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.

Meet-and-Confer Requirement Does Not Apply to Pension Reform Measure Placed on Ballot through Voter Initiative Process

April 2017
Number 20

In Boling v. Public Employment Relations Board (Apr. 11, 2017, D069626) ___ Cal.App.4th ___ (Boling), the Fourth District Court of Appeal invalidated a decision by the Public Employment Relations Board (PERB) holding that a city council violated the Meyers-Milias-Brown Act (MMBA) by placing a voter initiative to amend the city’s charter on the ballot without first meeting and conferring with the unions representing affected city employees. In doing so, the court rejected PERB’s reasoning that the mayor’s public support of the initiative effectively transformed it from a voter initiative to a city council-sponsored ballot proposal subject to meet-and-confer requirements.

This case addresses a longstanding issue. In a 1984 case, People ex rel. Seal Beach Police Officers Assn. v City of Seal Beach, the California Supreme Court concluded that a charter amendment proposed by a governing body is subject to the MMBA’s requirements, but cautioned that the case did “not involve the question whether the meet-and-confer requirement was intended to apply to charter amendments proposed by initiative.” Three decades after Seal Beach, a California appellate court has addressed that question for the first time.

The Boling case traces back to a City of San Diego decision on an issue that rarely evades controversy: public employee pension plans. In 2010, the city’s mayor and a city councilmember separately announced plans to replace the city’s existing defined benefit pension plans with 401(k)-style defined contribution plans for new hires. Ultimately, supporters of the mayor’s proposal and of the city councilmember’s competing proposal joined forces to produce an initiative to adopt a charter amendment mandating changes to pension plans for new hires.

The California Constitution provides two options for proposing an amendment to a city charter: an initiative qualified for the ballot through signed voter petitions, or a ballot measure sponsored by the governing body of the city. Rather than pursuing a ballot measure sponsored by the San Diego City Council (City Council), which the mayor believed the City Council would not place on the ballot “under any circumstances,” he launched a citizens’ initiative for his pension reform proposal. The parties to the case never disputed the fact that the mayor and his staff assisted in drafting the proposal and in campaigning for the citizens’ initiative.

In the summer of 2011, proponents of the proposal circulated a voter petition to place the initiative on the ballot. Meanwhile, a municipal employees’ union wrote to the mayor and asserted that the MMBA required the city to meet and confer over the initiative before it could be placed on the ballot. The city disagreed and refused to do so. In November 2011, the county’s registrar of voters reviewed and certified the petition. Subsequently, the City Council passed a resolution of its intention to put the measure on the ballot.

In January 2012, the union filed an unfair practice charge. Other unions followed suit. Later that month, the City Council enacted an ordinance placing the initiative on the June 2012 ballot. Shortly thereafter, PERB issued a complaint against the city and ordered an expedited administrative hearing. PERB also filed a superior court action seeking a preliminary injunction to bar the city from putting the initiative on the ballot. The trial court denied PERB’s request for an injunction and the voters overwhelmingly approved the initiative in June 2012.

However, the proceedings before PERB continued and the case went to a hearing in July 2012. At the conclusion of the PERB hearing, the administrative law judge (ALJ) issued a proposed decision determining that the mayor, acting under the color of his elected office and with support of councilmembers and the city attorney, violated the MMBA by denying the unions the opportunity to meet and confer over the mayor’s decision to launch and pursue the initiative. The ALJ further determined that since the mayor was an agent of the city, and because the city ratified the mayor’s policy decision, the obligation to meet and confer extended to the city. PERB agreed and issued a decision consistent with the ALJ’s proposed decision.

The city and the initiative’s proponents filed separate petitions for writs of extraordinary relief with the Fourth District Court of Appeal challenging PERB’s decision, which the Court of Appeal consolidated for purposes of its decision.

The Court of Appeal disagreed with PERB’s conclusions and determined that the MMBA’s meet-and-confer requirement does not apply when a proposed charter amendment is placed on the ballot by citizen proponents through the initiative process. Instead, only a governing body-sponsored proposal willtrigger the meet-and-confer requirement.

Central to the court’s analysis was the principle that procedural requirements that govern city council action generally do not apply to citizen-sponsored initiatives. Unlike a charter amendment proposed by a city council, a voter-initiated charter amendment proposal must be placed on the ballot; the city council has no discretion to decide otherwise. (Elec. Code, § 9255.) In contrast, a city council’s vote to adopt a ballot proposal for submission to its voters is discretionary and is thus subject to certain procedural constraints, including the requirement to negotiate. Moreover, the court reasoned, the MMBA’s meet-and-confer provisions expressly refer to “governing body” proposals, which a voter initiative is not.

The court further determined that PERB erred when it applied legal theories regarding principal-agent relationships to transform the initiative from a citizen-sponsored initiative into a governing body-sponsored ballot proposal, even given the mayor’s role in developing and supporting the initiative. This was in part because under the express language of the city’s charter, the mayor had no authority to place a City Council-sponsored ballot proposal on the ballot without City Council approval, and there were no indicators that he obtained such approval. The court also rejected PERB’s arguments under the theories of apparent authority, respondeat superior, and ratification as legally erroneous.

This case resolves a major question regarding the balance of power between voter-driven initiatives and union collective bargaining rights, with the court deciding the issue in favor of the electoral process.

For more information on the Boling decision or a local government agency’s collective bargaining duties, please contact the authors of this Client News Brief or an attorney at one of ournine offices located statewide. You can also visit our website, follow us on Facebook or Twitter or download our Client News Brief App.

Written by:

Steven A. Nunes

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 Returns Transgender Student Rights Case to Lower Court

March 2017

On March 6, 2017, the United States Supreme Court sent the case of Virginia transgender high school student Gavin Grimm back to an appellate court, which must now consider the case and the parties’ arguments “in light of the guidance document issued by the Department of Education and Department of Justice on February 22, 2017” that rescinded the Obama administration’s May 2016 guidance on transgender student rights and facilities access. (Gloucester County School Board v. G.G. (March 6, 2017, No. 16-273).)

Last April, the United States Court of Appeals for the Fourth Circuit held that courts should defer to the Obama administration’s guidance on and interpretation of Title IX and Title IX’s regulations (specifically, 34 C.F.R. § 106.33) relative to access to school restrooms based upon gender identity. The appellate court’s ruling held that Grimm should have access to school restrooms based upon gender identity.

The Supreme Court’s order to vacate the court of appeals’ decision follows the Trump administration’s rescission in February of the Obama administration’s guidance. ( See 2017 CNB No. 9.) For now, it is left to the lower courts in this matter to decide whether gender identity discrimination constitutes sex-based discrimination prohibited by Title IX, or possibly under other theories of law, such as constitutional equal protection.

As we await further guidance from the courts on this important interpretation of federal law, California school districts are reminded that their obligations under state law remain unchanged. AB 1266 (Ed. Code, § 221.5(f)), which became effective January 1, 2014, and other state laws (Ed. Code, §§ 220, 234.1), prohibit discrimination against students based upon their gender identities and require that students be permitted to use facilities and participate in sex-segregated school programs and activities that are consistent with their gender identities. (See 2014 Client News Brief No. 14
and 2016 Client News Brief No. 16.)

For more information on the Supreme Court’s decision or on federal Title IX guidance and state law regarding gender identity, 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:

Joanna J. Kim

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.

California Public Records Act Applies to Private Accounts

March 2017
Number 11

Emails, text messages and other written communications sent to or from a public official’s private account may be subject to disclosure under the California Public Records Act (CPRA), the California Supreme Court ruled unanimously in a highly anticipated decision published on March 2, 2017. (City of San Jose et al. v. Superior Court (March 2, 2017, No. S218066) ___ Cal.5th ___ < http://www.courts.ca.gov/opinions/documents/S218066.PDF>.)

The court held that the public has a right under the CPRA to access texts, emails and other records discussing public business regardless of whether the records were created, received by or stored in a private account. “If public officials could evade the law simply by clicking into a different email account, or communicating through a personal device,” the court wrote, “sensitive information could routinely evade public scrutiny.”

This case had its origin in a 2009 lawsuit against the City of San Jose, its redevelopment agency and several city officials. The plaintiff in that case, a community activist, claimed that the city’s failure to provide certain records regarding a downtown redevelopment project and other city business violated the CPRA. The city had provided certain records, but declined to provide voicemails, emails and text messages that were sent and received by city officials on personal devices using personal accounts. In 2013, a trial court judge ruled against the city, finding that communications sent to or received from city officials regarding public business are public records regardless of what device or account was used to create and deliver them. ( See 2013 Client News Brief No. 17.)

The city appealed the decision, and in 2014, the Sixth District Court of Appeal reversed the decision. The appellate court ruled that the CPRA’s definition of public records as communications “prepared, owned, used, or retained” by a public agency did not include messages sent or received on individual city officials’ and employees’ private devices and accounts. ( See 2014 Client News Brief No. 21.) Distinguishing between a public agency as the holder of public documents and its individual elected officials and employees, the appellate court held that, as a practical matter, the city could not use or retain a message sent from an individual council member’s phone that was not linked to a city server or account. While acknowledging the potential for abuses, the court determined that it is up to the Legislature to decide whether to require public agencies to police officials’ private devices and accounts.

The community activist then appealed to the California Supreme Court, where the case languished for nearly three years before the high court overturned the appellate decision.

In its ruling, the Supreme Court disagreed with the appellate court because records “prepared” on private devices could still qualify as public records. The high court observed that the agency itself is not a person who can create, send and save communications; rather, any such communication would come from or be received by an individual. As such, the city’s elected officials and employees were in essence acting as the city, and to the extent that their emails pertained to city business, they were public records.

The court did narrow the type of records that are subject to disclosure, holding that records containing conversations that are primarily personal in nature are not subject to disclosure under the CPRA. The court also acknowledged that determining whether particular communications constitute public records is a heavily fact-specific process, and decisions must be made on a case-by-case basis. This will create challenges for public agencies as they attempt to follow the reasoning of this decision.

The court also addressed the practical challenges around retrieving records from personal accounts, including ways to limit the potential for invading personal privacy. For guidance, the court offered examples of methods for retrieving records from personal accounts including procedures adopted by federal courts applying the Freedom of Information Act and followed by the Washington Supreme Court under that state’s records law that allow individuals to search their own devices for responsive records when a request is received and to submit an affidavit regarding potentially responsive documents that are withheld. The court also discussed adoption of policies that would prohibit the use of personal accounts for public business, unless messages are copied and forwarded to an official government account. While these methods were offered as examples, the court did not endorse any specific approach.

The opinion did not address a host of other practical issues, such as how public agencies should proceed when employees refuse or fail to provide access to records contained in their private accounts.

The decision means that public agencies must now carefully consider how to retrieve business-related public records that may be located in employees’ and officials’ personal accounts. One approach is to create new policies that address the decision. However, public agencies should consider the implications such policies may have on issues such as collective bargaining, records retention, acceptable use policies and other policies concerning technology.

Lozano Smith attorneys can provide a wide array of CPRA services, including preparing policies to address this opinion, responding to CPRA requests, analyzing documents and assisting in related litigation. Lozano Smith has a model email retention policy, and is in the process of reviewing and updating this and other model policies to reflect the impact of this decision. In order to receive our existing retention policy, which addresses individual employees’ obligations in relation to electronic communications, or to request our upcoming board policy to address the court’s decision, you may also email Harold Freiman at hfreiman@lozanosmith.com or Manuel Martinez at mmartinez@lozanosmith.com. We will also be producing webinars about the City of San Jose case and electronic records under the CPRA.

For more information on the City of San Jose opinion or about the California Public Records Act application to personal technology 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:

©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 Federal Guidance Regarding Transgender Students Will Not Impact California Schools

February 2017
Number 9

Under new leadership following the 2016 presidential election, the United States Department of Justice (DOJ) and Department of Education (DOE) issued a joint “Dear Colleague” letter on February 22, 2017 withdrawing the Obama administration’s May 2016 letter and guidance regarding transgender students and sex-based discrimination under Title IX of the Education Amendments of 1972 (20 U.S.C. § 1681 et. seq.) and Title IX’s regulations. The prior letter and guidance, consistent with the Obama administration’s enforcement of Title IX in school districts, provided that Title IX’s protections extended to transgender students, irrespective of that student’s sex assigned at birth, and included access to facilities like restrooms and locker rooms. (See 2016 Client News Brief No. 31 and July 25, 2016 article.)

The federal government’s new Dear Colleague letter includes a twofold explanation of the reasons for the rescission of the prior letter and guidance: (1) the prior letter and guidance lacked extensive or sufficient legal analysis to support the extension of Title IX protections to include access to sex-segregated facilities for transgender students; and (2) the DOJ and DOE desire to provide greater discretion to individual states regarding the issue of facilities use by transgender students, given the legal uncertainty and the fact that the prior guidance resulted in litigation in several states. One case involving the now rescinded May 2016 letter and guidance is currently pending before the United States Supreme Court. The Supreme Court has invited the parties in that case to submit letters addressing whether this new guidance impacts how the case should proceed.

Despite the withdrawal of the May 2016 Dear Colleague letter, the new federal guidance continues to emphasize a commitment to protect LGBT students from discrimination, bullying and harassment.

While the May 2016 federal letter and guidance are no longer in effect, California law, including Assembly Bill 1266 (Ed. Code, § 221.5(f)) and related non-discrimination provisions providing protections on the basis of gender identity (Ed. Code, §§ 220, 234.1, etc.), continues to control in the state. Likewise, the California Department of Education’s guidance on transgender youth in schools continues to stand. (See 2016 Lozano Smith Client News Brief No 16 .) Specifically, state law requires California school districts and other local education agencies to ensure transgender students’ rights consistent with, if not beyond, the previously issued and now rescinded federal letter and guidance.

If you have questions about the new Dear Colleague letter, its interaction with California law or state or federal law regarding transgender student rights in general, please contact 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:

Inna Volkova

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.

Change in Law May Require Shift to Even-Year Elections

February 2017
Number 8

In September 2015, Governor Jerry Brown signed into law Senate Bill (SB) 415. SB 415, which becomes operative on January 1, 2018, prohibits political subdivisions from holding odd-year regular elections if a prior odd-year election resulted in a “significant decrease in voter turnout,” as defined by statute. The new law reflects a policy of encouraging election consolidations to defray election costs and encourage voter participation. It applies only to regular elections and not to special elections.

Specifically, the new law, which is codified at Elections Code sections 14050 et seq., provides that a political subdivision (such as a city, school district, community college district or other district organized pursuant to state law) shall not hold an election other than on a statewide election date if holding an election on a “nonconcurrent date” has previously resulted in a “significant decrease in voter turnout.” “Nonconcurrent dates” are non-statewide election dates such as odd-year board member elections (or “off-cycle” election dates). A “significant decrease in voter turnout” is a voter turnout in a regular election in a political subdivision that is at least 25 percent less than the average voter turnout within that political subdivision for the previous four statewide general elections.

If a political subdivision has experienced such a “significant decrease in voter turnout” and is prohibited from holding future off-cycle elections, it may still hold off-cycle elections through 2021 if, by January 1, 2018, it has adopted a plan to consolidate a future election with a statewide election not later than the November 8, 2022 statewide general election.

In determining when to make the transition, political subdivisions should build in an administrative time buffer. In order to consolidate a currently-scheduled election into a general election, cities will need to enact an ordinance and seek approval from their county board of supervisors, among other requirements. Likewise, certain other categories of political subdivisions that wish to consolidate a currently-scheduled legislative body member election will need to adopt a resolution, seek approval from their county board of supervisors and comply with other statutory preconditions. Elections Code sections 10404 and 10404.5 provide that such a resolution must be adopted and submitted for approval no later than 240 days prior to the date of the currently-scheduled election. For an election scheduled in November 2017, the deadline for such actions would be March 13, 2017.

Political subdivisions should also consider the short-term effects of the transition. School districts, for example, which may now be able to hold Proposition 39 bond measure elections on an annual basis, will be limited to holding such elections once every two years once they transition to even-year election cycles. Political subdivisions should also be aware that consolidating elections to move them from odd to even years may affect the duration of their officers’ or board members’ terms. Consolidating school board elections, for example, will result in extending terms for current board members by one year.

A political subdivision that holds an odd-year election after January 1, 2018 without first adopting a transition plan can be sued by a voter within the political subdivision and compelled to comply with SB 415. If the voter prevails, the political subdivision will be liable for attorney’s fees and litigation expenses.

Lozano Smith has assisted political subdivisions with applying the 25 percent rule of SB 415 and with the mechanics of transitioning to even-year election cycles. If you have questions about compliance with SB 415 or any other issues impacting school districts and other local government entities, please contact 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:

Steven Nunes

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.

Court Reaffirms Undocumented Students’ Eligibility for Higher Education Aid Programs

February 2017
Number 6

The Second District Court of Appeal has rejected arguments that sought to bar the University of California (UC) from making certain financial aid programs available to undocumented students. In decidingDe Vries v. Regents of University of California (2016) 6 Cal.App.5th 574, the appellate court has reaffirmed undocumented students’ eligibility for such programs.

As some colleges express concern about the potential for federal policies that could impact their undocumented students, De Vries builds on the existing body of law that enables California’s higher education institutions to provide support for such students.

In its December 9, 2016 decision, the Court of Appeal held that three laws that aid undocumented students apply to those attending UC: Assembly Bill (AB) 540 (2001), which allows certain undocumented students to qualify for resident fees; AB 131 (2011), which makes undocumented students eligible for state aid programs; and SB 1210 (2014), which allows undocumented students to participate in student loan programs. The taxpayer plaintiff filed suit in Los Angeles County Superior Court challenging the legality of these programs at UC. The trial court dismissed the suit, and the Court of Appeal affirmed that decision.

Central to the case is a federal law, 28 U.S.C. section 1621(d), which states that undocumented immigrants may be “eligible for any state or local public benefit,” including those related to postsecondary education, “only through the enactment of a State law … which affirmatively provides for such eligibility.” The plaintiff argued that under section 1621(d), such a state law must directly grant a benefit to the students, but that the three state laws at issue only granted the benefits they confer to students at California State University and the state’s community colleges, and not to students attending a UC. The plaintiff in De Vries then honed in on the unique status of UC under the California Constitution, which grants its Board of Regents “broad powers to organize and govern the university and limits the Legislature’s power to regulate either the university or the regents.” The plaintiff insisted that the three state laws in question do not, and cannot, affirmatively provide for any benefit to students at UC as required under section 1621(d) because the Legislature cannot legislate UC and UC cannot otherwise enact a state law.

The Court of Appeal rejected these arguments. First, the court held that section 1621(d) “requires only that state law provide eligibility for undocumented immigrants to receive public benefits. It does not require that state law confer such benefits on eligible persons or mandate that any other entity do so.” Therefore, because AB 540, AB 131 and SB 1210 complied with section 1621(d) by making undocumented students eligible for the benefits of these respective laws, UC itself could adopt policies that opted its students into such programs. Speaking directly to AB 540, for example, the court reasoned that the law “removed the federal barrier to making undocumented immigrants eligible for the exemption from nonresident tuition, and the Regents conferred that benefit on qualified UC students. Nothing in section 1621(d), California’s Constitution, or AB 540 requires more.” Moreover, the “legislative deference to the University’s constitutional status does not affect the Legislature’s express intent to make UC students eligible for the exemption from nonresident tuition.” UC students are not entitled to that benefit unless the University of California elects to provide it.” Likewise, AB 131 and SB 1210 “provide eligibility for the specified benefits to those students, regardless of whether the University ultimately confers such benefits on them.”

The De Vries decision adds to existing legal precedent that affirms the state’s ability to make higher education programs available to undocumented students. If you have any questions regarding such programs or appropriate guidelines for related resolutions and 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:

Michelle Cannon

Partner

Steve Ngo

Senior Counsel

©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.

Schools and Immigration Enforcement

January 2017
Number 4

In the wake of the recent presidential election, changes in immigration law and enforcement may be on the horizon.

Some California K-12 school district and community college district officials have voiced concerns over the potential for increased enforcement of existing immigration laws, due in part to the president-elect’s campaign statements that he would triple the number of enforcement agents at Immigration and Customs Enforcement (ICE) and deport 2 million undocumented immigrants. These proposals appear to have created apprehension in local immigrant communities over potential enforcement visits to school campuses, and requests from ICE agents for student- and parent-related records and information. The rising fears prompted State Superintendent of Public Instruction Tom Torlakson to issue a statement on December 21, 2016 declaring California’s public schools safe havens for students and their families.

With these developments in mind, many school and community college districts are considering adoption of guidelines for interacting with ICE agents, as well as related alternatives such as “sanctuary school” resolutions and policies.

The federal Family Educational Rights and Privacy Act (FERPA) and California’s Education Code generally limit the disclosure of student records and information without parent consent to specifically delineated exceptions. How ICE agents’ requests for records or information interact with those laws and exceptions may depend on the specific facts of each request, and the form in which ICE makes the request. For example, both FERPA and the Education Code generally require compliance with a lawfully issued subpoena for student records, assuming that is the method through which ICE were to seek such information.

Federal law does not require school districts to report undocumented students to immigration authorities. Moreover, there may be an argument that the United States Supreme Court’s opinion in Plyler v. Doe (1982) 457 U.S. 202, prohibits school districts from reporting undocumented students to law enforcement agencies in the absence of a court order or subpoena requesting such information, as such voluntary reporting could result in denying undocumented students the right to access a free public school education. This said, there are other federal laws that prohibit the intentional concealing or shielding of an illegal alien from detection. Due to the evolving and somewhat unsettled nature of the law in this area, school districts are encouraged to consult with legal counsel regarding these issues.

The potential for increased ICE enforcement and its impact on undocumented students is likely to grow in importance in 2017. As a result, districts may wish to consider their role in relation to this issue, as well as policies, practices or procedures that can provide guidance and structure.

Lozano Smith is working on guidance on these and other immigration-related issues and on model sanctuary campus policies for our school and community college district clients. If you are interested in receiving our guidance or copies of our model policies or have any questions regarding immigration enforcement on school campuses, please contact the authors of this Client News Brief or an attorney at one of our nine offices located statewide. You can also visit ourwebsite, follow us on Facebook or Twitter or download our Client News Brief App.
Written by:

Kristy J. Boyes

Associate

©2016 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 Invoices are Subject to Disclosure under the Public Records Act

January 2017
Number 3

The California Supreme Court has ruled that invoices from a public agency’s legal counsel are subject to disclosure under the California Public Records Act (CPRA), with limited exceptions. Invoices for work in pending and active legal matters may generally be shielded from disclosure under the attorney-client privilege.

In Los Angeles County Board of Supervisors v. Superior Court (Dec. 29, 2016, No. S226645) ___ Cal.4th___ < http://www.courts.ca.gov/opinions/documents/ S226645A.PDF >, the court considered to what extent invoices from a public entity’s attorney are subject to disclosure under the CPRA.

The American Civil Liberties Union (ACLU) suspected attorneys for the Los Angeles County jail system of wasting public funds by engaging in “scorched earth” litigation tactics. The ACLU submitted a CPRA request to Los Angeles County (County) seeking invoices indicating amounts billed in connection with nine different lawsuits in order to determine whether the county engaged in wasteful legal strategies. The county agreed to produce invoices relating to three lawsuits that were no longer pending, with attorney-client privileged information redacted, but declined to produce invoices for the six remaining lawsuits that remained pending, claiming the attorney-client privilege protected them from disclosure.

The Court of Appeal ruled that the attorney-client privilege generally protects attorney invoices from disclosure if the invoices were maintained in a privileged manner.

In a close 4-3 ruling, a divided Supreme Court reversed the appellate court’s decision, balancing competing rights and privileges in its majority opinion. While the CPRA provides the public with a broad right of access to records in the possession of state and local government agencies, it also contains a number of exceptions that protect certain categories of documents from disclosure, including documents protected by the attorney-client privilege.

In analyzing whether attorney invoices are categorically protected by the attorney-client privilege, the Supreme Court adhered to the principle that “the heartland of the privilege protects those communications that bear some relationship to the attorney’s provision of legal consultation.” The court explained that the attorney-client privilege does not extend toall communications between an attorney and client, but rather “to communications that bear some relationship to the provision of legal consultation.” The court concluded that the primary purpose of invoices is for the attorney to receive payment, and not “for the purpose of legal consultation.” In other words, invoices may not be withheld simply because they are sent from an attorney. Whether an invoice or specific information in the invoice can be withheld is a fact-specific inquiry into whether the invoice as a whole, or certain information contained in it, bears a relationship to the provision of legal consultation.

The court concluded that information in an invoice “to inform the client of the nature or amount of work occurringin connection with a pending legal issue” is protected by the attorney-client privilege. The amount of fees being expended on a pending and active legal matter is also privileged, because changes in spending could indirectly reveal legal strategy to a party that can use that information to the detriment of the government agency. However, fee information for concluded legal matters may not be subject to the privilege because, over time, the information “no longer provides any insight into litigation strategy or legal consultation.” While the fee information contained in such an invoice may not be protected by the attorney-client privilege, the court’s opinion appears to allow redaction of specific information in the invoice that may reveal information about legal consultation, though the court was not that express about this point.

The takeaways from this case can be summarized as follows:

  • Legal invoices for concluded matters are disclosable, subject to any lawfully allowed redactions of information that reveals attorney-client confidences; and
  • Legal invoices for pending or active matters can be withheld in their entirety.

Lozano Smith strives to provide invoices that have sufficient information for audit purposes and to keep clients informed. However, we are conscious of our clients’ obligations under the CPRA and endeavor to avoid including information in invoices that could reveal attorney-client privileged advice or strategy.

For more information on this case or the California Public Records Act 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:

Nicholas J. Clair

Associate

©2016 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.

School District Bid Threshold Raised for 2017

December 2016
Number 88

According to the California Department of Education Office of Financial Accountability and Information Services, pursuant to Public Contract Code section 20111(a), the bid threshold for K-12 school districts’ purchases of equipment, materials, supplies and services (except construction services) has been adjusted to $88,300, effective January 1, 2017. This represents an increase of 0.626 percent over the 2016 bid limit. The notice may be viewed here.

The California Community Colleges Chancellor’s Office is expected to 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), sometime in the next few days. Once released, that information will be availablehere.

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.

For more information on how the new law impacts your agency, please contact the authors of this Client News Brief or an attorney at one of our nine offices located statewide. You can also visit ourwebsite, follow us on Facebook or Twitter or download our Client News Brief App.
Written By:

Devon Lincoln

Partner

©2016 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.

Proposition 64: Legal and Practical Considerations

December 2016
Number 87

On November 8, 2016, California voters passed the “Control, Regulation and Tax Adult Use of Marijuana Act” (“Prop. 64”), legalizing recreational marijuana use for those 21 years old and older. The new law, effective immediately, among many other provisions does the following related to marijuana:

  • Establishes a regulatory scheme for cultivation, distribution, sale, testing and use;
  • Allows for personal cultivation of up to six plants inside a private home;
  • Prohibits public use;
  • Prohibits all use in vehicles and maintains existing laws about driving while impaired;
  • Prohibits use within 1,000 feet of a school, day care center or youth center (unless it is in a private residence within that radius and the smoke cannot be detected at the school or center);
  • Allows cities and counties significant local control over regulation related to sale, manufacturing, production, cultivation and related businesses, including the authority to ban certain activities within the agency’s jurisdiction;
  • Allows public and private employers to prohibit use, possession, purchasing, transporting, obtaining or giving away marijuana on their premises and to establish and enforce drug- and alcohol-free workplace policies;
  • Imposes penalties for public use, use in prohibited school or tobacco-free zones or for having an open container; and
  • Provides for drug prevention education and community service for offenders younger than 18 years.

The Act also establishes the Bureau of Marijuana Control, a division within the Department of Consumer Affairs, which will oversee the licensing, regulation and taxation of all marijuana businesses beginning January 1, 2018. Thus, provisions related to licensing and taxation are not effective until January 1, 2018. However, the provisions allowing personal use and cultivation of marijuana inside a private residence are effective immediately.

The impact of federal law on enforcement of Prop. 64 is uncertain. Marijuana continues to be a Class 1 narcotic under the federal Controlled Substances Act, but the U.S. Department of Justice indicated in a 2013 memorandum that it would defer enforcement for marijuana violations to states that had established “strong and effective regulatory and enforcement systems.” It is uncertain whether the Department of Justice’s current practice will remain in effect or be altered when a new presidential administration takes office in January.

The passage of Prop. 64 raises many issues for public agencies responsible for school and child safety, public health and safety, law enforcement, and for maintaining safe and drug-free workplaces. These issues include, but are not limited to:

  • Employees possessing, using or sharing marijuana in or near the workplace;
  • Establishing a defensible drug-free workplace policy, including a drug-testing protocol; and
  • Dealing with employees and/or students who are suspected of being under the influence.

Lozano Smith is currently working with our municipal, school district, community college and special district clients to address these and other issues related to the enactment of Prop. 64. For more information on how the new law impacts your agency, please contact the authors of this Client News Brief or an attorney at one of our nine offices located statewide. You can also visit ourwebsite, follow us on Facebook or Twitter or download our Client News Brief App.

 
Written by:

Lee Burdick

Senior Counsel

©2016 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.

Labor and Employment Legislative Update, Part Two

December 2016
Number 86

Governor Jerry Brown considered several bills this legislative season that will affect the rights of public employees and their employers. In this second part of a two-part series, Lozano Smith summarizes seven new laws with the greatest potential impact on public employers in 2017.

Assembly Bill (AB) 2248: Expedited Authorizations for Out-of-State Teachers with Bilingual Authorization

AB 2248 seeks to address California’s teacher shortage and expedite the ability of schools to place qualified bilingual teachers (i.e., teachers authorized to deliver content instruction in a pupil’s primary language) in California classrooms. Under existing law, teachers who hold an out-of-state credential authorizing instruction of English learners are allowed to earn an English learner authorization to teach in California. However, current law does not extend that authorization to out-of-state bilingual teachers. Instead, out-of-state bilingual teachers must take professional tests and coursework to obtain a bilingual authorization in California regardless of their qualifications. AB 2248 amends Education Code section 44253.4 so that a teacher who holds an out-of-state bilingual authorization can earn an equivalent bilingual learner authorization in California by simply submitting an application and a fee.

Senate Bill (SB) 1001: New Prohibitions on Employer Review of Employment Authorization Documents

On September 28, 2016, Governor Jerry Brown signed SB 1001 into law. SB 1001 adds section 1019.1 to the Labor Code, which will prohibit employers from engaging in certain practices when reviewing employment authorization documents in order to verify, as required by federal law, whether an individual is authorized to work in the United States. Pursuant to SB 1001, an employer is prohibited from: (1) requesting more or different work authorization documents than are required under federal law; (2) refusing to honor documents that on their face reasonably appear to be genuine; (3) refusing to honor documents or work authorization based upon the specific status that accompanies the authorization to work; and (4) attempting to re-investigate or re-verify an incumbent employee’s authorization to work using an unfair immigration-related practice. The new code section also provides for sanctions against employers who violate its provisions, including monetary penalties imposed by the state Labor Commissioner of up to $10,000 per violation. In addition, job applicants and employees can bring a complaint with the Division of Labor Standards Enforcement to address violations of this new law. Employers should be mindful of these new prohibitions when reviewing employment authorization records to ensure compliance with the law.

SB 1180: Additional Leave Rights for Military Veterans

On September 28, 2016, Governor Brown signed SB 1180 into law. The bill, which adds sections 44978.2 and 45191.5 to the Education Code, is intended to provide disabled veterans who are new school employees with additional leave benefits during their first year of employment. Pursuant to SB 1180, certificated and classified employees hired on or after January 1, 2017 who are military veterans with a military service-connected disability rated at 30 percent or more by the U.S. Department of Veterans Affairs are entitled to a leave of absence for illness or injury with pay of up to 10 days (certificated) or 12 days (classified) during their first year of employment for the purpose of undergoing medical treatment for their military service-connected disability. This new leave is in addition to other leave already provided by existing law.

AB 1676 and SB 1063: Amendments to California’s Fair Pay Act

Existing law prohibits an employer from paying any employee “at wage rates less than the rates paid to employees of the opposite sex for substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions.” Willfully doing so is a misdemeanor punishable by a fine of up to $10,000 and/or six months imprisonment. (Lab. Code, §§ 1197.5, 1199.5.) The law contains specific exceptions, including where the pay differential is based on (1) a seniority system, (2) a merit system, (3) a system that measures earnings by quantity or quality of production or (4) a bona fide factor other than sex, such as education, training, or experience. These factors must be reasonably applied and account for the entire wage differential. (Lab. Code, § 1197.5.)

AB 1676 amends Labor Code section 1197.5 to provide that an employee’s “prior salary,” by itself, is not sufficient to justify any disparity in compensation. That is, an employer who relies solely on the employee’s prior salary to explain a pay differential will not qualify for the “bona fide” factor exception.

SB 1063 amends Labor Code sections 1197.5 and 1199.5 so that in addition to pay differentials based on sex, employers are prohibited from paying employees “at wage rates less than the rates paid to employees of another race or ethnicity.” Willfully paying employees less based on race and ethnicity is a misdemeanor. Local agencies and school districts are not entitled to reimbursement from the state for any costs they may incur as a result of SB 1063.

AB 1843: Juvenile Record Off Limits in Employment Decisions

With some exceptions, under existing law set forth in Labor Code section 432.7, when making employment decisions, an employer cannot inquire about or consider information concerning an arrest or detention that did not result in a conviction, a referral to or participation in any pretrial or post-trial diversion program or a conviction that has been judicially dismissed or ordered sealed. AB 1843 amends Labor Code section 432.7 to prohibit employers from asking a job applicant to disclose, or from utilizing as a factor in determining any condition of employment, information concerning or related to an arrest, detention, processing, diversion, supervision, adjudication or court disposition that occurred while the person was subject to the process and jurisdiction of juvenile court law. In addition, the definition of “conviction” in Labor Code section 432.7 will expressly exclude any adjudication by a juvenile court or any other court order or action taken with respect to a person who is under the process and jurisdiction of the juvenile court law.

AB 2028: Reinstatement of PERS Benefits

AB 2028 adds section 20969.3 to the Government Code and applies it to all active Public Employees’ Retirement System (PERS) school and local agency members. Pursuant to AB 2028, a member who is involuntarily terminated on or after January 1, 2017 and is later reinstated to that employment pursuant to an administrative, arbitral or judicial proceeding – including proceedings before school boards – is entitled to reinstatement with all retirement benefits that the member otherwise would have accrued. In addition, PERS contributions must be made, and service credit given, for any period for which salary is awarded in the proceeding. The reinstatement of benefits is effective as of the date from which salary is awarded. Employers are required to notify PERS of the final decision ordering the member’s reinstatement within five days of the date the decision becomes final.

For more information on these new laws, please contact the authors of this Client News Brief or an attorney at one of our 10 offices located statewide. You can also visit our website, follow us on Facebook or Twitter or download our Client News Brief App.

Written by:

Marisa Lincoln

Partner

Sarah Starcevich Miller

Senior Counsel

Nicholas Smith

Associate

©2016 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.

Labor and Employment Legislative Update, Part One

December 2016
Number 85

Governor Jerry Brown considered several bills this legislative season that impact the rights of public employees and their employers. In this first part of a two-part series, Lozano Smith examines four new laws with the greatest potential impact on public employers in 2017, plus two major bills the Governor vetoed.

Assembly Bill (AB) 1918: County Offices of Education May Issue Temporary Certificates to Teachers Working in Nonpublic Schools while their Credential Applications are processed

AB 1918, signed into law on August 17, 2016, enables county offices of education to issue temporary certificates to certificated employees whose credentials are being processed by the California Commission on Teacher Credentialing (CCTC), including persons who have a certificate from another state and certificated employees of nonpublic schools. Prior to issuing a temporary certificate, a county office of education is required to obtain a certificate of clearance from the CCTC for the employee. The new law goes into effect on January 1, 2017.

Senate Bill (SB) 916: CCTC May Now Issue Single Subject Teaching Credentials in Dance and Theater

SB 916 authorizes the CCTC to issue two new single subject teaching credentials, in dance and theater. The bill, which the Governor signed on September 26, 2016, goes into effect on January 1, 2017. Existing law requires teachers to possess a single subject English credential in order to teach theater. Similarly, to teach dance, a teacher is required to possess a physical education teaching credential. In addition to the new credentials, the bill also permits current holders of physical education and English credentials, or persons who pursue such credentials before the establishment of a single subject teaching credential, to teach dance and theater, respectively. The Legislature made clear that these new provisions do not prohibit a school district from employing a teacher with a single subject teaching credential in another subject with an authorization to teach theater or dance.

Senate Bill (SB) 1413: Teacher Housing Act of 2016

The Teacher Housing Act of 2016 could make housing more affordable for school district employees throughout California. SB 1413, signed into law on September 27, 2016, will enable California school districts serving grades Pre-K through 12 to use federal tax credits and state and local funds to develop affordable housing for teachers and other school district employees. The Legislature anticipates SB 1413 will help address high teacher turnover rates that are driven, in part, by the increasing cost of housing in many California markets.

The stability of housing for school employees is critical to the overall success of California schools. Many believe that the current lack of affordable housing for educators negatively impacts teacher retention. The lack of affordable housing exacerbates the record low supply of new teachers in California, which disproportionately impacts schools serving low-income and minority students. According to the Legislature, both students and the community benefit from teachers living near their employing school district.

Under the new law, which goes into effect on January 1, 2017, districts may leverage federal low-income housing tax credits, along with state and local public and private funding, in order to establish affordable housing programs for district employees. The law also creates a new state policy, pursuant to the federal Internal Revenue Code, allowing district-owned land to be developed as affordable rental housing earmarked solely for district employees. In order to comply with SB 1413, a school district must offer a majority of the rents at levels that are affordable to low or moderate income levels. Affordable housing options on or near school sites will offer the added benefits of reducing employees’ commute time and time away from the home.

While SB 1413 does not address local zoning requirements for such housing, it is unlikely that local zoning laws could be overridden by the school district. SB 1413 signals an opportunity for school districts to seek out local housing developers interested in proposing options to develop affordable housing on District-owned property and shoulder the burden of any zoning variance required for such purpose.

Senate Bill (SB) 294: Military Service Retirement Credits for Public Employees

SB 294 requires school districts and other employers participating in the California Public Employees’ Retirement System (CalPERS) to inform military veteran employees of their right to receive CalPERS credit for periods of active service.

Under existing law, public employees participating in CalPERS are entitled to certain rights upon return to public employment following a leave of absence to perform active military duty. Such employees have the right to receive salary adjustments, retirement contributions and applicable employer-paid service credit in the retirement system to include the employee’s period of active duty. Veterans who performed active military duty prior to membership in CalPERS are also allowed to self-purchase additional military service credits. In order to receive service credits, eligible employees must properly file an application form with CalPERS.

Under SB 294, on or by March 31, 2017, school districts and other CalPERS employers must inform returning veterans of their rights to receive applicable service credits and, within 30 days of their return to state service, must provide veterans with the appropriate CalPERS application forms. Upon hire, CalPERS employers must also inform veterans of their right to purchase CalPERS credits for military service prior to employment and membership in CalPERS.

Currently, some veterans are unaware that they are eligible for this important CalPERS benefit, or do not know how to submit forms in order to apply for the benefit. With SB 294, the Legislature aims to simplify the benefits process and ensure military veterans and their survivors have a greater chance of receiving the retirement credits to they are entitled to.

Assembly Bill (AB) 2826: Governor Vetoes Law that would have Expanded Methods and Measures Available for Use in Teacher Evaluations

AB 2826, which was vetoed by Governor Jerry Brown on September 30, 2016, would have expanded methods and assessment tools available for use and consideration in the formal teacher evaluation process. The Education Code requires school districts to evaluate teachers according to standards relating to pupil progress toward certain academic standards, instructional techniques and strategies used and teacher adherence to curricular objectives.

AB 2826 would have added an Education Code section to specifically permit and encourage the use of certain student academic progress information and data in teacher assessment and evaluation. The bill also included specific measures for assessing instructional techniques and strategies and adherence to curricular objectives.

While some school districts already use student progress data in teacher evaluations, its use has been the subject of recent legal challenge. (See 2016 Client News Brief No. 80.) In his veto message, Governor Brown expressed his belief that the additional assessment factors would not “materially change current teacher evaluations in California.” Given the veto, it is likely that districts’ ability to use student assessment data in teacher evaluations will be decided by the courts rather than the Legislature.

Assembly Bill (AB) 2197: Unemployment Insurance for Classified Employees

AB 2197, which was vetoed by the Governor on September 30, 2016, would have made classified school employees eligible to receive unemployment benefits between school years, with or without a reasonable assurance of being employed the next academic year. Under the proposed law, classified employees would have been eligible to receive up to two weeks of unemployment benefits beginning July 1, 2017, increasing to eight weeks of benefits by July 1, 2020. In his veto message, the Governor declined to approve the bill due to conformity issues with federal unemployment insurance laws, potentially resulting in sanctions from the federal government and the loss of significant tax credits for California employers.

For more information on these new laws, please contact the authors of this Client News Brief or an attorney at one of our 10 offices located statewide. You can also visit our website, follow us on Facebook or Twitter or download our Client News Brief App.

Written by:

Penelope Glover

Senior Counsel

Gabriela Flowers

Senior Counsel

Erin Hamor

Associate

 

©2016 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 Appeals Court Affirms Constitutionality of Student Conduct Code, but Allows Free Speech Retaliation Claim against University to Proceed

October 2016
Number 81

The Ninth Circuit Court of Appeals denied a university’s request to dismiss a student’s lawsuit alleging retaliation for protected speech under the First Amendment.

In O’Brien v. Welty (9th Cir. 2016) 818 F.3d 920, a student intruded into the university offices of two faculty members, questioned the faculty members about a poem published in the student newspaper and proceeded to video record the interactions. The university disciplined the student under its student conduct code on the ground the student’s conduct constituted prohibited intimidation and harassment.

The student sued, alleging the discipline was unlawful retaliation for his protected speech in violation of the free speech clause of the First Amendment. The university moved to dismiss the complaint, arguing that the student’s allegations, even if true, did not state a claim under the First Amendment. The trial court rejected the student’s claim that the terms “intimidation” and “harassment,” as used in the code of conduct, were unconstitutionally overbroad. The trial court then dismissed the complaint, agreeing with the university that the student failed to allege enough facts to establish a free speech retaliation claim.

The Court of Appeals agreed that the code of conduct was not unconstitutionally overbroad, but disagreed that the student failed to allege sufficient facts to state a claim. The court observed that a plaintiff must establish three elements to state a First Amendment retaliation claim: (1) the plaintiff was engaged in a constitutionally protected activity; (2) the defendant’s actions would “chill a person of ordinary firmness from continuing to engage in the protected activity”; and (3) the protected activity was a “substantial or motivating factor in the defendant’s conduct.”

The court explained that action taken under the code of conduct could support a claim under this standard if “motivated by retaliation for having engaged in activity protected under the First Amendment.” In this case, the court found that the student did allege sufficient facts that, if true, could reasonably support a conclusion that university officials not only disagreed with the student’s expressed political views but also sought to “punish and muzzle him in retaliation for his expression of those views.”

The court noted the following allegations in support of its conclusion:

  • An administrator “requested that students and other faculty members gather information and complaints to use against” the student.
  • A student provided complaints and other documents to the administrator pursuant to the request.
  • Employees sent emails to university administrators demanding they do something about the student and his website, which criticized the student body president and the university.
  • Faculty members said that the student was “stalking” the hallway, and that they should post “wanted” signs with the student’s face to mock him and serve as a warning to other students and faculty.
  • The university and several other defendants “did not facilitate – and indeed impeded – [the student] in his attempt to document and explain his side of the story” during the student’s disciplinary hearing.
  • As part of the discipline imposed for the student’s conduct, an administrator imposed an additional punishment of probation that was not part of the university panel’s recommendation, which had the effect of limiting the student’s political activity, which included serving as president of the political advocacy club he founded and as a member of the university’s student government.
  • After the discipline was imposed, university officials deleted posts made by the student on “university-managed Facebook pages, permanently blocking him from posting about certain issues, while at the same time allowing posts expressing left-leaning viewpoints to remain.”

The case will now return to the trial court for further proceedings.

Notably, the Court of Appeals also emphasized that institutions can avoid liability if they can show that they would have taken the same disciplinary actions in the absence of the student’s protected activity. Further, the court cautioned “against overreading our opinion,” explaining that the “First Amendment does not give a free pass to students who violate university rules simply because they can plausibly show that faculty or administrators disapprove of their political views,” even where a student’s “misconduct is preceded by or accompanied by the expression of opinions with which faculty members or administrators strongly disagree.”

The impact codes of conduct have on student expression on campus is a challenge facing higher education institutions across the country. While O’Brien reaffirms students’ right to appropriate expression free from retaliation, it also reaffirms an institution’s right to regulate unprotected, harmful speech and activity. Institutional officials must, however, be careful to not act based on a particular viewpoint and to sufficiently document the viewpoint-neutral rationale for an action.

If your institution has any questions regarding the impact of the O’Brien opinion or the First Amendment in general, please contact the authors of this Client News Brief or an attorney at one of our 10 offices located statewide. You can also visit our website, follow us on Facebook or Twitter or download our Client News Brief App.

Written by:

Trevin Sims

Partner

Steve Ngo

Senior Counsel

 

©2016 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.

California Supreme Court Rules That Retirement is a Form of Quitting Under the Labor Code

October 2016
Number 71

The California Supreme Court has ruled that retirement is a form of quitting under the prompt payment protections in California’s Labor Code. (McLean v. State of California (2016) 1 Cal.5th 615.)

However, this ruling only applies to State of California and private employees, as Labor Code section 220 continues to exempt employees directly employed by any county, incorporated city, town or other municipal corporation.

In McLean, a retired California Department of Justice employee sued the state claiming she had not received her final wages within the time period set out in the Labor Code. Labor Code sections 202 and 203 require an employer to make prompt payment of all final wages to an employee who “quits” his or her employment, or else pay extended wages for up to 30 days. Labor Code section 202 states that an employee, not having a written contract for a definite period, is entitled to his or her final wages within 72 hours of quitting employment, or no later than the time of quitting if the employee provides the employer with 72-hour advance notice of his or her intention to quit.

The California Supreme Court was unpersuaded by the state’s argument that retirement does not qualify as “quitting” under Labor Code section 202. Instead, the court concluded that California’s laws regarding wages, hours and working conditions are to be liberally construed in favor of protecting employees. After looking at the plain language of the Labor Code’s prompt payment provisions, the high court unanimously affirmed the Court of Appeal decision in the former employee’s favor and held that retirement is a form of quitting, thus entitling the retired employee to statutory penalties of up to 30 days of wages at the same rate they earned prior to quitting.

Secondly, the court held that the retired employee’s lawsuit was not subject to dismissal simply because the employee filed it against the state rather than the agency she worked for. In coming to this conclusion, the court highlighted Labor Code section 220’s prompt payment exemption for “employees directly employed by any county, incorporated city, or town or other municipal corporation.” As supported by the plain language of Labor Code section 220 and subsequent California Courts of Appeal decisions (see Johnson v. Arvin-Edison Water Storage Dist. (2009) 174 Cal.App.4th 729; Division of Labor Law Enforcement v. El Camino Hosp. Dist. (1970) 8 Cal.App.3d Supp. 30) holding that water districts and hospital districts qualify as “other municipal corporation[s]” for purposes of Labor Code section 220, it is highly likely that public corporations and quasi-municipal corporations such as K-12 school districts, community college districts, county offices of education and other special districts qualify for the exemption.

If you have any questions about the decision or wage issues in general, please contact the authors of this Client News Brief or an attorney at one of our 10 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 Curley III

Senior Counsel

Iain MacMillan

Associate

 

©2016 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.

PERB Holds District’s Delay in Responding to Union Information Request, Policy Banning Distribution of Union Materials in the Workplace May Violate the EERA

September 2016
Number 60

The Public Employment Relations Board (PERB) recently held that an employee union could bring claims alleging violations of the Educational Employment Relations Act (EERA) for a district’s unreasonable delay in providing the union with requested negotiations information and for its blanket prohibition on the distribution of union literature in the workplace.

In this case, the Petaluma Federation of Teachers (PFT) filed an unfair practice charge with PERB Counsel, alleging the District committed several violations of the EERA. Most notably, PFT alleged the District violated the EERA when it delayed in responding to a request for employee information for a period of six weeks. The PFT also alleged the District unlawfully interfered with employee rights by prohibiting distribution of union flyers in the workplace, including during non-duty time. After the PERB agent dismissed the unfair practice charge for failure to state a prima facie case, PFT brought an appeal with the board.

On July 2, 2014, as the District and PFT were in the middle of negotiations, a representative of the PFT requested information from the District regarding employee salaries and the number of certificated employees who had retired the prior year. The letter requested that the information be provided at the next negotiations session, which was scheduled for July 7, 2014. The District did not object to the request, nor did it advise that the information was unavailable. The July 7, 2014 meeting was canceled by the District due to reasons unrelated to the request. On August 13, 2014, approximately six weeks after PFT’s request, the District provided the information.

PERB held that the exclusive representative has a broad right to all information that is relevant and necessary to discharge its representational duty. PERB found that a request for information pertaining to unit employee wages, hours or working conditions is presumptively relevant and must be disclosed, unless the employer can establish that the information is plainly irrelevant or can provide some other justification for the nondisclosure. PERB found that in the absence of any concurrent explanation by the District for the delay in providing the relevant information, PFT need only demonstrate sufficient facts to allege that the District’s delay was unreasonable. Notably, and contrary to prior PERB decisions, PERB did not require PFT to present facts showing that it was prejudiced by the delay.

The second issue before PERB focused on the District’s alleged ban on distributing union information. On September 5, 2014, the District superintendent’s executive assistant sent a message to teachers via email and site mailboxes intended to “define the rules for staff handing out flyers.” In the email, teachers were directed not to pass out flyers before school starts “as they are to be in their classroom[s] 30 minutes prior to school starting.” The message further stated that teachers could pass out flyers only off school property and after their work duties were finished. Teachers were also directed not to hand out flyers of a “political or union nature.” On October 10, 2014, the principal of one of the school sites sent an email to the teachers advising that they would only be permitted to hand out pamphlets outside of the workday, which she defined as before 7:55 a.m. and after 2:45 p.m.

PERB held that the District’s message constituted unlawful interference with union representation. PERB found that a union may establish interference where an employer is alleged to have engaged in conduct that tends to or does result in at least slight harm to rights guaranteed by EERA. In its decision, PERB reiterated its prior decisions that peaceful picketing, including distribution of leaflets or other materials to advance grievances or solicit support from employees and the public are among the employee rights guaranteed under EERA. PERB found that the District’s blanket restriction on distributing flyers at any time during the work day, including non-duty time and in non-working areas, was overbroad and presumptively unlawful. The District’s geographic restriction to allow distribution of flyers only “off campus” was also not permissible, as it could reasonably be interpreted to prohibit these activities on campus but in non-working areas such as the parking lot, a breakroom or a staff lounge.

This case serves as an important reminder of the scope of representational rights for unions and employees and what employer actions may interfere with such rights. School districts and community colleges should carefully evaluate practices and policies.

If you have any questions regarding this decision or employee rights in general, please contact the authors of this Client News Brief or an attorney at one of our 10 offices located statewide. You can also visit our website, follow us on Facebook orTwitter or download our Client News Brief App.

Written by:

Dulcinea Grantham

Partner

Amanda Ruiz

Associate

 

©2016 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.

Gotta Catch ‘Em All: Spotting the Issues Augmented Reality Games Raise for Public Agencies

September 2016
Number 59

Released in July 2016, Pokémon Go is a technological and gaming sensation that swept across the country, where players use their mobile devices to locate Pokémon (virtual creatures) in the real world. Pokémon can appear in any physical location, and as avid fans know, players “gotta catch ’em all.” This may result in players entering or approaching public property to capture Pokémon, which means public agencies may have to address issues regarding disruption to operations, trespass, safety and privacy, among others. While the Pokémon Go phenomenon seems to be cooling, there may be an increase in the number of games utilizing Pokémon Go’s gaming format, known as “augmented reality.” Below, we highlight some issues that public agencies may need to consider as a result.

Augmented Reality Basics
Augmented reality games utilize a mobile device’s GPS and camera capabilities to generate a virtual map based on real-life surroundings. Players create a virtual version of themselves, which appears on the map on the mobile device’s screen. In the case of Pokémon Go, players are directed to nearby virtual Pokémon, PokéStops and Pokémon gyms, where players can buy in-game items like lure modules that help attract Pokémon to a trainer, meet up and battle one another.

Disruption to Operations and Trespassing
Local agencies may need to anticipate disruption to their operations and trespassing issues as a result of Pokémon Go and future augmented reality games. The game’s popularity has seen increased pedestrian traffic in public areas as members of the public take to the streets to play the game. For Pokémon Go, PokéStops, Pokémon gyms and Pokémon may be located in any physical location, including in a public agency’s restricted areas. For example, players found a Pikachu in an employee-only room of a county hospital. Additionally, as the game may be played at all hours, public agencies may need to guard public property after business hours. In one instance, trainers trespassed onto a zoo after climbing a fence at 1:30 a.m. to capture a Pokémon located within the zoo’s grounds.

Safety
Augmented reality games raise safety concerns for local agencies. The increased potential for large crowds gathering on public property may lead to increased accidents or confrontations. Individuals have even used Pokémon Go to lure and rob players who were in search of a rare Pokémon.

School districts will need to be vigilant about the potential increase in unauthorized people trying to enter school sites while students are present. Likewise, school authorities will need to ensure that students do not leave campus in response to lure modules set off campus.

Privacy
Augmented reality games raise privacy concerns for public agencies.

School districts need to be aware that they are responsible for protecting student data. As a mobile device’s camera helps create the images on the device’s screen, there may be an increased risk that players will use the game as a pretext to take pictures of employees, members of the public or, in the case of schools, students. In other words, a player may have his mobile device raised as if he is playing, but he may actually be taking pictures of a person.

Technology Use Policies/Agreements and Discipline
Pokémon Go’s popularity may result in increased mobile device activity in the workplace during work hours or attempts to access the game using a public agency’s Internet or wireless networks, in violation of technology use agreements, policies or professional standards governing the workplace. This may lead to discipline of employees who engage in non-related work activities during work hours or who create liability for the local agency by failing to comply with use agreements or policies.

School districts may face an increase in student disciplinary issues resulting from disruptions on campus, like playing the game during class; violations of behavior expectations, such as bringing mobile devices to campus if they are not allowed; and violations of technology use agreements, like using district-issued mobile devices to play or to try to download the game.

How to Prepare for a Future with Augmented Reality
For a public agency, one way to prepare is to use Pokémon Go to inspect areas of the public agency. This will help identify specific issues the public agency may face and to find out if any PokéStops, Pokémon gyms or Pokémon are located in any restricted areas.

Local agencies may wish to review and update their policies regarding access to their respective parks, buildings, schools and other maintained venues, as well as safety procedures, employees’ and students’ expectations and technology use.

Where access needs to be prohibited, public agencies may need to work toward removing Pokémon, PokéStops and Pokémon Gyms from public property. Working with Pokémon Go creator Niantic and other third-party cybersecurity companies, local businesses and companies have been able to prevent the game from drawing individuals to specific geographic locations that maybe sensitive.

Pokémon Go may be the tip of the iceberg for augmented reality games. Our Technology and Innovation Practice Group will continue to monitor this emerging field and analyze its impact on public agencies.

If you have any questions regarding how Pokémon Go and other augmented reality games and technology may impact your agency, or need assistance reviewing or revising your policies and technology use agreements, please contact the authors of this Client News Brief or an attorney at one of our 10 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 Freiman

Partner

William Curley III

Senior Counsel

Elí Contreras

Associate

Nicholas Felahi

Associate

 

©2016 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.

Governor Signs Bill Requiring Local Legislative Bodies to Provide Oral Summary of Compensation Recommendations for Local Agency Executives

September 2016
Number 58

Governor Jerry Brown recently signed into law Senate Bill (SB) 1436, which impacts the process for approving the compensation of a local agency executive. To encourage transparency, SB 1436 requires that, before taking final action, a local agency’s legislative body orally report a summary of the recommended compensation of a local agency executive. This report must be made during the same open meeting in which final action on the compensation is to be taken.

In 2011, the Legislature passed Assembly Bill (AB) 1344 in reaction to the City of Bell corruption scandal. AB 1344 increased the procedural requirements and limitations related to local agency executives (LAE) and added Government Code section 3511.1, which defined a “local agency executive.” An LAE is defined under this statute as a person employed by a local agency who is not represented by an employee organization and who meets any of the following requirements:

(1) The person is the chief executive officer, a deputy chief executive officer or an assistant chief executive officer of the local agency.

(2) The person is the head of a department of a local agency.

(3) The person’s position within the local agency is held by an employment contract between the local agency and that person.

AB 1344 prohibited a legislative body from calling a special meeting regarding LAE salaries, salary schedules or compensation paid in the form of fringe benefits. Approval of an LAE’s compensation must instead be made at a regular meeting. AB 1344 did not affect a local agency’s ability to hold a closed session with its designated representatives regarding the negotiation of compensation with the agency’s unrepresented employees, but the closed session may not include final action on the proposed compensation for an unrepresented employee.

SB 1436’s purpose is to further the goals of AB 1344 by fostering openness and transparency regarding LAE compensation. Effective January 1, 2017, SB 1436 amends Government Code section 54953 and will require a legislative body to orally report a summary of the recommendation for a final action on LAE salaries, salary schedules or compensation paid in the form of fringe benefits. The oral report must be given in open session at the same open meeting that the final action is to be taken. SB 1436 also provides that amended Government Code section 54953 will not impact the public’s rights under the California Public Records Act to inspect and copy records created or received when developing this compensation recommendation.

Many local agencies currently approve LAE contracts and salaries during open session as individual agenda items, and those agencies will simply need to provide an oral summary of the compensation and fringe benefits recommended in those agenda items.

If you have any questions regarding SB 1436, please contact the author of this Client News Brief or an attorney at one of our 10 offices located statewide. You can also visit our website, follow us on Facebook or Twitter or download our Client News Brief App.

Written by:

Darren Kameya

©2016 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 ADA Regulations Confirm Congressional Intent to Give Broad Protection to Individuals with Disabilities

August 2016
Number 56

The Department of Justice recently released revisions to the regulations implementing the Americans with Disabilities Act (ADA) Amendments of 2008, which went into effect on January 1, 2009. The 2008 amendments were passed by Congress in response to various Supreme Court cases which denied protection to individuals under the ADA based, in part, on a finding that the individuals failed to qualify as “disabled” under the law. The purpose of the newly released revisions to the ADA regulations is to confirm Congress’ original intent for the ADA to be construed in favor of broad coverage for persons with disabilities.

Under the ADA, an individual with a physical or mental impairment is considered “disabled” if the impairment substantially limits the individual’s ability to perform a major life activity, as compared to members of the general population. Specifically, the revisions to the ADA do the following:

  • Clarify that the terms “disability” and “substantially limits” should be interpreted broadly and that the question of whether someone has an ADA-qualifying disability should not demand extensive analysis. Rather, the focus of an ADA inquiry should be on whether an employer has complied with its obligations under the law.
  • Expand the definition of “major life activities” to include “writing,” “operation of major bodily functions,” and a number of other activities included on a non-exhaustive list now provided in the regulation.
  • Clarify that an impairment which is episodic or in remission is a disability if it would substantially limit a major life activity when active.
  • Clarify that an impairment need only substantially limit one major life activity to be considered a disability.
  • Confirm that individuals who qualify for protection under the ADA because their employers regard them as having an impairment are not entitled to reasonable accommodation. However, these individuals may establish an employer’s violation of the ADA if they are subjected to a prohibited action because of an actual or perceived physical or mental impairment, regardless of whether the impairment limits or is perceived to limit a major life activity.
  • Add Attention-Deficit/Hyperactivity Disorder (ADHD) as an example of a physical or mental impairment.

The revisions to the ADA regulations are intended to clarify existing law and create no new legal obligations for employers. Furthermore, California’s Fair Employment and Housing Act (FEHA) is generally more favorable than the ADA in protecting persons with disabilities, so much of the new federal regulatory language is already required under state law. In summary, employers should broadly construe the language and intent of the FEHA and the ADA when considering employees’ requests for accommodation.

Finally, please note that these revisions are consistent with recent guidance regarding section 504 the Rehabilitation Act of 1973, under which public school staff must also broadly construe whether a student has a physical or mental impairment which substantially limits a major life activity.

For questions regarding the revised regulations or an employer’s general obligations to individuals with disabilities under state and federal law, 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:

Jennifer Ulbrich

Associate

Ryan Tung

Associate

 

©2016 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.

U.S. Supreme Court Reaffirms “Strict Scrutiny” Standard Governing the Use of Race in Public College and University Admissions

August 2016
Number 49

In Fisher v. University of Texas at Austin (June 23, 2016) No. 14-981 579 U.S. __ [2016 U.S. LEXIS 4059], the United States Supreme Court reiterated its 2013 holding that public higher education institutions may only consider an applicant’s race in deciding whether to admit that student if the method by which race is considered is narrowly tailored to meet a compelling state interest (this standards is known as “strict scrutiny”). While courts are entitled to take at face value a higher education institution’s determination that the achievement of the benefits of a racially diverse student body is central to the school’s educational program, the institution must still show that the consideration of race meets the strict scrutiny test.

Fisher was originally filed by a Caucasian woman who was denied admission to the University of Texas at Austin’s undergraduate program in 2008. (Fisher v. University of Texas at Austin (2013) 133 S. Ct. 2411; see 2013 Client News Brief No. 37.) Believing that less qualified applicants were admitted over her due to their race, Fisher sued the university, claiming that the school’s use of race in admissions violated her Fourteenth Amendment right to equal protection of the laws. In the 2008 iteration of the case, the Supreme Court ultimately returned the case back to the lower court to determine whether the university’s plan to use race in admissions met the strict scrutiny standard without deference to the university’s position.

In the Fisher case’s second and most recent trip to the nation’s highest court, the Supreme Court held that the university’s race-conscious admissions program is lawful under the Fourteenth Amendment’s Equal Protection Clause. The court set out three controlling principles for assessing the constitutionality of a public university’s affirmative action program. First, a university must show “with clarity” that its purpose or interest in a racially diverse student body is both constitutionally permissible and substantial, and that its use of racial classifications is necessary to achieve that purpose. Specifically, the court held that the purposes of providing an academic environment that offers a robust exchange of ideas, exposure to different cultures, preparation for the challenges of an increasingly diverse workforce and acquisition of competencies required of future leaders qualify as compelling interests.

Second, the decision to pursue the educational benefits that flow from student body diversity cannot not be executed by imposing a fixed quota or otherwise defining diversity as some specified percentage of a particular racial group.

Third, a university must show that a nonracial approach would not promote its interest in the educational benefits of diversity, and that its race-conscious program would promote that interest, at an acceptable administrative expense. This third prong “does not require exhaustion of every conceivable race-neutral alternative,” but does require colleges and universities to meet the burden of demonstrating that available and workable race-neutral alternatives are inadequate.

Fisher clarifies the very limited measure of deference afforded to public colleges and universities regarding the use of race in admissions. Though courts may defer to the institutions’ reasonable articulations of their compelling interest in using race in admissions, courts will heavily scrutinize the means by which those institutions achieve their goal. As a result, public colleges and universities should review their admissions practices to ensure they comply with the Supreme Court’s rulings in Fisher.

Please note that distinct from federal constitutional equal protection principles covered in Fisher, the California Constitution, article 1, section 31, subdivision (a), put in place through voter approval of Proposition 209, prohibits discrimination or the granting of preference to any individual based on race, sex, color, national ethnicity or national origin in the operation of public education. The most recent judicial opinion involving Proposition 209 was handed down in 2009. In American Civil Rights Foundation v. Berkeley Unified School District (2009) 172 Cal.App.4th 207, the California Court of Appeal held that a school district’s consideration of neighborhood demographics in student assignment for the purposes of achieving social diversity does not violate Proposition 209. This opinion confirms that Proposition 209 is not an absolute bar to consideration of race in policies aimed at achieving social diversity in schools.

If you have any questions regarding the Fisher decisions or higher education legal issues in general, or application of California’s Proposition 209 to K-12 or higher education public schools, 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:

Sloan Simmons

Partner

©2016 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 Ruling Regarding Overtime Payments and the Fair Labor Standards Act May Have a Significant Impact on Employers

July 2016
Number 47

Striking a major blow to the practice of providing employees with cash payments in lieu of benefits (or “opt-out payments”), the Ninth Circuit Court of Appeals issued a ruling on June 2, 2016, holding that employers, including public agency employers, must include these cash payments in the regular rate of pay when calculating the overtime rate for employees under the Fair Labor Standards Act (FLSA). (Flores v. City of San Gabriel (9th Cir., June 2, 2016, No. 14-56421) __ F.3d __ [2016 U.S. App. LEXIS 10008].)

This ruling, coupled with the Internal Revenue Service’s (IRS) recent treatment of these same arrangements in the context of the Affordable Care Act (ACA), shows a trend discouraging the use of cash-in-lieu payments related to health care coverage.

In Flores, the city provided a flexible benefits plan to its employees under which each employee was furnished a designated monetary amount for the purchase of medical, vision and dental benefits. All employees were required to use a portion of the amount to purchase vision and dental benefits, but could opt out of purchasing medical benefits with proof of alternate coverage. If an employee opted out of medical benefits, the city paid the employee the unused portion of the benefits allotment as a cash payment added to the employee’s regular paycheck. For payroll purposes, the city has historically designated these cash-in-lieu payments as “benefits” and excluded them from its calculation of employees’ regular rate of pay. Non-exempt police officers sued the City of San Gabriel for underpayment of overtime compensation, challenging the city’s treatment of cash-in-lieu payments.

Under the FLSA, employers must pay their employees premium overtime compensation of one and one half times the regular rate of pay. The “regular rate” of pay includes “all remuneration for employment paid to, or on behalf of, the employee,” subject to a number of exclusions set forth in § 207(e) of the FLSA.

In Flores, the city argued that it properly excluded cash-in-lieu payments from employees’ regular rate of pay because the payments were not compensation for hours worked or otherwise tied to the amount of service provided by employees, citing statutory language that excludes payments made for such purposes as vacation, holidays, travel expenses and “other similar payments to an employee which are not made as compensation for his hours of employment.” The court rejected this argument, explaining that the question of whether a particular payment falls within the “other similar payments” clause turns on whether the payment is a form of compensation for performing work – not on whether the payment is tied to an hourly wage.

The city also attempted to argue that the cash-in-lieu payments were properly excluded because the FLSA excludes contributions made by an employer to a trustee or third person pursuant to a “bona fide” benefits plan from the regular rate of pay. The court also rejected this argument, explaining that the city’s payments are not made to a trustee or third party and therefore do not meet the requirements of the benefits exclusion.

Taking it one step further, the court also found that the city’s flexible benefits plan as a whole failed to meet the requirements of a “bona fide plan” because the city’s cash payments to its employees constituted more than 40% of the total plan contributions and thus were not incidental. As a result, even the city’s payments to trustees or third parties under its plan were not properly excluded under the benefits exclusion.

An employer who violates the FLSA’s overtime provisions is liable for the amount of unpaid overtime compensation and an equal amount of liquidated damages which results in an employer having to pay double the amount of the underpayment. Employers that can show that they acted in good faith and had reasonable grounds to believe their actions did not violate the FLSA may avoid the otherwise mandatory award of liquidated damages.

In an attempt to show the city’s good faith, an employee in the payroll department testified that the payroll and human resources departments work together to determine whether to include a particular type of payment in the regular rate of pay when the payment is first provided, conducting further review of the designation if new authority surfaces. The city also included other types of payments in the regular rate of pay and provided overtime payments that were more generous than what the FLSA requires.

The court described the city’s evidence of its good faith as “paltry,” explaining that employers need to be able to show they have taken concrete steps to ensure compliance with the FLSA. Further, the city’s generosity in some areas failed to mitigate its inability to show how it properly determined to exclude the payment at issue. For similar reasons, the court also found that the city’s violation was “willful,” and therefore extended the statute of limitations from two years to three years, an action permitted under the FLSA for willful violations.

This is the first time that the Ninth Circuit has considered the treatment of cash-in-lieu payments in the context of FLSA overtime. The Court of Appeals preceded its analysis with the requirement that the FLSA be construed liberally in favor of employees, explaining that it would not find an exemption applicable except in contexts “plainly and unmistakably” within the given exemption’s “terms and spirit.” While this case involved treatment of a very specific type of payment to employees, it serves as an important message to all employers that determinations related to the regular rate of pay for employees must be made carefully and with an understanding that, if ever challenged, the employer must show the concrete steps it took to confirm that its designation was in compliance with the FLSA.

In light of this ruling, employers would be wise to immediately review their regular rate of pay for non-exempt employees and work with counsel to consider whether there are any issues with current designations and exclusions of compensation. Immediate action to add cash-in-lieu payments to the regular rate of pay for purposes of overtime may be necessary to mitigate damages in case of future challenge.

We will update you if this case is appealed. For further information regarding calculation of the regular rate of pay for non-exempt employees or regarding the treatment of specific type of payments for purposes of the FLSA, 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:

Dulcinea Grantham

Partner

Niki Nabavi Nouri

Associate

©2016 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.

California Supreme Court Upholds Superintendent’s Criminal Conviction for Misappropriating Funds

July 2016
Number 46

The Supreme Court of California in People v. Hubbard (2016) 63 Cal. 4th 378 recently upheld the criminal conviction of the former superintendent of the Beverly Hills Unified School District for improperly paying a district employee without board approval.

Jeffrey Hubbard served as superintendent of the Beverly Hills Unified School District from 2003 to 2006. During his tenure, he directed the district’s payroll department to increase the compensation of Karen Christiansen, the district’s director of planning and facilities, including increasing her auto allowance by $350 per month and issuing her a one-time stipend of $20,000. Hubbard testified this was compensation for additional work Christiansen performed for the district after the termination of its construction management team. Hubbard did not submit the auto allowance increase or the stipend to the district’s governing board for approval.

Hubbard was convicted of violating Penal Code section 424, which states that “each officer of this state, or of any county, city, town, or district of this state, and every other person charged with the receipt, safekeeping, transfer, or disbursement of public moneys” who appropriates money without authorization for the use of another may be punished with imprisonment. Hubbard appealed his conviction, arguing that he was not an “officer” under Penal Code section 424 because only the board had the authority to approve the payments to Christiansen. The Court of Appeal agreed and overturned the conviction.

The Supreme Court of California reinstated Hubbard’s criminal conviction, holding that it did not matter whether Hubbard had exclusive control over the funds. As Hubbard had “some degree of material control over the funds’ disposition,” this was sufficient to establish criminal liability. The court found that as superintendent, Hubbard had a duty to safeguard school district funds and, as a public officer, he should face criminal liability for misappropriating those funds.

This case is an important reminder of the role of a superintendent and other public officers responsible for safekeeping public funds. It also cautions public administrators to obtain the approval of the governing board, city council or other governing body for salary increases. Superintendents and other public officers of cities, counties, school and other districts entrusted to safeguard public funds could be held criminally or civilly liable if they knowingly misappropriate public funds that they are responsible for protecting.

If you have any questions regarding the Hubbard decision or public officers’ responsibilities with respect to public funds, please contact the author 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:

Dulcinea Grantham

Partner

 

©2016 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.

Governor Signs Bill Raising Legal Age to Buy Tobacco Products to 21

July 2016
Number 45

Governor Jerry Brown recently approved Senate Bill 7 (SB 7), increasing the age to buy tobacco for smoking, dipping, chewing and “vaping” from age 18 to age 21. The law became effective June 4, 2016.

The new law makes California the second state, besides Hawaii, to increase the age to buy tobacco from 18 to 21.

SB 7 amends provisions of the Business and Professions Code and the Penal Code that govern the sale, possession and use of tobacco products. The bill prohibits persons under the age of 21 from buying tobacco for smoking, dipping, chewing and vaping but offers an exemption for active duty military personnel. Notably, the law also eliminates previously existing criminal penalties for underage persons found in possession of tobacco products.

While SB 7 does not make changes to the Education Code, K-12 school districts and community college districts should be aware of the new law from a policy development and implementation perspective and for its broad application to not only cigarettes, but also to devices used for vaping such as e-cigarettes. School and community college districts may wish to consider updating policies, rules, regulations and handbooks regarding use of tobacco products by students under 21 years of age, as well disciplinary and other consequences for possession and/or use of tobacco products on school grounds.

Education Code sections 48900, subdivision (h), and 48901, respectively, permit K-12 school districts to regulate and impose discipline for possession or use of tobacco products on school grounds. While section 48901 explicitly prohibits “smoking,” it does not expressly prohibit the possession or use of vaping products like e-cigarettes. However, section 48901 cites Business and Professions Code section 22950.5, subdivision (c), for the definition of “smoking.” Section 22950.5’s definition includes “the use of an electronic smoking device that creates an aerosol or vapor, in any manner or in any form, or the use of any oral smoking device for the purpose of circumventing the prohibition of smoking.” Thus, consistent with existing law and the intent of SB 7, school districts may bar students from the use or possession of all tobacco products on school grounds, including vaping products like e-cigarettes.

A related bill, Assembly Bill 1594 (AB 1594), is pending before the Legislature. If signed into law, AB 1594 would provide community college districts with direct authority to prohibit smoking, including vaping, on community college campuses.

If you have any questions about SB 7 or would like assistance updating tobacco use 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:

Sloan Simmons

Partner

Aimee Perry

Associate

 

©2016 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.

Increase in Minimum Salary for Employees to be Exempt from Overtime Pay

June 2016
Number 39

On May 23, 2016, the United States Department of Labor published updated overtime regulations that increase the minimum salary amount necessary for employees to be exempt from overtime pay requirements. The updated regulations (Final Rule) will take effect on December 1, 2016.

The federal Fair Labor Standards Act of 1983 (FLSA) requires an employer to pay an employee at an overtime rate if the employee works more than 40 hours in one week. Employees can be exempt from the FLSA overtime rules if:

  1. They are paid a fixed salary (salary basis test);
  2. The salary is at or above the government-set salary level (salary level test); and
  3. The employment is in an executive, administrative or professional capacity, as defined by the FLSA.

The Final Rule makes the following changes:

  • Increases the salary and compensation levels for the salary level test from $455 per week, or $23,660 annually, to $913 per week, or $47,476 annually. The salary level test now allows use of non-discretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.
  • Increases the annual salary requirement for highly compensated employees (HCE) subject to a minimal duties test. The new salary requirement is $134,004 annually for a full-time employee. The expiring rule set the salary level at $100,000 annually for a full-time employee.
  • Creates a method for automatically updating the salary and compensation levels on a three-year cycle, beginning on January 1, 2020.

While the FLSA overtime pay requirement affects classified school employees who work over 40 hours per week, school employers should note that it does not apply to certificated employees under a specific “teaching professional” exemption in the FLSA regulations. (29 C.F.R. § 541.303.) School employers should also be mindful that California law entitles classified school employees to an overtime pay rate after working eight hours in one day (unless a statutorily-allowed alternative schedule is approved).

Before the final rule takes effect, public agencies should evaluate their employment rosters prior to determine whether currently exempt employees will continue to qualify for an exempt status under the higher salary levels contained in the new regulations. If currently exempt employees do not meet the new minimum salary level, the employer must either: 1) begin paying the employee for the overtime he or she works, or 2) increase the employee’s salary so that he or she will meet the new minimum salary level and continue to be exempt from overtime pay. Thus, the new regulations will likely result in increased costs for the employer.

If you have questions about the new overtime regulations or any other employee compensation issues, 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:

Desiree Serrano
Associate

 

©2016 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.

Proposed Amendments to FEHA Regulations Regarding Transgender Identity and Expression

June 2016
Number 38

California’s Fair Employment and Housing Council (Council) is set to consider amendments to the Fair Employment and Housing Act (FEHA or Act) that the Council says will more explicitly spell out existing protections for transgender workers and bring those protections in line with federal guidance and state law.

The Council will discuss the proposed amendments at its June 27 meeting and is now accepting public comment. A date to consider approval of the proposed amendments – or some version of them – has not yet been announced.

The Act, which is spelled out in Government Code sections 12900 et. seq. and implemented by the California Code of Regulations title 2, division 4.1, subchapter 2, article 5, already bars employers from discriminating against employees and applicants on the basis of gender identity or expression. In its initial statement of reasons for the proposed changes, the Council said its goals are to clarify an “often misunderstood and increasingly prominent facet of the law” and to better align FEHA with state law and federal guidance.

The list of proposed changes includes:

  • Gender-neutral language. Overall, the Council proposes to use gender-neutral language and eliminate dichotomous references to gender in the Act, substituting “individual” for “male” or “female” and “opposite sex” with “different sex.” In addition, the term “transitioning” is proposed to be included within the definitions found in section 11030 as “the process some transgender people go through to begin living as the gender with which they identify, rather than the sex assigned to them at birth,” which “may or may not include changes in name and pronoun, bathroom, facility usage, participation in activities like sports teams, hormone therapy, sex reassignment surgery, or other medical procedures.”
  • Working Conditions. The Council proposes to expand employees’ equal access to workplace facilities to include locker rooms, dressing rooms, dormitories and restrooms and to establish employers’ obligations to make such facilities available. The proposed amendments provide that employees must be permitted to use facilities that correspond to their gender identity or expression, regardless of the employee’s assigned sex at birth. If individual facilities are not available, employers are to provide alternatives to ensure privacy, such as locking toilet stalls and shower curtains. The proposed amendments also prohibit an employer from requiring an employee to use a particular facility and from requiring transitioning employees to undergo, or provide proof of, any particular medical treatment in order to use facilities designated for a particular gender. Employers with single-occupancy facilities under their control will have to use gender-neutral signage, such as “Restroom,” “Unisex,” “Gender Neutral,” or “All Gender Restroom.”
  • Physical Appearance, Grooming and Dress Standards. Clarifying employers’ existing obligations under FEHA, the proposed amendment would only permit employers to impose physical appearance, grooming or dress standards if they serve a legitimate business purpose and do not discriminate based on an individual’s sex, gender, gender identity or gender expression. The proposed amendment also adds that employers may not require individuals to “dress or groom themselves in a manner inconsistent with their gender identity or gender expression.”
  • Recording of Gender and Name. The Council proposes provisions that will make it unlawful to require an applicant or employee to disclose whether the individual is transgender, on a job application or otherwise. In situations where a job application requires an individual to identify as male or female, an employer cannot consider fraudulent or a misrepresentation, an applicant’s designation of a gender inconsistent with the applicant’s assigned sex at birth or presumed gender.

    Under the proposed amendments, employers will also be required to honor employees’ requests to be identified with a preferred gender, name and/or pronoun, except under limited circumstances. Acknowledging that the severe or pervasive misuse of an employee’s name could be sufficient to create a hostile or abusive work environment, the Council deemed this amendment necessary to prevent the occurrence of sexual harassment.

  • Additional Rights. Finally, the proposed amendments prohibit the denial of employment based wholly or in part on an individual’s gender identity or gender expression, as well as discrimination against an individual who is transitioning or has transitioned. If adopted, it will be unlawful for employers to inquire or request documentation or proof of an individual’s sex, gender, gender identity or gender expression as a condition of employment, except under limited circumstances.

If adopted as currently written, the amendments will require employers to review and potentially revise their existing policies and standards, and to make changes to facility access, signage and privacy considerations. FEHA defines an employer as “any person regularly employing five or more persons; any person acting as an agent of an employer, directly or indirectly; the state or any political subdivision thereof.”

Prior to adopting its proposed amendments, the Council will consider comments submitted in writing or presented at the June 27 public hearing. Written comments may be submitted via e-mail to FEHCouncil@dfeh.ca.gov until 5 p.m. June 27.

If you would like additional information about the proposed FEHA changes or your responsibilities with respect to transgender workers, please contact the authors of this Client News Brief or an attorney in 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:
Darren Kameya
Partner

Joanne Kim
Associate

©2016 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.

Employer’s Mistaken Belief Is No Defense to an Employee’s First Amendment Challenge to Discipline for His Off-Duty Political Activity

May 2016
Number 32

Last month, the U.S. Supreme Court held in Heffernan v. City of Paterson (April 26, 2016, No. 14-1280) 578 U.S. __ [2016 U.S. LEXIS 2924] that an employee may challenge an employer’s adverse action under the First Amendment even if the employer’s action was based on a mistaken perception that an employee engaged in political activity. The decision impacts government employers, including school districts, county offices of education, and local governments by giving greater protection to all government employees.

Heffernan establishes that actual engagement in a protected activity is not an element that must be proven to prevail in First Amendment retaliation claims. Instead, retaliation claims must be evaluated based on the employer’s motive and whether that motive was constitutional, regardless of whether the motive was based on actual facts or mistaken perception.

During the 2006 mayoral election in Paterson, New Jersey, Jeffery Heffernan worked in the office of Police Chief James Wittig. The candidates included the incumbent mayor who appointed Wittig and former Chief Lawrence Spagnola, Heffernan’s good friend. Before the election, Heffernan’s bedridden mother asked him for a “Spagnola” yard sign. Heffernan visited a Spagnola distribution spot where city police officers saw Heffernan talking to campaign workers and holding a Spagnola yard sign, and word of this sighting quickly spread throughout the department. The next day, Heffernan’s supervisors demoted him from detective to patrol officer as punishment for his “overt involvement” in a political campaign. Wittig later claimed this was against office policy even though Heffernan did not work on Spagnola’s campaign or otherwise show support for the candidate.

In August 2006, Heffernan sued the city for retaliating against him for exercising his First Amendment rights. Heffernan claimed he was demoted because, in his supervisor’s mistaken view, he engaged in conduct that constituted protected speech under the First Amendment.

The city claimed that the First Amendment protects an employee from retaliation for exercising a “right,” and that the First Amendment was not implicated here because – by his own admission – Heffernan was not involved in the Spagnola campaign and only picked up a lawn sign for his mother. Heffernan asserted he was still protected by the First Amendment, which required only that the city believed he was exercising his First Amendment right, not that he actually did so.

The District Court and Court of Appeals both held that, for a retaliation claim, Heffernan needed to show that he actually exercised his free speech and association rights prior to the city’s adverse action. According to these courts, Heffernan was not deprived of any First Amendment right because he never engaged in a constitutionally protected political act.

The Supreme Court heard Heffernan’s appeal and rejected the lower courts’ rationale, reasoning that “[w]hen an employer demotes an employee out of a desire to prevent the employee from engaging in political activity that the First Amendment protects, the employee is entitled to challenge that unlawful action . . . even if, as here, the employer makes a factual mistake about the employee’s behavior.” Simply put by the Supreme Court, “the government’s reason for demoting Heffernan is what counts.”

Public employers are reminded by this case to be wary when considering discipline against an employee for conduct that is related to involvement in political activities, and to consult with legal counsel to ensure that any adverse action taken does not violate a public employee’s First Amendment rights.

For more information on the impact of this decision or employee retaliation claims in general, please contact 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:

 

©2016 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.

Employers Subject to New FEHA Regulations on Anti-Harassment Policies, Training, and Notice

May 2016
Number 30

Effective April 1, 2016, California employers are subject to new regulations under the California Fair Employment and Housing Act (FEHA), which prohibits workplace discrimination and harassment. The new regulations focus on changes in the following three areas: employer policies, training and dissemination of an employer’s harassment, discrimination and retaliation prevention policy.

Employer Anti-Discrimination/Anti-Harassment/Anti-Retaliation Policies

All employers subject to the FEHA must have written policies in place that include all of the following content:

  • The types of prohibited discrimination and harassment under the law.
  • A statement that employees are protected under the FEHA from unlawful conduct from their co-workers, managers, supervisors and third parties.
  • The complaint process, including language that explains that a complaint of discrimination or harassment will: (1) be confidential to the extent possible; (2) receive a timely response; (3) be investigated in a timely and impartial manner by qualified personnel; (4) be documented and tracked through the complaint process; and (5) be timely closed with options for remedial action and resolution, as appropriate.
  • Notification that employees may file a complaint with someone other than their immediate supervisor, such as a designated representative for the employer.
  • Notification that employees may not be retaliated against for making a discrimination or harassment complaint or for participating in any complaint investigation.

Training Requirements

Employers with 50 or more employees must provide their supervisors with training on prohibited harassment, discrimination, and abusive conduct. During this training, supervisors must be notified of their duty to report sexual harassment, discrimination, and retaliation. The training must also include instruction on appropriate measures to remediate harassing conduct.

Supervisors must be provided with the definition of “abusive conduct” and informed that unless an act is particularly egregious, a single act will generally not constitute abusive conduct. The training should explain the negative impacts of abusive conduct in the workplace and must include examples of abusive conduct.

Employers must keep written records of harassment training for two years. Records that must be retained during this period include sign-in sheets, copies of webinars, written questions and responses to questions associated with the training, and certificates of attendance or completion. Employers must still keep records of the names of supervisors trained, the date of the training, the type of training, and the name of the training provider.

Policy Distribution/Dissemination

Employers must ensure that employees are provided with their anti-discrimination/anti-harassment policies. The written policies must be translated into all languages spoken by at least 10% of the workforce. Only one of the following methods must be used to distribute the policies:

  • Provide employees with a printed copy of the policy with an acknowledgement form for the employee to sign and return;
  • E-mail the policy with an acknowledgement return form;
  • Post the policy on the internal company intranet with a tracking system to ensure that employees have read and acknowledged receipt of the policy; or
  • Discuss the policy upon an employee’s hiring and/or during an orientation session.

In light of these new regulations, public agency employers should review their policies and process for disseminating the same to ensure compliance with the new law.

For more information on the new FEHA requirements and the implications on your current anti-discrimination and anti-harassment policies, please contact 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:

Dulcinea Grantham
Partner

Gabriela Flowers
Associate

©2016 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.

Digging Deeper Into Recent Affordable Care Act Topics: Guidance Employers Need To Know

May 2016
Number 28

If you thought you were finally getting a handle on the Affordable Care Act (ACA), the influx of IRS guidance that came at the end of the 2015 calendar year probably reopened some old wounds. On December 29, 2015, we alerted you to IRS Notice 2015-87 (Notice), a compilation of Questions and Answers intended to provide guidance on a number of complex and highly technical topics related to group health plan market reform and employer shared responsibility requirements. The purpose of this Client News Brief is to dig a little deeper into the topics addressed by the IRS Notice that may be of particular interest to state, school, and other local public agency employers. In addition, we encourage you to watch our video on some common questions and issues that arise from the implementation of the Affordable Care Act.

1. Affordability Calculations – Inflation Adjustments

Under the ACA, coverage offered by applicable large employers to their full-time employees must be affordable in order for the employer to avoid liability. Coverage is affordable if the employee’s required contribution for self-only coverage does not exceed 9.5% percent of the taxpayer’s household income. Since employers are unlikely to know their employees’ household incomes, the ACA provides various safe harbors to assist employers in determining whether their offers of coverage are under the affordability threshold of 9.5%. The Notice states that the IRS intends to amend the regulations to clarify that this 9.5% threshold in the affordability safe harbors is subject to the same annual adjustments for inflation as contained elsewhere in the ACA. Specifically, this amount will be adjusted as follows: 9.56% for plan years beginning in 2015; and 9.66% for plan years beginning in 2016. The same adjustments apply to the 9.5% referenced in the ACA with respect to the Multiemployer Plans, as well as to the reporting of “Qualifying Offers.”

2. Penalty Increases – Inflation Adjustments

The Notice also clarifies the adjusted amounts relative to the $2,000 and $3,000 penalty amounts, or “assessable payments,” applicable to employers under the employer shared responsibility provisions of the ACA. Generally, section 4980H of the Internal Revenue Code provides that an applicable large employer may be subject to an assessable payment if certain conditions are met related to the failure to offer appropriate coverage to full-time employees. For 2015, the adjusted $2,000 assessable payment amount is $2,080, and the adjusted $3,000 assessable payment amount is $3,120. In 2016, these assessable payment amounts will go up to $2,160, and $3,240, respectively. The Treasury and IRS anticipate that they will post future adjustments on the IRS.gov website.

3. Affordability & Transition Relief

The Notice addresses how various types of common arrangements are treated, or will likely be treated, for purposes of determining an employee’s required contribution towards the cost of self-only employer-sponsored coverage. This category of guidance is particularly significant to employers because much of the IRS treatment described in the Notice will likely change how employers currently view employee and employer contributions to health care and impact whether coverage is affordable for purposes of the ACA. However, there is some transition relief for employers – described below in the relevant sections – if an arrangement was in place prior to or on December 16, 2015. For an arrangement to be in place prior to or on December 16, 2015, it must meet one the following conditions:

  1. The employer offered the arrangement (or a substantially similar arrangement) for a plan year including December 16, 2015; or
  2.  A board, committee, or similar body or an authorized officer of the employer specifically adopted the arrangement before December 16, 2015; or
  3.  The employer had provided written communications to employees on or before December 16, 2015 indicating that the opt-out arrangement would be offered to employees at some time in the future.

Contributions to HRA
Employer contributions to a plan-integrated health reimbursement arrangement (HRA) are counted toward the employee’s required contribution (meaning they reduce the dollar amount of that required contribution) only if: (1) an employee may use the contribution to pay premiums; and (2) the amount of the employer’s annual contribution is required under the terms of the arrangement or otherwise determinable within a reasonable time before the employee must decide whether to enroll in the eligible employer-sponsored plan. This is true even if the amount may be used for cost-sharing and/or for other health benefits not covered by that plan in addition to premiums.

Flex Contributions
Under a § 125 cafeteria plan, the employee’s enrollment in a group health plan generally is funded by salary reduction but may also be funded by employer flex contributions. If the employer flex contribution qualifies as a “health flex contribution,” it will count towards the employee required contribution, reducing the amount of the required contribution. To qualify as a health flex contribution, all of the following conditions must be met: (1) the employee may not opt to receive the amount as a taxable benefit (i.e., cash); (2) the employee may use the amount for minimum essential coverage; and (3) the employee may use the amount exclusively to pay for medical care. For instance, if an employee may use the flex contribution towards life insurance or dependent care through the cafeteria plan, the contribution is not a health flex contribution. Similarly, if the employee may opt to receive the contribution as cash instead of putting it towards health care, the contribution is not a health flex contribution. If the employer flex contribution is not a health flex contribution, it does not reduce an employee’s required contribution, which may negatively impact the affordability of coverage.

As a form of transition relief, all employer flex contributions that are available to pay for health coverage, regardless of whether they qualify as health flex contributions, will count toward reducing the employee’s required contribution for plan years beginning before January 1, 2017 unless the flex contribution arrangement was adopted after December 16, 2015, or substantially increases the amount of the flex contribution after December 16, 2015.

Employers that wish to offset the cost of the employee’s required contribution should review their plan structure to ensure that the flex contribution is only available for medical-related expenses.

Opt-out Payments
The Notice focuses on the IRS position regarding the treatment of unconditional opt-out arrangements. An unconditional opt-out arrangement is an arrangement that provides for a payment to an employee that is conditioned solely on an employee declining coverage and not on an employee satisfying any other meaningful requirement, such as proof of coverage elsewhere. For instance, consider an employer that offers employees group health coverage through a § 125 cafeteria plan, requiring employees who elect self-only coverage to contribute $200 per month toward the cost of that coverage but offering employees an additional $100 per month in taxable wages if they decline coverage, no questions asked. This is an unconditional opt-out arrangement.

The IRS considers such an arrangement to be analogous to a “cash or coverage” arrangement – the employee must choose between receiving the $100 payment and enrolling in health care coverage. The IRS intends to issue proposed regulations that require employers to include the amount of the opt-out payment in the employee’s required contribution for purposes of the employer shared responsibility provisions. Referring back to our example, under this rule, the employer would report $300 as the monthly required employee contribution towards the cost of coverage, rather than $200 because the employee is foregoing $100 in order to enroll in health care coverage. The likely intent behind this rule is to deter employers from incentivizing employees to decline health care coverage, particularly in instances where coverage is not available to them elsewhere. The proposed regulations will also likely address and request comments on the treatment of opt-out payments that are conditioned on the satisfaction of additional conditions, such as proof of coverage. However, the Notice does not elaborate on what position the IRS is likely to take on these arrangements.

The regulations will apply only for periods after the issuance of final regulations, but the IRS and Treasury anticipate that any unconditional opt-out arrangements adopted after December 16, 2015 will be subject to the rule. In other words, employers that are subject to the ACA should consider these anticipated regulations prior to approving a new opt-out or cash-in-lieu arrangement after December 16, 2015, because these opt-out payments may increase the employee required contribution to the cost of health care coverage.

4. “Hour of Service”

For purposes of determining full-time status of employees, the ACA defines the term “hour of service” as each hour for which an employee is paid, or entitled to payment, for the performance of duties for the employer; and each hour for which an employee is paid, or entitled to payment by the employer for a period of time during which no duties are performed due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or leave of absence (as defined in 29 CFR 2530.200b-2(a)). The Notice provides clarification on certain limitations to this definition, particularly with regard to its reference to 29 CFR 2530.200b-2(a), which is an existing federal Department of Labor regulation. The Notice clarifies that an “hour of service” for purposes of the ACA does not include any of the following:

  1. Hours after the individual terminates employment with the employer.
  2.  An hour for which an employee is directly or indirectly paid, or entitled to payment, on account of a period during which no duties are performed if such payment is made or due under a plan maintained solely for the purpose of complying with applicable workers’ compensation, or unemployment or disability laws.
  3.  An hour for a payment which solely reimburses an employee for medical or medically related expenses incurred by the employee.
  4.  Periods during which the employee is not performing services but is receiving payments in the form of workers’ compensation wage replacement benefits under a program provided by the state or local government.

The Notice clarifies that the limitation contained in 29 CFR 2530.200b-2(a) regarding the maximum amount of hours that may be credited to an employee for a single continuous period during which the employee performs no duties does not apply in the ACA context (please note that there does exist a 501-hour limit on hours of service required to be credited to an employee of an educational organization during employment break periods, which continues to apply).

The Notice further clarifies that periods during which an individual is not performing services but is receiving payments due to short-term disability or long-term disability do result in hours of service for any part of the period during which the recipient retains status as an employee for the employer, but only if payments are made from an arrangement to which the employer contributed to directly or indirectly. For example, disability payments made by or from a trust fund or insurer to which the employer contributes to or pays premiums for would be deemed to be made by the employer and therefore would count towards the employee’s hours of service as long as the employee remains employed. A disability arrangement for which the employee contributed to on an after-tax basis would be treated as an arrangement to which the employer did not contribute, meaning it would not be considered hours of service.

5. Rehire/Break Rules for Staffing Agencies

Under the ACA regulations, specific rules apply to educational organizations regarding the identification of full-time employees, including how to treat breaks in service. The Treasury and IRS anticipate amending these regulations to extend the same rules to employees of third-party staffing agencies or other employers that are not technically “educational organizations,” but that employ individuals that provide services for educational organizations. For instance, the rules would apply to an employer with respect to a bus driver who is primarily placed to provide bus driving services for an educational organization, regardless of whether the employer itself is an educational organization.

6. Aggregation Rules (Government Entities)

The ACA regulations include certain aggregation rules for purposes of determining whether an employer has 50 or more full-time and full-time equivalent employees, and therefore is an applicable large employer. Specifically, the following groups may in each case be treated as a single employer: (1) corporations that are part of a controlled group of corporations, (2) groups of other types of entities that are under common control, and (3) members of an affiliated service group. The aggregation rules do not expressly address the application of these standards to government entities, which are defined as the government of the United States, any State or political subdivision thereof, and any Indian tribal governments, and likely include local governmental agencies such as school districts. The Notice clarifies that government entities may apply a reasonable, good faith interpretation of the employer aggregation rules for purposes of determining whether a government entity is an applicable large employer, and therefore subject to the employer shared responsibility provisions and reporting requirements of the ACA.

Please note that this news brief does not detail every element of the topics discussed above. We encourage you to review the Notice for a full review of the topics addressed by the Treasury and IRS.

If you have any specific questions regarding the impact of this Notice on your organization, please contact 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:

Karen Rezendes
Partner

Niki Nabavi Nouri
Associate

©2016 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 Required Employer “Intent” Element in Disability Discrimination Claims Under FEHA

April 2016
Number 26

To prove a claim for disability discrimination under the California Fair Employment and Housing Act (FEHA), an employee must establish intent on the part of the employer. Recently, the Court of Appeal for the Fifth District held that the “intent” requirement is satisfied if the employee proves (1) the employer knew the employee had a disability or the employer perceived the employee as disabled, and (2) the employee’s actual or perceived disability was a “substantial motivating reason” for the adverse employment action (e.g., termination, reassignment, demotion, unpaid leave etc.). (Wallace v. County of Stanislaus (Feb. 25, 2016, No. F068068) ___Cal.App.4th___ [2016 Cal. App. LEXIS 148].)

In Wallace, the plaintiff, Sheriff’s Deputy Dennis Wallace, sued the County and the Sheriff’s Department for disability discrimination, failure to prevent discrimination, failure to accommodate, and failure to engage in the interactive process. While working as a Sheriff’s Deputy, Mr. Wallace suffered work related injuries and was assigned to a bailiff position to accommodate his work restrictions. Later that year, Mr. Wallace was seen by a doctor. The doctor’s report listed various different or additional work restrictions. On receiving the doctor’s report, the County removed Mr. Wallace from his bailiff position because they believed he could not perform the essential functions of that position with or without accommodation. The County told Mr. Wallace there were no positions that could accommodate Mr. Wallace’s work restrictions. They placed Mr. Wallace on unpaid leave.

Mr. Wallace sued the County. The jury ruled in the County’s favor, finding that Mr. Wallace had not suffered disability discrimination. Mr. Wallace appealed, claiming the jury had not been properly instructed about the “intent” an employee needed to prove to support a disability discrimination claim against the employer.

On appeal, the Court held that an employee could satisfy the “intent” requirement, without proving the employer acted with “ill will” or “animus.” The Court found the “intent” requirement was satisfied if the employee proved that his actual or perceived disability was a “substantial motivating” reason for an adverse employment action. In Wallace, the Court found that removing Mr. Wallace from his bailiff position following receipt of the new medical restrictions was improper.

The Court focused on the fact that the County removed Mr. Wallace from his bailiff position without thoroughly evaluating whether he could be reassigned to other positions. The Court expressed that the employer should have consulted with Mr. Wallace’s supervisors to determine if he could indeed perform the functions of the bailiff position, instead of only relying solely on the doctor’s report. This case is a reminder to employers about the importance of engaging in the interactive process and thoroughly evaluating all available accommodation options.

Should you have questions about the effect of this decision, please contact 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:

Dulcinea Grantham
Partner

Meera Bhatt
Associate

©2016 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 Public Private Partnership (P3) Project Delivery Method: What Is It and Is It an Option for Your Project?

April 2016
Number 23

Local public agencies have several options when it comes to choosing a delivery method for a construction project. The public-private partnership method, or P3, is one option that is receiving increased attention. P3 involves a long term partnership between a public agency and private entity, where typically the private entity finances, designs, builds, operates, and/or maintains a fee-producing public project. In exchange, the private entity will be repaid over an extended period of time through the fees generated by the public project or as otherwise permitted by statute. This can involve the private entity’s lease or ownership of the project for an extended period of time during the repayment period.

In order to utilize the P3 method for a public agency’s project, there must be authorizing legislation. The primary P3 law is the California Infrastructure Finance Act (Gov. Code §§ 5956 et seq.), which allows P3 for specific types of fee-producing local government projects through a “competitive negotiation” process. This Act applies to cities, counties, school districts, community college districts, county boards of education, public districts, joint powers authorities, transportation commissions or authorities, and any other public or municipal corporations. The Act covers specified types of projects: irrigation; drainage; energy or power production; water supply, treatment, and distribution; flood control; inland waterways; harbors; municipal improvements; commuter and light rail; highways or bridges; tunnels; airports and runways; purification of water; sewage treatment, disposal, and water recycling; refuse disposal; and structures or buildings, except structures or buildings to be primarily used for sporting or entertainment events.

Other California statutes allow P3 but apply less generally to local public entities. For instance, Government Code section 70371.5 permits public-private partnerships whereby the private entity shares some of the risk of financing, design, construction, or operation of court facilities. Section 143 of the Streets and Highways Code permits CalTrans and regional transportation agencies to partner with private entities for transportation projects.

One notable P3 project that has garnered attention recently is the new city hall, library, park, and port headquarters being built in the City of Long Beach. The City benefited from specific legislation that established its right to utilize the P3 method for these projects. (Gov. Code §§ 5975 et seq.) Since these projects were not fee-producing, existing legislation did not permit use of P3.

A major benefit of the P3 method is the ability to obtain private financing. Additionally, risks and responsibilities of the project design and construction are shifted to the private entity. Of course, the public agency also gives up some control of the project design. Each project is unique and each public agency’s needs are different, so the use of P3 should be evaluated on a case-by-case basis. For additional information about other project delivery methods, read the following: Client News Brief No. 8, February 2015 and Client News Brief No. 71, November 2015.

If you have any questions regarding P3 or other delivery methods for your project, please contact 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

David Wolfe
Partner

Arne Sandberg
Senior Counsel


Maryn Oyoung
Associate

 

©2016 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.

California Supreme Court Refuses to Review Court of Appeal Decision Barring Parcel Tax Challenge Filed after Expiration of Period for Reverse Validation Action

April 2016
Number 22

The California Supreme Court recently denied a petition for review of the Court of Appeal’s decision in Golden Gate Development Company, Inc. v. County of Alameda, et al. (2015) 242 Cal.App.4th 760. As a result, the holdings in Golden Gate Development remain undisturbed, including that: (1) a reverse validation action is the proper procedure for challenging a parcel tax; and (2) such action must be brought within 60 days of passage of the parcel tax measure.

In February 2014, real estate developer Golden Gate Development Company, Inc. (Golden Gate), filed suit seeking a refund of taxes paid under parcel tax measures of the Albany Unified School District (District) passed in 2009. Golden Gate’s complaint, which referenced the recent decision in Borikas v. Alameda Unified School District (2013) 214 Cal.App.4th 135, alleged that the tax rates Albany’s measures were improper because different rates were imposed on residential and nonresidential properties, as well as nonresidential properties of different sizes. In Borikas, the Court of Appeal held that a tiered-rate parcel tax exceeded the school district’s taxing authority and was invalid because the rate structure was not uniform for all taxpayers and parcels.

The County and District demurred to Golden Gate’s complaint, contending that Golden Gate failed to present its claims in a reverse validation action within 60 days of passage of Albany’s measures pursuant to Code of Civil Procedure section 860 et seq. Generally, the validation statutes provide an expedited process by which certain public agency actions may be determined legally valid and not subject to subsequent legal challenge. The trial court sustained the demurrer without leave to amend. Golden Gate appealed the trial court’s decision.

The Court of Appeal upheld the trial court’s ruling, finding that the exclusive procedure for challenging the validity of the parcel tax measures was a reverse validation action. In reaching its decision, the court reasoned that Golden Gate’s claim, while styled as a refund of taxes, was based on the alleged illegality of the tax scheme of the parcel tax measures, which can only be challenged under the validation statutes. Since Golden Gate did not timely bring a reverse validation action against the measures, it had missed its opportunity to challenge their legality.

On February 17, the California Supreme Court refused to disturb the ruling, denying Golden Gate’s petition for review; therefore, this decision is now settled law.

Lozano Smith prepared the amicus curiae brief of the California School Boards Association’s Educational Legal Alliance in support of the District before the Court of Appeal.

If you have questions regarding this decision, or parcel taxes generally, or would like assistance preparing a parcel tax measure, please contact 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

 

©2016 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.

Governor Brown Signs Landmark Minimum Wage Legislation

April 2016
Number 21

On April 4, 2016, Governor Jerry Brown signed into law Senate Bill (SB) 3, which amends California Labor Code section 1182.12 to increase California’s minimum wage to $15 per hour by the year 2022. The legislation was approved by the State Assembly and Senate on party line votes. The bill ultimately gained the Governor’s support after a compromise was reached to gradually phase in increases to the minimum wage over a five year period. The new law explicitly includes public employers, such as school districts, county offices of education, cities, and other municipal bodies.

Under SB 3, the minimum wage will first increase by $.50, to $10.50 per hour, on January 1, 2017. A second $.50 increase will occur on January 1, 2018, and subsequent increases of one dollar will occur on January 1 each year thereafter until the $15 target is reached in 2022. For employers with 25 or fewer employees, the first wage increase will occur on January 1, 2018, and the $15 target will be reached in 2023. However, until the $15 minimum wage is reached, the Governor may suspend the scheduled annual wage increases if certain findings showing poor economic conditions are made. Should that occur, the timetable for reaching the $15 minimum wage will be delayed by a year each time that the Governor suspends a planned wage increase. After the $15 minimum wage is reached, it will be annually increased for inflation by an amount not to exceed 3.5%.

Given the scheduled annual increases, possibility of suspending the annual increases, and future adjustments for inflation, employers will need to adopt new levels of vigilance to ensure that they comply with the law. In addition, a variety of new considerations will arise for employers. For public employers operating under collective bargaining agreements, collaboration with bargaining units will be necessary to timely phase in the required wage increases for affected employees. Employers may also need to examine the impact that the planned wage increases will have on personnel budgeting for future years. Addressing these questions, and others that may arise, will require advance planning by an employer’s executives and budget officers, and collaboration with key stakeholders prior to the first planned wage increase on January 1, 2017.

If you have any questions about California’s new minimum wage law and how it impacts public employers, please contact 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

Eric Barba
Associate

 

©2016 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.

Two Cases Demonstrate the Reach of Government Code Section 1090: Criminal and Civil Penalties Await the Unwary Government Official

March 2016
Number 15

Two recent cases involving high profile public officials highlight the reach of Government Code section 1090. Government Code section 1090 prohibits conflicts of interest, self-dealing and corruption among public entity officials.

Sweetwater Union School District v. Gilbane Building Company (February 24, 2016) 245 Cal.App.4th 19, sprang from one of the largest political corruption scandals in San Diego County history, in which construction vendors provided gifts to school district board members as incentives for the award of construction management contracts. Among other things, vendor representatives paid for expensive dinners with District officials, provided tickets to entertainment and sporting events, paid travel expenses, and made contributions to political campaigns and charities in an effort to influence the District’s award of construction management contracts. District board members and vendor representatives pled guilty to various crimes associated with this “pay to play” scheme.

The District sought to void three construction management contracts under Government Code Section 1090, and demanded that the vendors awarded those contracts disgorge all monies paid under the void contracts. In response, the vendors filed an anti-SLAPP motion challenging the District’s Section 1090 claim. “SLAPP” refers to a “strategic lawsuit against public participation” — that is, a lawsuit brought primarily to “chill”, or prevent, the valid exercise of constitutional rights to challenge unlawful conduct. An “anti-SLAPP motion” refers to the procedural mechanism a defendant may use to challenge that “chilling” lawsuit as an alleged infringement of the defendant’s free speech rights. A court faced with an anti-SLAPP motion must engage in a two pronged analysis. First, the court decides whether the defendant made a threshold showing that plaintiff’s claim is one arising from protected activity. However, a defendant cannot meet this showing if its alleged protected activity is illegal as a matter of law. Second, if the defendant clears this initial hurdle, the court then analyzes whether the plaintiff has demonstrated a probability of prevailing. If the plaintiff meets that burden, the anti-SLAPP motion will be denied.

The trial court held that the vendors’ anti-SLAPP motion could not meet the first element, finding that the conduct underlying the complaint was illegal as a matter of law.

On appeal, however, the Sweetwater court disagreed with the trial court’s finding on the first element, concluding that the vendors could show that their claim arose from constitutionally protected activity, namely that making political contributions and lobbying government officials is a type of political speech. The appellate court also held that although the District introduced evidence that many of the individuals entered guilty or no contest pleas to certain criminal activity, none of the individuals pled guilty to Section 1090 violations. The Sweetwater court found that “while the evidence may establish that some of the conduct may have been illegal, the evidence does not establish that all of the conduct at issue was illegal as a matter of law.” (Emphasis in the original.)

The Sweetwater court next turned to the second element of an anti-SLAPP motion, finding that the evidence the District proffered confirmed that the District had a probability of prevailing on the merits of its Section 1090 claims. While there was no allegation that any official stood to gain economically from the contract performance, it was clear they had a financial interest in the relevant contracts as a result of activities that occurred during the contracting process and in the making of the contracts. For example, testimony of those convicted and testimony of other individuals knowledgeable of the facts showed that the gifts and contributions were made for the purpose of swaying District officials’ votes in favor of awarding contracts to the vendors. Thus, one could reasonably infer from the chronology of campaign contributions and excessive gift giving, together with the award of the contracts, that the former District officials were influenced to award contracts to the vendors as a result of the gifts and contributions. Accordingly, because the District showed facts sufficiently demonstrating a probability of prevailing on its Section 1090 claims against the vendors, the District defeated the anti-SLAPP motion and the case continued.

In another case involving Government Code section 1090, a former school district superintendent in San Diego County recently pled guilty to a felony charge for bonuses he received tied to the approval and authorization of charter schools. Steve Van Zant served as the Superintendent of the Mountain Empire School District (San Diego County) from 2008 through 2013. Beginning in 2010, Mr. Van Zant’s contract awarded him a stipend for each charter school that the District authorized. The stipend was equivalent to five percent of the revenue generated by the charter authorization. Once authorized, a handful of the charter schools subsequently hired Mr. Van Zant’s private consulting firm to provide administrative services.

In January 2016, the San Diego District Attorney’s office filed a felony charge against Mr. Van Zant alleging that his actions violated Government Code section 1090’s conflict of interest provisions. While unwilling to provide specific details, the District Attorney noted that Mr. Van Zant violated section 1090 on or around May 12, 2010 (the date Mr. Van Zant’s stipend incentive was adopted). On February 26, 2016, Mr. Van Zant pled guilty to the felony charge. As part of his plea agreement, Mr. Van Zant agreed to return the stipends he received for authorizing the charters, 5 years’ probation, 300 hours of community service, and 30 days home confinement.

These two cases illustrate that seriousness of Government Code Section 1090’s conflict of interest provisions, and demonstrate the very real potential of penalties for a violation. If you have any questions about these cases or Government Code section 1090, please contact 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

William Curley III
Senior Counsel

Matthew Hicks
Senior Counsel

Ryan Tung
Associate

 

©2016 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.

California Supreme Court Holds Attorney-Client Privilege Not Waived by Public Agency’s Accidental Disclosure of Privileged Communications in Response to a Public Records Act Request

March 2016
Number 14

If a public agency accidentally discloses privileged attorney-client information when it responds to a Public Records Act request, does the agency waive the attorney-client privilege? The answer is no, according to a California Supreme Court ruling issued today, March 17, 2016. The decision significantly impacts how public agencies throughout the state handle Public Records Act requests.

In Ardon v. City of Los Angeles, the California Supreme Court resolved conflicting rulings by courts of appeal on the proper interpretation of a provision of the Public Records Act, Government Code section 6254.5, which provides in relevant part:

Notwithstanding any other provisions of law, whenever a state or local agency discloses a public record which is otherwise exempt from this chapter, to any member of the public, this disclosure shall constitute a waiver of the exemptions specified in Section 6254, 6254.7, or other similar provisions of law.

The California Supreme Court reversed a decision by the Second District Court of Appeal, which had held that the City of Los Angeles waived the attorney-client privilege as to documents the City mistakenly disclosed to a taxpayer, who was also the plaintiff in a pending lawsuit against the City. In response to a Public Records Act request made by the plaintiff, the City handed over 53 pages of documents, three of which were privileged and previously withheld when the plaintiff requested them in litigation. The City requested return of the privileged documents two months after their production when the requesting party’s attorney notified the City that the documents were produced. The Ardon Court of Appeal concluded that because “the City has disclosed the documents to one member of the public,” that it “was prohibited as a matter of law from ‘selectively withholding’ that document from any other member of the public.” Furthermore, according to the Ardon Court of Appeal, the plain language of section 6254.5 dictated a waiver because the law contained nine explicit exceptions to waiver, but did not include documents handed over by mistake or inadvertence.

Rejecting the decision of the Ardon Court of Appeal, the California Supreme Court followed the First District Court of Appeal in Newark Unified School District v. Superior Court (Newark). Lozano Smith successfully represented Newark Unified School District in this litigation, including before the Court of Appeal (See Client News Brief No. 42, August 2015). In contrast to the Ardon Court of Appeal, the Newark Court of Appeal held that a school district did not waive the attorney-client privilege when its employee accidentally gave privileged information to the requesting party. The California Supreme Court agreed, reasoning in Ardon that the Legislature could not have possibly contemplated that the mistaken release of privileged information would waive the attorney-client privileges, especially given the Public Records Act’s safeguards for private, sensitive information of citizens that are in the hands of the government. Rather, the law focused on preventing intentional and selective disclosures by a public agency. Citing to Newark‘s discussion of the law’s legislative history, the California Supreme Court stated: “When a release is inadvertent, no selection occurs because the agency has not exercised choice in making the release. It was an accident. Accordingly, an inadvertent release does not involve an attempt to assert the exemption as to some, but not all, members of the public, the problem section 6254.5 was intended to address.” Like the Newark Court of Appeal, the California Supreme Court further reasoned that Evidence Code section 912 and the importance of the attorney-client privileges repudiate “the ‘gotcha’ theory of waiver, in which an underling’s slip-up in a document production becomes the equivalent of actual consent.” Indeed, one further point made by the California Supreme Court is the impracticality of such a rule: “the logistical problems public entities can face in reviewing, in some cases, even thousands of pages of records responsive to a public records request . . . is daunting. It would be foolish to believe that human errors in the processing of public records requests will cease . . . .”

It is important to emphasize that the California Supreme Court in Ardon, like Newark, presumed that a public agency’s mere assertion that a mistaken release of documents could be challenged and a trial court would examine all the relevant circumstances to determine waiver. “This holding applies to truly inadvertent disclosures and must not be abused to permit the type of selective disclosure section 6254.5 prohibits,” the California Supreme Court stated. Moreover, in some circumstances, it may not matter whether or not a public agency can show that it released documents by mistake. Public agencies must take note of the caveat in the Newark decision, that a member of the public could prove the distribution of privileged documents reached a point that would make a court order to return the documents hard to enforce. Newark specified that trial courts would have to make a determination on a case-by-case basis; in Newark, there was no evidence of such a wide and irretrievable distribution and the school district employee quickly put the requesting party on notice of the accidental disclosure of privileged documents and demanded their return. This “Newark notice” appears a prudent step by public agencies that would seek a court order to return privileged documents disclosed by mistake.

In October 2015, the California Supreme Court granted review of the Newark decision, but effectively stayed its review pending the outcome of Ardon. Today, the California Supreme Court ordered the Newark decision published and noted that order in its Ardon decision, meaning that the case is good law to be relied upon by public agencies statewide.

The school district’s litigation team in Newark included Lozano Smith Partners Jerome Behrens and Sloan Simmons, Senior Counsel Steve Ngo and Matthew Hicks, and Associate Frances Valdez.

If your public agency has any questions regarding the Ardon or Newark opinion or the Public Records Act in general, please contact 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

Sloan Simmons
Partner

Steve Ngo
Senior Counsel

 

©2016 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.

April 1 Deadline for Filing Form 700’s

March 2016
Number 11

April 1 is the deadline for those holding “designated positions” under their agency’s Conflict of Interest Code (Code filers), as well as so-called “Section 87200 filers,” to file the annual Statement of Economic Interests (Form 700). Section 87200 filers include mayors, city council members, city managers, city attorneys, city treasurers, members of planning commissions, members of the board of supervisors, district attorneys, county counsels, county treasurers, county chief administrative officers, other public officials who manage public investments, and candidates for any of these offices at any election. The Political Reform Act (Gov. Code, §§ 81000-91014) requires those public officials and employees to disclose on Form 700 certain investments, interests in businesses and real property, and sources of income, as well as certain gifts that were received in the previous 12-month period which exceed designated dollar amounts. School districts, cities, counties, and other public agencies are required to adopt a conflict of interest code which, at a minimum, includes the terms of Government Code section 87300, and the related regulations.

If a Code filer or Section 87200 filer receives a gift or gifts totaling $50 or more from a single source in the previous calendar year, then the gift or gifts must be disclosed on the Form 700. (Gov. Code, § 87210) The filers may not receive gifts totaling more than $460 (for 2015-2016) in any calendar year from a single source if they would be required by their agency’s Code or Section 87200 to report income or gifts from that source on Form 700. (Gov. Code, § 89503; Cal. Code Regs., tit. 2, § 18940.2)

The Political Reform Act includes a broad definition of a “gift”: anything of value that is received by a public official or employee for free or at a discount and which is not otherwise made available to members of the general public. This could include meals, tickets to concerts or sporting events and some forms of travel. There are some limited exceptions for gifts that are exchanged for holidays, birthdays and similar occasions, gifts received from relatives and informational materials that primarily convey information and are provided to assist the recipient in the performance of his or her official duties. (Cal. Code Regs., tit. 2, §§ 18942, 18942.1) Because the reporting of gifts and other conflict of interest issues have drawn particular scrutiny and media attention recently, including a few high-profile enforcement actions, particular care should be taken to comply with the rules.

Under the Political Reform Act, required filings such as Form 700 must be open for public inspection and reproduction during a public agency’s regular business hours. Although these disclosure requirements are similar to the Public Records Act, there are separate rules that apply. (Gov. Code, § 81008)

If you have any questions regarding the Political Reform Act’s rules on gifts, when reporting is required, or updating your agency’s conflict of interest code, please contact 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

Ruth Mendyk
Partner

David Wolfe
Partner

©2016 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.

Bid Threshold For School District Purchases Raised For 2016; Similar Increase For Community Colleges Expected

December 2015
Number 83

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 $87,800, effective January 1, 2016. This represents an increase of 2.12% over the 2015 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 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

Ruth Mendyk
Partner
Fresno Office
rmendyk@lozanosmith.com

©2015 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 Law Limits Government Searches of Cell Phones and Other Devices

December 2015
Number 82

AUTHOR’S NOTE: Due to the significant legal changes caused by Senate Bill (SB) 178, we recommend that all government agencies, including school districts, contact legal counsel for guidance before searching any electronic devices in the possession of staff or students. Government agencies should further update any relevant policies and procedures, and provide training to all staff whose job functions may include searching the electronic devices of others. SB 178 becomes effective on January 1, 2016.

According to its author, SB 178 was introduced to update existing laws to protect privacy and free speech in the digital age by “instituting a clear, uniform warrant rule for California law enforcement access to electronic information, including data from personal electronic devices, emails, digital documents, text messages, metadata, and location information.” SB 178 responds to an increase in warrantless government demands to cell phone providers and social media websites for the personal data of users. It also codifies two recent court decisions requiring law enforcement to obtain a warrant before obtaining GPS information for vehicle tracking, and before searching data contained on a cell phone seized during an arrest.

Under SB 178, a government entity is prohibited from doing the following:

  1. Compelling production of information directly from a service provider (e.g., AT&T, Verizon);
  2. Compelling production from anyone other than the authorized possessor of the device; and
  3. Accessing information by means of physical interaction or electronic communication with the device (e.g., physically taking the device from the person
    and searching it or searching the device by electronic means), except when one of the following applies:
  • Pursuant to a warrant;
  • Pursuant to a wiretap order;
  • With the specific consent of the authorized possessor of the device;
  • With the specific consent of the owner of the device, only when the device has been reported as lost or stolen;
  • With a good faith belief that it is required in an emergency to prevent death or serious physical injury;
  • With a good faith belief that the device is lost, stolen, or abandoned, and only to identify, verify, or contact the device’s owner or authorized
    possessor; and
  • If the device is seized from a correctional inmate or is unclaimed in a correctional facility, except as otherwise prohibited by law.

The new law defines “specific consent” to mean consent provided directly to the government entity seeking information, including when the communication was directed at an audience that included the government entity.

If data is obtained in violation of SB 178, an individual may move to suppress the data in any trial, hearing, or proceeding in which it is introduced as evidence. Furthermore, the Attorney General may commence a civil action to compel a government entity to comply with the new law. Currently, a violation of SB 178 does not carry any criminal penalties.

The full implications of this new law are uncertain for government entity employers as well as school and community college districts. Prior to searching any electronic devices possessed by employees or students, a government entity should contact legal counsel to evaluate how the new law impacts such actions. Government employers may wish to consider providing information or training to staff members who perform searches in the scope of their duties. Additionally, government employers may need to revise policies and procedures to incorporate specific consent as a term and condition of use of the electronic device. For more information, please contact 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

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

Inna Volkova
Associate
Fresno Office
ivolkova@lozanosmith.com

©2015 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.

California Supreme Court Extends the Scope of Design Immunity

December 2015
Number 81

In a unanimous decision, the California Supreme Court recently issued a ruling that extends the scope of design immunity for public agencies. Hampton v. County of San Diego (Dec. 10, 2015, S213132) 2015 Cal.Lexis 9854 (Hampton) clarifies that a public agency need not necessarily show that an employee approving a public works project followed, or was even aware of, applicable design standards to claim immunity. However, such an inquiry is still relevant in deciding whether or not the plan or design was reasonable.

Government Code section 830.6 gives immunity to public agencies where defective designs in certain public projects result in injury to third parties. The most common example of such projects are traffic improvements, where an injured party asserts that the road or signage condition resulted in an accident and injury. To be eligible for immunity in such instances, the public agency must show the following: (1) a causal relationship between the plan or design and the accident; (2) discretionary approval of the plan or design prior to construction; and (3) substantial evidence supporting the reasonableness of the plan or design. If a public agency is successful in proving these three elements then it will not be held liable for injuries caused by dangerous conditions of public property.

In Hampton, the Supreme Court evaluated the second element and determined that a public agency is immune from civil liability even when an employee who approves the plan was not aware of the particular design standards. The plaintiffs in question were involved in a car accident while attempting to turn onto a two-lane thoroughfare from a rural side road. The plaintiffs alleged that the County had created a dangerous condition in planning the intersection by failing to account for a “high, raised embankment covered with shrubs.” They asserted that the failure to account for the embankment rendered visibility plainly inadequate under County standards. The County argued that it was immune under section 830.6, offering design plans for the intersection in question.

The Supreme Court agreed with the County, determining that section 830.6 was applicable because the very purpose of the statute was “to avoid second-guessing the initial design decision adopted by an employee vested with authority to approve it….” The Court confirmed that a public agency is not required to show that the designated employee considered applicable standards when approving the plan or was authorized to deviate from any possibly relevant standards. What is essential is that the employee approving the plan or design had authority to do so.

While this case helps expand one aspect of section 830.6 immunity, public agencies should be mindful of the remaining requirements. The Court cautioned that while an employee need not be aware of applicable standards when approving a plan to satisfy the second element, such circumstances could be relevant as to whether or not the plan was reasonable under the third element. As such, it remains important that public agencies remain vigilant in considering applicable standards as well as any other requirements when implementing new plans or designs.

For more information on public agency immunity, please contact 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

Megan Macy
Partner
Sacramento Office
mmacy@lozanosmith.com

Shawn A. VanWagenen
Associate
Fresno Office
svanwagenen@lozanosmith.com

©2015 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.

PERB Upholds Union’s Right to Receive Information Despite Employees’ “Opt Out”

October 2015
Number 64

The Public Employment Relations Board (PERB) recently held that a school district violated the Educational Employment Relations Act (EERA) by failing to fully respond to a union’s request for information despite the fact that some employees opted out of the release of their information and the union did not reassert its request when it did not receive all the information.

In Los Angeles Unified School District (2015) PERB Decision 2438, the District reassigned teachers who were being investigated for serious misconduct to one of its six educational service centers (ESC). The teachers were expected to work at the ESCs and earned their full compensation. The union demanded to bargain over the hours and duties of teachers assigned to the ESCs and requested their names and work locations. The union stated it needed this information to communicate with the teachers to see if they needed help and to develop proposals to change the working conditions in the ESCs.

The District asserted that teachers assigned to the ESCs had a privacy interest in that assignment and told the union that it would only comply with its request after it informed the teachers that they could “opt out” of having their information released. The District argued that providing names of teachers assigned to the ESCs would essentially disclose they were under a District or criminal investigation for serious misconduct. The union objected to the opt-out procedure emphasizing it was not seeking any discipline or investigation records from the District and the union also offered to enter into a confidentiality agreement requiring them to maintain the information as confidential. The District decided to inform all 276 teachers assigned to the ESCs of the union’s request and allow them the opportunity to opt out from the release of their assigned information. After 15 teachers opted out, the District provided the union the names and work locations of 261 teachers. The union did not restate its request for the names and work locations of the 15 teachers who opted out. Instead, the union filed an unfair practice charge.

In considering a union request for information that implicates employees’ privacy interest, PERB applies a balancing test, placing the burden on the employer to demonstrate whether this interest outweighs the union’s need for information. In Los Angeles Unified School District, PERB found that the information the union requested was “necessary and relevant,” but also agreed with the District that employees’ had a privacy interest in their assignment to ESCs.

PERB held the District did not demonstrate that its employees’ privacy interest outweighed the union’s need for information. PERB specifically considered all of the following: 1) the union did not seek discipline or investigation records from the District; 2) the union offered to enter into a confidentiality agreement which the District refused to consider without any explanation; 3) the teachers did not experience a significant invasion of privacy because if they did not want to communicate with the union they could inform the union that or ignore the communication; and 4) the District had not always treated the information the union requested confidentially since it disclosed the identity of a teacher assigned to an ESC to the media. PERB found that even if the District assured employees their assignment to an ESC would be confidential, such assurance would not necessarily override the union’s right to the information.

PERB also held that the union did not have to reassert its request for information after the District refused to provide it information about the 15 employees who opted out. PERB found that the District knew that the union wanted the names and work locations of all the employees assigned to the ESCs and that the union objected to the opt-out process so partial compliance was not sufficient. In addition, PERB held that the District was not entitled to implement an opt-out process without negotiating that process with the union. PERB also found it significant that the union was willing to enter into a confidentiality agreement with the District

This case demonstrates that the significant burden on employers in establishing that employees’ privacy concerns outweigh a union’s need for information, especially when a union is not seeking discipline or investigation records. Districts should be cautious when asserting employee privacy rights as basis for denying a request for information to ensure that such assertions will withstand PERB scrutiny. If the District elects to use an opt-out process, and employees opt-out, that opt-out alone may not provide the District a sufficient basis to withhold documents or information. Employers may also be liable for failing to provide a union requested information, even if the union does not reassert its request. Important to this case was that the union’s request for information was clear and it objected to the use of the opt-out process. Lastly, employers should also be cautious when providing employees an opportunity to opt-out before responding to a union’s request for information, without first negotiating such process with the union.

For further information about this decision, please contact 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

Dulcinea Grantham
Partner
Walnut Creek Office
dgrantham@lozanosmith.com

Ameet K. Nagra
Associate
Fresno Office
anagra@lozanosmith.comm

©2015 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 Rules that a Report Prepared By a Third-Party, Non-Governmental Entity Is a Public Record

October 2015
Number 63

In Pasadena Police Officers Association v. Superior Court (PPOA), (2015) 240 Cal. App. 4th 268, the California Court of Appeal held that an investigative report commissioned by the City of Pasadena but drafted by third party is a public record subject to disclosure under the California Public Records Act (CPRA). Additionally, the appellate court closely scrutinized redactions to the report, which were based on a recognized exemption to the CPRA, and held that the trial court had overreached.

The Legislature enacted the CPRA to promote transparency in government by determining that all records maintained by a public agency that pertain to the public’s business are open to inspection. The CPRA contains a limited list of document categories which are exempt from disclosure. Courts broadly construe the CPRA in favor of transparency and interpret its exemptions narrowly. Given this principle, if a public record contains both disclosable and privileged information, courts will generally require disclosure of the public record after the privileged portions have been redacted.

At issue in PPOA is a CPRA exemption that prevents the disclosure of documents otherwise privileged by federal or state law. (Gov. Code § 6254(k).) Specifically, a series of California laws, known as the Pitchess statutes, protect certain police personnel records from disclosure.

In PPOA, the City of Pasadena commissioned an independent third party to conduct a review of the Pasadena Police Department in the wake of an officer involved shooting. The third party report examined and discussed two internal investigations conducted by the Pasadena Police Department, a criminal investigation and an internal affairs investigation that contained personnel information. After the City was asked to release the independent report through a CPRA request, the Pasadena Police Officers Association argued that the entire investigative report was exempt from disclosure because it constituted confidential police personnel information under the Pitchess statutes. The trial court ordered the report to be released, but redacted several portions that it believed were derived from confidential police personnel records.

The appellate court upheld the trial court’s determination that the independent report was a public record subject to disclosure, reasoning that the CPRA’s policy favoring transparency is heightened when the information sought involves the conduct of police officers. The appellate court clarified the principle that the Pitchess statutes protect disciplinary records and information derived from police personnel files from disclosure under the CPRA, even when that privileged information is contained in an otherwise public record. Given this finding, the appellate court closely scrutinized the portions of the report that the trial court had redacted and concluded that the trial court’s redactions were overbroad because they included information that was not explicitly exempted from disclosure. The appellate court remanded the case to the trial court, with instructions that it limit its redactions to content that specifically related to protected police personnel files as described in the Pitchess statutes.

The court’s holding puts public agencies on notice that even reports created for a public entity by a third party may be considered disclosable public records. Public agencies should not rely upon blanket arguments that a document is exempt from disclosure. Instead, public
agencies may wish to look critically at the content within a document and determine whether any CRPA exemptions apply. As PPOA demonstrates, courts are apt to carefully review documents and favor disclosure wherever possible.

For further information about this case and the California Public Records Act’s requirements and exemptions, please contact 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

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

Eric Barba
Associate
Walnut Creek Office
ebarba@lozanosmith.com

©2015 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.

CalSTRS Employer Information Circular Provides Helpful Reminders of Common Reporting Errors

October 2015
Number 53

CalSTRS recently issued an Employer Information Circular (EIC) containing important reminders of common errors leading to negative audit findings for school districts, county offices of education and community colleges.

The EIC addresses proper reporting for special compensation and clarifies that extra-duty compensation must be reported separately from special compensation. For example, off-schedule bonuses or advanced degree pay are reported differently than coaching pay. This allows CalSTRS to credit such compensation appropriately. Errors in reporting for a particular employee could lead to an overpayment during that employee’s retirement that the District may be partially liable to repay.

The EIC also provides information on the proper reporting of unused sick leave for service credit. For example, when reporting service credit, school districts must use caution in providing CalSTRS with the correct number of an employee’s “base contract days” (i.e., length of the work year) to avoid artificially inflating or deflating the employee’s retirement allowance.

The EIC further addresses a school district’s obligations when hiring retirees or contracting with vendors who hire retirees. In particular, school districts are required to notify CalSTRS retirees of the earning restrictions and report to CalSTRS compensation paid to them. This is true regardless of whether the retiree is employed by the District directly, is hired as an independent contractor, or is working as an employee of a third-party vendor. While some exceptions do apply, they are complex and should be analyzed on a case-by-case basis.

A copy of the EIC, Vol. 31, Issue 3 is available here. Lozano Smith attorneys are available to provide guidance on creditable service, creditable compensation and other pre- and post- retirement employment issues for CalSTRS and CalPERS members, including those discussed in the EIC.

Lozano Smith attorneys are also available to assist you in reviewing Board Policies, Administrative Regulations, collective bargaining agreements and administrator contracts to ensure compliance with CalSTRS and CalPERS regulations. In particular, we are able to assist school districts in determining whether to restructure administrator contracts in light of the December 31, 2015 deadline (see Client News Brief No. 21, April 2015). If you have any questions about CalSTRS/CalPERS retirement issues, or how retirement laws govern public schools and their employees, please contact 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

Michael Smith
Partner
Fresno Office
msmith@lozanosmith.com

Thomas Manniello
Partner
Monterey Office
tmanniello@lozanosmith.com

Ashley N. Emerzian
Associate
Fresno Office
aemerzian@lozanosmith.com

©2015 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 Changes to Paid Sick Leave Law Effective Immediately

September 2015
Number 49

On July 13, 2015, Governor Brown signed Assembly Bill (AB) 304 into law, which clarifies the provisions of the Healthy Workplaces, Healthy Families Act of 2014 (Act), also known as AB 1522 or the “paid sick leave law.” The Act expanded the right to paid sick leave to cover many more part-time employees in California. AB 304 clarifies portions of the Act and adds new options for compliance with the requirements of the Act. AB 304 was passed as an urgency measure and its provisions are effective immediately. Employers should ensure that their policies comply with AB 304.

The main changes to the Act made by AB 304 include:

  • Exclusion for Some Retirees. The Act, as amended by AB 304, excludes specified retirees from the definition of “employee.” This means that specified retirees are not entitled to paid sick leave benefits under the Act. The Act now provides that the term “employee” does not include a public employee who receives a retirement allowance and is employed without reinstatement into his or her respective retirement system under the Public Employees’ Retirement System (CalPERS) or the County Employees Retirement Law of 1937. This new exclusion does not apply to the California State Teachers Retirement System (CalSTRS).
  • Alternative Accrual Methods. Previously, the Act required that employees accrue at least one hour of paid sick leave for every 30 hours worked. In addition to this option, Labor Code section 246 now also allows employers to use the following accrual methods:
    • An employer may use a different accrual method “provided that the accrual is on a regular basis so that an employee has no less than 24 hours of accrued sick leave or paid time off by the 120th calendar day of employment or each calendar year, or in each 12-month period.”
    • An employer may provide not less than “24 hours or three days of paid sick leave that is available to the employee to use by the completion of his or her 120th calendar day of employment.”

While now a part of the Act, employers should use caution in applying these alternative accrual methods and be mindful that the Labor Commissioner may provide further clarification regarding their use.

  • “Grandfather Clause” for Paid Leave Policies. An employer is not required to provide additional paid sick days if, prior to January 1, 2015, the employer provided a paid sick leave policy or paid time off (PTO) policy, that meets specified requirements, to a class of employees and the leave may be used for the same purposes and under the same conditions as specified in the Act. Under this option, the Act now allows these policies to continue for both current and new employees in the class covered by such policies if the policy: 1) provides at least one day or eight hours of paid sick leave or PTO within three months of employment of each calendar year, or each 12-month period; and 2) the employee was eligible to earn at least three days or 24 hours of paid sick leave or PTO within nine months of employment.

If the employer changes the accrual method used in the grandfathered paid sick leave or PTO policy it had in place, the policy will lose its grandfathered status and the Act’s accrual requirements will apply.

The applicability of this “grandfather clause” will depend on the policy the employer had in place prior to January 1, 2015. We recommend employers work with legal counsel to determine whether the “grandfather clause” applies to a pre-existing paid sick leave or PTO policy.

  • Alternative Method for Calculating Rate of Pay. The Act, as amended by AB 304, now provides two options for calculating the rate of pay for paid sick leave for nonexempt employees. The employer may either:
    • Calculate paid sick time in the same manner as the regular rate of pay for the workweek in which the employee uses paid sick time; or
    • Calculate paid sick time by dividing the employee’s total wages, not including overtime pay, by the employee’s total hours worked in the full pay periods of the prior 90 days of employment.
  • No Requirement to Reinstate Paid Sick Leave if Paid Out at Separation. AB 304 clarifies that an employer is not required to reinstate the paid time off that the employer paid at the time of termination, separation, or resignation of employment.

AB 304 addresses several of the questions that employers had raised as they worked to implement the Act. However, there are still a number of uncertainties regarding the Act’s interpretation. If you have questions about how this legislation will affect any of your employee groups or classifications, please contact 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

Darren C. Kameya
Partner
Los Angeles Office
dkameya@lozanosmith.com

Desiree Serrano
Associate
Los Angeles Office
dserrano@lozanosmith.com

©2015 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.

California Appellate Court Holds That Closed Session Agenda Language Substantially Complies with the Brown Act Despite Errors in Agenda Item

August 2015
Number 47

In Castaic Lake Water Agency v. Newhall County Water District, et al. (Castaic) (June 26, 2015) 2015 Cal. App. Lexis 641, the court of appeal recently addressed the question of what constitutes substantial compliance with the Brown Act’s agenda requirements. The court addressed whether the Newhall County Water District’s (Newhall) description of a closed session agenda item complied with the Brown Act. The court held that Newhall substantially complied with the Brown Act despite the fact that Newhall did not utilize “safe harbor” language to describe the subject of the closed session and cited to the wrong specific provision of the Brown Act in relation to the agenda item.

The Brown Act allows for legislative bodies to hold closed sessions in enumerated circumstances, provided that the agenda sufficiently describes the matters being discussed. The Brown Act contains specific “safe harbor” language for closed session items, usage of which is presumed to comply with the Brown Act.

When conferring with legal counsel regarding litigation in closed session, Government Code section 54954.5, subdivision (c), provides safe harbor language applicable to three specific scenarios as follows: existing litigation, exposure to litigation, or initiation of litigation. In Castaic, Newhall’s board considered the last category, initiation of litigation. For this item, the designated Brown Act safe harbor language is:

CONFERENCE WITH LEGAL COUNSEL – ANTICIPATED LITIGATION
Initiation of litigation pursuant to paragraph (4) of subdivision (d) of Section 54956.9 (Specify number of potential cases).

Newhall’s closed session agenda to discuss initiating litigation against the Castaic Lake Water Agency instead described the item as “Conference with Legal Counsel pursuant to Government Code Section 54956.9(c) to discuss potential litigations (2 cases).” This item did not track the Brown Act’s safe harbor language and did not specify that the closed session was to consider initiating litigation, as opposed to defending or prosecuting an existing case, or discussing exposure to litigation, which are other permissible closed session topics set forth in paragraphs (1) and (2) of subdivision (d) of Government Code section 54956.9.

In holding that Newhall nevertheless substantially complied with the Brown Act, the appellate court reasoned that Newhall’s errors were merely technical and that the substance of the notice properly informed the public that the agency was going to meet to discuss potential litigation. The court reached this conclusion even though Newhall’s agenda said nothing about initiating litigation.

Castaic appears to go somewhat further than prior cases interpreting the Brown Act by finding substantial compliance despite discrepancies between the agency’s agenda and the prescribed safe harbor language where the specific type of litigation at issue – in this case initiating litigation (where the agency is a plaintiff) versus exposure to litigation (where the agency is a defendant) – was not identified. This decision reaffirms the principle of substantial compliance, and that if a local agency commits what is determined to be a minor drafting error when preparing a closed session agenda item, a court might not find a Brown Act violation.

It is not yet known whether the Castaic Lake Water Agency will appeal this decision to the California Supreme Court. Lozano Smith will continue to monitor the case.

For further information about this case and the Brown Act’s open meeting requirements, including how public agencies should provide notice for closed sessions within meetings, please contact 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

Harold M. Freiman
Partner
Walnut Creek Office
hfreiman@lozanosmith.com

Eric Barba
Associate
Walnut Creek Office
ebarba@lozanosmith.com

©2015 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.

Employee’s Inability to Work Under a Particular Supervisor is Not a Disability Under FEHA

August 2015
Number 43

The California Court of Appeal recently held that an employee’s inability to work with her supervisor due to stress and anxiety did not qualify as a disability protected under the Fair Employment and Housing Act (FEHA).

In 2010, Michaelin Higgins-Williams, a clinic assistant for Sutter Medical Foundation who had been diagnosed with adjustment disorder and anxiety, took an approved medical leave based on stress and anxiety caused by interactions with her manager. (Higgins-Williams v. Sutter Medical Foundation (2015) 237 Cal.App.4th 78.) Ms. Higgins-Williams returned to work in August 2010 after exhausting the leave provided by the Family Medical Leave Act (FMLA) and the California Family Rights Act (CFRA).

On her return, Ms. Higgins-Williams received a negative evaluation from her supervisor-the first negative evaluation she had received since starting work at Sutter in 2007. The following month, her supervisor grabbed Ms. Higgins-Williams and yelled at her. Her regional manager ostracized Ms. Higgins-Williams while exhibiting friendly behavior toward other staff. In mid-September 2010, Ms. Higgins-Williams requested a leave of absence, which was granted. While on leave, Ms. Higgins-Williams’ doctor notified Sutter that Ms. Higgins-Williams needed to transfer to another department. Sutter, however, did not transfer Ms. Higgins-Williams.

In late December 2010, Ms. Higgins-Williams’ doctor notified Sutter that she could return to work. Disagreeing with the doctor’s conclusion that she was able to return to work, Ms. Higgins-Williams requested additional leave on January 6, 2011. On January 24, 2011, Sutter informed Ms. Higgins-Williams that there was “no information to support a conclusion that additional leave as an accommodation would effectuate” her return to work as a clinical assistant. Sutter notified Ms. Higgins-Williams that she had until January 31, 2011 to provide such information or else her employment would be terminated. Ms. Higgins-Williams failed to provide the requested information and Sutter terminated her employment on February 1, 2011.

Ms. Higgins-Williams sued Sutter, alleging that Sutter: i) discriminated against her based on a mental disability; ii) failed to engage in the interactive process to make a reasonable accommodation for her disability; iii) retaliated against her for requesting a disability accommodation; and iv) wrongfully terminated her in violation of public policy.

The court determined that Ms. Higgins-Williams’ stated disability, anxiety caused by her supervisor, did not constitute a qualifying disability under FEHA. In arriving at this conclusion, the court relied heavily on Hobson v. Raychem Corp. (1999) 73 Cal.App.4th 614, 628, which held that “the inability to perform one particular job or to work under a particular supervisor, does not constitute a qualified disability under FEHA.” While the court acknowledged that portions of Hobson had been disapproved in subsequent decisions, the finding that an inability to work under a particular supervisor was not a disability under FEHA remained intact. Therefore, because Ms. Higgins-Williams did not suffer from a qualifying disability, she was not entitled to the protections afforded by FEHA.

Ms. Higgins-Williams’ claim that she was wrongfully terminated in violation of public policy for using FMLA/CFRA leave was similarly denied by the court, as it found that Sutter had a legitimate reason for terminating her employment and Ms. Higgins-Williams failed to demonstrate that such reason was pretextual.

While this case provides additional guidance as to what constitutes a qualifying disability under FEHA, it does not simplify the disability accommodation process or analysis. For instance, anxiety caused exclusively by an employee’s supervisor would not qualify as a FEHA disability under Higgins-Williams. On the other hand, an employee’s pre-existing mental disease or illness, exacerbated by interactions with the employee’s supervisor, may qualify as a disability under Higgins-Williams as a psychiatric disability related to supervision in general, or for other reasons recognized by FEHA (e.g., a disability that limits a major life activity).

It is crucial for employers to exercise good faith in determining whether an employee has a qualifying disability, and when engaging in the interactive process to determine if a reasonable accommodation is available. Both FEHA and the federal Americans with Disabilities Act recognize that the interactive process may require several meetings with the employee in order for an employer to satisfy its obligations under the law.

For more on information on Higgins-Williams and its implications on leaves and disability accommodations, please contact 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

Darren C. Kameya
Partner
Los Angeles Office
dkameya@lozanosmith.com

Gabriela D. Flowers
Associate
Sacramento Office
gflowers@lozanosmith.com

©2015 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.

California Court of Appeal Holds Attorney-Client Privilege Not Waived by Public Agency’s Accidental Disclosure of Privileged Communications in Response to a Public Records Act Request

August 2015
Number 42

In a decision impacting public agencies across the state, the California Court of Appeal held that a school district did not waive its attorney-client privilege when it accidentally revealed attorney-client communications in response to a request under the Public Records Act. In Newark Unified School District v. Superior Court (July 31, 2015) 2015 Cal.App.Lexis 671 (Newark), the Court of Appeal reversed the trial court, which previously ruled that the school district waived the privilege even upon a mistaken release of documents. Lozano Smith’s litigation team represented the school district in the case before the trial court and on appeal.

The controversy centered on a Public Records Act statute, Government Code section 6254.5, which states “whenever a state or local agency discloses a public record which is otherwise exempt . . . to any member of the public, this disclosure shall constitute a waiver of the exemptions specified in” Government Code section 6254. Among the exemptions under Government Code section 6254 are “[r]ecords, the disclosure of which is exempted or prohibited pursuant to federal or state law, including, but not limited to, provisions of the Evidence Code relating to privilege.” (Gov. Code, § 6254, subd. (k).) The Newark court held that regardless of Government Code section 6254.5, when a public entity mistakenly turns over attorney-client communications in response to a Public Records Act request, that is not a “disclosure” of attorney-client communications resulting in the waiver of the attorney-client privilege.

In Newark, just hours after the release of over 1,500 documents in response to a Public Records Act request, the district realized that the disclosed documents included over 100 pages of privileged communications between the district and its lawyers, and requested their return or destruction. The requesting party refused, prompting the district to seek a restraining order in superior court on the basis that the attorney-client privilege is not waived under the Public Records Act when such privileged communications are inadvertent or unintentional. The requesting party argued that any disclosure, accidental or not, resulted in a waiver of the attorney-client privilege. The trial court ruled against the district, but issued a restraining order against the requesting party and others prohibiting the review and dissemination of the privileged documents until any further ruling on appeal.

In reversing the trial court, the appellate court found the statutory language susceptible to the interpretations encouraged by each of the parties and, therefore, analyzed the legislative history of Government Code section 6254.5 to determine its meaning and intent. Based upon the legislative history, the court concluded that the Legislature did not intend Government Code section 6254.5 to undermine the attorney-client privilege, but rather “to prevent government officials from manipulating the [Public Record Act] exemptions by asserting them against some members of the public while waiving them as to others.” Section 6254.5 thus does not address a public agency’s employee’s accidental release of information protected by the attorney-client privilege. Furthermore, the proper interpretation of section 6254.5 required the court to reconcile it with Evidence Code section 912, which defines how the attorney-client privilege can be waived. Because inadvertent disclosures do not waive the attorney-client privilege under Evidence Code section 912, and Government Code section 6254.5 could be interpreted to avoid such a conflict with the evidence code, Newark concluded the school district did not waive the attorney-client privilege when it responded to the request under the Public Records Act.

The court did caution, however, that a member of the public could prove the distribution of privileged documents was so widespread that a court order to return the documents would be hard to enforce. The court specified that trial courts would have to a make a determination on a case-by-case basis, but that under the facts in Newark, there was no evidence of such a wide and irretrievable distribution and the school district employee quickly put the requesting party on notice of the accidental disclosure of privileged documents and demanded their return. This “Newark notice” appears a necessary step by public agencies seeking a court order to return privileged documents disclosed by mistake.

The issuance of Newark by the Court of Appeal’s First Appellate District comes as the California Supreme Court takes up Ardon v. Los Angeles, an earlier opinion by the Second Appellate District, which held that the city had surrendered its attorney-client privilege when it inadvertently disclosed attorney-client information under the Public Records Act. Ardon was de-published pending a decision by the California Supreme Court. Notably, in Ardon, the party requesting documents under the Public Records Act put the public agency on notice of the apparent disclosure of attorney-client communications and the public agency did not request the communications’ return or destruction until several months after the documents had been disclosed. Because of the Supreme Court’s consideration of Ardon, Supreme Court review may also be sought by the losing party in Newark.

The district’s litigation team in Newark included Lozano Smith Partners Jerome Behrens and Sloan Simmons, Senior Counsel Steve Ngo and Matthew Hicks, and Associate Frances Valdez.

If your public agency has any questions regarding the Newark opinion or the Public Records Act in general, please contact 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

Sloan R. Simmons
Partner
Sacramento Office
ssimmons@lozanosmith.com

Steve Ngo
Senior Counsel
Walnut Creek Office
sngo@lozanosmith.com

©2015 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.

Significant Changes to California Family Rights Act Regulations

July 2015
Number 37

The California Family Rights Act (CFRA) is the state law that allows qualifying employees to take up to 12 weeks of leave in a 12 month period to care for an employee’s family member or for the employee’s own medical condition, or in connection with the birth, adoption or fostering of an employee’s child. To qualify for CFRA leave, several threshold requirements must be met: (1) an employer must employ 50 or more employees; (2) an employee must work at a worksite with at least 50 employees within a 75 mile radius; (3) an employee seeking CFRA leave must have worked 1,250 hours for that employer in the 12 consecutive months prior to the leave; and (4) an employee must have been employed by the employer for at least 12 non-consecutive months before the requested leave.

The Family Medical Leave Act (FMLA) is the federal law that allows employees annually to take 12 weeks of leave for reasons that include those allowed under CFRA. While there are significant differences between CFRA and FMLA, the CFRA regulations have recently been changed to align the application of CFRA leave rights more closely with the application of FMLA leave rights. These revised CFRA regulations are effective July 1, 2015. Laws regarding leaves of absence, including CFRA and FMLA, can be complex and may overlap in various ways. Employers should consult with legal counsel when any specific questions of implementation arise.

Some of the significant amendments to the CFRA regulations include:

Eligibility Requirements
The CFRA regulations now align with FMLA regulations, which allow an employer to disregard the months worked by an employee before a break in employment of seven years or more when determining if an employee has worked for at least 12 months for the employer. However, employees who are ineligible for CFRA because they have not satisfied the 12 month requirement at the start of their leave may later become eligible for CFRA while on another leave (such as sick or vacation) regardless of whether that leave is paid or unpaid.

Employer Response
An employer previously had 10 calendar days to respond to a CFRA leave request. The CFRA regulations now align with the FMLA and require the employer to respond to a leave request within 5 business days.

Intermittent Leave
The CFRA regulations provide much greater detail regarding how intermittent CFRA leave may be taken and how it is counted against an employee’s 12 week leave allotment. For example, partial-day absences must be counted against the allotted CFRA leave amount in the shortest period of time that the employer’s payroll system uses to track leaves or absences, but the minimum increment cannot exceed a one-hour period.

Medical Information
The CFRA amendments limit an employer’s ability to obtain additional medical information regarding an employee or an employee’s family members. Under the new regulations, an employer is limited to only contacting the health care provider for the sole purpose of receiving authentication of a medical certification.

An employee must also cooperate with the employer’s requests for necessary medical information. An employee’s failure to respond to permissible employer inquiries may cause the employer to deny CFRA leave rights and protections. This may happen if the employer cannot determine if the leave that the employee is requesting is CFRA-qualifying. The employer may set a deadline for providing medical certifications no later than 15 calendar days after the employer has requested the information. The employer must give the employee notice of the consequences of non-compliance. Absent extenuating circumstances, the employer may deny CFRA leave protections following the 15-day time period until the employee produces sufficient certification.

Under the CFRA regulations, an employer may demand that an employee obtain the opinion of a second health care provider when it has a “good faith, objective reason” to doubt the validity of the initial certification. A third health care provider may be used only when the second opinion differs from the first health care provider’s certification.

Health Coverage, Benefits, and Seniority
With a few exceptions, an employer must maintain group health plan coverage for an employee while the employee is on CFRA leave. The employee is responsible for maintaining timely payment of their premiums for their health plan coverage while on CFRA leave, and the revised CFRA regulations provide specific and limited circumstances under which an employer may discontinue coverage prior to reinstatement.

If an employer provides a new or different health plan or benefits during an employee’s CFRA leave, the employer must give the employee notice that he or she is subject to the terms of the new or changed plan or benefits. Additionally, the CFRA regulations now expressly protect an employee from losing any seniority or longevity “credit” that he or she would have accrued without having taken a CFRA leave.

Reinstatement Rights and Obligations
An employee returning from CFRA leave is entitled to reinstatement to the same or comparable position upon his or her return to the workplace. The revised regulations clarify that the employee’s position of reinstatement must be “virtually identical” in terms of pay, benefits, shift, schedule, geographic location, and working conditions including privileges, perquisites, and status. The regulations also expressly authorize an employer to accommodate an employee’s request for a different position for personal reasons, promotion, or as a disability accommodation.

When an employee returns to work after a continuous CFRA leave, the employer may require the employee to produce a medical release to return-to-work, but only if it is required from other employees returning to work after illness, injury, or disability, and is not prohibited by a collective bargaining agreement. A medical release is not required upon return from every intermittent CFRA leave, but may be required every 30 days based upon reasonable safety concerns for the employee. A fitness-for-duty examination cannot be required as a condition of reinstatement, but it may be required after an employee returns to work if it is job-related and consistent with a business necessity.

Retaliation
The amended regulations provide much greater detail regarding prohibited “retaliation” and “interference” with an employee’s exercise of CFRA rights. Prohibited conduct by an employer includes: interfering with an employee’s right to take CFRA leave, retaliation or discrimination against an employee for requesting or taking CFRA leave, or requesting that employees “waive” their CFRA leave rights. Notably, the CFRA regulations now expressly affirm that an employee loses his or her reinstatement rights if the employee obtained or used CFRA leave on a fraudulent basis.

The application of CFRA and other leave laws requires a fact specific inquiry and an analysis of each individual employee’s unique circumstances. Employers should consult with legal counsel if any questions arise regarding an employee’s entitlement to CFRA leave or the employer’s CFRA obligations.

For more on information on the CFRA regulations, please contact 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

Darren C. Kameya
Partner
Los Angeles Office
dkameya@lozanosmith.com

Inna Volkova
Associate
Fresno Office
ivolkova@lozanosmith.com

©2015 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.

An Employment Decision Cannot be Motivated by an Employee’s Need for an Accommodation Due to Religious Beliefs or Practices

June 2015
Number 32

The United States Supreme Court recently ruled that an employer may not use a seemingly neutral policy or practice to discriminate against an employee or applicant in the free exercise of religion. In Equal Employment Opportunity Commission v. Abercrombie & Fitch Stores, Inc. (June 1, 2015) 2015 U.S. Lexis 3718, (Abercrombie & Fitch), the Court found that even a neutral policy may cause intentional discrimination against an employee or applicant when used to deny employment or employment rights because of the employee’s need for an accommodation due to his or her religious beliefs.

Samantha Elauf, a practicing Muslim, applied for a position with Abercrombie & Fitch Stores. She was interviewed by the store’s assistant manager and was given a rating qualifying her for hire. However, Abercrombie & Fitch has a “Look Policy” governing employee dress. The policy prohibits the wearing of “caps.” During her interview Ms. Elauf wore a headscarf and the assistant manager was concerned it would conflict with the store’s policy. Upon inquiry, the district manager informed the assistant manager that the headscarf would in fact violate the policy, as would any headwear, and directed the assistant manager not to hire Ms. Elauf. The Equal Employment Opportunity Commission (EEOC) filed suit on behalf of Ms. Elauf alleging a violation of Title VII of the Civil Rights Act of 1964 (Title VII).

Title VII prohibits two categories of employment practices: disparate treatment (or intentional discrimination) and disparate impact (or unintentional discrimination). Intentional discrimination is found when an employer fails or refuses to hire or discharges any individual because of that individual’s race, color, religion, sex, or national origin. Intentional discrimination can also be found where an employer discriminates against an individual with respect to compensation, terms, conditions, or privileges of employment. Challenges based on a failure to accommodate, as in the Abercrombie & Fitch case, can be brought as intentional discrimination claims. In Abercrombie & Fitch, the Supreme Court found that the company had a neutral policy against “caps” because the policy forbid the wearing of any kind of cap, religious or non-religious, and the policy was neutrally applied, as it was applied to all employees regardless of religion. However, the Court found that the store had an obligation to accommodate Ms. Elauf’s desire to wear a headscarf and therefore Abercrombie & Fitch had intentionally discriminated against Ms. Elauf by failing to provide an accommodation for her religious practice.

The Abercrombie & Fitch decision reminds employers to be cautious when denying employment or employment opportunities based on practices or policies that may impact an employee’s or applicant’s exercise of religion. A neutral policy applied in a neutral manner may not withstand judicial scrutiny if the policy discriminates against an employee or applicant based on his or her religious practices. Employers have a duty to accommodate religious practices, unless the employer can demonstrate it would cause undue hardship on the conduct of the employer’s business.

If you have any questions regarding this decision, or other questions regarding employer accommodations for religious practices, please contact 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

Dulcinea Grantham
Partner
Walnut Creek Office
dgrantham@lozanosmith.com

Samantha Corner
Associate
Monterey Office
scorner@lozanosmith.com

©2015 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.

Significant Lease-Leaseback and Conflict of Interest Issues Sparked by Appellate Court

June 2015
Number 30

Despite a recent appellate court decision that affirmed the validity of “lease-leaseback” contracts for school districts to build facilities under Education Code §§17400, et seq., a new appellate court decision from a different appellate court district has allowed a lawsuit to proceed against a particular lease-leaseback arrangement that was similar to many in use by school districts in the State. In a portion of the decision relevant to all public agencies, the court also concluded that a civil cause of action for conflict of interest under Government Code section 1090, et seq., can be brought to seek invalidation of a contract where the conflict involves an outside consultant, rather than a public agency employee or officer. The court’s decision is not yet final, and may be subject to further review.

Lease-Leaseback

Last year, the Fourth District appellate court in Los Alamitos Unified School District v. Howard Contracting, Inc. (2014) 229 Cal.App.4th 1222, upheld a school district’s use of lease-leaseback under Education Code section 17406 to build facilities and confirmed that competitive bidding was not required when using that authority. (See Client News Brief No. 62, September 2014.)

This week, in Davis v. Fresno Unified School District (June 1, 2015) case no. F068477 (5th App. Dist.), the court agreed with Los Alamitos that lease-leaseback can comply with the law, and does not require competitive bidding. However, the court allowed a lawsuit, currently only at the pleading stage, to move forward challenging a specific lease-leaseback arrangement. The case was sent back to the trial court for further proceedings and, as a result, the ultimate outcome of this case may be decided on appeal or after a trial on the specific issues. For these reasons, it is too soon to say to what extent Davis may impact other school districts in their specific lease-leaseback arrangements. The case does not directly address lease-leaseback for other public agencies.

While it is premature to say that Davis has changed or will change the landscape of lease-leaseback, the court’s decision calls into question a number of aspects of many school district lease-leaseback agreements. A primary concern regarding the lease-leaseback agreement addressed by the court is that the agreement functioned more like a construction contract than a “true” lease. The court addressed a number of alleged characteristics of the school district’s specific contract documents, and concluded that the plaintiff might be able to establish at trial that the agreement was not a “true” lease under the lease-leaseback statutes. The court opined that in order to be a lease, the statute requires the district to occupy and have use of the site for some period of time while the lease and leaseback (sublease) were in effect. The court also opined that a lease-leaseback under Section 17406 must function as a financing vehicle for the school district, although the court rejected the notion that a school district must lack access to facility funding in order to use lease-leaseback. The court’s conclusions are debatable, and may yet be subject to further judicial review.

Conflict of Interest

In addition to the lease-leaseback issue, the Court addressed conflict of interest in a manner that is applicable to all local agencies. The court allowed further legal action on a claim that the contractor, as a pre-construction consultant to the school district, participated in the making of a contract in which it subsequently became financially interested, and thus potentially violated conflict of interest laws. The plaintiff alleged that the contractor had a conflict of interest because it developed the plans and specifications for the project, and simultaneously acted in its role as a government agency consultant to participate in making the overall lease-leaseback contract, which was a substantial financial benefit to the contractor. While the court acknowledged prior case law holding that an outside consultant cannot be criminally prosecuted for an alleged conflict of interest violation under Government Code section 1090, the court left open the possibility that the consultant might be found to have committed a violation that can be pursued in a civil lawsuit. Such a lawsuit could seek to invalidate the contract in question. This opens the door to potential scrutiny of outside consultants in a variety of contexts beyond construction. The court did, however, find that the Political Reform Act (Gov. Code §§ 87100, et seq.) does not apply to an outside corporation offering consulting services.

Lozano Smith will be monitoring this case closely and will report on any significant developments. Because of the scrutiny of the lease-leaseback authority that will likely follow the Davis case, and may continue until the case is finally resolved, school districts may wish to work particularly closely with their legal counsel on lease-leaseback issues and agreements. Similarly, for all public agencies, care should be taken when considering issuing contracts to consultants who have previously advised the agency on a related matter.

If you have any questions regarding this case or lease-leaseback agreements that school districts may have in place or are considering, please contact 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

Harold M. Freiman
Partner
Walnut Creek Office
hfreiman@lozanosmith.com

Arne Sandberg
Senior Counsel
Walnut Creek Office
asandberg@lozanosmith.com

©2015 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 Equal Employment Opportunity Commission’s Conciliation Efforts May Be Reviewed By Courts

May 2015
Number 29

By unanimous decision, the United States Supreme Court held that courts may now review whether the Equal Employment Opportunity Commission (EEOC) satisfactorily engaged in conciliation efforts with employers. Under Title VII of the Civil Rights Act of 1964, the EEOC must attempt to remedy an unlawful employment practice through a conciliation process before bringing a lawsuit for discrimination. Now, courts may review whether the EEOC has complied with its obligation to use informal methods of dispute resolution.

In Mach Mining, LLC v. EEOC (2015) 2015 U.S. Lexis 2984, a woman filed a charge alleging Mach Mining would not hire her as a coal miner because of her sex. The EEOC investigated and found reasonable cause to believe the woman’s claim. The EEOC then sent a letter to Mach Mining announcing its determination and invited the company and the woman to engage in an informal dispute resolution process. A year later, the EEOC sent Mach Mining a second letter stating that conciliation efforts were unsuccessful. The EEOC then sued Mach Mining for sex discrimination in hiring. In response, Mach Mining argued that the EEOC had failed to conciliate in good faith prior to filing the lawsuit.

The Supreme Court analyzed Title VII, which imposes a mandatory duty on the EEOC to attempt conciliation of a discrimination charge prior to filing a lawsuit. The Court noted that this is a necessary precondition to filing a lawsuit. While the law provides the EEOC with wide discretion over the conciliation process, whether the process actually occurred may be reviewed by the courts. To satisfy its statutory obligation, the EEOC must inform the employer about the claim and provide the employer with an opportunity to confer. The Court concluded judicial review was appropriate because, without such review, compliance with the law would be left to the discretion of the EEOC alone.

The Court next looked to the scope of the review. The EEOC argued that courts should rely on a facial examination of EEOC documents, while Mach Mining argued that the same standards imposed in union bargaining be applied. The Court accepted neither argument and found that the level of review should match Title VII’s language. That is, the review should ensure that the EEOC gave the employer a chance to discuss and remedy the discriminatory practice. Courts will not look to the content of the discussions, merely that such discussions occurred. The Supreme Court further found that the EEOC’s two letters to Mach Mining were not enough to show compliance with the law. The Court suggested the EEOC also provide an affidavit stating that it has performed its obligations. However, if an employer submits credible evidence indicating the EEOC has not engaged in the conciliation process, the court may then review and decide the dispute. If the court sides with the employer, the EEOC must undertake the conciliation process. Therefore, the Supreme Court has made clear that lower courts may review whether the EEOC has complied with Title VII’s requirement that it engage in conciliation efforts to resolve discriminatory employment practices.

Despite the fact that Mach Mining is a favorable ruling for employers, the Court gives EEOC an out by imposing a remedy that allows the conciliation process to occur after the lawsuit is filed, despite the EEOC’s initial failure to engage in the process. Ultimately, Mach Mining makes clear that the EEOC cannot cut corners during its investigation and dispute resolution phases, but it must go through the conciliation process

If you have any questions regarding the Mach Mining decision, or other questions regarding the EEOC, please contact 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

Mark K. Kitabayashi
Partner
Los Angeles Office
mkitabayashi@lozanosmith.com

Frances M. Valdez
Associate
Walnut Creek Office
fvaldez@lozanosmith.com

©2015 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 Designating a Title IX Coordinator and an Overview of Title IX Requirements

May 2015
Number 28

The U.S. Department of Education’s Office for Civil Rights (OCR) issued a guidance package on April 24, 2015 discussing the obligation of school districts, colleges, and universities to designate a Title IX coordinator and providing guidelines for addressing sex discrimination in education programs and activities and meeting other Title IX requirements.

Title IX of the Education Amendments of 1972 (Title IX) prohibits discrimination on the basis of sex in all education programs or activities that receive federal financial assistance. The spirit of Title IX is that an institution may not exclude, separate, deny benefits to, or treat differently any person on the basis of sex unless authorized to do so under Title IX.

OCR’s guidance package includes three documents:

  • A Dear Colleague Letter to school districts, colleges, and universities emphasizing their obligation to designate a Title IX coordinator and explaining the role of the Title IX coordinator.
  • A letter to Title IX coordinators that provides information about their important role.
  • A Title IX resource guide that includes a summary of Title IX’s requirements in several areas including recruitment, admissions, and counseling; financial assistance; athletics; sex-based harassment; treatment of pregnant and parenting students; discipline; single-sex education; employment; and retaliation.

Each educational institution should ensure that a Title IX coordinator has been designated. A Title IX coordinator is charged with coordinating the educational institution’s efforts to comply with and carry out its responsibilities under Title IX. The Dear Colleague Letter stressed the essential role that a Title IX coordinator plays in assisting an educational institution with complying with Title IX and emphasized the need for the Title IX coordinator to have independence, the support of the educational institution, appropriate training, and visibility by complying with required notices.

For additional information regarding the OCR’s April 24, 2015 guidance package, Title IX and other laws prohibiting sex discrimination, please contact 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

Roberta L. Rowe
Partner
Fresno Office
rrowe@lozanosmith.com

Desiree Serrano
Associate
Los Angeles Office
dserrano@lozanosmith.com

©2015 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.

U.S. Supreme Court Addresses Separate Accommodation Policies and Pregnancy Discrimination Claims

April 2015
Number 19

The United States Supreme Court has ruled that courts should analyze differences in accommodations for pregnant versus nonpregnant employees. In Young v. United Parcel Service, Inc. (March 25, 2015) 2015 U.S. Lexis 2121, the Supreme Court held that when an employee brings a pregnancy discrimination lawsuit under the Pregnancy Discrimination Act (PDA) (42 U.S.C. § 2000e(k)), courts must consider whether and how an employer’s policy treats pregnant workers less favorably than nonpregnant workers with similar work restrictions. This case is a helpful reminder that separate accommodation policies (i.e., those that differentiate between on-the-job injuries, ADA disabilities, etc.) may open the door to litigation, especially since California’s Fair Employment and Housing Act explicitly requires that employers provide reasonable accommodations for conditions related to pregnancy. (Gov. Code, § 12945, subd. (a)(3)(A).)

Peggy Young was employed as a UPS driver who delivered packages. When she became pregnant, her doctor advised that she should not lift more than 20 pounds at the beginning of her pregnancy and no more than 10 pounds thereafter. UPS required that drivers be able to lift packages weighing up to 70 pounds. When Ms. Young provided UPS with her medical restriction, UPS told her she could not be accommodated and therefore could not work while under the lifting restriction. However, UPS had a practice of accommodating employees with similar work restrictions who had become disabled on the job, lost their Department of Transportation certifications, or suffered from a disability under the ADA. As a result, Ms. Young brought a pregnancy discrimination suit alleging that she was intentionally treated less favorably than employees with her qualifications but outside her protected class. The trial and appellate courts both concluded that Ms. Young’s case against UPS failed because the policy was “pregnancy-blind” and that the categories of employees UPS accommodated were too different to compare to a pregnant worker.

The Supreme Court disagreed and concluded that Ms. Young could proceed with her lawsuit against UPS. While the Supreme Court noted that the PDA does not grant pregnant employees “an unconditional most-favored-nation status,” an employee bringing a pregnancy discrimination lawsuit may establish discrimination by showing: (1) she belongs to the protected class, (2) that she sought accommodation, (3) that the employer did not accommodate her, and (4) that the employer accommodated others “similar in their ability or inability to work.” An employer may then justify its refusal to accommodate for legitimate and nondiscriminatory reasons. However, the reason cannot be that it is more expensive or less convenient to accommodate pregnant women. If an employer sets forth a legitimate, nondiscriminatory reason for denying her accommodation, the burden shifts to the pregnant employee to show that the reason is pretextual.

The Court determined that a pregnant employee can sustain a lawsuit “by providing evidence that the employer accommodates a large percentage of nonpregnant workers while failing to accommodate a large percentage of pregnant workers.” Because the Court found Ms. Young had met this burden, the Supreme Court returned the case to the lower court to determine whether the reasons UPS treated Ms. Young less favorably than it treated nonpregnant employees were pretextual.

The Young decision reminds employers to be cautious when considering and maintaining separate accommodation policies. The Court noted that the lower courts did not consider “why, when the employer accommodated so many, could it not accommodate pregnant women as well?” Under Young it may now be easier for a pregnant employee to establish a case of employment discrimination under the PDA. In fact, before the Supreme Court issued its decision in Young, UPS changed its practice and now provides accommodations to pregnant workers in the same manner. Finally, while Young was decided under federal law, it may be instructive to California courts analyzing pregnancy discrimination cases because California law requires employers to accommodate pregnant workers.

If you have any questions regarding the Young decision, or other questions regarding employee accommodations, please contact 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

Dulcinea Grantham
Partner
Walnut Creek Office
dgrantham@lozanosmith.com

Frances M. Valdez
Associate
Walnut Creek Office
fvaldez@lozanosmith.com

©2015 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.

It’s An E-World: Governing in the Electronic Age

March 2015
Number 17

Technology often outpaces the law. Lozano Smith attorneys have emphasized this point at numerous presentations on technology legal issues over the past decade. Occasionally, the Legislature tries to catch up with changes in technology: in 2015, such legislative changes focused on school districts, which now must enact new policies on several fronts, as discussed below. However, the law on many other local government issues remains unsettled, and is not likely to be clarified by legislative action any time soon. Lozano Smith’s Technology & Innovation Practice Group was formed to help our clients navigate these murky legal waters for all California public agencies. This news brief summarizes some of the many challenging issues we are tackling in 2015.

Email, the Public Records Act and the Retention of Records. Public agencies often struggle with how to identify public records to be retained, as well as how and whether to preserve emails, and for how long. The California Public Records Act imposes obligations for managing and disclosing public records on all state and local agencies, but retention issues are proliferating. These issues are of particular public interest at the moment due to attention being paid to use of personal email accounts by prominent national political candidates.

As we previously reported in CNB No. 21 (2014), an appellate court ruled last year that public agency emails sent and received on personal devices and using personal accounts are not subject to disclosure under the California Public Records Act. The opinion in City of San Jose v. Superior Court (2014) 225 Cal. App. 4th 475 reversed a trial court ruling that such emails were subject to disclosure if they concerned public agency business, even when a public agency employee or official was using his or her personal account on a personal device. The case has been appealed to the California Supreme Court, and a ruling is likely in 2015. Lozano Smith is watching this case closely and will provide a news brief on the opinion when it comes down.

When it comes to record retention for school districts, regulations dating from the 1970s (before the advent of personal computers and, of course, email) govern how long to retain documents, including electronic documents. As discussed in detail in CNB No. 63 (2012), those regulations appear to require that some emails be retained indefinitely, and the California Department of Education has not pursued revisions to the regulations to make them current. To help educational agencies better evaluate their options for determining what email to retain and for how long, Lozano Smith has created “School District Email Retention”, which discusses possible policy solutions. A copy of this document can be obtained by contacting any of the authors identified below.

Cities and other local governmental agencies face their own records retention issues; many such agencies are turning to digital records to store security, library, police, and traffic data, along with many other uses. Of particular concern lately is the retention and storage of video images, including images from security and traffic cameras and police body and car cameras. Lozano Smith attorneys have developed the unique retention and management protocols these records require.

Contracting for Cloud Services. As summarized in CNB No. 78 (2014), school districts are now subject to three bills regarding technology services and student privacy that were passed by the California Legislature last year, two of which became effective as of January 1, 2015 (the third, affecting vendors of technology services, will not go into effect until January 1, 2016). Assembly Bill (AB) 1584 enacted new Education Code section 49073.1, requiring that educational agencies enact board policies governing new contracts with third parties for digital storage, management, and retrieval of pupil records (including cloud-based storage) or digital educational software related to pupil records. Education Code section 47603.1 also requires that such contracts contain nine provisions designed to protect student privacy.

Also effective on January 1, 2015, AB 1442 enacted Education Code section 49073.6, which places requirements on an educational agency when considering a program to gather or maintain student information obtained from social media. Such an agency must first conduct a public meeting on the issue and notify students and parents of the opportunity to comment on the program. If the program is enacted, the educational agency must adhere to certain privacy safeguards set out in the statute. Although this statute appears to have been drafted to target an agency’s widespread monitoring of its students’ social media activities, the statute may also apply to incidental review of social media — for instance, when a particular student’s alleged misconduct may be reflected on his or her social media account.

Lozano Smith attorneys can assist with model policy documents and contractual terms for compliance with these new laws. In addition, as reported in CNB No. 32 (2014), Lozano Smith attorneys Michael Smith and Manuel Martinez were contributors to the National School Boards Association’s Council of School Attorneys publication, “Cloud Computing and Student Privacy: A Guide for School Attorneys”. While the COSA Guide is not generally available to non-COSA members, our attorneys are available to provide similar guidance to our school district and municipal clients.

Purchasing and Installing Technology. Many school districts and public libraries are in the process of purchasing technology upgrades to assist in the implementation of the Common Core State Standards. Such projects are often funded by the federal E-rate program. When making such purchases, it is important to navigate both the federal E-rate rules and state laws regarding the purchase of goods and services by California public agencies. For school districts, one little-explored option is to use the “competitive negotiation” procedures set out in Public Contract Code section 20118.2. That statute permits a school district to purchase “computers, software, telecommunications equipment, microwave equipment, and other related electronic equipment and apparatus” using the detailed request for proposal procedures set out in the statute. This statute cannot be used for construction or “for the procurement of any product that is available in substantial quantities to the general public”.

Lozano Smith has also taken the lead in developing contracts for public agency shared acquisition, website design and management, and data management services by and between municipalities. This cutting edge undertaking presents cost-effective, immediate functionality to the user groups.

Finally, public agencies should carefully consider whether their technology installation contracts are governed by prevailing wage laws. As reviewed in CNB No. 43 (2014), sweeping changes to prevailing wage law now require, among other things, that contractors on public works projects register with the Department of Industrial Relations. Where a contract calls for significant installation on public property, it may be subject to these requirements.

Lozano Smith’s Technology & Innovation Practice Group can offer guidance on these and many other technology legal issues facing local public agencies. If you are attending the CASBO Annual Conference next week, you can catch Lozano Smith partners Harold Freiman and Devon Lincoln presenting on Technology Legal Issues on Wednesday, April 1 beginning at 1:45. Also, in the coming year, our clients will begin to receive our new quarterly publication on law and technology for public agencies. If you have questions on a technology legal issue, please contact 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

Harold M. Freiman
Partner
Walnut Creek Office
hfreiman@lozanosmith.com

Devon B. Lincoln
Partner
Monterey Office
dlincoln@lozanosmith.com

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

Manuel F. Martinez
Associate
Walnut Creek Office
mmartinez@lozanosmith.com

©2015 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.

No FEHA Violation for Releasing Employee Who Was Unable to Perform Essential Job Functions

March 2015
Number 15

In Nealy v. City of Santa Monica (January 21, 2015) 2015 Cal.App. Lexis 139, the Second District Court of Appeal affirmed a judgment in favor of the City of Santa Monica (City) finding that because an employee was unable to perform the essential job functions even with reasonable accommodations, the City did not violate the California Fair Employment and Housing Act in releasing the employee from employment. Specifically, the court found the City was not required to eliminate an essential function of a job or reassign the employee to a position for which he was not qualified in ordr to accommodate him.

Tony Nealy worked for the City as a solid waste equipment operator. Mr. Nealy injured himself while on the job and subsequently took multiple injury-related leaves of absence. He was eventually released to return to work with restrictions. Mr. Nealy expressed his desire to return to work in his former solid waste equipment operator position. The City and Mr. Nealy participated in multiple meetings to engage in an interactive process. During this process, the City determined it could not place Mr. Nealy in this position because there were essential functions of the solid waste equipment operator position that Mr. Nealy could not perform with or without accommodations. However, the City did identify alternative vacant positions for which Mr. Nealy could be considered. Although Mr. Nealy applied for a couple of these vacant positions, the City ultimately denied his applications because he was not qualified to meet the requisite application criteria. The City subsequently ended Mr. Nealy’s employment.

Mr. Nealy filed a lawsuit against the City alleging disability discrimination, failure to provide reasonable accommodation, failure to engage in an interactive process, and retaliation. The trial court dismissed all allegations and the Court of Appeal affirmed.

The court found that Mr. Nealy could not perform the essential functions of the solid waste equipment operator position even with accommodations. The court found that the City was not required to eliminate an essential function of the position, despite Mr. Nealy’s request that the City do so to accommodate him. The court further found that while a reasonable accommodation may include reassignment to a vacant position, the City was not required to reassign Mr. Nealy to a vacant position for which he was not qualified.

This case affirms the importance for employers of engaging in a meaningful interactive process with employees, which may include considering alternate job placements for the employee. However, the court recognized that it would be an unreasonable accommodation to require employers to eliminate essential functions of positions or assign employees to positions for which they are not qualified.

For further information about this case, accommodating employees, or the interactive process, please contact 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

Dulcinea Grantham
Partner
Walnut Creek Office
dgrantham@lozanosmith.com

Maryn Oyoung
Associate
Walnut Creek Office
moyoung@lozanosmith.com

©2015 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.

California Supreme Court Confirms that Employees May Be Terminated While on Leave, But Questions Remain Unanswered

March 2015
Number 14

An employer may dismiss an employee who is on medical leave if the employee violates company policy during the leave. In Richey v. Autonation, Inc. (2015) 60 Cal. 4th 909, a case that applies both to school and municipal employers, the California Supreme Court reversed the court of appeal and upheld an arbitrator’s award in favor of an employer that terminated the employee while he was on an approved medical leave because he violated the company policy that prohibited working during a leave.

Avery Richey began working at Power Toyota in Cerritos in 2004. He was aware that outside employment while on California Family Rights Act (CFRA) leave was not allowed. Employees that violated this policy in the past had been fired. In October 2007, Mr. Richey decided to open a restaurant while he was still working at Power Toyota. In March 2008, Mr. Richey injured his back at home and he was unable to work as a result of his injury. Mr. Richey filed for leave under the CFRA and the federal Family Medical Leave Act (FMLA) and Power Toyota granted the leave.

While Mr. Richey was on leave, Power Toyota sent him a letter stating that employees were not allowed to engage in outside employment while on leave and he could contact them if he had questions. Mr. Richey failed to respond to the letter. After receiving information that Mr. Richey was working while on leave, Power Toyota conducted an investigation and determined that Mr. Richey was working at his restaurant. Just prior to the conclusion of Mr. Richey’s leave Power Toyota terminated him. Mr. Richey began legal action against Power Toyota. An arbitrator granted an award in favor of Power Toyota and Mr. Richey sought to vacate the award in court.

The CFRA (Gov. Code § 12945.2) and the FMLA (29 U.S.C. 2601, et. seq.) allow employees to take up to 12 weeks of leave in a 12 month period to care for an employee’s family member or for the employee’s own medical condition. An employee is entitled to reinstatement in the same, or a comparable position, at the end of their leave. Defenses to reinstatement exist under both the CFRA and the FMLA. One such defense provides that “[a]n employee has no greater right to reinstatement or to other benefits . . . of employment than if the employee had been continuously employed during the CFRA leave period.” An employer has the burden of proving that an employee would not have been employed at the time of reinstatement even if they had not taken leave. (Cal.Code Regs., tit. 2, § 11089, subd. (c)(1); see also 29 C.F.R. § 825.216(a).)

The California Supreme Court found that the evidence overwhelmingly supported the arbitrator’s factual findings that Mr. Richey was fired because he pursued outside employment while on CFRA leave, not because he decided to take CFRA leave for his injury. The California Supreme Court was persuaded by evidence such as Power Toyota’s notice to Mr. Richey of company policy that prohibited outside employment, including self-employment, while on leave and Mr. Richey’s failure to respond to his employer’s concerns. The court acknowledged that even if the arbitrator was correct in finding that Power Toyota’s employee handbook was “poorly written,” Mr. Richey was clearly informed that he was not supposed to pursue outside employment while he was on CFRA leave. The court stated that to decide otherwise would undermine the defense included in the CFRA that an employee does not have “greater right to reinstatement” because they have taken leave.

This case demonstrates that employee protections under the CFRA are not absolute, when ample evidence exists that they have violated a clear, known policy of their employer. When there is suspicion that an employee is abusing leave, the employer should conduct a thorough investigation with supporting documentation. Here the court found it significant that the employee was fully aware of the policy prohibiting outside employment while on leave and he was reminded of the same but disregarded it.

The California Supreme Court did not decide whether policies prohibiting outside employment while on leave are generally legal because Mr. Richey did not raise this argument until the appeal. How California courts will address the legality of these policies remains to be seen. An important lesson from this decision is that school districts and other public entities should have clear policies with unambiguous language, ensure that employees are notified of the policy, and ensure that policies are consistently enforced before considering whether to discipline or terminate an employee under the policy.

If you have any questions regarding the Richey decision and how it may impact your existing leave policies, or if you have questions regarding employee leave rights in general, please contact 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

Roberta L. Rowe
Partner
Fresno Office
rrowe@lozanosmith.com

Ameet K. Nagra
Associate
Fresno Office
anagra@lozanosmith.com

©2015 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.

Court Decision Reinforces Public Agencies’ Right to Access Retention Funds

January 2015
Number 2

An appellate court has confirmed that a public agency can access retention funds held in escrow simply by declaring the contractor to be in default on the public works project. In Pittsburg Unified School District v. S.J. Amoroso Construction Co., Inc. (December 22, 2014) 2014 Cal.App. Lexis 1175, the contractor attempted to distinguish its case from other recent court decisions that allowed such access, but the court rejected its arguments.

Generally, if requested by a contractor on a public works project, the owner must put retention funds in an escrow account pursuant to an agreement signed by the owner, the contractor, and the bank. The escrow agreement language is generally required by statute (Public Contract Code § 22300), and it allows the owner to withdraw the retention funds after giving written notice to the bank of default by the contractor.

In upholding the right of the school district in this case to access the retention funds, the court rejected the contractor’s argument that the district had to await a favorable judicial ruling on the merits of the case. As stated by the court: “The rule [the contractor] urges us to adopt – that a public project owner must await judicial resolution of the underlying contract dispute before it can withdraw retention funds – would undermine the entire purpose of retention. It would deny an owner the funds to complete its project until long after the intended completion date for the project. [The contractor’s] position is unsupported by logic or law.”

The court also rejected the many other arguments raised by the contractor, concluding that the owner’s unilateral right to declare a default and take possession of the escrow funds did not violate either Civil Code section 1670, which requires that any dispute regarding one party’s unilateral decision under a public works contract be resolved by arbitration or litigation, or any alleged due process rights of the contractor. Also, the fact that the owner did not issue a “formal” declaration of default was found to be irrelevant – the owner clearly made a determination of default by terminating the contract and notifying the contractor of its breach. The court determined that Public Contract Code section 22300 “requires only a notice of default to the escrow agent and not a formal determination of fault by the governing board….” The court also rejected the contractor’s argument that the retention funds were held in trust for subcontractors.

This decision reinforces an owner’s right to determine a default, thus giving an owner significant flexibility when trying to close out a troubled project, including accessing retention funds that are held in escrow. Despite confirmation of this rule of law, owners must still proceed cautiously. If an owner is found to have wrongly determined that a default (breach of contract) has occurred, it could be found liable to the contractor in later litigation.

If this decision is not reheard by the appellate court, or reversed or depublished by the California Supreme Court, it will be binding precedent on trial courts across the state. If you have any questions regarding this case, or construction close-out disputes in general, please feel free to 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

Harold M. Freiman
Partner
Walnut Creek Office
hfreiman@lozanosmith.com

Arne Sandberg
Senior Counsel
Walnut Creek Office
asandberg@lozanosmith.com

©2015 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.

Deadlines for Compliance with New Paid Sick Leave Law

January 2015
Number 1

On September 10, 2014, Governor Brown signed into law Assembly Bill (AB) 1522, the Healthy Workplaces, Healthy Families Act of 2014. AB 1522 provides that an employee who, on or after July 1, 2015, works in California for 30 or more days within a year from the beginning of employment, is entitled to paid sick leave at the rate of at least one hour of paid sick leave for every 30 hours worked. AB 1522 includes part-time, seasonal, and temporary employees within its scope of coverage. As discussed in an earlier Lozano Smith News Brief (See News Brief No. 59, September 2014), AB 1522 permits an employee to use sick leave for the diagnosis, care, and treatment of the employee or a family member, as well as for the employee’s needs related to domestic violence, sexual assault or stalking.

Although many requirements of AB 1522 do not take effect until July 1, 2015, there are a number of steps that employers should take now in order to ensure they are in timely compliance with the provisions of the new law. Those steps include the following:

Posting Requirement
Although AB 1522 does not expressly include a posting date, the Labor Commissioner has interpreted the law to require that, effective January 1, 2015, employers must display a poster created by the Labor Commissioner in a conspicuous location at each work site notifying employees of their rights under AB 1522. Copies of the posters are available here. Scroll down the page to the section entitled “Employers.”

Leave Tracking/Recordkeeping
Under AB 1522, accrual of sick leave begins on the first day of employment or July 1, 2015, whichever is later. Thus, the effective date for employers to start tracking earned sick leave through the payroll system is July 1, 2015. However, employers should begin updating their leave tracking systems in advance of the effective date. In addition, employers will need to retain records documenting hours worked and paid sick leave days consistent with AB 1522 and other applicable law.

Payroll/Notice to Employee
AB 1522 requires employers to provide employees with written notice of the amount of sick leave available or paid time off provided in lieu of sick leave on either the employee’s itemized wage statement or by separate written notice. While providing this Notice to Employee is not required until July 1, 2015, employers should prepare for implementation of this requirement.

AB 1522 also generally requires an employer to provide employees with an Initial Hire Notice that discloses, among other things, an employee’s right to paid sick leave under AB 1522. Please note that AB 1522 specifically excludes an employee of the state or any political subdivision thereof, including any city, county, city and county, or special district, from this Initial Hire Notice requirement.

Review and Revision of Board Policies
Although other changes may be necessary later in the event of clean-up legislation, employers should begin reviewing and revising their board policies to provide for the minimum requirements under the new law. Specifically, employers may establish limits for both the use and accrual of paid sick leave as follows:

  1. accrual of paid sick leave may be limited to 48 hours (six days) per year;
  2. an employee’s use of paid sick leave may be limited to 24 hours (three days) per year; and
  3. an employee may be required to use leave in reasonable minimum increments, not to exceed two hours.

Audit of Collective Bargaining Agreements
Employees covered under a valid collective bargaining agreement may be exempt from AB 1522 if the CBA expressly provides for:

  1. paid sick days or a paid leave or paid time off policy that permits the use of sick days;
  2. binding arbitration of disputes regarding the application of paid sick leave;
  3. premium wage rates for all overtime; and
  4. regular hourly pay of not less than 30% more than the state minimum wage.

Notably, AB 1522 allows for this exemption only if an employee is entitled to take paid sick days for all of the reasons guaranteed under AB 1522. Employers should review collective bargaining agreements to determine whether employees are already exempted from AB 1522, or whether CBAs should be updated accordingly.

AB 1522 is an untested law and questions are likely to emerge once implementation of the law begins. If you have questions about the effect of the AB 1522 on specific employee groups or classifications, please feel free to 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

Darren C. Kameya
Partner
Los Angeles Office
dkameya@lozanosmith.com

Claudia P. Weaver
Senior Counsel
Monterey Office
cweaver@lozanosmith.com

©2015 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.

Recent Fines for Failure to Disclose Gifts on Form 700 Serve as a Reminder to Public Officials

November 2014
Number 88

The Fair Political Practices Commission (FPPC) is the state agency responsible for administering and enforcing California’s Political Reform Act. (Gov. Code § 81000, et seq.) Recently, the FPPC has been active in issuing fines to local government officials for failing to report gifts of meals and ballgame tickets on their Statement of Economic Interests, also known as Form 700. Accordingly, now more than ever is a good time to review the Political Reform Act’s disclosure requirements and to ensure proper reporting of income, business investments, real property, and gifts.

Some elected and appointed officials must file full disclosure of all economic interests. These officials are listed in Government Code section 87200 and include many elected local government officials, top administrators, and officials who manage public investments. In addition, the Political Reform Act requires that public employees holding designated positions listed in their agency’s conflict of interest code file a Form 700. These “designated employees” are those who are involved in decision-making that may foreseeably have a material effect on the employee’s financial interests.

Filers must disclose annually the required information on Form 700, within thirty days of assuming office, and within 30 days of leaving office. A candidate for an elective office must also file a Form 700.

Under the Political Reform Act, a gift is a payment or anything of value that provides a personal benefit when the recipient does not provide full payment or services in return for the value of the benefit received. Although there are many gift exceptions, the definition of a gift is broad and includes all types of meals, tickets, entertainment, and some forms of travel.

Filers must disclose gifts received from a single source totaling $50 or more in value per calendar year. The Political Reform Act also places an annual limit on gifts received from a single source, which is currently $440 per calendar year. The gift limit, however, will be adjusted starting January 1, 2015. Separate gifts received from the same source and during the same calendar year must be aggregated in value for reporting purposes.

Here are several practical tips to help with compliance:

  1. Understand your disclosure obligation. Obtain your disclosure categories from your agency – they are located in your agency’s conflict of interest code and are not contained in Form 700. Persons with broad decision-making authority must disclose more interests than those in positions with limited discretion. For example, you may be required to disclose only investments, business positions, income or gifts from businesses of the type that contract with your agency, or you may not be required to disclose real property interests. Not all economic interests are disclosed unless your agency’s conflict of interest code specifies full disclosure.
  2. A recipient of a gift is responsible for disclosing its fair market value. You can ask the donor for the value of the gift, but if it is unknown you must still give a good faith estimate.
  3. Travel payments are complicated. Carefully determine disclosure obligations whenever a third party other than your employer pays for travel, even if it is business-related.
  4. The gift and disclosure regulations contain many exceptions and special rules. Take some time to review the Fair Political Practices Commission fact sheets regarding Form 700, gifts, and other topics of interest. Consult FPPC staff or legal counsel as needed. Please note that one can amend Form 700 as often as necessary if inadvertent problems arise.

If a filer fails to properly disclose economic interests on Form 700, they can be subject to substantial fines and, in rare cases, criminal prosecution. As its recent activity demonstrates, the FPPC is likely to continue its scrutiny of public officials’ gift disclosures.

If you have any questions regarding Form 700 reporting requirements or the Political Reform Act, 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 E. Gauthier
Partner
Sacramento Office
tgauthier@lozanosmith.com

Toni A. Gibbs
Associate
Walnut Creek Office
tgibbs@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.

Legislature Expands What Community Colleges Can Charge for Use of Their Facilities

October 2014
Number 81

Until recently, community college districts have not been permitted to charge organizations a share of the costs associated with maintenance and normal “wear and tear” incurred during the use of college facilities and grounds under the Civic Center Act. However, on August 21, 2014, Governor Brown signed into law Assembly Bill (AB) 1906, expanding the types of “direct costs” that community college districts may charge for the use of college facilities or grounds. Effective January 1, 2015, AB 1906 aligns the direct costs that community college districts may charge with those that K-12 districts may now charge as a result of the enactment of Senate Bill (SB) 1404 in September 2012.

The Civic Center Act (Act) (Ed. Code § 82537, et seq.) provides that a community college district must permit the use of college facilities or grounds by nonprofit organizations, clubs, and associations organized for general character building or welfare purposes, when an alternative location is not available. The Act also authorizes a community college district’s governing board to charge a fee, which may not exceed the district’s direct costs, for the use of college facilities and grounds. Under existing law, these direct costs include a share of the costs of supplies, utilities, janitorial services, and community college district services and salaries necessary for the organization’s use of the facilities or grounds.

In amending Education Code section 84542, the Legislature recognized that maintenance costs often exceed the operational costs connected with an organization’s use of college facilities and grounds. Accordingly, AB 1906 expands the types of direct costs that community college districts may charge to include a share of the costs for maintenance, repair, restoration, and refurbishment, proportionate to an organization’s use of college facilities and grounds.

Of note, newly amended section 84542 limits a user’s proportionate share of maintenance, repair, restoration and refurbishment to costs associated with the use of non-classroom space and “grounds,” including but not limited to, playing fields, athletic fields, track and field venues, tennis courts and outdoor basketball courts, Also, classroom-based programs that operate after school hours, including tutoring and child-care programs, and instructional organizations retained by the college or community college district will not be required to bear a share of the costs for maintenance, repair, restoration and refurbishment.

Amended section 84542 requires the Chancellor of the California Community Colleges to develop, and the Governors of the Community Colleges to adopt, implementing regulations by December 31, 2015 to guide community college districts in determining the proportionate share and allowable costs that may be included as direct costs for using college facilities and grounds. On the K-12 side, regulations were slow to be developed, but were finally adopted as of July, 2014. (See Client News Brief No. 33, July 2014.) Since AB 1906 mirrors SB 1404 so closely, the K-12 regulations (Cal. Code Regs., tit. 5, § 14037 et seq.) may offer community college districts some preliminary guidance on how they may be allowed to calculate direct costs in the future.

Amended section 84542 will sunset on January 1, 2020, unless a later statute deletes or extends that date.

If you have any questions regarding AB 1906, or other issues related to the Civic Center Act, 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

Devon B. Lincoln
Partner
Monterey Office
dlincoln@lozanosmith.com

Claudia P. Weaver
Senior Counsel
Monterey Office
cweaver@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.

New Laws Seek to Improve College Safety

October 2014
Number 80

The Governor recently signed three bills addressing campus or student safety at higher education institutions. Senate Bills (SB) 967, regarding sexual assault, and 1400, regarding keeping students who are subject to protective orders out of classes, take effect January 1, 2015. Assembly Bill (AB) 1433, regarding reporting of crimes, took effect immediately upon the Governor’s September 29, 2014 signature. Together, the three bills signal heightened attention to issues of student safety at California’s colleges.

SB 967: Student Safety – Sexual Assault

According to the authors of this bill, adjudication of sexual assault on college campuses is inconsistent and inadequate. This law, nicknamed the “Yes Means Yes” law, imposes new requirements on the governing bodies of California Community Colleges, the University of California, the California State University, and independent postsecondary institutions (collectively “Higher Education Institutions”). These entities must comply with the new requirements in order to receive state funds for student financial assistance.

The new law adds section 67386 to the Education Code and requires Higher Education Institutions to adopt a sexual assault, domestic violence, dating violence, and stalking policy, which is a condition of receiving state funds for student financial assistance, and includes specified standards regarding how allegations of sexual assault must be evaluated. Most notably, the policy must contain an “affirmative consent standard,” which is defined as an “affirmative, conscious, and voluntary agreement to engage in sexual activity.”

Higher Education Institutions must adopt “detailed and victim-centered policies and protocols,” as specified, which address how the institution will respond to reported sexual assault, domestic violence, dating violence, and stalking incidents. The new law also requires these entities to form alliances, to the extent feasible, with existing on-campus and community-based organizations (e.g. rape-crisis centers) in order to make services available to both victims and the accused. In addition, Higher Education Institutions must implement comprehensive prevention and outreach programs, which address sexual violence, domestic violence, dating violence, and stalking. Such programs shall be included in every incoming student’s orientation. Lastly, if the Commission on State Mandates concludes that the bill imposes mandated costs, Higher Education Institutions may be entitled to reimbursement for costs associated with implementing SB 967.

SB 1400: Community Colleges – Protective Orders

Under existing law, upon the expiration of a protective order that keeps a student out of class, a student can re-register at a community college without any review of whether the individual presents a continuing safety threat. SB 1400 amends Education Code section 76030 and provides that if a protective order was issued against a student for good cause to protect a campus or person regularly on a campus, the community college district may require the student to apply for reinstatement before the expiration of such order. If the student applies for reinstatement, a review of the application must consider, at a minimum, the gravity of the offense, evidence of subsequent offenses, and likelihood of substantial disruption if reinstated. Upon review, the governing board may approve, deny, or permit conditional reinstatement.

AB 1433: Student Safety

AB 1433 amends section 67380 and adds section 67383 to the Education Code and requires, as a condition for participation in the Cal Grant Program, the governing bodies of California Community Colleges, the University of California, the California State University, and private and independent postsecondary institutions with full time enrollment of more than 6,000 students to adopt written policies and procedures to ensure that reports of certain crimes be forwarded to law enforcement agencies. A report of willful homicide, forcible rape, robbery, assault, sexual assault, or hate crime made by the victims to campus security authority for purposes of notifying the institution or law enforcement must promptly be forwarded to the appropriate law enforcement agency. This requirement applies to crimes occurring both on and off campus. As noted above, these new requirements are already in effect as of September 29, 2014. This means that if the necessary written policies and procedures are not already in effect, they should be adopted as soon as possible.

The new law makes it clear that the report to the appropriate law enforcement agency shall be made without identifying the victim unless the victim, after being informed of his or her rights to have identifying information withheld, consents to being identified. The bill is intended to alleviate the problems of underreporting sexual assaults on campuses and mishandling cases, create a closer relationship between campuses and local law enforcement, improve investigations, outcomes for victims, and community safety.

If you have any questions regarding the implications of these new laws, or would like assistance in complying with the new requirements, including preparation of the necessary written policies, 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

Harold M. Freiman
Partner
Walnut Creek Office
hfreiman@lozanosmith.com

Maryn Oyoung
Associate
Petaluma Office
moyoung@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.

California Enacts Historic Sustainable Groundwater Management Act

October 2014
Number 79

For the first time in its history, California has passed comprehensive legislation providing for the sustainable management of the state’s groundwater resources. The several bills, Senate Bill (SB) 1168, SB 1319, and Assembly Bill (AB) 1739, collectively enacted the “Sustainable Groundwater Management Act” (Act). The goal of the Act is to achieve “sustainability” for California’s groundwater basins, which will now be regulated by local agencies.

A total of 127 groundwater basins will be required to comply with the Act, while the remaining basins may opt in to its provisions. The impacts and duties imposed by the Act on the autonomy of cities and on land management of school districts may be dramatic. Lozano Smith is assessing these impacts and is ready to assist local agencies in gaining the most control and benefit possible. Agencies that are water providers that have facilities or well systems will wait to pay close attention to these new laws.

Current Groundwater Regulation

California produces approximately 14 million acre-feet of groundwater each year, which provides for approximately 40% of California’s total water supply in normal years and as much as 60% in drought years. Some communities in California are 100% reliant on groundwater for their water supply. California’s groundwater resources are stored in naturally occurring geologic “basins,” which are separate and distinct geographical and hydrological formations.

Currently, California’s groundwater basins are managed in three general ways. Some counties and cities have adopted local ordinances regulating groundwater under their police powers. More commonly, courts have adjudicated groundwater rights for regional basins. Finally, some local agencies regulate groundwater by express statutory authority or through “groundwater management plans” adopted pursuant to AB 3030. AB 3030 plans are voluntary and provide for the planned use, storage space, transmission capability, and water storage for a basin.

However, no current law requires the reasonable management of these critical water storage resources and, as a result, groundwater management in California has been piecemeal. This has resulted in the overuse (overdraft) of some basins. Given the necessary role of water, the Legislature felt this hodge-podge of management could no longer be accepted.

The Sustainable Groundwater Management Act

The Act authorizes one or more local agencies overlying a groundwater basin that have water supply, water management, or land use responsibilities to become a “Groundwater Sustainability Agency” (GSA) for that basin. GSA’s are granted broad authority under the Act to adopt and enforce rules and regulations for management of groundwater resources, conduct investigations, impose fees and restrictions on groundwater extraction, and require registration and monitoring of groundwater wells among other powers.

Each GSA is authorized to adopt a “Groundwater Sustainability Plan” (GSP) that will guide the exercise of its powers and authorities under the Act. The basic elements of a GSP mirror closely the requirements for existing groundwater management plans adopted pursuant to AB 3030.

A GSP must include interim milestones in five year increments to achieve the adopted “sustainability goal” for the particular basin within twenty years of adoption of the GSP. The sustainability goal must achieve sustainable groundwater management by identifying and causing the implementation of measures that will ensure the basin is operated within its sustainable yield, including preventing the chronic lowering of groundwater levels, reductions in groundwater storage, as well as preventing seawater intrusion, degraded water quality, land subsidence, and surface water depletions.

A total of 127 high- and medium-priority basins, as designated by the Department of Water Resources in Bulletin 118, must be managed by a GSP. Bulletin 118 contains data and evaluations of all groundwater basins in the state. The GSA for the particular basin must be formed by July 1, 2017. For basins that are subject to critical conditions of overdraft pursuant to Bulletin 118, a GSP must be adopted by January 31, 2020. For all other high- and medium-priority basins, a GSP must be adopted by January 31, 2022. All other water basins in California may form a GSA and adopt a GSP, but are not required to do so.

The Department of Water Resources is authorized to revise Bulletin 118 for designation of groundwater basins. Therefore, the number of basins subject to the mandatory provisions of the Act may change in the future. If the deadlines for adoption of a GSP are not complied with, the State Water Resources Control Board has the authority to impose its own “interim” plan until an acceptable GSP is in place in accordance with the Act.

Effects on Local Agencies

Before July 1, 2017, local agencies in California with water supply, water management, or land use responsibilities must decide whether to be the GSA for their groundwater basin, either alone or in conjunction with other similar local agencies overlying the basin. If the local agency wishes to be the GSA, it must commence the procedures for doing so under the Act. Once the GSA is formed, it must adopt a GSP by the deadlines described above.

Effects on Groundwater Extractors

Individuals and entities that extract groundwater in a high- or medium-priority basin in California will be subject to the rules and regulations adopted by the GSA for their basin, including the “sustainability goal” set forth in the GSP, once formed and adopted. Given the goals and intent of the Act, it is likely that restrictions on the total amount of groundwater extracted and fees for groundwater extraction will be imposed. Other rules and regulations can be expected as well and will depend on the specifics of the particular groundwater basin in question. However, domestic users of less than 652,000 gallons of groundwater will not be required to comply with any reporting or monitoring requirements imposed by a GSA for their groundwater basin. Therefore, while most domestic users will be exempt from reporting and monitoring requirements, certain institutions, users, and local agencies will be impacted by the new laws.

Future State Action

Governor Jerry Brown stated in his signing statement for the legislation implementing the Act that he will propose legislation in the next session to streamline the process for judicial adjudication of groundwater rights in the state.

It is very important to develop a strategy early to best protect and benefit your agency as the Act is implemented. If you have any questions regarding the Act, 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

Gary B. Bell
Associate
Fresno Office
gbell@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.

New Compensation Disclosure Requirements for School and Special Districts Under Assembly Bill 2040

October 2014
Number 76

The Governor signed Assembly Bill (AB) 2040, which amends Government Code sections 12463 and 53892 to mandate disclosure of the compensation of school and special district elected officials, officers and employees. Starting January 1, 2015, these agencies will have new reporting and internet posting requirements to provide the public with easy access to this compensation information.

For transparency, the compensation of all state, county and city elected officials, officers and employees has been available to the public through mandatory disclosure obligations under the prior versions of Government Code sections 12463 and 53892. AB 2040 expands these obligations to school districts and other special districts, such as water and fire districts. Under AB 2040, school and other special districts must include the compensation disclosures of their elected officials, officers and employees in their annual reports to the state Controller. Additionally, the compensation must be listed in a conspicuous location on each agency’s website if the district maintains a website. The information will also be available on the state Controller’s website.

Examples of the types of compensation that must be disclosed include:

  1. Salary;
  2. Vacation and sick leave; and
  3. Health and retirement benefits.

Compensation can also include less obvious forms of remuneration, such as salary step advancements. However, compensation does not generally include tenure or seniority credits. Agencies should contact their legal counsel to determine what compensation should be reported and made available on the agency’s website to adhere to the technical rules of disclosure.

AB 2040 is an effort to build confidence in all forms of local government. The new bill allows schools and special districts to demonstrate the ethical compliance and financial responsibility of its operations. Full disclosure of the compensation of elected officials, officers and employees will provide assurances to the public that such compensation is within industry standards. The disclosure and reporting practices from the state, county and cities have been well received. Compliance with AB 2040 will provide further confidence in our schools and special districts now that the Legislature has extended the requirements to these agencies as well.

A full copy of AB 2040 can be found on the California Legislature’s website.

If you have questions regarding the new disclosure requirements or other local governance obligations, 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

Jessica Gasbarro
Associate
Sacramento Office
jgasbarro@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.

Baccalaureate Degrees Soon to Be Available at Select California Community Colleges

October 2014
Number 75

In late September 2014, Governor Brown signed Senate Bill (SB) 850, granting California community colleges the authority to award certain baccalaureate degrees. This brings California in line with twenty-one other states. The new legislation will be found in Education Code sections 78040, et seq.

Beginning January 1, 2015, the Board of Governors of the California Community Colleges may establish a pilot baccalaureate degree program at no more than 15 community colleges. The Board of Governors must adopt regulations by March 31, 2015, detailing the funding model for the program. Each of the participating colleges will be limited to establishing one baccalaureate degree program. There are several requirements participating districts must satisfy in order to establish a baccalaureate degree program, including but not limited to the following:

  • The baccalaureate degree offered must not be offered by the University of California (UC) or California State University.
  • The district is limited to one baccalaureate degree which shall only be available at one campus in the district.
  • The district must identify and document unmet workforce needs in the subject area that the baccalaureate degree program will be offered.
  • The district must have the expertise, resources, and student interest to offer a quality program.
  • A community college must commence its pilot program no later than the 2017-2018 calendar year.

SB 850 will provide additional opportunities for students drawn to educational programs unique to the community college system and creates a more affordable option for a baccalaureate degree. That said, the new legislation raises several key questions. The California community college system has been able to provide affordable quality education in the face of rising tuition fees and costs in the UC and California State University systems. Whether community colleges will be able to keep tuition costs low while providing baccalaureate degrees remains to be seen. There is also some concern that if successful, the baccalaureate degree programs will detract from the two-year degree programs which have historically been the foundation of the community college system. Finally, there will be questions about the specific funding formula for this program that will have to await adoption of new regulations. These and other questions will likely be answered over the life of the pilot program, which is set to expire in 2023.

If you have any questions regarding this legislation or community college issues 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

Harold M. Freiman
Partner
Walnut Creek Office
hfreiman@lozanosmith.com

Gabriela D. Flowers
Associate
Sacramento Office
gflowers@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.

AB 2053 Requires “Abusive Conduct Prevention” Component be Added to Sexual Harassment Prevention Training for Supervisors

September 2014
Number 69

Assembly Bill (AB) 2053 amends Government Code section 12950.1 effective January 1, 2015 to require that abusive conduct prevention be included in sexual harassment prevention training. Under Government Code section 12950.1, employers with 50 or more employees are required to provide at least two hours of sexual harassment prevention training to supervisory employees. Employers must provide this training within six months of the date the employee assumes the supervisory position and, afterwards, once every two years. Public agencies, including school districts, are subject to the requirements of Government Code section 12950.1.

AB 2053 defines “abusive conduct” as “conduct of an employer or employee in the workplace, with malice, that a reasonable person would find hostile, offensive, and unrelated to an employer’s legitimate business interests.” The “[a]busive conduct may include repeated infliction of verbal abuse or physical conduct that a reasonable person would find threatening, intimidating, or humiliating, or the gratuitous sabotage or undermining of a person’s work performance.” Finally, the bill specifies that “[a] single act shall not constitute abusive conduct, unless especially severe and egregious.”

Public agencies should review their sexual harassment prevention policies and training materials to ensure compliance with these new requirements. Lozano Smith provides sexual harassment prevention training for supervisors and has updated our training materials to meet the requirements of AB 2053. If you have questions regarding AB 2053 or how its requirements impact your agency, 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

Dulcinea Grantham
Partner
Walnut Creek Office
dgrantham@lozanosmith.com

Mark P. Bookholder
Associate
Monterey Office
mbookholder@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.

AB 1443 Extends Anti-Discrimination and Harassment Protections to Unpaid Interns and Volunteers

September 2014
Number 68

Legal protections against discrimination and harassment got a little broader this year. Government Code section 12940, which is part of the California Fair Employment and Housing Act (FEHA), protects employees, applicants for employment, and certain contactors from unlawful discrimination and harassment. Government Code section 12940 prohibits employers from discriminating against or harassing employees on the basis of race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, or military and veteran status. Assembly Bill (AB) 1443 amends Government Code section 12940 to extend these anti-discrimination protections to unpaid interns and other participants in training programs of limited duration.

AB 1443 makes it unlawful to discriminate against any person in “the selection, termination, training, or other terms or treatment of that person in any apprenticeship training program, any other training program leading to employment, an unpaid internship, or another limited duration program to provide work experience for that person” based on any of the protected characteristics. AB 1443 also extends its protections to unpaid interns and volunteers. These changes to Government Code section 12940 are effective January 1, 2015.

Public agencies should review their existing anti-discrimination policies to ensure that they comply with the requirements of AB 1443. If you have questions regarding AB 1443, or whether your existing policies or regulations are compliant with its requirements, 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

Dulcinea Grantham
Partner
Walnut Creek Office
dgrantham@lozanosmith.com

Mark P. Bookholder
Associate
Monterey Office
mbookholder@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.

Public Agencies May Recover Costs of Preparing the CEQA Record Even if the Party Suing the Agency Elects to Self-Prepare the Record

September 2014
Number 65

An appellate court has held that a public agency may recover administrative record preparation costs in a lawsuit filed against it under the California Environmental Quality Act (CEQA), even where the petitioner elects to prepare the record. This decision calls into question CEQA petitioners’ tendency to elect to prepare the record themselves in order to avoid paying agency costs.

In CEQA lawsuits, Public Resources Code Section 21167.6 governs the record of proceedings or administrative record. That section states that at the time the action is filed, the petitioner must request that the public agency prepare the record. In the alternative, the petitioners suing the public agency under CEQA may elect to prepare the record themselves, subject to certification of its accuracy by the public agency. The statute also provides that the “parties” shall pay any reasonable costs or fees related to the preparation of the record of proceedings.

Although the cost recovery language refers to the “parties,” thus including both the petitioner and the public agency, petitioners in CEQA lawsuits have long taken the position that the public agency is precluded from recovering record preparation costs after the petitioner elects to prepare the record. CEQA petitioners will typically sue the public agency, elect to prepare the record, and then simply obtain the record documents from the public agency through a Public Records Act request. In such circumstances, the public agency generally incurs the same cost as the agency would have had it prepared the record itself. However, under the Public Records Act, the agency can charge only actual and reasonable copying costs. If the petitioners elect to make the copies themselves, nothing can generally be charged under the Public Records Act.

In Coalition for Adequate Review v. City and County of San Francisco (September 15, 2014) __ Cal.App.4th __ 2014 WL 4537020, the Court of Appeal expressly held that the fact that a petitioner elects to prepare the record does not bar the recovery of record preparation costs by a public agency. The court recognized that the public agency may be required to incur record preparation costs notwithstanding the petitioner’s election. In Coalition for Adequate Review, the record prepared by the petitioner was incomplete because it omitted documents that were statutorily required to be in the record, and had been provided to the petitioners by the City. As a result, the City was required to supplement the record with approximately 12 additional volumes of documents totaling 4,559 pages. The City prevailed in the CEQA lawsuit, and sought costs associated with preparing the supplemental record. The costs were denied by the trial court in their entirety, but the decision was reversed on appeal.

The Court of Appeal held that when a record prepared by the petitioner is incomplete, and an agency is forced to supplement it to ensure completeness, the statute allows the agency to recoup its costs if the agency prevails in the litigation. The court expressly acknowledged that public monies should not be used to fund CEQA challenges brought by private parties, particularly where the private party loses the CEQA challenge on the merits.

This case represents a victory for public agencies, as it challenges the idea that petitioners can elect to prepare the record as a way to avoid paying agency costs. The costs claimed by the public agency must still be reasonable, which is a question of fact for the trial court. In Coalition for Adequate Review, the City’s claim for over $64,000 in costs, including staff and paralegal time, was sent back to the trial court for a consideration of reasonableness. While the case addressed the need for a supplemental record, it is noteworthy that the court indicated a public agency may seek costs even when there is no need to supplement the record and even if the public agency does not prevail in the underlying CEQA case.

If you have any questions regarding this case or CEQA issues 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

Harold M. Freiman
Partner
Walnut Creek Office
hfreiman@lozanosmith.com

Kelly M. Rem
Associate
Walnut Creek Office
krem@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.

Public Agencies Providing On-Street Parking Must Include Parking That Is Accessible to Disabled Persons

September 2014
Number 64

Under the Americans with Disabilities Act (ADA), public agencies must ensure that all government services, programs, and facilities are reasonably accessible to disabled persons. In a recent decision by the Ninth Circuit Court of Appeals, Fortyune v. City of Lomita (9th. Cir. Sept. 5, 2014) __ F.3d __ 2014 WL 4377467, the court held that on-street parking is a government facility that must be accessible to individuals with disabilities. The court reached this holding even though there are no ADA implementing regulations that address this type of facility. This means that when a public agency provides on-street parking, it should ensure that there are sufficient accessible on-street parking spaces or that nearby public parking lots have equal or better accessible parking facilities.

In Fortyune, the disabled plaintiff brought a claim under the ADA alleging that he experienced great difficulty when going to facilities in the City of Lomita (City) due to a lack of on-street parking for people with disabilities. The City asserted it had no obligation to provide accessible on-street parking due to the absence of ADA implementing regulations specifically addressing on-street parking facilities.

Disagreeing with the City’s contention, the court pointed to the mandates of Title II of the ADA (42 U.S.C. § 12131, et seq.). Title II requires public agencies to ensure that no disabled persons are excluded from participation in or denied the benefits of its services, programs, or activities. In prior decisions, the Ninth Circuit construed the terms “services,” “programs,” and “activities” as encompassing virtually any normal function of a public entity.

In an earlier decision, Barden v. City of Sacramento (9th Cir. 2002) 292 F.3d 1073, the Ninth Circuit held that because maintaining sidewalks is a normal function of a public entity, Title II requires public entities to maintain accessible public sidewalks, despite the absence of ADA implementing regulations. Applying the same reasoning, the Fortyune court determined that because maintaining public on-street parking is also a normal function of a public entity, accessible on-street parking must be provided despite the lack of a current ADA regulation directly addressing this obligation.

While the Fortyune decision compels public entities to provide accessible on-street parking despite the lack of ADA implementing regulations, it does not provide guidance on how to comply with this mandate. Until regulations are issued, the United States Department of Justice, in its amicus brief filed in the case, suggests that public entities look to analogous standards addressing other types of parking facilities for guidance on how to satisfy its statutory obligation to provide accessible on-street parking.

Public agencies potentially may be able to meet the accessibility requirements when off-street public parking is provided serving a facility if the off-street parking provides equal or greater access in terms of distance from an accessible entrance, user cost, and convenience, and when the total on-street and off-street accessible parking spaces meet the required minimum number of accessible spaces. However, there are risks that should be addressed with legal counsel.

If you have any questions on the Fortyune decision or the ADA 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

David J. Wolfe
Partner
Fresno Office
dwolfe@lozanosmith.com

Toni A. Gibbs
Associate
Walnut Creek Office
tgibbs@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.

Court of Appeal Upholds Employer’s Use of a Fitness for Duty Examination to Evaluate Employee

September 2014
Number 60

A recent court of appeal decision held that employers may require a fitness for duty exam (FFDE) under the California Fair Employment and Housing Act (FEHA) to evaluate a workplace threat when an employee exhibits erratic and confrontational behavior in a manner that causes reasonable fear and confusion to other members of the work environment. (Kao v. University of San Francisco (September 3, 2014) __ Cal.App.4th__ 2014 WL 4375929.)

An FFDE under FEHA is an employer-initiated and paid medical examination of an employee. Employers commonly turn to FFDEs when they have concerns regarding the status of an employee’s physical or mental health in performing the job or in relation to the work environment. The purpose of an FFDE is to inform the employer whether an employee is physically or psychologically able to perform the essential functions of his or her job. FEHA generally prohibits an FFDE except when the FFDE is job-related and consistent with business necessity. (Gov. Code, § 12940, subd. (f).)

In Kao v. University of San Francisco, Professor John Kao was a tenured mathematics professor for the University of San Francisco. In 2006 and 2007, Kao filed a complaint with the University alleging race-based discrimination and harassment. He then had confrontational meetings with the school administration. Shortly thereafter, Kao began exhibiting erratic behavior that caused other faculty members in the math department and the school administration to feel threatened and fearful of their physical well-being. Specifically, Kao engaged in the following conduct: uncontrolled rants; yelling at coworkers; glaring at coworkers with his fists clenched in anger; bumping or charging towards coworkers in the hallways in an intimidating way; and reacting with rage in response to benign questions. He had not exhibited such behavior in his prior fifteen years of employment with the University.

Concerned about the safety of employees and the work environment, and not knowing the cause behind the behavior, the University directed Kao to complete an FFDE. The FFDE would inform the University whether Kao was fit to perform his job, not fit, or fit with an accommodation but would not reveal any confidential information to Kao’s employer. Kao refused to submit to the FFDE. After a number of unsuccessful meetings between the University, Kao, and Kao’s legal counsel, the University terminated his employment. In response, Kao filed a number of claims against the University including, among others, disability discrimination and violation of his rights under the Confidentiality of Medical Information Act.

Affirming the trial court’s decision and upholding the jury’s findings, the court of appeal rejected all of Kao’s claims. The court focused on the lawfulness of the University’s directive that Kao undergo an FFDE. Kao argued that an employer is required to engage in the interactive process before it can refer an employee for an FFDE. The court disagreed, explaining that the interactive process is related to disability accommodations, and an FFDE is not a disability accommodation. Here, the University was not required to engage in an interactive process because Kao never acknowledged having a disability or sought accommodation, and no disability was obvious.

Kao also argued that the FFDE was not “job related and consistent with business necessity.” In response, the court explained that there is a business necessity for an FFDE “if it is vital to the business.” Employers have a duty to maintain an environment where people can safely work. There was ample evidence that Kao’s erratic behavior caused fear and confusion in the work environment. On this basis, the court found it was reasonable for the jury to conclude that it was vital to the University’s business to “obtain an independent assessment of [Kao’s] fitness for duty.” As a result, the court also struck down Kao’s argument that his termination was a violation of the Confidentiality of Medical Information Act, which prohibits discrimination or termination for an employee’s refusal to release of medical information. The court concluded that since the FFDE was necessary, the request for information was also appropriate and necessary

As demonstrated by Kao v. University of San Francisco, the appropriate use of an FFDE, particularly in regard to an employer’s duty to maintain a safe work environment, can be a useful tool for employers. However, employers should remember that FFDEs are an exception in the law that involve a fact-specific inquiry. As such, employers should treat each case independently and contact counsel when uncertain about an FFDE’s applicability.

If you have any questions regarding this case or other labor and employment issues, 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

Jenell Van Bindsbergen
Senior Counsel
Fresno Office
jvanbindsbergen@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.

New Law Requires Minimum Paid Sick Days For Employees

September 2014
Number 59

On August 30, 2014, Governor Brown signed into law Assembly Bill (AB) 1522, the Healthy Workplaces, Healthy Families Act of 2014 (Act). Beginning on July 1, 2015, employees, including part-time, seasonal and temporary employees, who work 30 or more days within a year from the commencement of employment must now accrue a minimum of one hour of sick leave for every 30 hours worked. There is no hourly minimum for eligibility. Employees may begin to use accrued paid sick days beginning on the 90th day of employment. Accrued paid sick days carry over to the following year unless the full amount of leave is provided at the beginning of each year.

Sick leave may be used for the diagnosis, care, and treatment of the employee or an employee’s family member, as well as for an employee’s needs relating to domestic violence, sexual assault or stalking. Those needs include obtaining social and legal assistance. The Act’s definition of “family member” is broader and includes more extended family members than the definitions provided under the Family Medical Leave Act and the California Family Rights Act.

AB 1522 provides employers with options on employees’ use and accrual of sick leave. Employees’ use of paid sick days may be limited to 24 hours (or three working days) per year of employment and employees’ accrual of paid sick leave may be limited to 48 hours (or six working days). Employees may be required to use a reasonable minimum increment of sick leave not to exceed two hours.

Employees covered by a valid collective bargaining agreement are exempt from this law if the collective bargaining agreement meets certain conditions, including (1) expressly providing for paid leave to be used for illness, (2) binding arbitration of disputes regarding the application of paid sick days provisions, (3) premium wage rates for all overtime hours worked, and (4) regular hourly pay of not less than 30% more than the state minimum wage. Providers of in-home support services are also exempt.

Employers must place a poster created by the Labor Commissioner containing relevant information to AB 1522 in a conspicuous place. Employers must also maintain records documenting hours worked and paid sick days accrued and used by an employee for at least three years. The Act requires employees to receive written notice setting forth the amount of paid sick leave accrued and used on either the itemized wage statement or in a separate writing provided on the designated pay date with the payment of wages.

While many public agencies may not be significantly impacted by the Act because their employees are already covered under generous sick leave policies and collective bargaining agreements, the Act will apply if the applicable collective bargaining agreement does not provide for binding arbitration of disputes regarding the application of paid sick days or if any of the other requirements for the exemption are not met. Collective bargaining agreements should be reviewed to ensure that minimum increment use requirements do not exceed two hours and to ensure employees may use sick leave to attend to domestic violence needs, including obtaining social and legal services. Additionally, the leave rights of part-time and temporary workers, substitute teachers, and lunchtime aides may be affected.

The Act includes penalties for failure to comply, including the ability of the Labor Commissioner or the Attorney General to bring a civil action. Many public agencies will need to revise their sick leave policies and collective bargaining agreements to address the requirements of the Act prior to the effective date of July 1, 2015. The application of this legislation to certain types of employees raises many questions that are not specifically addressed by the terms of AB 1522. To the extent you have questions about how this legislation will affect any of your employee groups or classifications, 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

David J. Wolfe
Partner
Fresno Office
dwolfe@lozanosmith.com

Dulcinea Grantham
Partner
Walnut Creek Office
dgrantham@lozanosmith.com

Ashleigh Rollins
Associate
San Diego Office
arollins@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.

Reminder: Minimum Wage in California Increased in 2014

August 2014
Number 52

Effective July 1, 2014, the minimum wage increased from $8.00 an hour to $9.00 an hour. The minimum wage will increase a second time on January 1, 2016 to $10.00 an hour. (Labor Code § 1182.12.) Due to this change in the law, local educational agencies should review their pay practices and ensure they are in compliance with all wage and hour laws.

Most California employees must be paid at least the state minimum wage. Accordingly, employers should examine their current pay practices and policies to evaluate if changes need to be made due to the minimum wage increase. The new law not only affects the base salaries of employees but will also affect overtime pay, meal and lodging credits, and exempt/nonexempt classifications. For example, the increase in the minimum wage impacts whether employees qualify for overtime exemptions for executive, administrative or professional employees (i.e. teachers or department heads). One requirement of the overtime exemption is that an employee receives a salary that is not less than two times the California minimum wage for full-time employment of 40 hours per week. Therefore, effective July 1, 2014, the minimum salary to qualify for an overtime exemption is $3,120 per month, or $37,440 annually.

Violations of the minimum wage law carry serious penalties for employers. Labor Code section 1199 provides that an employer that violates a minimum wage law order is guilty of a misdemeanor, which is punishable by a fine of at least $100 or by imprisonment for 30 days, or by both. The employer could also be exposed to additional civil penalties. For example, nonexempt employees who are paid less than the minimum wage can file a wage claim with the Labor Commissioner’s Office or can file a civil lawsuit to collect the difference between what they were paid and what they should have been paid at the new minimum wage.

If you have any questions regarding this issue, 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.

Other 2014 Back to School Client News Briefs

Reminder: The “Personal Belief” Exemption from Immunization Now Has New Requirements

Changes to the Laws Regarding Independent Study Go Into Effect Immediately

Annual Notice Requirements Modified for 2014-2015

Courts Intervene to Keep Charter Schools Operating Pending Appeals of Revocation Cases

State Board of Education Amends Special Education Regulations Effective July 1, 2014

Written By

Jenell Van Bindsbergen
Senior Counsel
Fresno Office
jvanbindsbergen@lozanosmith.com

Amanda E. Ruiz
Associate
Fresno Office
aruiz@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.

New Law Increases Paid Parental Bonding Leave for Community College Employees

July 2014
Number 39

Beginning January 1, 2015, Assembly Bill (AB) 1606 will allow academic and classified community college employees to use up to 30 days of paid sick leave to bond with a newborn or newly adopted child.

Under prior law, academic employees at community colleges could use up to 6 days of earned sick leave for personal reasons or personal necessity. Similarly, contract and permanent classified employees could use up to 7 days of earned sick leave for personal necessity, unless a collective bargaining agreement or board resolution granted more days.

This bill increases the number of days both academic and classified employees may use specifically to bond with a newborn or newly adopted child to up to 30 days. For biological parents, the leave may be taken within the first year of the child’s birth. For adoptive parents, the leave may be taken within the first year of the adoption.

The bill adds Education Code sections 87784.5 and 88207.5 and takes effect on January 1, 2015. However, if the bill’s provisions conflict with a collective bargaining agreement in effect before January 1, 2015, then the bill will not take effect until expiration or renewal of the agreement.

For questions about this new law or the leave rights of community college employees generally, please contact one of our eight offices located statewide. You can also visit ourwebsite, follow us on Facebook or Twitter, or download our Client News Brief App.

Written By

Trevin Sims
Partner
Los Angeles Office
tsims@lozanosmith.com

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 to Law Enforcement: No Warrant, No Cell Phone Search!

July 2014
Number 36

The United States Supreme Court has concluded that a police officer may not search an arrested person’s cell phone data without first obtaining a search warrant. While officers are permitted to conduct limited searches of lawfully arrested persons without first obtaining a warrant, such searches should not include the data content of the arrested person’s cell phone.

Riley v. California (June 25, 2014) 573 U.S. ___, involved two cases where the evidence and criminal convictions were obtained as a result of warrantless cell phone searches.

The Fourth Amendment of the United States Constitution protects the public from unreasonable searches and seizures by the government. In general, the Fourth Amendment’s “reasonableness” requirement requires officers to obtain a warrant before conducting searches, unless an exception to the warrant requirement applies. One exception permits warrantless searches conducted in the course of a lawful arrest.

In a prior case, Chimel v. California (1969) 395 U.S. 752, the Court determined that an officer, without a warrant, may search an arrested person and the area within the arrested person’s immediate control, in order to remove any weapons that the arrestee might use to resist arrest or escape. The officer could also search for and seize any evidence on the arrested person to prevent its concealment or destruction. The Chimel rule is intended to provide for immediate protection of evidence and the parties involved in the arrest.

In Riley, the Court had to determine whether the exception set forth in Chimel also permits an officer to search the data content of a cell phone found on the arrested person. To answer this, the Court conducted a “balancing of interests” test and weighed the degree of intrusion upon the arrested person’s privacy against the degree to which the search is needed to promote a legitimate governmental interest, such as safety.

The Court determined that the government interest in a warrantless search of an arrested person’s cell phone data is minimal because the justifications for searches incident to an arrest are not implicated by cell phone data. The Court found that cell phone data cannot itself be a weapon to harm an officer or a tool to effectuate an escape or resist arrest. The Court also concluded that there is little to no increased risk of evidence being destroyed if an officer is first required to obtain a warrant before searching cell phone data because the officer can take possession of the cell phone without searching its data and a warrantless search does not remove the risk of the arrested person deleting data immediately prior to an anticipated arrest. Therefore, a warrantless search provides no significant government benefit.

Further, the Court ruled that an arrested person’s privacy interests demanded procedural protections. While an arrestee has a decreased expectation of privacy by virtue of being lawfully arrested, the Court found that cell phone data includes an extremely broad and private array of information. The Court recognized that the immense quality and quantity of information stored by most people on their cell phones was probably far greater than what they keep in their homes, and certainly greater than the few personal effects that may be kept on a person that have up until now been allowed to be subject to warrantless searches, such as a wallet or address book.

Because the arrested person’s privacy interest surpassed the government’s limited interest in a warrantless search, a warrantless search of cell phone data is not reasonable within the requirements of the Fourth Amendment. The Court, bowing to the realities of technology and the substantial societal changes that the use of cell phones have brought about, embraced and protected this nearly universal piece of hardware that often contains a full chronicle of ones life, including significantly private matters.

The Court’s decision does not directly address searches and seizures of student cell phones by school officials on school ground or during school-related activities. However, proponents of student privacy are likely to view the Court’s discussion of cell phone privacy as an arrow in their quiver and may turn to the Riley opinion to support a ban or limits on student cell phone searches by school officials. Generally, public school officials may search student cell phones when there is a reasonable suspicion of wrongdoing, although the scope of any search must be reasonably limited to discovering evidence of that wrongdoing. Even though Riley does not apply directly to the student cell phone-school context, the Court’s emphasis on the privacy interest in cell phone data makes it important to narrowly tailor student cell phone searches, restricting such searches to discovery of the suspected wrongdoing that justifies the search at its inception.

For more information on this ruling, municipal searches and seizures, or the search and seizure of student cell phones, 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

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.

California Appellate Court Rules that Public Records Act Does Not Apply to Electronic Communications Sent on Personal Devices to Personal Accounts

April 2014
Number 21

What happens when elected officials and government employees communicate using their personal electronic devices and private accounts? If these messages relate to government business, are they subject to public disclosure under the California Public Records Act (CPRA) (Gov. Code §§ 6250 et seq.)?

In the first published appellate court decision in California addressing this issue, the court on March 27, 2014, ruled that private communications sent on personal devices that are not stored on a public agency’s servers are not subject to the CPRA. (City of San Jose v. Superior Court (March 27, 2014, Case No. H039498).) While this case provides important guidance, it still remains subject to potential appeal, and leaves a number of questions unanswered.

The San Jose case started when a member of the public made an extensive CPRA request to the City of San Jose. That request included a demand for certain emails and text messages sent or received on “private electronic devices” used by the Mayor, City Council, and City staff. The City produced such messages if they were sent or received from private electronic devices using City accounts, but took the position that such emails and text messages sent or received using personal devices and personal accounts were not governed by the CPRA. The requesting party sued, and last year, the trial court ruled that all such responsive emails and texts had to be produced under the CPRA, even if they were sent or received on personal devices using personal accounts. The trial court reasoned that any other result would mean “a public agency could easily shield information from public disclosure simply by storing it on equipment that it does not technically own.” (For more details regarding the superior court case, Smith v. San Jose (March 19, 2013, No. 1-09-CV-150427), please see our previous Client News Brief dated April 2013, No. 17.)

The appellate court reversed the trial court decision. The appellate court received extensive arguments from free speech and media organizations in support of the trial court’s public policy reasoning. Countervailing policy arguments from the City and the California League of Cities contended the trial court’s ruling was impractical, and violated privacy protections. While the appellate court acknowledged these various policy arguments, it concluded the entire matter could be determined solely based on the express language of the CPRA. Because section 6252, subdivision (e), of the CPRA defines “public records” as communications “prepared, owned, used, or retained” by the public agency, the court concluded the requested emails and texts were not governed by the CPRA. The court thus distinguished between a public agency as the holder of public documents and its individual elected officials and employees. The court observed as a practical matter that “the City cannot, for example, ‘use’ or ‘retain’ a text message sent from a council member’s smartphone that is not linked to a City server or City account.”

While the court did acknowledge concerns about abuses resulting from the ability of an elected official or public employee to address public business on personal devices and accounts, the court concluded this was a policy issue to be resolved by the Legislature. As explained by the court: “That city council members may conceal their communications on public issues by sending and receiving them on private devices from private accounts is a serious concern; but such conduct is for our lawmakers to deter[mine] with appropriate legislation.”

The original plaintiff in this case still has the option to appeal the court’s ruling, or to seek de-publication, modification or a rehearing of the matter. Based on the coalition of free speech and media entities that supported the plaintiff, and the novelty of the issues being considered, this chapter may not yet be closed. Media reports have already quoted the plaintiff’s legal team as planning to seek review of the appellate court’s decision by the California Supreme Court. The court’s decision could also be read as an invitation for the Legislature to revisit this issue. Based on the strong public policy in favor of public disclosure, and the interest of the media and free speech groups in keeping records public, it would not be surprising to see attempts at legislation that would effectively reverse the court’s decision. We will continue to monitor this case and report on its progress should there be an appeal or modification, or legislation proposed to address the issue.

While the San Jose case gives guidance regarding the treatment of electronic documents under the CPRA, there are many questions left to be answered. One such question is whether a writing must both be sent to or from a personal device and be sent or received from a personalaccount to escape application of the CPRA. The City of San Jose had elected to produce electronic communications that were sent to or from personal devices but on City provided or owned devices, so those types of communications were not at issue before the court. Some may argue the court of appeal’s decision supports the notion that the CPRA would not apply if the communications were either on personal devices or were on personal accounts. This stems from the following statement in the court’s decision: “We conclude that the Act does not require public access to communications between public officials using exclusively private cell phones or email accounts.” (Emphasis added.) However, there are multiple other instances in which the court either directly or indirectly made it seem that the CPRA applies unless the materials were on a personal device and on a personal account. This includes references to communications “sent or received by public officials and employees on their private devices using their private accounts.”

Another issue left open is what impact a local agency’s policies and practices regarding personal emails and devices would have on a future court’s review of the CPRA issue. The court observed that “it is within the province of the agency to devise its own rules for disclosure of communications related to public business.” In this case, the City of San Jose had a policy addressing the disclosure of private communications, but this policy did not appear to factor into the court’s interpretation of state law. The implication remains that local agencies could expand on the public’s access to agency records.

It is important to note that the court in San Jose limited its ruling to communications exchanged between devices and accounts that are exclusively private. The court did not address several other situations such as whether communications are disclosable under the PRA when: (1) communications are exchanged between a government issued device and a private device; or (2) communications exchanged between private devices where employees receive a stipend from their employing agency to offset the expenses of using their private device for public business.

In light of the court’s ruling regarding personal devices and email accounts and the various questions that remain, it would be prudent for public agencies to review their policies and practices regarding personal devices, and to establish clearly defined and consistent electronic communication practices. One issue not affected by the court’s decision is the presumption that electronic communications sent or received in government accounts and/or on government devices may constitute public records.

Attorneys at Lozano Smith have been asked by school districts for model policies governing the retention and disposal of emails for educational agencies. In response to this demand, Lozano Smith created an informative document entitled “School District Email Retention.” The document sets forth certain policy options for addressing the complexities raised by the retention of emails and other electronic communications. It offers possible options for adding to existing school board policies and administrative regulations on retention of district records and on employee use of technology. If you would like a copy of “School District Email Retention,” please contact Harold Freiman (hfreiman@lozanosmith.com), or Manuel Martinez (mmartinez@lozanosmith.com).

Issues regarding the San Jose case and electronic communications under the CPRA will be addressed by Lozano Smith partner Harold Freiman at the upcoming California Association of School Business Officials 2014 Annual Conference & California School Business Expo in Sacramento during his presentation “Technology Legal Issues.” The workshop on April 3, 2014 will cover the latest technology and legal issues that school districts face in today’s world.

If you have any questions regarding the San Jose decision or CPRA requests in general, or if we can be of assistance in reviewing or developing your policies regarding electronic communications and retention, please feel free to 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

Harold M. Freiman
Partner
Walnut Creek Office
hfreiman@lozanosmith.com

Manuel F. Martinez
Associate
Walnut Creek Office
mmartinez@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.

Bid Threshold Raised

December 2013
Number 84

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 $84,100, effective January 1, 2014. This represents an increase of 0.858% over the 2013 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 feel free to 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

©2013 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.