body, which provides a cautionary tale for all public agencies that conduct adjudicatory proceedings.

Background

In 2012, the owner of a Colorado bakery, Masterpiece Cakeshop, informed a same-sex couple that he would not prepare a wedding cake for them due to his religious opposition to same-sex marriages. The couple filed a charge with the Colorado Civil Rights Commission that the owner had discriminated against them based on their sexual orientation. The Commission ultimately ruled in the couple’s favor, which the Colorado state courts affirmed.

The bakery owner petitioned the United States Supreme Court to overturn the Commission’s decision, arguing that if anti-discrimination laws are interpreted to require him to create a same-sex wedding cake against his religious views or face a penalty, then the government is compelling him to make speech supporting same-sex marriages. The owner viewed this as a violation of his rights of free speech and free exercise of religion.

On the other hand, the same-sex couple was seeking goods and services for their wedding reception the same way other soon-to-be-wed heterosexual couples typically do. The bakery owner’s refusal raised significant, controversial issues, such as: What rights do individuals have to assert their views over an individual’s religious beliefs? When does expressing a religious viewpoint become discriminatory or unlawful? These are questions public entities from around the country have grappled with during recent periods of social change.

The Supreme Court reaffirmed that religious and philosophical objections to gay marriage are protected views and at times, protected speech. The Court also ruled that anti-discrimination laws protect the rights of gay people to acquire goods and services on the same terms and conditions as other members of the public. However, the Supreme Court did not address the free speech issue because it concluded that the Commission had violated the bakery owner’s free exercise of religion by not considering his arguments for refusing to serve the same-sex couple in a “neutral and respectful manner.”

Adjudicatory proceedings must be fair and treat individuals equally. The Court found that the Commission failed to do this because a commissioner told the owner during a public hearing, on the record, that if he wants to do business in the state and his religious views conflict with anti-discrimination laws, then he needs to compromise, and another commissioner compared the owner’s argument to justifications for slavery and the Holocaust. Read together, and without any verbal or written objections from the other commissioners, the Court found the Commission was not fair and impartial in adjudicating the case.

The government must be neutral with respect to religion. Justice Kennedy’s opinion holds that even a slight suspicion of animosity or distrust of religion, including that which stems from verbal comments made by a minority of members of a decision-making body during an adjudicatory proceeding about religion, may result in a violation of an individual’s right to free exercise of religion. To what extent other board members, council members or other adjudicatory decision-makers must publicly disavow opinionated comments from another member during the decision-making or adjudicatory process is unclear and will require further clarification from the courts. The Supreme Court’s anticipated ruling later this month inTrump v. Hawaii may provide some instruction on this issue, and specifically, the impacts of decisions made by public office holders or employees when they are alleged to have made statements evidencing discriminatory animus in relation to the decisions at issue.

Takeaways

The Court’s opinion serves as a reminder for public entities that civil discourse, perhaps now more than ever, should be a fundamental standard in an adjudicatory setting-a neutral space where individuals will be treated fairly and equally, regardless of their cultural, sexual, or religious differences. Public bodies that deviate from this standard risk losing their credibility and their decisions may be subject to successful legal challenge.

If you have any questions about this case; how to approach conflicts between religion and LGBTQ+ issues with your constituents, employees, or students; or about how your public agency can promote civil discourse in this time of social change, please contact the authors of this Client News Brief or an attorney at 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:

Michael E. Smith

Partner

Sloan R. Simmons

Partner

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.

Alert: California Public Records Act Requests Regarding Lease-Leaseback Procedures

June 2018
Number 23

Many school districts throughout the state have recently received one or more California Public Records Act (CPRA) requests from the California Taxpayers Action Network (CalTAN) and the Carlin Law Group regarding lease-leaseback (LLB) transactions. CalTAN and the Carlin Law Group filed multiple lawsuits against school districts in the past regarding lease-leaseback practices, and this CPRA request may be a precursor to future litigation.

The first of the recent CPRA requests CalTAN and the Carlin Law Group sent to school districts seeks documents related to board authorization of lease-leaseback transactions and payment records. A second CPRA request sent to school districts that provided documents to CalTAN in response to the first request seeks information related to the use of a “skilled and trained workforce,” which is a relatively new requirement for lease-leaseback projects.

Recent Changes in Lease-Leaseback Procedures for School Districts

Over the past several years, there have been multiple appellate court decisions and legislative changes which have affected the laws regarding lease-leaseback projects. School districts should be familiar with such changes, and if necessary should update their policies, practices and documents accordingly.

Lease-Leaseback Court Decisions

CalTAN is a nonprofit organization that participates in litigation against public entities, including in three major lease-leaseback cases described below. The Carlin Law Group appeared as plaintiff’s counsel in all three cases.

In 2015, the Fifth District Court of Appeal (which has jurisdiction in the Central Valley) held that a lease-leaseback contract must contain provisions that reflect contractor financing and post-construction tenancy by the school district. Davis also held that a lease-leaseback contract with an entity that provided preconstruction services under a separate contract could be subject to legal challenge for a potential conflict of interest under Government Code section 1090. (Davis v. Fresno Unified School District (2015) 237 Cal.App.4th 261; see 2015 Client News Brief No. 30.)

In 2016, the Second District Court of Appeal (which has jurisdiction in Los Angeles County and certain parts of the Central Coast) agreed with theDavis court about the potential for a conflict of interest in a lease-leaseback contractor’s performance of preconstruction services under an earlier contract, but expressly disagreed with the Davis court regarding terms required for lease-leaseback contracts, ruling that a lease-leaseback contract need not include provisions about contractor financing and post-construction tenancy. (McGee v. Balfour Beatty Construction (2016) 247 Cal.App.4th 235; see 2016 Client News Brief No. 25.)

Most recently, in California Taxpayers Action Network v. Taber Construction, Inc. et al. (2017) 12 Cal.App.5th 115, the First District Court of Appeal (which has jurisdiction in San Francisco and the Northern coastline of California) agreed with the McGee decision, and declined to follow the lease-leaseback holding of Davis and to read Davis’ “genuine lease” and “financing” requirements into the lease-leaseback statute. (See 2017 Client News Brief No. 32.) All three cases agree on the Government Code section 1090 conflict of interest issue, but a conflict exists in different California appellate courts as to what must be contained in an LLB contract.

Legislative Changes

Effective January 1, 2016, Assembly Bill (AB) 566 requires prequalification of contractors and mechanical, electrical, and plumbing subcontractors for all LLB projects for districts with ADA of 2,500 or more, regardless of funding source and regardless of price. AB 566 also requires use of a skilled and trained workforce on lease-leaseback projects, which relates directly to the information sought by CalTAN and the Carlin Law Group. (See 2015 Client News Brief No. 51.)

The most recent modification to lease-leaseback procedures came through AB 2316, which went into effect on January 1, 2017. AB 2316 requires selection of the lease-leaseback contractor through a “best value” procedure specifically laid out in statute. Proposals submitted in response to a request for proposals (RFP) must be ranked by their best value scores and the board must award to the contractor that submitted the sealed proposal determined by the board to be the best value. The bill expressly permits a school district to award a single lease-leaseback contract that includes preconstruction services, apparently attempting to remove any potential conflict of interest issue under Davis and McGee that could result from the award of a preconstruction services contract to the contractor who will be providing construction services. AB 2316 also permits a school district to award the LLB contract for an agreed-upon lump sum or a fee for performing the services. (See 2016 Client News Brief No. 63.)

Takeaways

Lease-leaseback procedures are complicated, and the law regarding lease-leaseback projects has changed significantly over the past several years. School districts may wish to review their policies and practices regarding lease-leaseback projects and consult with legal counsel to ensure full compliance with the most recent laws and regulations. If your school district has received a CPRA request from CalTAN and the Carlin Group regarding lease-leaseback procedures, you may wish to contact legal counsel to assist with providing a timely and compliant response to the request.

If you have any questions about CalTAN and the Carlin Group’s CPRA requests, or lease-leaseback procedures generally, please contact the authors of this Client News Brief or an attorney at 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:

Harold M. Freiman

Partner

Kelly M. Rem

Partner

Ellen N. Denham

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.