Local 11 Union Scores Ninth Circuit Win

On February 22, 2024, a panel of judges for the United States Court of Appeals for the Ninth Circuit issued an unpublished opinion upholding enforcement of a National Labor Relations Board (“NLRB”) order holding that a restaurant, Grill Concepts Services, Inc. (“Grill Concepts”) violated the National Labor Relations Act by refusing to bargain in good faith with the UNITE HERE Local 11 union. The panel granted NLRB’s petition for enforcement and denied Grill Concepts’ petition for review.

NLRB alleged that Grill Concepts engaged in a course of bad faith conduct between ...

Posted in Legal Bites
Los Angeles County Sues Grubhub for Unfair Business Practices and False Advertising

On February 21, 2024, Los Angeles County filed a complaint for injunctive relief and damages against Grubhub alleging that the company engaged in false and deceptive advertising and unfair business practices that harm consumers, delivery drivers, and restaurants. The lawsuit was filed by the office of County Counsel. The County’s press release announcing the lawsuit states that it was filed “in response to complaints from consumers and restaurant owners.”

The unlawful business practices alleged in the complaint include:

  • Bait-and-switch delivery pricing, in which ...
Posted in Legal Bites
FTC Sues to Stop $24.6 Billion Kroger-Albertsons Deal

On February 26, 2024, the Federal Trade Commission (“FTC”) issued an administrative complaint and authorized a lawsuit in federal court to block Kroger Company’s proposed $24.6 billion acquisition of the Albertsons Companies, Inc. The acquisition would be the largest supermarket merger in United States history.

The complaint was made pursuant to the agency’s authority under the FTC Act, and alleges that the proposed acquisition is anticompetitive. Nine attorneys general joined the FTC in filing the complaint.

The FTC’s complaint alleges that the ...

When Does a “Dispute” Arise Under the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act?

In 2022, Congress enacted the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act” (the “Act”) which provides that, at the election of the person alleging conduct constituting a sexual harassment dispute or sexual assault dispute, “no predispute arbitration agreement or predispute joint-action waiver shall be valid or enforceable with respect to a case which is filed under Federal, Tribal, or State law and relates to the sexual assault dispute or the sexual harassment dispute.”  (9 U.S.C. § 402).       

The California Court of Appeals recently ...

California Court of Appeals Reinforces Strict Limits on Arbitration Fee Payment Deadline

The California Court of Appeals recently revisited the issue of the draconian deadline for paying arbitration fees established by California Code of Civil Procedure section 1281.97.  In Suarez v. Superior Court of San Diego County, the new twist that prompted appellate court review was that the 30-day grace period to pay the arbitration fees ended on January 1, 2023.  Because January 1, 2023 was a holiday, the employer argued that the arbitration payment deadline was extended by statute under Code of Civil Procedure sections 12 and 1010.6.

More specifically, and among several ...

Trial Courts Do Not Have Authority to Dismiss PAGA Claims for Lack of Manageability

Until recently, California courts were split on whether Private Attorneys General Act (“PAGA”) claims could be dismissed for a lack of “manageability” – referring to the practicality of effectively conducting a trial on the issues.  Like class actions, PAGA actions generally purport to represent a significant number of an employer’s current and former employees.  However, there are important distinctions between class and PAGA actions, which caused California’s appellate courts to issue conflicting opinions on how PAGA cases should be adjudicated.  The ...

Happy Valentine’s Day! A Reminder that Employers Must Notify Employees of Void Non-Compete Clauses and Agreements by February 14, 2024

As part of a focused effort by the California Legislature to protect employees from unenforceable non-compete clauses and agreements and increase fair competition among employers in 2024, Assembly Bill 1076 enacted Business and Professions Code section 16600.1.

In addition to any other Valentine’s Day plans that employers may have, all employers that provided any agreement with an unlawful non-compete clause or otherwise executed an unlawful non-compete agreement with its employees who were employed after January 1, 2022 must provide written notice to each employee or ...

Posted in Legal Bites
FDA Identifies Priority Guidance Topics for Foods Program

On January 25, 2024, the U.S. Food and Drug Administration (“FDA”) announced a new website listing regulations that its Foods Program plans to publish by October 2024 and longer-term regulations it is prioritizing for publication at a later date.

FDA also updated the list of guidance topics that it is considering and expects to publish by the end of 2024. The following five topics have been added to the list of guidance documents the FDA expects to publish by the end of December 2024:

  • Notifying FDA of a Permanent Discontinuance in the Manufacture or an Interruption of the Manufacture ...
Courts surprisingly affirm insurance coverage to defend against economic loss

For parties facing class action lawsuits, where the class seeks to recover for economic losses, there may still be opportunities for insurance coverage. Thus, where economic losses arise out of the purchase of products that have the potential for causing bodily injury, insurance coverage, at least for purposes of the duty to defend, may well be available.

Two fairly recent cases take up this scenario and both affirm coverage, at least for purposes of the duty to defend. Coverage was affirmed even though the relief sought in the class action complaints was solely for damages occasioned ...

Stand Up and Be Counted! Employee Count Guidance for Statutes Without Express Guidelines

Many California state statutes are applied based on the number of persons employed by an employer employee count.  Unfortunately, there are a number of these laws, including statutes establishing employee leaves of absence requirements, that do not specify which employees must be counted to determine if the law applies to a particular employer.  A recent state guidance regarding the 2023 state pay transparency statute, which requires the inclusion of a pay scale in job postings by employers with at least 15 employees, but which law does not specify who must be included in the count ...

California Enacts Higher Minimum Wage for Health Care Workers

Commencing on June 1, 2024, Senate Bill 525 will raise the minimum wage for covered health care workers at covered health care facilities in California. A “covered health care facility” as further defined by various statutes, is:  a facility or other work site that is part of an integrated health care delivery system; a licensed general acute care hospital; a licensed acute psychiatric hospital; a special hospital; a licensed skilled nursing facility, if owned, operated, or controlled by a hospital or integrated health care delivery system; a patient’s home when health care ...

California Expands Requirements for Successor Grocery Employers

Effective January 1, 2024, California’s Assembly Bill 647 will expand recall rights for grocery workers when there is a change of control in a grocery establishment.  Prior to AB 647, existing law required an incumbent grocery employer to provide, within 15 days of execution of a transfer document, a list of eligible grocery workers. Successor grocery employers were then required to maintain a preferential hiring list of these eligible grocery workers and hire from that list for 90 days. This law did not apply to grocery stores that had ceased operations for 6 months or more before the ...

Is an Order Approving a Sale of Receivership Property Immediately Appealable?

Q: I am a defendant in a receivership, where the receiver has moved to sell my property. If the court approves the sale,
I want to appeal. My attorney says an order approving the sale cannot be directly appealed and I will have to wait until the end of the case, which could be years from now. Is this correct?

A: It depends on whether your case is in federal or state court. In the Fifth Circuit case SEC v. Barton, 2023 WL 4060191, the defendant appealed the district court’s order approving the receiver’s sale of the defendant’s home, for the purpose of recouping funds for defrauded ...

SB 428 Further Modifies Workplace Violence Restraining Order Law

As reported here, California recently took steps to provide employers additional tools to combat workplace violence, including requiring a written workplace violence prevention plan, by enacting Senate Bill 553.  Effective January 1, 2025, Senate Bill 428 makes further changes to existing procedures for workplace violence restraining orders, and creates limitations to prevent employers from using such orders to restrict labor-related speech and activities. These changes are codified as section 527.8 of the Code of Civil Procedure.

Employers in California may ask for a court ...

California Expands Right to Recall for Hospitality Employees

During the height of the COVID-19 pandemic in 2020, California enacted a temporary right to recall for hospitality employees, codified as Labor Code section 2810.8 (see our related post describing the law here). This law covers laid-off employees who were employed for the 6 or more months preceding January 1, 2020, and whose layoff was due to a reason related to the COVID-10 pandemic. The law was scheduled to expire on December 31, 2024.

Covered employers include hotels with fifty or more guest rooms, airport hospitality operations and service providers, certain event centers, and ...

Some, But Not All, California COVID-19 Laws Will Sunset at the End of 2023

California’s COVID-19 notice requirements under California Labor Code § 6409.6, requiring employer notice to employees of COVID-19 exposures in the workplace, will expire at the end of 2023.

However, although these state notice requirements will expire, under Cal/OSHA’s COVID-19 non-emergency regulations, employers must still notify employees and independent contractors who had a close contact with a COVID-19 case, as well as any employer with an employee who had a close contact, as soon as possible.  Local health department requirements may also apply.

The end of 2023 ...

Civil Rights Council’s Amendment to the Fair Chance Act Increases Employer Obligations

The California Office of Administrative Law approved the California Civil Rights Council’s proposed amendment to the California Fair Chance Act, effective October 1, 2023. In addition to providing employers with further guidance on how to handle job applicants with a criminal history, the amendment also expands which employers and job applicants fall under the scope of the FCA.

Originally enacted in 2018, the FCA aims to remove unnecessary difficulties for individuals with criminal backgrounds to find employment. Specifically, the FCA prohibits an employer with five or more ...

National Labor Relations Board Adopts Stricter Employer Workplace Rule Standard

Under the National Labor Relations Act (NLRA), employees have “the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.”  In Stericycle, Inc., 372 NLRB No. 113 (2023), the National Labor Relations Board (NLRB) adopted a new, stricter standard for assessing workplace policies for the purpose of protecting these employee rights.  Under the new standard, a work rule is ...

Employers Beware: Equal Employment Opportunity Commission and Department of Labor Agree to Collaborate to Maximize Enforcement of Laws

Earlier this year, the Equal Employment Opportunity Commission (EEOC) and Department of Labor, Wage and Hour Division (WHD) entered into a memorandum of understanding “to maximize and improve the enforcement of” the laws administered by the two agencies.  The purpose of the MOU is to foster better collaboration between the agencies through “information sharing, joint investigations, training, and outreach.”

Taking immediate effect, the organizations have agreed to broader information and data sharing between each other.  Notably, either organization “may share ...

California Amends the Wage Theft Prevention Act to Add Additional Written Notice Requirements for Employees

Since 2011, the Wage Theft Prevention Act has required California employers to provide certain written information to new employees at the time of hiring and within seven days of any change. The Labor Commissioner provides a form Notice to Employee Labor Code Section 2810.5 for this purpose

Beginning January 1, 2024, Assembly Bill 636 will amend Labor Code 2810.5 to require employers to include in the 2810.5 Notice information regarding any federal or state emergency or disaster declaration issued within 30 days before hire that applies to the county or counties in which the ...

Employer Alert: SB 553 Requires Workplace Violence Prevention Plans for Most California Employers by July 1, 2024

Unfortunately, incidents of workplace violence are taking place with increasing frequency.  In an effort to give employers additional tools to combat these issues, the California Legislature has given us Senate Bill 553.  Effective January 1, 2024, SB 553 amends Code of Civil Procedure section 527.8 to permit any employer that employs someone who has suffered unlawful violence or a credible threat of violence from any individual that can reasonably be construed to be carried out or to have been carried out at the workplace to seek a temporary restraining order on behalf of the employee ...

How To Handle the Cost of Producing Records From a Closed Receivership

Q: I was involved in a now closed receivership. I want access to some of the records of the entity that was in receivership and some emails and information I believe was sent to the receiver or her counsel. I contacted the former receiver. She said the entity’s records she had have been destroyed and if I want emails or information she or her counsel have, I would have to subpoena them and pay for the cost of locating and producing the items. Is this appropriate?

A: Probably. It depends on what the order approving the receiver’s final account and report, or other orders, state about record ...

New California Law Protects Victims of Sexual Harassment, Discrimination or Assault From Claims of Defamation

The California Legislature recently passed Assembly Bill 933, a bill expanding privileged speech to expressly include communications regarding factual information pertaining to incidents of sexual assault, harassment or discrimination.

Currently, California statutes list specific types of oral and written communications that are privileged and therefore cannot be the basis for a claim of defamation against the speaker.  Privileged categories include, among other things, statements made in pursuit of a lawsuit or made in the proper discharge of an official duty.  ...

NLRB Issues Rule Expanding Definition of Joint Employer

The National Labor Relations Board recently issued a final rule broadening who may be considered a joint employer of another employer’s employees under the National Labor Relations Act.

Under the former rule, passed in February 2020 during the Trump administration, an entity is considered a joint employer of a separate’s employer’s employees only if the two employers “share or codetermine the employees’ essential terms and conditions of employment, which are exclusively defined as wages, benefits, hours of work, hiring, discharge, discipline, supervision, and ...

Opportunities for insisting on independent counsel

Civil Code section 2860 authorizes the retention of independent counsel in the event a conflict of interest arises between the insurer and its insured. Under the statute a conflict of interest is deemed to arise “when an insurer reserves it rights on a given issue and the outcome of that coverage issue can be controlled by counsel first retained by the insurer for the defense of the claim”. Section 2860(b).

But what happens if, in the absence of insurer appointed counsel, the insured selects counsel to defend the claim, with the insurer’s acquiescence? In that circumstance, is the ...

Privacy vs. Innovation: California's Proposed Regulations on AI and Automated Decision-Making

The California Privacy Protection Agency (“CPPA”) has unveiled draft regulations regarding AI and automated decision-making technologies.  AI and automated decision-making encompasses systems leveraging machine learning, statistics, and data processing to evaluate personal information.  Such technologies not only aid in human decision-making, they also involve individual profiling capabilities, which triggers a potential need to safeguard privacy rights.  The draft regulations include, among other things, provisions for providing notice of AI technology use ...

California Expands Protections for Employee Conduct

        Employee claims of retaliation in the workplace have been on an upward trend since the California Legislature amended Labor Code section 1102.5 to include protections for whistleblower complaints made directly to a person with authority over the complaining employee or to another employee with authority to investigate the claims alleged.  Senate Bill 497, which goes into effect on January 1, 2024, will serve to permit claims for employees alleging retaliation in the workplace under not only Labor Code section 1102.5, but also sections 98.6 (engaging in protected activity related ...

Appealing A Petition to Compel Arbitration Ruling No Longer Automatically Stays Superior Court Proceedings

            Over the past few years, this blog has followed the California Legislature’s concerted efforts to vitiate employment arbitrations in the state.  Senate Bill 365 is the next in line.  This bill amends Code of Civil Procedure section 1294(a) to state that, while an aggrieved party may appeal from an order dismissing or denying a petition to compel arbitration, “the perfecting of such an appeal shall not automatically stay any proceedings in the trial court during the pendency of the appeal.” (Emphasis added). 

            Although a small change to a short statute, the effects may be ...

California Enacts Further Protections for Marijuana-Using Workers and Job Applicants

Passed in 2022 and effective January 1, 2024, Assembly Bill 2188 creates Government Code section 12954 to make it unlawful for an employer to discriminate against a person in hiring, termination, or any term or condition of employment, or otherwise penalizing a person, for either:

(1) The person’s use of cannabis off the job and away from the workplace; or

(2) An employer-required drug screening test that has found the person to have nonpsychoactive cannabis metabolites in their urine, hair, blood, urine, or other bodily fluids.

Now Senate Bill 700, which will also become effective ...

California Employers Must Pay for Food Handler Card and Training

On October 8, 2023, California Governor Gavin Newsom signed Senate Bill (“SB”) 476. The law will go into effect on January 1, 2024.

Employees of retail food facilities are already required to obtain a food handler card and maintain that card for the duration of their employment. SB 476 requires employees to compensate the training and food handler examination time as “hours worked” for which the employer would pay. Employers must also reimburse the employee for all costs associated with obtaining a food handler card. Lastly, employers must relieve the employee of all other ...

California Creates Employee Right to Reproductive Loss Leave

California Senate Bill (“SB”) 848, which becomes effective on January 1, 2024, entitles employees to five days of leave following a reproductive loss event. SB 848 adds section 12945.6 to the Government Code and applies to employers with five or more employees. Employees are eligible for the leave if they have worked for the employer for at least 30 days before suffering the reproductive loss.

SB 848 defines “reproductive loss event” as “the day or, for a multiple-day event, the final day of a failed adoption, failed surrogacy, miscarriage, stillbirth, or an unsuccessful ...

California Enacts Additional Restrictions on Employer Noncompete Agreements

          The California Legislature has sought in recent years to expand the rights of employees in nearly every facet of business in California.  Employer restrictions on an employee’s ability to work in the same industry after employment ends have been no exception.  As a result of the 2023 legislative term, two bills limiting post-employment restrictions on employees. In addition to Senate Bill 699, which voids noncompete agreements of out-of-state employee seeking work in California, Assembly Bill 1076 was signed into law. 

            AB 1076 amends Business Code Section 16600 and creates ...

California Increases Paid Sick Leave for Employees

Senate Bill 616, which was signed into law by Governor Newsom this month, amends existing law regarding paid sick leave to California employees. 

The Essentials:

Beginning January 1, 2024 –

  • The number of paid sick days per year will be increased to 40 hours or 5 days, whichever is greater (increased from 24 hours or 3 days).
  • Employers may cap an employee’s use of paid sick leave to 40 hours or 5 days in each year of employment, calendar year, or 12-month period (increased from 24 hours or 3 days).
  • Employers may cap paid sick leave carryover accrual at 80 hours or 10 days, whichever is greater ...
California Enacts Fast Food Bill with $20 Minimum Wage

After years of debate, and a looming referendum, a compromise between labor and business representatives has resulted in a final law regulating the fast-food industry. On September 28, 2023, California Governor Gavin Newsom signed Assembly Bill (“AB”) 1228 into law. AB 1228 is a compromise version of the Fast Food Accountability and Standards Recovery Act, a law that initially became effective on January 1, 2023, but them became the subject of a referendum which halted enforcement.  Now that AB 1228 has been enacted, the referendum on the Fast Food Accountability and Standards ...

­California Opens its Doors to Commerce by Voiding Out-Of-State Non-Compete Agreements

You may have heard the half-serious joke that California acts as its own independent country.  One example of this is California’s strong disfavor of non-compete agreements, which stands in contrast with the rest of the country which permits these agreements to varying degrees.

California has leaned further into its famed independence with the passage of Senate Bill 699, which will go into effect on January 1, 2024.  SB 699 seeks to strengthen California’s existing ban against non-compete agreements set forth in Business and Professions Code section 16600 which simply states ...

Can a Receivership Court Bar Third Party Claims?

Q: I am a receiver for a corporation, in a case arising out of fraud allegations. I have asserted claims against various insiders. They are willing to settle with me for a significant sum, but only if the court bars investors, customers and vendors from suing them. Can the court issue such a bar order?

A: Maybe. It will depend on the types of claims the third parties possess. The issue of third party releases is a hot topic in bankruptcy. It recently arose in the infamous Purdue Pharma bankruptcy, where the Saclker family agreed to pay $4.55 billion, but only if they were released from any third ...

California Minimum Wage Increases

What goes up continues to go up!  As we pointed out here last year, the trend of increasing the minimum wage continues, as follows:

State:

On January 1, 2024, the California state minimum wage will increase from $15.50 per hour to $16.00 for employers of all sizes, reflecting a 3.5% increase, which is based on the expected rate of inflation.  The state minimum wage also governs the exempt employee threshold salary, which will increase accordingly.  The new minimum salary for employees who otherwise qualify to be exempt from overtime will be $66,560 annually for employers of all sizes.

Posted in Legal Bites
California Food Safety Act Passes

On September 1, 2023, the California legislature passed Assembly Bill (“AB”) 418, the California Food Safety Act.

If the law is passed, then any person or entity will be prohibited from manufacturing or selling a food product for human consumption containing specified food additives. The banned additives include brominated vegetable oil (CAS no. 8016-94-2); potassium bromate (CAS no. 7758-01-2); propylparaben (CAS no. 94-13-3); and red dye 3 (CAS no. 16423-68-0).  The original version of the bill included a fifth additive, titanium dioxide. However, shortly before the ...

Compromise Reached on FAST Act

On September 11, 2023, industry, government, and union representatives announced that they had reached a deal to remove a California referendum on the Fast Food Accountability and Standards (“FAST”) Recovery Act from the 2024 ballot. The Fast Act has a storied history, commencing with legislation which was scheduled to take effect on January 1, 2023, which prompted a responsive referendum and legal action.    

The compromise bill, Assembly Bill (“AB”) 1228 will increase the minimum wage for fast food workers in the state to $20 an hour in April 2024 if the fast food chain has more ...

Is a Receiver Entitled to Interest on the Receiver’s Awarded, but Unpaid, Fees?

Q: In a receivership I just wrapped up, the court approved my final account and report and awarded me final fees. Because there were insufficient funds in estate to pay my fees in full, the court ordered the defendant to pay my outstanding approved fees. The defendant, however, has not paid me. Am I entitled to interest on my outstanding fees even though I don’t have a judgment?

A: Actually, you do have a judgment and you are entitled to interest on your unpaid fees. As explained in a prior Ask the Receiver, “judgment” is defined differently in different sections of the Code of Civil ...

Posted in Legal Bites
Ninth Circuit Revives Nestle “Premier White Morsel” Class Action

On August 15, 2023, a panel of judges for the United States Court of Appeals for the Ninth Circuit revived a class action lawsuit against Nestle regarding its “Premier White Morsels” Toll House product.  In the opinion, Prescott v. Nestle USA, No. 22-15706, the court vacated the district court’s ruling and asked the court to reconsider its decision in light of the California Court of Appeal’s decision in Salazar v. Walmart, Inc., 83 Cal. App 5th 561 (2022).

Plaintiffs alleged that Nestle violated California state law, including the Unfair Competition Law (“UCL” ...

Traps for the Unwary: Reporting Requirements Under Liability Policies

Companies reporting liability insurance claims need to be aware that the pertinent rules vary depending on whether a policy is “claims made and reported” or “occurrence”.

Most, if not all, Directors and Officers and Errors and Omissions policies are written on a claims made and reported basis. By contrast, Commercial General Insurance, or CGL insurance, is written on an occurrence basis. Under a claims made and reported policy, a claim must have arisen and been reported during the same policy period. By contrast, under an occurrence policy, the claim may be reported long ...

Los Angeles Enacts Freelance Worker Protections Ordinance

With the stated purpose of providing protection to freelance workers who may struggle to receive timely and full payment for their services, the city of Los Angeles has established an ordinance which will require hiring entities to have a written contract with any freelance worker for services valued at $600 or more in a calendar year.  Titled the “Freelance Worker Protections Ordinance”, the legislation establishes specific rights and remedies for freelance workers which could prove costly to uninformed employers. 

As defined by the ordinance, a “hiring entity” is any ...

Posted in Legal Bites
FDA Revokes Uses of Partially Hydrogenated Oils in Food

On August 9, 2023, the Food and Drug Administration (“FDA”) announced a direct final rule revoking certain uses of partially hydrogenated oils (“PHOs”) in food.  The rule will go into effect on December 22, 2023. Any comments to the rule must be submitted by October 23, 2023.

The rule removes PHOs as an optional ingredient in the standards of identity for peanut butter and canned tuna. It also revises FDA's regulations affirming food substances as generally recognized as safe pertaining to menhaden oil and rapeseed oil to no longer include partially hydrogenated forms of these ...

Posted in Legal Bites
Ninth Circuit Finds Protein False Labeling Cases Are Preempted

On August 14, 2023, a panel of judges for the United State Court of Appeals for the Ninth Circuit issued a published opinion affirming dismissal of two complaints alleging that food product labels advertising the amount of protein in products were false and misleading under federal and state law. The panel held that the claims were preempted by FDA regulations.

In Case No. 22-15377, the panel ruled on two related cases, Nacarino v. Kashi, and Brown v. Kellogg. The plaintiffs in both cases argued that the protein claim on Kashi and Kellogg’s labels were false because the nitrogen method ...

Ninth Circuit Broadly Interprets Exemption under Federal Arbitration Act for Transportation Workers

On July 21, 2023, the United States Court of Appeals for the Ninth Circuit affirmed a district court order denying Domino Pizza’s motion to compel arbitration in a putative class action brought by plaintiff Dominos truck drivers who alleged that Domino’s had violated California labor law.

The decision in Carmona v. Domino’s Pizza, No. 21-55009 involved an analysis of the Federal Arbitration Act. A Ninth Circuit panel had previously affirmed the denial of the motion to compel, but the United States Supreme Court granted certiorari, vacated the panel’s decision and remanded ...

California Supreme Court Rules that PAGA Claims May Be Pursued in Court Despite Arbitration Agreement

Following the United States Supreme Court’s landmark ruling in Moriana v. Viking River Cruises, California courts were tasked with the open question of whether an “aggrieved” employee whose individual Private Attorneys General Act (PAGA) claims are subject to an arbitration agreement has standing to represent other similarly aggrieved employees in Superior Court.  In Adolph v. Uber Technologies, Inc., the California Supreme Court answered that question in the affirmative; a representative employee’s standing to represent others is not affected by any existing ...

Can a Receivership Court Stay Pending Lawsuits?

Q: I was appointed state court receiver over a corporation. There are a number of pending lawsuits against the corporation. At the current time, there are few liquid assets and I would rather not use them to defend the lawsuits. Can the receivership court stay the lawsuits and require the claims be dealt with in a claims procedure in the receivership case?

A: It depends. The pivotal issue is whether the case you were appointed in is an action (C.C.P §22) or a special proceeding ( C.C.P. §23). The distinction is important because C.C.P. § 526(b)(1) prohibits an injunction: “to stay a ...

California Appellate Court Holds that Employers Must Reimburse Work-from-Home Expenses During COVID Lockdown

The Court of Appeal of the State of California recently held in Thai v. IBM, A165390, that employers are obligated to reimburse expenses incurred by employees working from home if those expenses are a consequence of the employee’s job duties, even if those expenses were caused by state stay-at-home COVID orders rather than by the employer.

Plaintiff Paul Thai (“Thai”) is a former IBM employee whose regular job duties required internet access, telephone service, a computer, and a headset. On March 19, 2020, California Governor Gavin Newsom signed Executive Order N-33-20 (the ...

Supreme Court Unanimously Approves Higher Standard for Religious Accommodations Under Title VII

On June 29, 2023, the Supreme Court of the United States unanimously held in Groff v. DeJoy, No. 22-174, that Title VII of the Civil Rights Act of 1964 (“Title VII”) requires an employer that denies a religious accommodation to show that the burden of granting an accommodation would result in substantial increased costs that would affect the conduct of the employer’s business.

U.S. Post Office employee Gerald Groff is an Evangelical Christian who believes that Sunday should be devoted to worship and rest.  Groff had been a USPS employee since 2012. At the time he started, the USPS ...

Posted in Legal Bites
FDA Announces Updated Foods Program Priorities


On July 6, 2023, the U.S. Food and Drug Administration (“FDA”) released an updated list of draft and final topics that the agency anticipates publishing guidance documents for by the end of December 2023.

The guidance topics on labeling issues include:

  • Foods Derived from Plants Produced Using Genome Editing;
  • Menu Labeling Supplemental Guidance;
  • Labeling of Plant-Based Alternatives to Animal-Derived Foods;
  • Use of Nutrient Content Claims for Added Sugars in the Labeling of Human Food Products

FDA stated: “[w]e currently intend to develop guidance on each topic; however ...

Insure Against Data Breaches Suffered By Vendors and Service Providers

Over the last several years several companies, including Marriott, Yahoo and Volkswagen, have been victimized by hackers breaking into a company’s computer network. In some cases, they have put confidential information on the internet. In others, the hackers have held the company’s information hostage through ransomware. While companies are rightly concerned about the security of their own networks, there is another risk. Recent court cases are testing the liability of companies and their directors for data breaches suffered by their vendors or service providers. This is ...

Federal Pregnant Workers Fairness Act Now Effective

On June 27, 2023, the federal Pregnant Workers Fairness Act (“PWFA”) went into effect.  The law requires employers with 15 or more workers to provide “reasonable accommodations” to a worker’s known limitations related to pregnancy, childbirth, or related medical conditions, unless the accommodation will cause the employer an “undue hardship.”

The PWFA does not replace federal, state, or local laws that are more protective of workers affected by pregnancy, childbirth, or related medical conditions. These laws have been passed in approximately 30 jurisdictions ...

FTC Proposes Ban on Fake Reviews and Testimonials

On June 30, 2023, the Federal Trade Commission (“FTC”) announced that it would be publishing a notice of proposed rulemaking on the use of consumer reviews and testimonials.

The proposed rule follows FTC’s November 2022 Advance Notice of Proposed Rulemaking. The FTC voted 3-0 to approve the notice of proposed rulemaking, which will be published in the Federal Register and open to public comment.

Specific practices that would be prohibited under the proposed rule and subject to FTC fines or enforcement action include:

  • Selling or Obtaining Fake Consumer Reviews, Consumer ...
Ninth Circuit Clarifies Standard for “Client Employer” Liability

On June 1, 2023, a panel of judges for the United States Court of Appeals for the Ninth Circuit held that berry distributors were not liable as “client-employers” of agricultural workers. The plaintiff agricultural workers had been hired by strawberry growers to pick fruit that was then turned over to defendants Red Blossom Sales, Inc. and Better Produce, Inc. for distribution.

In 2018, the strawberry growers stopped paying the plaintiff agricultural workers and filed for bankruptcy. The plaintiffs then sued the distributor defendants as joint employers and client ...

Posted in Legal Bites
Ninth Circuit Deals Another Blow to Restaurants in COVID-19 Insurance Coverage Case

On June 26, 2023, a panel of judges for the United States Court of Appeals for the Ninth Circuit affirmed an insurance company’s win over a restaurant group seeking insurance coverage for pandemic-related claims in Team 44 Restaurants, LLC v. American Insurance Company, No. 22-15403.

Plaintiffs owned various individual restaurants, who sought insurance coverage under business insurance policies. The defendant insurance companies denied coverage for COVID-19 losses under government shutdowns, on the basis that there was no direct physical loss to the restaurants.

The ...

Posted in Legal Bites
USDA to Increase Substantiation Requirements for Animal-Raising Claims

On June 14, 2023, the U.S. Department of Agriculture (“USDA”) announced that it was implementing a multi-step effort to strengthen the substantiation of animal-raising claims. Animal-raising claims are voluntary marketing claims that highlight aspects of how the source animals used for meat and poultry are raised. These claims include “grass-fed,” “free-range,” or “raised without antibiotics.”

Currently, these claims must be approved by USDA’s Food Safety and Inspection Service (“FSIS”) before they can be included on labels sold to consumers.  ...

Insurance Coverage for Email Scams

A genuine looking email is sent to a company’s accounts payable department with instructions from its president to pay money to a certain account. The “To” and “From” headers and the signature block look identical to hundreds of emails previously received by the department from the company’s president. In reliance on the email, money is wired to the designated account. It later turns out the email was fake and the company’s money was wired to a fraudster’s account.

In another scenario, the company’s accounts payable department receives an email purportedly from a ...

Can a Receiver Be Liable for Failure to Turnover Property When a Bankruptcy Is Filed?

Q: I was appointed receiver for some major assets owned by a corporation. I just learned the corporation has filed bankruptcy. I know I have to eventually turnover the assets I have. Can I wait to see if the bankruptcy sticks or if a trustee is appointed? Can I demand the corporation pay for the cost of my turning over the assets?

A: No and no (although you may have a claim for the cost). As most receivers know, if a bankruptcy is filed that involves an entity or assets in receivership, the receiver must turnover any property of the debtor in the receiver’s possession to the debtor or, if one is ...

Employer Alert: Local Minimum Wage Increases on July 1, 2023

On July 1, 2023, a number of local municipalities and the County of Los Angeles will be raising their hourly minimum wage, based on changes to the consumer price index, and as required by local minimum wage ordinances. Beginning July 1, 2023, the following increases will apply to employers in the designated areas:

In addition, on July 1, 2023, all businesses in the City of West Hollywood, including smaller businesses and hotel employers, will be required to raise the hourly minimum wage to $19.08.  In the past several years, the City of West Hollywood’s minimum wage and corresponding ...

Posted in Legal Bites
LA County Ban on Single-Use Plastic Goes into Effect

On May 1, 2023, a ban on single-use plastics went into effect for restaurants with permanent locations in unincorporated areas of Los Angeles County. The ban was originally passed in April of 2022 by the Los Angeles County Board of Supervisors, with enforcement rolled out based on the type of establishment. 

The ban will be enforced first in restaurants with permanent locations, then be effective on November 1, 2023 at food trucks, and May 1, 2024 at temporary/pop-up food facilities, catering companies, and farmers market. 

Restaurants that demonstrate financial hardship can apply ...

Posted in Legal Bites
Ninth Circuit Upholds Dismissal of “Just Fruit” Lawsuit

On April 28, 2023, a panel of judges from the U.S. Court of Appeals for the Ninth Circuit upheld a lower court’s dismissal of a lawsuit against Kroger alleging that the company misleadingly labeled spreadable fruit products as “Just Fruit.”

Plaintiff Sarah Vitort alleged that Kroger violated the Oregon Unlawful Trade Practices Act because the “Just Fruit” product included fruit syrup, pectin, calcium citrate, apple juice concentrate, and citric acid. Plaintiff argued that even though those ingredients could be extracted from fruit, they were not actually fruit ...

Uber Drivers Cannot Bring Class Action for Employment Claims

In a matter of first impression, a panel for the Third U.S. Circuit Court of Appeals recently affirmed a judgment of the District Court of New Jersey in Singh v. Uber Techs., Inc. (April 26, 2023), compelling arbitration in a putative class action against Uber Technology, Inc. (Uber). The class action was brought against Uber by its drivers who alleged that the rideshare company misclassified them as independent contractors, thereby depriving them of overtime pay and other benefits under wage and hour laws. The panel held that the drivers must bring work-related disputes as ...

Partition Referees and Receivers have quasi-judicial  immunity

A number of articles previously published in Receivership News have pointed out that while it is clear that receivers appointed by federal courts have quasi-judicial immunity ( See, New Alaska Dev. Corp. v. Guetschow, 869 F.2d 1298 (9th Cir. 1989); Trinh v. Fineman, 9 F. 4th 235 (3rd. Cir. 2021) [collecting cases]) up to  now it has been unclear whether that is true for receivers appointed by state courts in California, although there have been a number of unreported decisions that have held receivers do have such immunity (See, Haider v. Speiser, 2012 WL 41019411 (2012); Gruntz v. Wiley,

California Court of Appeals Holds that Joint Employers Must Sign Arbitration Agreement

In law school, aspiring attorneys are taught fundamental concepts related to contracts, including “agency”, “third party beneficiary”, and “equitable estoppel”, terms which relate to determining who should be subject to the terms of a contract.  In Hernandez v. Meridian Management Services, LLC, the California Court of Appeals referred back to these law school basics in denying a motion to compel arbitration brought by a number of companies who were alleged to be “joint employers” of an employee, but who were not signatories to an arbitration agreement between ...

Posted in Legal Bites
FTC Warns Advertisers about Unsubstantiated Product Claims and Endorsements

On April 13, 2013, the Federal Trade Commission (“FTC”) announced that it had sent a Notice of Penalty Offenses Concerning Substantiation of Product Claims and a Notice of Penalty Offenses Concerning Deceptive or Unfair Conduct around Endorsements and Testimonials letter to almost 700 marketing companies.

The purpose of a Notice of Penalty Offense (“NPO”) is to put firms on notice about deceptive or unfair acts or practices the FTC has previously fully litigated.  After the FTC issues an NPO, any recipient of the NPO is considered to be on notice of the prohibitions against ...

After Pushback, LA Revises “Al Fresco” Dining Ordinance to Lower Cost and Streamline Approval Process

On April 7, 2023, the City of Los Angeles (the “City”) released a revised “LA Al Fresco Ordinance,” to govern outdoor dining.  The City had previously released a February 2023 proposed ordinance that was met with intense opposition from restaurant owners and community members.

“LA Al Fresco” is a popular outdoor dining program that began in May 2020 during the COVID-19 pandemic in an effort to help restaurant owners use more space for outdoor dining without having to go through a prolonged approval process.  Through the program, restaurants and bars could apply to expand ...

Posted in The Real Dirt
Nine Ideas to Avoid the Effect of Measure ULA - The New Mansion Tax

The so-called “mansion tax” approved by Los Angeles voters in 2022 and effective April 1, 2023 (Measure ULA) is a misnomer. It establishes a new 4% documentary transfer tax on the sale of any real property priced or valued from $5 million up to $10 million and a 5.5% tax on real property sales priced or valued at $10 million or greater. This is in addition to the current base transfer tax. Measure ULA applies to more than just large homes. It applies to apartment buildings, raw land and commercial and industrial real estate. Anytime a sale price for real property exceeds $5 million in Los ...

Companies That Pay Hackers May Be Able to Recoup Their Losses 

Where companies are victimized by ransomware or email scams, their losses arise from payments made by an officer or employee of the company.

In the case of ransomware, a company’s files are held hostage pending payment by the company to release them. In the case of email scams, typically a company’s employee is tricked into sending funds to a third party account which the employee believes is legitimate.

In both cases, the loss is occasioned through some action by the company either in the form of payment to the cyber thief or to the fraudster’s account.

Insurers resisting payment ...

Court Rules Outside Salesperson Exemption Turns on Employer Control

Until recently, employers had the luxury of interpreting the outside salesperson exemption to minimum wage, overtime and meal and rest period requirements at face value.  This is because the definition of an “outside salesperson” is simply codified as “any person, 18 years of age or over, who customarily and regularly works more than half the working time away from the employer’s place of business selling tangible or intangible items or obtaining orders or contracts for products, services, or use of facilities.” 

However, in Espinoza v. Warehouse Demo Services, Inc.

Posted in The Real Dirt
Default Interest Rates on Principal Illegal Under California Law?

As interest rates rise, borrowers may find themselves in default, facing lenders who overreach by seeking to recover default interest in addition to regular interest on the principal of the loan. Borrowers may have a weapon in their arsenal to oppose unscrupulous lenders.

In Honchariw v. FJM Private Mortgage Fund, LLC, 83 Cal.App. 5th 893 (2022), a borrower alleged that a default interest rate of 9.99% per annum on the then outstanding principal was illegal. The trial court affirmed an arbitration decision rejecting the borrower’s position. The Court of Appeal ...

California Court of Appeals Rules that Proposition 22 is Constitutional…Mostly…For Now

In the 2020 general election, Californians passed Proposition 22, which gave ride-sharing and delivery app companies such as Uber, Lyft, and DoorDash the ability to continue classify their drivers as independent contractors.  Shortly after the proposition passed, a group of drivers challenged its constitutionality.  At its core, the issue is whether drivers in the gig economy should be entitled to the benefits typically afforded to employees.  As independent contractors, these workers forgo such benefits in exchange for the right to set their own work schedule and receive ...

When Should A Receivership Be Terminated?

Q: I was appointed a receiver to collect a judgment. I have not yet filed my final account and report, the court has not approved my final fees. Other creditors of the judgment debtor are demanding that I pay them, because they were not able to be paid from the judgment debtor’s assets taken into receivership. The judgment debtor has paid the judgment creditor and is now demanding that the receivership be terminated. Must the court now terminate the receivership?

A: Not necessarily. The general rule is a receivership should be terminated as soon as the purpose of the receivership has been ...

NLRB Declares Confidentiality and Non-Disparagement Provisions in Severance Agreements Unlawful

Over the last few years, employers throughout the United States have enjoyed some measure of protection from former employees who signed severance agreements.These agreements routinely contained a confidentiality provision that restrains former employees from disclosing the contents of the agreement to third parties other than (1) a spouse; (2) professional advisors for the purposes of obtaining legal counsel or tax advice; or (3) if legally compelled to do so by a court or administrative agency of competent jurisdiction.  These agreements also typically contained a ...

Arbitration Agreements Can Be A Condition of Employment Once Again

The saga of challenges to mandatory employment arbitration agreements is almost over. After three years of challenges, the United States Chamber of Commerce successfully appealed the enactment and enforcement of California’s Assembly Bill 51 (“AB 51”), which was originally intended to take effect on January 1, 2020. This piece of legislation would have banned the use of mandatory arbitration agreements as a condition of employment, and went so far as to include civil and criminal penalties on employers who violated the statute. 

After a federal district court granted a ...

Must A Receiver File An Inventory?

Q:   A few months ago I was appointed receiver over an operating business. A party is complaining that I have not filed an inventory of the assets of the business. My order of appointment says nothing about my having to file an inventory. The business has hundreds, if not thousands, of items of property (tools, desks, fork-lifts, supplies, etc.). Do I have to go to the trouble and cost of preparing and filing an inventory and, if so, how detailed must it be?

A:   Yes. You must prepare and file an inventory. The fact that the order of appointment does not specifically state that an inventory is ...

A Reminder: The IRS Mileage Rates Have Changed

The 2023 mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical, or moving purposes have increased or remained unchanged from mid-year changes in 2022, when rates were last modified. Specifically, as of January 1, 2023, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) are:

  • 65.5 cents per mile driven for business use, up three cents from the rate for the latter half of 2022;
  • 22 cents per mile driven for medical, or moving purposes for active duty members of the Armed Forces, unchanged from the ...
Posted in Legal Bites
Ninth Circuit Revives Serial ADA Litigant’s Case

On January 23, 2023, a Ninth Circuit panel issued a 2-1 decision reversing a lower court’s dismissal of a serial ADA litigant’s complaint against a lobster shop in a shopping complex. The shopping complex had assigned the owner of the lobster shop a space in the parking lot, and the shop owner had placed a “Lobster Shop Parking Sign” near that space. Plaintiff Chris Langer filed a lawsuit based on the lack of accessible parking for the lobster shop.

Private ADA plaintiffs are limited to seeking injunctive relief and costs under Title III of the ADA, so a plaintiff must show a ...

Court Puts FAST Act on Hold Pending Referendum

On January 13, 2023, Sacramento Superior Court Judge Shelleyanne Chang ruled that implementation of the Fast Food Accountability and Standards Recovery Act (“FAST Act”) should remain on hold pending the Secretary of State’s quality control process to review petition signatures.  In so doing, the Court held that “[c]ase law is clear that a qualified referendum pending vote by the people in a general election suspends the effectiveness of a law before it takes effect” and noted that there was no authority to support the Department of Industrial Relation’s position that ...

What To Do If A Receiver Fails To File Monthly Reports?

Q: I represent a party in a receivership case. While the receiver has been in place for over 3 months, she has not served the parties or creditors with any reports. I have written the receiver requesting reports, but she has ignored my requests. What should I do? Can the receiver be sanctioned?

A: Rules of Court 3.1182(a) requires a receiver to provide monthly reports to the parties. It says: must. The receiver is not required to provide reports to creditors, unless the creditor is a lien holder and requests the reports. If the receiver is not complying with the rule, there are a number of ...

Email Scam Losses May Find Recourse Via Cyber Or Business Interruption Coverage

Losses arising from email scams are usually covered, if at all, under a company’s crime policy. But a recent decision from The District Court in Minnesota suggests that recourse may also be found under an insured’s cyber or business interruption coverage. Importantly, the decision suggests that a “data breach” triggering cyber coverage may occur where a bad actor infiltrates and manipulates an insured’s email system.

In Fishbowl Sols., Inc. v. Hanover Ins. Co., 2022 U.S. Dist. LEXIS 200210 (D. Minn. Nov. 3, 2022), a bad actor gained unauthorized access to the email ...

California Expands Restroom Access

California retail businesses must prepare to open employee-only restrooms to members of the public to accommodate medical conditions including Crohn’s disease, ulcerative colitis, other inflammatory bowel disease, and irritable bowel syndrome.

On September 30, 2022, California Governor Gavin Newsom signed Assembly Bill 1632 into law. This bill requires a place of business that is open to the general public for the sale of goods and that has a toilet facility for its employees to allow any individual who is lawfully on the premises of that place of business to use that toilet ...

Employer Alert:  AB 2068 Requires Cal/OSHA Postings in Multiple Languages

Effective January 1, 2023, AB 2068 provides that employers posting a Cal/OSHA citation, special order or action must post the Cal/OSHA English version of the notice, along with multiple language versions of the notification that Cal/OSHA will have prepared, as applicable to the workplace. 

Cal/OSHA is required to prepare these notifications in English and the top seven non-English languages used by limited-English-proficient adults in California, as determined by the U.S. Census Bureau’s American Community Census, which are currently Spanish, Cantonese, Mandarin ...

Court Order Puts FAST Act on Hold

On December 30, 2022, Judge Shelleyanne Chang of the Superior Court of Sacramento issued a temporary restraining order to block adoption of the FAST Act, which was due to take effect on January 1. 

The Save Local Restaurants coalition of restaurant industry advocates filed a voter referendum on September 7, 2022 to block the new law, and appear to have gathered enough signatures to put the law on the November 2024 ballot. Despite the referendum, the California Department of Industrial Relations stated on December 27 that it would move forward with implementation of the FAST Act on ...

Employer Alert: SB 731 Will Expand Sealing of Criminal Records

Beginning July 1, 2023, SB 731 will provide for the automatic sealing of certain felony criminal records.  Arrests that do not result in conviction will also be sealed. This law also permits individuals with violent or serious felony records to petition courts to order their criminal records sealed.  Sealing of these records will make them unavailable to most employers through a background search, although school districts may still access these records for teacher credentialing or employment decisions.

Under SB 731, most defendants convicted of a felony are eligible to have their ...

Cal/OSHA Establishes Non-Emergency COVID-19 Preventive Regulations

Faced with the expiration of its COVID-19 Emergency Temporary Standards, Cal/OSHA voted to establish non-emergency standards. Once approved by the Office of Administrative Law, which is expected to take place in January of 2023, the new standards will remain in place for two years and will apply to most workers in California who are not covered by the Aerosol Transmissible Diseases standard. 

The regulations continue several key ETS requirements, including complying with California Department of Public Health rules regarding face coverings, and providing respirators to ...

California Prohibits Discrimination Due to Reproductive Health Decisionmaking

In response to recent Supreme Court decisions and laws in other states outlawing abortion, California passed a number of new laws designed to protect reproductive rights in the state. These include bills to prohibit a person from being criminally or civilly liable for a pregnancy loss, to prohibit a health care provider from releasing medical information on abortion care in response to out-of-state subpoenas, and to prohibit law enforcement cooperation with out-of-state entities related to a lawful abortion. California voters also approved Proposition 1 in November, which ...

California Expands Hotel Liability for Knowledge of Human Trafficking

California law already requires hotels to provide training to their staff on how to recognize human trafficking and how to report suspected trafficking to either law enforcement or the National Human Trafficking Hotline. Effective January 1, 2023, Assembly Bill (“AB”) 1788, codified as section 52.65 of the Civil Code, creates new civil liability for hotels for the failure of supervisory employees to report sex trafficking activity. 

Specifically, a hotel is liable under AB 1788 if sex trafficking activity occurred in the hotel and a supervisory employee of the hotel either ...

California Expands Franchise Regulation

On January 1, 2023, Assembly Bill (“AB”) 676 will go into effect, significantly amending the California Franchise Relations Act and Franchise Investment Law.  The provisions of AB 676 will only apply to franchise agreements entered into, amended or renewed on or after January 1, 2023.  If the amendment was initiated by the franchisee and the amendment does not adversely impact the franchisee’s rights, that amendment is not subject to AB 676.

AB 676 prohibits franchise agreements from including a provision requiring the franchisee to disclaim their reliance on ...

Can Bills In A Receivership Be Redacted?

Q: I represent a receiver in a contentious family law receivership. In order to prevent attorney client and work product information from being disclosed to one of the parties, the receiver does not want to attach my detailed bills to his monthly reports or to an upcoming interim fee application. I am concerned that not attaching my detailed bills may result in my fees not being allowed. Should I be concerned? Is there a way to protect such sensitive information and still have my fees approved?

A: Surprisingly, California law does not generally require detailed time sheets to be attached ...

Employer Alert: The U.S. Equal Employment Opportunity Commission and the California Civil Rights Department Issue Updated Mandatory Posters

The United States Equal Employment Opportunity Commission (EEOC) has released an updated “Know Your Rights: Workplace Discrimination is Illegal” poster that must be prominently displayed in the workplace. The poster summarizes various employee and applicant anti-discrimination protections that the EEOC enforces and also provides instructions on filing a workplace discrimination charge with the EEOC which include a QR code for quick digital access.  

The “Know Your Rights: Workplace Discrimination is Illegal” poster is available in English and Spanish:

FAST Act Referendum Moves Forward; Putting Law on Hold

California‘s FAST Recovery Act will likely be placed on hold until November 2024. 

The Save Local Restaurants coalition, a group composed of restaurant industry advocates, filed a voter referendum on September 7, 2022 to block the new law. California’s referendum process provides that opponents have 90 days from the date of a bill’s enactment to qualify a measure for the ballot by collecting enough signatures. Specifically, the group had until December 5, 2022 to submit 623,000 signatures in order for the law to be placed on the ballot.  Save Local Restaurants issued a statement

California Will Create a Pilot Program Recognizing Businesses That Create Safe and Welcoming Environments

Governor Newsom signed Assembly Bill 2448 into law, which will enact Civil Code section 51.17. The law requires the Civil Rights Department (formerly the Department of Fair Employment and Housing) to establish a pilot program to recognize businesses that promote or create environments free from discrimination and harassment of customers.  Recognition will come in the form of a certificate the department would issue to qualifying businesses that may be prominently displayed on site. The department would also publish on its internet website a list of businesses receiving the ...

LA City Council Passes “Fair Work Week” Ordinance

On November 22, 2022, the Los Angeles City Council passed the Fair Work Week ordinance (the “Ordinance”). The Ordinance passed with a 10-0 vote, and will go into effect on April 1, 2023. Covered employers subject to the requirements of the Ordinance are retail businesses with 300 or more employees globally, regardless of how many employees are based in Los Angeles.

The Ordinance requires covered employers to provide employees who work at two hours a week within the City of Los Angeles with written notice of their work schedules at least fourteen calendar days before the start of the ...

Employers Beware: SB 1044 Creates a Right to Refuse to Work in Emergency Conditions

Effective January 1, 2023, Senate Bill 1044 will prohibit employers from taking or threatening adverse action against any employee for refusing to report to, or leaving, a workplace or worksite during an “emergency condition” when the employee has a reasonable belief that the workplace or worksite is unsafe.  An “emergency condition” means the existence of either: (1) conditions of disaster or extreme peril to the safety of persons or property at the workplace or worksite caused by natural forces or a criminal act; or (2) an order to evacuate a workplace, a worksite, a ...

California Minimum Wage and Salary Exemption Threshold Increases for 2023

What goes up does not come down! The trend of increasing the minimum wage continues in 2023 as follows:

State:

On January 1, 2023, the California state minimum wage will increase to $15.50 per hour for employers of all sizes. The state minimum wage also governs the exempt employee threshold salary, which will increase accordingly.  On January 1, 2023, the new minimum salary for employees who otherwise qualify to be exempt from overtime will be $64,480 annually for employers of all sizes.

Local:

Additionally, several California municipalities will raise their minimum wage rates on July ...

Employer Alert: SB 951 Will Increase Paid Family Leave and State Disability Benefits

Beginning January 1, 2025, Senate Bill 951 will increase from 60% to a maximum of 90% the percentage of wage replacement based on the individual’s wages earned for persons receiving benefits under the Paid Family Leave (PFL) and State Disability Insurance (SDI) programs for claims filed on or after that date. To pay for this increase in benefits, on January 1, 2024, SB 951 will repeal the wage ceiling for contributions into the SDI fund, thereby making all wages subject to the SDI contribution rate.

Employees can apply for PFL or SDI benefits, as applicable, during an otherwise unpaid ...

New Employment Law Expands Required CalSavers Retirement Savings Program

Effective January 1, 2023, Senate Bill 1126 expands California’s CalSavers Retirement Savings Program by requiring employers with at least one employee to register for CalSavers by December 31, 2025, if the employer does not sponsor a retirement plan for its employees, or register as exempt if a retirement plan is provided.  Any employer may also choose to have a payroll deposit retirement savings arrangement (such as an IRA) to allow employee participation in the program.  However, SB 1126 excludes from the definition of “eligible employer” any sole proprietorships ...

California Employers Must Prepare for Pay Scale Disclosures in 2023

On September 27, 2022, Governor Newsom signed Senate Bill (SB) 1162, which requires employers with more than 15 employees to post salary scales with every job posting and to disclose the pay scale for a position held by an employee upon request, and expands pay data reporting requirements for employers with 100 or more employees.

The law will go into effect on January 1, 2023.

Pay Scale Disclosure in Job Postings and Upon Request

Under existing California law, which went into effect in January of 2018, employers were required to disclose the pay scale of any open position to any applicant ...

Does A Receiver Have To Comply With A Subpoena?

Q: I am a receiver in a partnership dispute case. I have been served with a subpoena issued from a case outside the receivership case, seeking partnership records and emails to and from a defendant in that case. Neither the partnership nor the partners are parties in that case. Do I have to comply with the subpoena? There are few liquid assets in the estate and it will be costly to locate and produce the documents.

A: Based on the reasoning in a recent bankruptcy case, from the Central District of California, if the subpoenaing party did not first obtain leave of the receivership court to ...

When Substantial Compliance Is Not Enough: A Cautionary Ruling For Employment Arbitration Actions

Since its enactment in 2020, employers have been forced to be mindful of the burdensome imposition of Code of Civil Procedure section 1281.97 et seq., which requires an employer to pay the full amount of arbitration fees within 30 days of an arbitrator’s invoice being due, unless the arbitration agreement specifies a different deadline. In a recent opinion titled Espinoza v. Superior Court, the Court of Appeals clarified that this deadline must be strictly followed and there is no leeway for “substantial compliance.” 

In Espinoza, a defendant employer failed to pay the ...

New Law Requires Bereavement Leave in California

Effective January 1, 2023, under Assembly Bill 1949, which amends the California Family Rights Act (CFRA), California employers with at least five employees must provide up to five days of bereavement leave to an eligible employee upon the death of a family member.  To be eligible for the leave, the employee must have completed at least 30 days’ service prior to the leave.  “Family member” means a spouse or a child, parent, sibling, grandparent, grandchild, domestic partner, or parent-in-law. 

The leave is unpaid, but the employee may elect to use available vacation, personal ...

Just When You Thought It Was Over: New Covid Laws For California Employers

With the relaxation of some governmental COVID-19 measures, it may appear that employers need no longer be concerned with any of the requirements imposed in the last two years.  On the contrary, the California Legislature has created a number of new COVID-19-related laws that may California Employers: 

  • Assembly Bill 152 extends COVID-19 Supplemental Paid Sick Leave (SPSL), which had been set to expire on September 30, 2022, to December 31, 2022. That means that California employers with at least 26 employees must continue to provide, under specified COVID-19-related ...
Posted in The Real Dirt
New Case Demonstrates How Tricky Dissolving a 50%-50% Owned California Limited Liability Company Can Be

Friends of Camden, Inc. v. Brandt, 81 Cal. App. 5th 1054 (August 2, 2022) illustrates the trickiness of the law governing dissolutions for limited liability companies and buyout election rights for those opposing dissolution. In Friends of Camden, the plaintiff manager and 1% owner of the LLC (Camden) filed an action for involuntary dissolution under Corporations Code section 17707.03. Certain defendants who were owners of 50% of the LLC moved immediately to exercise their rights to buyout Camden’s 1% ownership interest under Section 17707.03(c)(1) to avoid the dissolution ...

Getting Your Insurer To Favorably Resolve Litigation 

Where a liability carrier has assumed its insured’s defense under a reservation of rights, a variety of conflicts between those parties may arise when there are settlement discussions to resolve the underlying litigation. These conflicts include:

  • The insurer wants to settle to end its exposure for defense costs and the insured wants to continue to fight for business or reputational reasons.
  • Where the policy has “burning limits”—i.e., defense costs reduce the amount of coverage available to pay a settlement or judgment—the insured has an incentive to have the carrier ...
Are Consumer Protection or False Advertising Claims Covered By Insurance?

Whether consumer protec­tion or false advertising claims are covered by insurance depends on the kind of insurance policies in play. For ex­ample, coverage for such claims under a CGL policy is unlikely be­cause an insured's false represen­tation or false advertising about the qualities of its products typically does not fall within any of the "offenses" enumerated under the "advertising injury" coverage grant. See Applied Bolting Tech Prods v. US Fid & Guar Co., 942 F Supp 1029 (ED Pa 1996), in which the court held that alleged false advertising that an insured's products ...

FTC Issues Policy Statement on Gig Work

On September 15, 2022, the Federal Trade Commission (“FTC”) issued a Policy Statement on Enforcement Related to Gig Work (the “Policy Statement”).

The agency’s press release states: “American workers deserve fair, honest, and competitive labor markets. Over the past decade, internet-enabled “gig” companies have grown exponentially, and gig work now composes a significant part of the United States economy. One study suggests the gig economy will generate $455 billion in annual sales by 2023. The rapid growth of the gig economy is made possible by the ...

Posted in Legal Bites
California Appellate Court Revives “White Baking Chips” False Advertising Claims

On September 15, 2022, the Court of Appeal of California, Fourth Appellate District reversed the lower court and revived false advertising claims involving “white baking” chips or morsels. 

Both cases involve the same plaintiff, David Salazar, and similar “white baking” products, which did not contain white chocolate. The Target product at issue was “White Baking Morsels,” and Walmart’s product was “Great Value White Baking Chips.” In both complaints, Plaintiff Salazar supported his position by a survey indicating that 88% of consumers incorrectly ...

California’s FAST Recovery Act: A Game-Changer

On September 5, 2022, Governor Gavin Newsom signed Assembly Bill 257, a controversial and far-reaching law that will have a major impact on California fast food employers and is likely to shape the way the state regulates other industries in the future.

AB 257, the Fast Food Accountability and Standards Recovery Act or FAST Recovery Act, regulates nearly all fast food restaurants in the state and is poised to dramatically shake up regulation of the industry and impose standards far beyond the already high standards set for minimum wages and working conditions as enshrined by ...

Are You High?! AB 2188 Seeks To Protect Marijuana Users In The Workplace  

Assembly Bill 2188 has been sent to Governor Newsom for signature. If signed, AB 2188 will serve to further protect workers who use marijuana when off work from discrimination in the workplace. Specifically, AB 2188 will make it unlawful for an employer to discriminate against a person in hiring, termination, or any term or condition of employment, or otherwise penalizing a person, for either:

(1) The person’s use of cannabis off the job and away from the workplace; or

(2) An employer-required drug screening test that has found the person to have nonpsychoactive cannabis ...

California Court of Appeals Provides Guidance on Wage Order Seating Requirements

Among other protections and rights, employees are entitled to the use of suitable seats when the “nature of the work reasonably permits the use of seats” pursuant to the Industrial Welfare Commission’s Wage Orders. As recently as 2016, the California Supreme Court detailed a fact-intensive framework and multi-factor test to assist employers with the determination of when the nature of the work permits the use of seats.  However, the question of how to determine whether an employee was in fact “provided” suitable seating by his or her employer remained unresolved.

Update: Challenge to California’s Arbitration Agreement Law Marches On

Employers throughout California have been keenly awaiting the final decision from the 9th Circuit Court of Appeals regarding the United States Chamber of Commerce’s challenge to California Labor Code section 432.6, which is designed to prohibit employers from enforcing mandatory arbitration agreements or requiring them as a condition of employment.

In our last report, the 9th Circuit was awaiting the decision from the United States Supreme Court in the Moriana v. Viking River Cruises case, which also addressed the applicability of the Federal Arbitration Act’s ...

Another Minimum Wage Increase? There’s a Referendum for That

As we reported on June 30, 2022, the Los Angeles City Council voted unanimously to adopt a Healthcare Workers Minimum Wage Ordinance, which was designed to increase the minimum wage for workers of private healthcare facilities in Los Angeles to $25.00 per hour (the “ LA Ordinance”). The Ordinance would have gone into effect on August 13, 2022, but for a referendum petition against the ordinance filed on August 10, 2022. Similar ordinances have been passed in Long Beach, Monterey Park, and Downey. Like the LA Ordinance, the ordinance in Downey is also the subject of a referendum.

As a ...

Posted in Legal Bites
GAO Report: Federal Regulation of Food-Related Issues Is Fractured

The U.S. Government Accountability Office (“GAO”) issued a July 2022 report to urging federal agencies to better coordinate regulatory guidance on food-related challenges, including diet-related chronic health conditions and food safety. 

With regard to chronic health conditions related to diet and food, the report found that regulatory efforts were fragmented and ineffective.  Last year, in September 2021, GAO recommended that Congress consider identifying and directing a federal entity to lead a strategy on diet-related efforts, but the recommendation was not ...

LA City Council Puts Controversial Homeless Hotel Measure on March Ballot

In a move that has hospitality industry leaders expressing concerns about safety and a negative effect on tourism, on August 5, 2022, the Los Angeles City Council considered a proposal that would force hotels to rent vacant rooms to homeless people in exchange for government vouchers.

The ordinance was proposed by UNITE HERE Local 11, a labor union representing workers employed in hotels, restaurants, airports, sports arenas, and convention centers.  The ordinance began as an initiative petition and was secured by enough signatures to require the Council to vote on the measure.  The ...

Insurance Coverage For Claims Involving The Misuse Of Biometric Information 

As the use of biometric information for verification purposes becomes widespread, employers and others should be aware of statutes which regulate the collection, storage and dissemination of this data. In this regard, there have been several lawsuits involving the use or storage of biometric information which have resulted in multi-million dollar settlements.

The California Consumer Privacy Act (Civil Code sections 1978.100 et seq.) defines biometric information as follows:

Biometric information” means an individual’s physiological, biological, or behavioral ...

Posted in Legal Bites
Court Permanently Dismisses Misrepresentation Lawsuit Regarding Kellogg’s Strawberry Pop-Tarts

Kellogg successfully defeated a fraud and misrepresentation lawsuit concerning its popular Pop-Tarts product when a judge in the Southern District of New York granted its motion to dismiss. Plaintiff Elizabeth Russett filed a putative class action in the Southern District of New York alleging that Kellogg had, among other things, committed fraud and violated multiple consumer protection statutes by misrepresenting the amount of strawberries present in its Frosted Strawberry Pop-Tart.

Plaintiff’s allegations were based on the claim that Kellogg misled its customers by ...

Posted in Legal Bites
Judge Permits Revised 100% Tuna Claim Against Subway To Proceed On Select Misrepresentation Theories

After succeeding in having “100% tuna” claims dismissed, Subway experienced a setback when a judge in the Northern District of California permitted certain revised claims about Subway Restaurants, Inc.’s tuna products to proceed. Plaintiffs Karen Dhanowa and Nilima Amin filed a putative class action complaint against the sandwich maker and multiple affiliates, alleging that they committed fraud and violated several California consumer statutes by claiming, among other things, that its tuna fish products were “100% tuna” and contained “100% skipjack and ...

Los Angeles Enacts Hotel Worker Protection Ordinance

On July 8, 2022, Mayor Eric Garcetti signed the City’s new Hotel Worker Protection Ordinance (“the Ordinance”) into law. The Ordinance was passed by the City Council on June 28, 2022. It will go into effect 30 days after Mayor Garcetti’s signature, on August 8, 2022.

The Ordinance is similar to hotel ordinances recently passed in Long Beach, Santa Monica, Glendale and West Hollywood, which were also pushed forward and drafted by the Unite Here Local 11 union. As part of an effort to raise its profile and further union organizing efforts, the union drafted the Ordinance as an ...

California Passes Sweeping Plastic Reduction Act

On June 29, 2022, Governor Newsom signed Senate Bill 54, the Plastic Pollution Prevention and Packaging Producer Responsibility Act (the “Act”).  The Act is designed to phase out single-use plastics in the state and is the country’s most comprehensive extended producer responsibility bill. The Act passed 67-2 in the State Assembly and 29-7 in the Senate.

The Act requires that by Jan. 1, 2028, at least 30% of plastic items sold, distributed or imported into the state be recyclable. By 2032, that number goes up to 65%. The Act also calls for a 25% reduction in single-use plastic waste ...

Third-Party Email Fraud Covered By Insurance Policies

In Medidata Solutions, Inc. v. Federal Insurance Company, 268 F. Supp. 3d 471 (S. D. N. Y. 2017), aff’d, 729 Fed. Appx. 117 (2nd Circuit 2018), the Court found that there was insurance coverage where a company had been victimized by an email spoofing scheme that resulted in the company wiring funds to a fraudster’s account. More recent cases have also found insurance coverage for losses arising from similar incidents of this kind. See, e.g., Ernst & Haas v. Hiscox, Inc., 23 F. 4th  1125 (9th Cir. 2022)

In Medidata, the spoofed email came in the form of an email purportedly coming from the ...

BREAKING NEWS: Los Angeles City Council Increases Minimum Wage For Healthcare Workers 

On June 29, 2022, the Los Angeles City Council voted unanimously to adopt a Healthcare Workers Minimum Wage Ordinance (the “Ordinance”).  This comes after a 10-2 vote on June 21 required a second reading and vote. The Ordinance was initially submitted as an initiative petition to the City Clerk with voter signatures in May 2022.  Under the Ordinance, covered healthcare workers must be paid a minimum wage of $25/hour beginning on the effective date of the Ordinance. On January 1, 2024, the minimum wage will be further increased based on the Consumer Price Index for the Los Angeles ...

Employer Alert:  IRS Mileage Rates Will Increase on July 1st

Effective July 1, 2022, the mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical, or moving purposes will increase. 

In a rare move,  the IRS made this special adjustment for the final months of 2022 in recognition of recent gasoline price increases.  The IRS normally updates the mileage rates once each year in the fall for the next calendar year.  The last time the IRS made such a midyear increase was in 2011. 

Specifically, the new standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 62.5 cents per ...
Employer Alert: Local Minimum Wage Increases on July 1st

On July 1, 2022, a number of local municipalities will be raising their hourly minimum wage, based on changes to the consumer price index, and as required by their minimum wage ordinances. 

Beginning July 1, 2022, the following increases will apply to all employers in the designated areas:

Municipality

Current Minimum Wage

Increased Minimum Wage on
July 1, 2022

City of Los Angeles

$15.00

$16.04

County of Los Angeles (unincorporated areas)

$15.00

$15.96

City of Pasadena

$15.00 $16.11

City of Santa Monica

$15.00 $15.96

Additionally, on July 1, 2022, businesses in the City of West ...

United States Supreme Court Overrules Ban on PAGA Arbitrations

Private Attorneys General Act (“PAGA”) actions are the proverbial boogeyman to California employers.  On June 15, 2022, the United States Supreme Court reined in some of this statute’s bite by holding that “aggrieved employees” who signed arbitration agreements governed by the Federal Arbitration Act (“FAA”) cannot split their individual claims and their PAGA claims by proceeding with arbitration for the former and a court action for the latter.  An enforceable arbitration agreement will cover all claims, including PAGA claims, raised by the representative ...

Mandatory Responsible Beverage Service Training Requirements Begin July 1, 2022

On July 1, 2022, the Responsible Beverage Service Training Program Act (Assembly Bill 1221) will go into effect.  This means that Responsible Beverage Service training for alcohol servers and their managers at California Department of Alcoholic Beverage Control (“ABC”) On-Premises licensed establishments will go from being voluntary to mandatory.

AB 1221 was passed in 2017, and required ABC to create a Responsible Beverage Service Training Program (“RBSTP”) to ensure servers of alcoholic beverages and their managers are educated on the dangers of serving alcohol to ...

Posted in Legal Bites
FDA Launches Dietary Supplement Education Initiative

On June 2, 2022, the U.S. Food and Drug Administration (“FDA”) announced the launch of a new “Supplement Your Knowledge” initiative, with resources targeted to consumers, educators and healthcare professionals.

The initiatives webpage includes videos, infographics, articles and a social media toolkit providing information and warnings to the targeted groups about dietary supplements.

The “Understanding Dietary Supplements” fact sheet notes the agency’s limited role in regulating supplements: “Under the Dietary Supplement Health and Education Act ...

California’s Supreme Court Declares Meal and Rest Period Premiums are “Wages”

In the words of Tom Cruise’s character Lt. Daniel Kaffee in A Few Good Men, “the hits keep on coming.” This quote crystallizes how California employers will undoubtedly feel following the California Supreme Court’s ruling in Naranjo v. Spectrum Security Services, Inc., decided on May 23, 2022.

Initially decided by the Second Appellate District in 2019, Naranjo previously stood for the proposition that failure to provide missed meal and rest break premium pay did not entitle employees to pursue waiting time penalties under Labor Code section 203 or paystub violation ...

Multiple Liability Policies and Who Pays First

Where multiple liability policies are triggered, does one of the insurers get to insist that its deductible be satisfied before the insured can be provided with a defense? Relatedly, can the insured choose which insurer should provide the defense?  

This situation arises frequently in cases where the underlying damage is “continuous or progressive.” Montrose Chemical Co. v. Admiral Ins. Co., 10 Cal. 4th 645, 662 (1995). In Montrose, the California Supreme Court held where there are successive policies, and where there is damage that is continuous or progressive across multiple ...

Posted in Legal Bites
FTC Proposes Updates to Endorsement Guides and Requests Public Comment

On May 19, 2022, the Federal Trade Commission (“FTC”) announced that it was considering changes to tighten its guidelines for advertisers against posting fake positive reviews or manipulating reviews by suppressing bad ones. The agency also warned social media platforms about inadequate disclosure tools. The FTC is seeking public comment on the proposed updates to its Endorsement Guides

The proposed updates include:

  • Revising the definition of “endorsements” to clarify that “marketing” and “promotional” messages can be endorsements. When a social media ...
California Minimum Wage Will Increase to $15.50

On May 12, 2022, Governor Gavin Newsom announced that California’s minimum wage is projected to increase to $15.50 per hour for all workers beginning on January 1, 2023. The accelerated increase is required by Section 246 of the California Labor Code, which was enacted in April 2016 through Senate Bill 3. That law provides that the minimum wage will increase according to a specified schedule when inflation exceeds 7 percent. Newsom’s press release states that “[t]he COVID-19 pandemic has resulted in persistent supply chain disruptions and labor market frictions have driven ...

Employer Alert:  DFEH Updates Required Employment Posters and Pamphlets

The California Department of Fair Employment and Housing (DFEH) has updated a number of posters and pamphlets that California employers must post or distribute to employees. Employers should take note to use the most recent versions of these required documents.

All California employers are required to display the following poster, which was recently updated:  California Law Prohibits Workplace Discrimination and Harassment (PDF)

Additionally, California employers with at least five employees must display these three other posters, which were also recently updated:

    Posted in Legal Bites
    Ninth Circuit Panel Upholds Foie Gras Ban in 2-1 Panel Decision

    On May 6, 2022, a panel of three judges in the Court of Appeals for the Ninth Circuit considered a challenge to California’s ban on foie gras. The law has been heavily litigated for nine years, including three sets of appeals before the Ninth Circuit.

    The panel ruled 2-1 that the foie gras ban was not preempted by federal law and did not violate the dormant Commerce Clause.

    California Health and Safety Code §25982 provides that “[a] product may not be sold in California if it is the result of force feeding a bird for the purpose of enlarging the bird’s liver beyond normal size.”  The ...

    Mind the Proper Use of ‘Prior Knowledge’ Exclusions

    Liability insurance written on a claims made basis is designed to protect an insured against claims asserted following the policy’s inception even if the acts giving rise to the claim took place prior to policy inception. But if prior to policy inception the insured was aware of facts or circumstances that could have reasonably led the insured to believe a subsequent claim would be asserted during the policy period, then coverage might be challenged.

    Liability carriers have sought to address this by including “prior knowledge” exclusions in their policies. Under those ...

    Posted in Legal Bites
    Court Approves $15 Million Settlement in Godiva Product Origin Lawsuit Over Objections from State Attorneys General

    On April 20, 2022, a $15 million class action settlement was approved by the court in Hesse, et al. v. Godiva Chocolatier, Inc., over the objections of multiple State Attorneys General.

    Plaintiffs alleged that the company’s use of “Belgium 1926” as a marketing phrase led consumers to believe that chocolates were produced in Belgium rather than in Pennsylvania. Plaintiffs claimed that this marketing phrase violated state consumer protection laws and that consumers would not have purchased or not have paid as much for the chocolates if they knew they were not made in Belgium.

    In ...

    Cal/OSHA Standards Board Adopts New COVID-19 Prevention Emergency Temporary Standards

    On April 21, 2022, the Cal/OSHA Standards Board (Board) met and formally adopted a third version of the COVID-19 Emergency Temporary Standards (ETS) by a vote of 6-1.  

    The new ETS makes a number of changes to prior ETS rules, including: the significance of vaccination status, face-covering standards; testing requirements; cleaning and disinfection requirements; and the guidelines to follow for exclusion from and returning to work criteria.

    Vaccination status is no longer an aspect of the ETS, even in the event of a COVID close contact in the workplace. In fact, the definition of ...

    Posted in Legal Bites
    Jury Awards $56,000,000 To Independent Craft Brewery In Trademark Dispute Against International Beer Conglomerate

    A jury in the United States District Court for the Southern District of California last month found that an international beer conglomerate’s marketing of one of its drinks infringed on the trademark of a smaller, independent craft brewery. Plaintiff Stone Brewing Company, LLC, an independent craft brewery based in San Diego, sued Molson Coors Brewing Company and related entities, alleging that Molson Coor’s rebranding of its Keystone beer infringed on Plaintiff’s “STONE” trademark.  

    Named after a ski resort in Colorado, the original branding for Molson Coor’s ...

    Posted in Legal Bites
    FDA Issues New Draft Guidance on Allergens

    On April 18, 2022, the U.S. Food and Drug Administration (“FDA”) issued draft guidance for stakeholders on evaluating the public health importance of food allergens other than the current major food allergens identified by U.S. law. 

    The current major food allergens recognized by law are milk, eggs, fish, crustacean shellfish, tree nuts, peanuts, wheat and soybeans. Those allergens must be listed on the labels of packaged foods. Sesame will become the ninth major food allergen on January 1, 2023.

    The new draft guidance is part of FDA’s effort to evaluate emerging evidence ...

    LA County Public Health Order Requires Continued Masking on Public Transit

    On April 21, 2022, the Los Angeles County Department of Public Health issued a Health Officer Order to note that masking in all public transit within LA County and in LA County indoor transportation hubs continues to be required.

    Per the revised Order, masking continues to be required to be worn by everyone, 2 years of age and older, regardless of their COVID-19 vaccination status, on public transit within the County. This includes wearing masks on commuter trains, subways, buses, taxis, and ride-shares.

    Masking is also required in indoor transportation hubs including airport and bus ...

    Posted in Legal Bites
    FTC Seeks $5.5 Million Penalties for Deceptive Environmental Claims

    On April 8, 2022, the Federal Trade Commission (“FTC”) announced that it was using its Penalty Offense Authority to seek a $5.5 million penalty for deceptive environmental claims against Kohl’s, Inc. ($2.5 million) and Walmart, Inc. ($3 million).

    The FTC charged both companies with falsely marketing dozens of rayon textile products as bamboo and with claiming that the bamboo textiles were made using eco-friendly processes when the process actually used toxic chemicals and resulted in hazardous pollutants.

    The proposed orders settling the FTC’s complaints against ...

    Cal/OSHA Standards Board Planning to Adopt New COVID-19 Prevention Emergency Temporary Standards

    The Cal/OSHA Standards Board has scheduled a meeting for April 21, 2022, to adopt a third version of the COVID-19 Emergency Temporary Standards (ETS). The proposed changes will serve to modify several portions of the ETS, including: face-covering standards; testing requirements for individuals returning to work after testing positive and not developing any symptoms; employer testing requirements; cleaning and disinfection requirements; and the guidelines to follow for exclusion from and returning to work criteria. If passed, the third readoption would be the final version ...

    Posted in Legal Bites
    FDA to Investigate and Issue Guidance on "Healthy" Labeling

    On March 25, 2022, the U.S. Food and Drug Administration (“FDA”) announced a public process to update the “health” nutrient content claim for food labeling. This process will include the agency’s review of a voluntary symbol that could be used to convey that a product meets the criteria for the nutrient content claim “healthy.”

    The FDA issued a request for information on “healthy” labeling more than five years ago on September 28, 2016 and held a public meeting on March 9, 2017, but did not issue a new proposed rule. Until FDA issues guidance, food manufacturers can ...

    Supreme Court Hears Oral Argument on Arbitrability of California's Private Attorneys’ General Act Under Federal Arbitration Act

    Since the California Supreme Court’s ruling in Iskanian v. CLS Transportation Los Angeles, LLC in 2014, it has been widely understood that Private Attorneys’ General Act (“PAGA”) actions cannot be subject to employment arbitration agreements. The rationale for this decision has been that PAGA actions are unique in that the employee that brings the claim is not acting in an individual capacity, but rather acts as a representative for the Attorney General on behalf of the State of California.  For that reason, the Federal Arbitration Act (FAA), which would otherwise preempt ...

    LA Drops Proof-of-Vaccine Requirements

    On March 30, 2022, the Los Angeles City Council voted 13-1 to end the City’s mandate requiring customers to show proof of COVID-19 vaccination to use indoor facilities at restaurants, bars, gyms, personal care establishments, and entertainment facilities. The ordinance passed with an urgency clause, so it will go into effect as soon as it is signed by the mayor.  Individual businesses are still permitted to voluntarily require proof of vaccination if they choose to do so. The SafePassLA program mandating proof of vaccination has been in effect since November 8, 2021. Los Angeles ...

    Posted in Legal Bites
    SCOTUS Will Hear Challenge to California’s Farm Confinement Law

    On March 28, 2022, the Supreme Court of the United States granted a petition for a writ of certiorari in the case of National Pork Producers, et. al. v. Karen Ross, 21-468.  

    The order means that the Supreme Court will hear a constitutional challenge to California’s Proposition 12 farm animal confinement law. Proposition 12 was passed by California voters in 2018 as a ballot initiative.  The law prohibits confining certain farm animals (egg-laying hens, veal calves, and breeding pigs) in a cruel manner, and prohibits the sale of products from farm animals confined in a cruel manner in ...

    Posted in Legal Bites
    Ninth Circuit Rejects Insurance Coverage for COVID Losses

    On March 16, 2022, the Ninth Circuit joined other appellate courts in finding that restaurants were not entitled to insurance coverage for losses due to the COVID-19 pandemic shutdowns.  A panel of judges issued an unpublished opinion affirming a district court opinion that the pandemic and pandemic-related shutdown orders did not cause direct physical loss or damage within the meaning of the insurance policy at issue.

    The case, Steven Baker v. Oregon Mutual Insurance Co., 21-51097, came upon appeal from the San Francisco District Court. Plaintiff was a San Francisco café seeking ...

    LA City Council Takes First Step to End Proof-of-Vaccine Requirements

    On March 9, 2022, the Los Angeles City Council held a special meeting to discuss amending the City’s proof-of-vaccine requirement. The Council voted to direct the City Attorney to prepare a new ordinance making the verification of vaccine cards voluntary for covered locations and removing the requirement for large outdoor events.  Covered locations include restaurants with indoor dining, gyms, personal care establishments, and entertainment and recreation facilities.  The motion passed 12-0, with 3 absent members.  The Council did not hold a discussion on this matter before ...

    Does your Insurance Policy Protect you from Email Spoofing?

    Your CFO or accounts payable clerk receives a legitimate-looking email supposedly from the company’s president authorizing a wire transfer to a vendor or business partner. In reliance on that email, the company’s bank is directed to wire funds to that account. It is later revealed that the president was impersonated by an email scammer and the company’s money was wired to the scammer’s offshore bank account.

    This practice, known as “spoofing", is widespread and is growing. According to data security firm Proofpoint, it is estimated that 3.1 billion domain spoofing ...

    The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 is Now Law

    President Biden has signed H.R.4445, known as the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021”, into law. The law amends the Federal Arbitration Act to state that, at the election of the person alleging conduct constituting sexual harassment or sexual assault, or the named representative of a class or in a collective action alleging such conduct, no predispute arbitration agreement or predispute joint-action waiver will be valid or enforceable with respect to such cases as filed under federal, tribal, or state law. The law further provides ...

    LA County Relaxes Mask Mandate and Proof-of-Vaccine Requirements

    On March 4, 2022, Los Angeles County’s revised Public Health Order (the “Order”) went into effect, significantly relaxing masking rules and indoor proof-of-vaccine requirements.  As of March 3, 2022, Los Angeles County’s case and test positivity rates and hospitalizations had declined to a “Low” level, which prompted the change. 

    Masks are strongly recommended, but no longer required in indoor public settings and businesses.  Masks continue to be required in transportation hubs, all healthcare settings, including long term care and adult and senior care ...

    9th Circuit says Computer-Fraud Policies May Cover ‘Spoofing’

    Consider the following two scenarios resulting in identical losses, but potentially two entirely different insurance coverage outcomes:

    Scenario 1: A thief hacks, or gains unauthorized entry, into an insured’s computer system and causes that computer system to execute a bank transfer to the thief’s offshore account.

    Scenario 2: A thief utilizes a process called “spoofing,” in which an authentic-looking, but fraudulent, email is created to trick the insured into wiring funds to the thief’s offshore account. The “spoofing” process in essence tricks the ...

    LA County Modifying Mask Requirements

    On February 23, 2022, the Los Angeles County Department of Public Health announced that it would be modifying its Health Officer Order to allow establishments, businesses, and venues verifying vaccination status to make masking indoors optional for fully vaccinated patrons and workers. The modified Order will go into effect at 12:01 am on Friday, February 25, 2022.

    Businesses, establishments, or venues that want to allow fully vaccinated customers and workers to unmask while indoors must verify that 100% of customers and workers provide proof of full vaccination or proof of a ...

    SB 113 Makes RRF Grants Tax Exempt and Approves $150M in Small Business Grants

    On February 9, 2022, Governor Newsom signed Senate Bill 113, approving additional economic relief for the COVID-19 pandemic. The bill passed with strong bipartisan support, with a vote of 68-0 in the State Assembly and 27-0 in the State Senate.

    SB 113 makes federal grants received through the Restaurant Revitalization Fund exempt from state tax liability. This means that businesses that received these grants will not have to pay California state taxes on the grant amounts.

    Additionally, SB 113 will provide $150 million in grants to the state's Small Business COVID-19 relief ...

    LA County Removes Outdoor Mask Requirements

    Consistent with last week’s announcement from the Los Angeles County Department of Public Health, at 12.01 AM today the county lifted the requirement that masks be worn outdoors at K-12 schools and childcare facilities as well as outdoor “mega” events, such as those held at the Hollywood Bowl and SoFi Stadium. The change is due to the drop in hospitalizations for COVID-19, as well as new COVID-19 cases, which have declined significantly over the last few weeks. 

    However, unlike most other areas of California and, indeed, the United States, Angelenos will still be required to wear ...

    Los Angeles County Department of Public Health Issues Mask Update

    Following Governor Newsom’s announcement that California’s indoor mask mandate would end on February 15, 2022 for all vaccinated persons, the Los Angeles County Department today issued a statement clarifying when the county’s own mask requirements would be eased. Specifically, when COVID daily hospitalizations drop below 2,500 for 7 consecutive days, masking will not be required at outdoor mega-events or in outdoor spaces at childcare facilities and K-12 schools. In addition, the masking requirement for indoor spaces will continue until:

    • Los Angeles County has two ...
    California Lifting Indoor Mask Mandate on February 15

    On February 7, 2022, California Governor Gavin Newsom announced that the state’s indoor mask mandate would expire on February 15, 2022, for vaccinated people.

    New face covering guidance from the California Department of Public Health (“DPH”) will go into effect on February 16, 2022. Under the guidance, universal masking is only required in specified settings. These settings where masks will continue to be mandatory include:

    • Public transit;
    • Indoors in K-12 schools;
    • Emergency shelters;
    • Healthcare settings;
    • State and local correctional facilities and detention centers;
    Posted in Legal Bites
    FDA Announces New Priorities for Guidance 

    On January 31, 2022, FDA released a list of draft and final guidance topics that are a priority for the FDA Foods Program to complete during the next 12 months.

    The guidance topics include several focused on plant-based labeling, so companies making these products should pay close attention to developments. Several topics are focused on food safety and risk reduction so are specific to developing guidance on action levels for lead and arsenic in juice and prevention of some specific foodborne illnesses. Other topics could have a significant effect on product labeling and claims.

    Some ...

    AB 628: Breaking Barriers to Employment Initiative

    The California Legislature expanded the Breaking Barriers to Employment Initiative by passing Assembly Bill 628, which amends Section 14033 of the Unemployment Insurance Code. 

    AB 628 builds on the 2017 California Workforce Innovation and Opportunity Act, which made programs and services available to assist individuals with employment barriers with finding opportunities to join the workforce. Specifically, AB 628 seeks to enhance racial and economic justice, in addition to promoting employment. In doing so, AB 628 revises the 2017 grant selection criteria requirements, the ...

    What Duties Do Receivers Have To Creditors?

    Q: I am a creditor of an entity that is now in receivership. I have contacted the receiver, and her attorney, a number of times requesting information about what is going on, especially the proposed sale of the entity’s assets. The receiver and her attorney have stated they don’t have to provide me with information and the receiver’s duty is only to the court and the parties in the case giving rise to the receivership. Is this correct? I want to make sure any sale is on the up and up so I get paid, as I don’t trust the owners of the entity, one of which sought the receiver’s appointment. 

    Posted in Legal Bites
    FDA Focuses on Food Safety to Begin In 2022

    In January 2022, FDA announced new initiatives focused on food safety, indicating that the agency will continue to prioritize that area. Several of these programs are designed to provide more transparency and more information on foodborne illnesses and food safety hazards directly to consumers. Others, including a new egg regulatory program and a proposed rule on pre-market notification for food contact substances, are more technical and industry-focused.

    • On January 5, FDA announced its new public-facing reportable food registry. The RFR public data dashboard contains 10 ...
    SB 362 Prohibits Use of Quotas at Chain Pharmacies

    Continuing the trend of legislation in response to headline news, California passed SB 362 prohibiting the use of quotas at chain community pharmacies. This bill modifies California’s Pharmacy Law, which regulates all pharmacy licensees.

    SB 362 applies to chain community pharmacies, which are defined as chains of 75 or more stores in California under the same ownership. Chain community pharmacies are distinct from independent community pharmacies (four pharmacies or less under the same ownership).

    The bill adds Section 4113.7 to the Business and Professions Code. That ...

    Governor Newsom To Revive COVID-19 Paid Sick Leave 

    Governor Newsom and the California Legislature have agreed to enact new legislation that will revive COVID-19 paid sick leave. The prior law created by Senate Bill 95, expired on September 30.  The new law is included in the state budget process and should be complete in a matter of weeks.

    The proposal is still being worked on, but it is likely that it will apply to all businesses with 26 or more employees. It is also probable that the bill will be retroactive to January 1, 2022 and will continue until September 30, 2022. The qualifying reasons will be the same as in SB 95 and will cover any ...

    SB 331 Expands Restrictions on Nondisclosure, Settlement and Separation Agreements

    In an effort to support the Me Too movement, California previously enacted Code of Civil Procedure section 1001 to prohibit any provision in a settlement agreement that prevents the disclosure of an act of sexual harassment, discrimination or assault related to a claim filed in a civil or administrative action.  In addition, Government Code section 12964.5 was created to make it unlawful to require an employee to sign a nondisparagement or nondisclosure agreement to deny the employee the right to disclose information about unlawful acts in the workplace, including sexual ...

    Supreme Court Upholds Vaccine Mandate for Medicare and Medicaid-Certified Providers and Suppliers

    On the same day that the United States Supreme Court imposed a stay of enforcement on OSHA’s vaccine mandate for private employers with over 100 employees, the Court ruled that the Centers for Medicare & Medicaid Services (CMS) had the statutory authority to impose a vaccination mandate on healthcare providers who care for Medicare and Medicaid patients. Facilities in states that were not previously subject to injunctions (listed below) must demonstrate that their staff is fully vaccinated by February 28, 2022.

    For those states where injunctions were lifted following the ...

    United States Supreme Court Imposes Stay on OSHA Vaccine Mandate

    Following an expedited hearing on January 7, 2022, the United States Supreme Court granted a petition for stay of enforcement of OSHA’s COVID-19 Vaccination and Testing; Emergency Temporary Standard that would have been imposed on employers of 100 or more employees.  This stay is, in effect, injunctive relief pending disposition of the numerous businesses, trade groups, and non-profit organizations’ consolidated petitions for review in the Sixth Circuit Court of Appeals.

    The Court disagreed with the Sixth Circuit’s prior opinion and determined that the applicants’ ...

    Los Angeles County Tightens Mask Mandates for Employers

    On January 5, 2022, Los Angeles County’s Department of Public Health modified its ongoing COVID-19 health order due to drastic increases in cases and resultant hospitalizations related to the Omicron and Delta variants. Among these modifications is an important new requirement which pertains to the wearing of masks by employees. 

    Specifically, employers in Los Angeles County must now provide their employees who work indoors and in close contact with other workers or the public with a well-fitting medical-grade mask, surgical mask or higher-level respirator, such as an N95 ...

    Can a Discharged Receiver Be Sued Without Court Permission?

    Q:  I was discharged as receiver a number of years ago. One of the defendants in the case has now sued me and my former attorney, contending we violated his civil rights when I sold some of his assets and that we conspired with the plaintiff to injure him. The former defendant did not obtain leave from the court that appointed me to sue me and my former attorney. Even though I was discharged and the case is closed, isn’t court permission to sue me still required?

    A:  I assume that since you were sued for civil rights violations, the new lawsuit is in federal court. If the case is in First ...

    A Reminder: The IRS Mileage Rates Have Changed

    The 2022 mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical, or moving purposes have increased from last year or remained unchanged. Specifically, as of January 1, 2022, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) are:

    • 58.5 cents per mile driven for business use, up two and one-half cents from the rate for 2021;
    • 18 cents per mile driven for medical, or moving purposes for active-duty members of the Armed Forces, up two cents from the rate for 2021; and
    • 14 cents per mile driven in service of ...
    Posted in Legal Bites
    New California Compost Law Goes into Effect

    On January 1, 2022, California’s new compost law will officially go into effect. Senate Bill 1383 was passed in September 2016 as part of a statewide effort to reduce emissions of short-lived climate pollutants. SB-1383 set the ambitious targets of reducing organic waste disposal 50% by 2020 and 75% by 2025.

    Beginning on January 1, 2022, every jurisdiction in California (i.e., city, county, or special district that provides solid waste collection services) is required to provide organic waste collection services to all residents and businesses. The state’s CalRecycle ...

    Isn’t it Grand? New Law Provides That Wage Theft Can Be Charged as Grand Theft

    Under Assembly Bill 1003, which becomes effective on January 1, 2022, the intentional theft of wages in an amount greater than $950 from any one employee, or $2,350 in the aggregate from 2 or more employees, by an employer in any consecutive 12-month period can be punishable as grand theft. Violations carry a possible prison sentence of up to three years. This criminal charge would be in addition to any attempt to recover wages, penalties, interest and attorneys’ fees and costs through a civil action.

    For purposes of the new law, “wages” include wages, gratuities, benefits or ...

    Mandatory Arbitration Agreements in California: Down, But Possibly Not Out

    Businesses and attorneys alike have kept a close eye on the developments surrounding the challenge to California Assembly Bill 51 (now codified as Labor Code section 432.6). Most recently, in a 2-1 decision, the 9th Circuit Court of Appeals declared that the Federal Arbitration Act (“FAA”) did not preempt the new law which bars California employers from utilizing mandatory arbitration agreements or from requiring an employee to sign an arbitration agreement as a condition of employment.  One month after this decision came down, the Chamber of Commerce of the United States filed ...

    California Restricts Use of Quotas in Warehouses

    On January 1, 2022, Assembly Bill 701, which aims to regulate and curb the use of quotas in warehouses, will go into effect. While the bill was specifically intended to target Amazon, all California warehouse employers must pay close attention to its provisions and to accompanying regulations that will likely be issued in 2022.

    The bill requires employers of 100 or more nonexempt employees at a single warehouse distribution center, or 1000 or more non-exempt employees at one or more warehouse distribution centers in the state, to provide each employee with a written description of ...

    Recent Private Attorneys General Act Reform Efforts

    Since being enacted in 2004, the Private Attorneys General Act (PAGA) has been a proverbial bogeyman for employers in California. Despite having only a one-year look-back period, PAGA claims commonly inflate plaintiff’s demands and judicial decisions to a punitive degree that decimates an employer’s incentive to maintain a business in California. This statute, among other factors, has served to motivate a mass exodus of businesses fleeing to other, more business-friendly states. While PAGA has withstood many challenges and attempted reforms over the years, there is ...

    Employer Alert: New Compensation Requirement for Computer Software Overtime Exemption

    Effective January 1, 2022, the California Department of Industrial Relations issued a new compensation threshold for exempt computer software employees, reflecting an increase of 5.3% from last year. 

    To qualify for the overtime exemption, computer software employees must be paid a salary of at least $104,149.81 annually ($8,679.16 monthly), or an hourly wage of at least $50.00. In addition, a computer software employee must also meet the duties test set forth in California Labor Code Section 515.5, which are also included in all Wage Orders except Orders 14 and 16. 

    More ...

    Personal Jurisdiction in the Digital Age

    The concept of “presence” for jurisdictional purposes has evolved with the widespread use of websites, social media and other digital platforms. A company or individual may have no physical presence in a forum, but may nevertheless be subject to personal jurisdiction there as a consequence of its activities on these digital platforms.

    Importantly, general jurisdiction does not necessarily follow from the defendant’s maintenance and use of an “interactive” website. Thus, “[t]he level of interactivity of a nonresident defendant’s website provides limited help ...

    California Reinstates Indoor Mask Requirement 

    Citing the Omicron variant as a concern, the California Department of Public Health (CDPH) announced that it is requiring masks to be worn in all indoor public settings, irrespective of vaccine status, for the next four weeks (December 15, 2021 through January 15, 2022). Here is a link to the CA Department of Public Health's updated guidance (as of December 13, 2021) which reflect the latest masking state order.  The order specifies that masks must be worn in all California indoor public settings, irrespective of vaccine status, for the next four weeks (December 15, 2021 through January ...

    New Private Attorneys General Act Developments

    Enacted in 2004, California’s Private Attorneys General Act (“PAGA”) authorizes aggrieved employees to file lawsuits to recover civil penalties on behalf of themselves, other employees, and the State of California for Labor Code violations. Although only 25% of the amount recovered can be retained by the aggrieved employees with 75% going to the Labor and Workforce Development Agency, PAGA has become a tool commonly used by plaintiffs to attempt to inflate even minor claims beyond reasonable value.  Although the Legislature has made minor changes to the law over the years ...

    Following COVID-19 Related Guidance Just Became Easier for Employers

    For much of the COVID-19 pandemic, employers have been frustrated by the lack of notice regarding important mandates issues by different public health officials at all levels of state and local government. Senate Bill 336 is designed to make obtaining current information a little easier. 

    With the enactment of SB 336, if either the State Department of Public Health or a local health officer issues an order or mandatory guidance related to COVID-19, the respective agency must do the following:

    (1) Publish on their internet website the order or mandatory guidance and the date it takes ...

    New Law Expands Cal/OSHA’s Enforcement Authority

    Senate Bill 606, which becomes effective on January 1, 2022, strengthens Cal/OSHA’s enforcement powers by creating two new categories of Cal/OSHA violations: “enterprise-wide” and “egregious”. A finding of an enterprise-wide violation may result in increased fines and penalties and requirements for abatement across multiple employer worksites, while an egregious violation permits increased fines and penalties per employee, per violation in certain circumstances. The new law also highlights the importance of compliant written health and safety policies.

    Senate Bill 762: Another Tall Hurdle for Employers Seeking Arbitration

    Since the turn of the century, the judicial and legislative branches in California have added barrier after barrier to employers who have consciously sought arbitration; an oft-stated “preferred” method of resolution. The most draconian of these barriers became effective on January 1, 2020, with the enactment of Code of Civil Procedure § 1281.97 et seq.  These statutes provide that if an employer fails to timely pay the fees for the arbitration, the employee would be entitled to either withdraw the claim from the arbitration and proceed in court or otherwise compel arbitration ...

    California Expands Family Leave and Modifies Small Employer Mediation Pilot Program

    On January 1, 2022, as a result of Assembly Bill 1033, leave under the California Family Rights Act (CFRA) will be expanded to provide employees with up to twelve weeks of job-protected leave to provide care to a parent-in-law with a serious medical condition.  The CFRA previously only allowed for leave for an employee to care for a child, parent, grandparent, grandchild, sibling, spouse, or domestic partner who has a serious health condition.

    AB 1033 also makes changes to the Department of Fair Employment and Housing’s (DFEH’s) small employer family leave mediation pilot ...

    Posted in Legal Bites
    FDA Issues Final Rule for Lab Accreditation for Food Testing

    On December 1, 2021, the U.S. Food and Drug Administration (“FDA”) issued a final rule establishing the Laboratory Accreditation for Analyses of Food (“LAAF”) program.

    FDA will utilize the LAAF program to recognize accreditation bodies that will accredit food testing laboratories to specified standards. The final rule outlines eligibility requirements for both accreditation bodies and laboratory facilities. The LAAF program will mark a major shift in food testing, which is currently handled by private laboratories with limited government oversight.

    After the LAAF ...

    New Law Expands Employer Record Retention Requirements and DFEH Enforcement Powers

    Senate Bill 807, which becomes effective January 1, 2022, will extend the period in which employers must retain personnel records for applicants and employees from 2 years to 4 years from the date the records were created or received, or the date the employment action was taken. 

    In the event that a complaint with the Department of Fair Employment and Housing (“DFEH”) has been filed against an employer, the employer must retain any related personnel records until the employer has been notified that the action has been fully resolved, or the first date after the period for filing a ...

    New Law Permits Emailing of Employment Notices and Postings, But Posting Requirement Remains

    Senate Bill 657, a new law which becomes effective on January 1, 2022, in recognition of the prevalence of remote workers during the COVID-19 pandemic, permits employers to email required employment postings to employees. However, the law specifies that such email distribution “shall not alter the employer’s obligation to physically display the required posting.” Thus, notices requiring posting must still be physically displayed in the workplace, in a conspicuous and easily accessible location, such as an employee lunchroom or bulletin board.

    Although SB 657 does not ...

    California Bans Piece Rate Pay for Garment Workers

    On January 1, 2022, Senate Bill 62, the Garment Worker Protection Act, will become effective, making California the first state to ban piece rate pay for garment workers. SB 62 prohibits any “employee engaged in the performance of garment manufacturing” from being “paid by the piece or unit, or by the piece rate.” The law creates a compensatory damages penalty of $200 per employee against a garment manufacturer or contractor, payable to the employee, for each pay period in which each employee is paid by the piece rate. “Garment manufacturing” is defined to include sewing ...

    Judge Halts Centers for Medicare and Medicaid Services Rule Requiring COVID-19 Vaccination for Healthcare Workers

    In early November the Centers for Medicare and Medicaid Services (CMS) announced that it would be requiring applicable healthcare facilities to have a policy in place ensuring that eligible staff receive their first dose of a COVID-19 vaccine series by December 5, 2021 and to have completed the series by January 4, 2022. The failure to comply with the requirement would place an organization’s Medicare funding in jeopardy. On Tuesday, November 30, 2021, Judge Terry A. Doughty, a United States District Court Judge sitting in Louisiana, issued an injunction stopping enforcement of ...

    Posted in Legal Bites
    Restrictions on Plastic Utensils Go into Effect for LA Restaurants

    On November 15, 2021, a Los Angeles City Council ordinance aiming to drastically reduce single-serve plastic utensils within the city went into effect.

    Restaurants with more than 26 employees are required to remove all single-use disposable food-ware dispensers from common areas. Additionally, these restaurants are required to stop including plastic utensils and napkins with takeout orders or for dine-in meals unless customers specifically ask for them. If restaurants use an online ordering platform or third-party food delivery service, they are required to require ...

    Ruling is Instructive of Biometric-Related Claims and Insurance 

    As part of the larger trend of invasion of privacy claims asserted by employees or consumers against businesses, several states have recently passed legislation that sets forth requirements for the collection, storing and dissemination of biometric information such as fingerprints, voice recordings and even keystroke patterns. See, e.g., California Civil Code Sections 1798.100, 1798.140(b). Similar statutes have been enacted in Illinois, Washington and New York.

    As claims arising from the collection and disclosure of biometric information proliferate, businesses faced ...

    Posted in Legal Bites
    Changes To Statutory Covid-19 Exposure Notice and Reporting Requirements 

    COVID-19 has had a unique and continued impact on health and safety requirements in the workplace.  As a result, laws are being revised to catch up to the current work climate. Assembly Bill 654, which amends California Labor Code sections 6325 and 6409.6, is one such law. The amendments to these two statutes which initially established California’s COVID-19 notice and reporting requirements went into effect on October 5, 2021 and the statutes themselves shall remain in effect only until January 1, 2023.

    What Does AB 654 Do?

    Amendment to Labor Code § 6325

    As a minor amendment to this ...

    Posted in Legal Bites
    Court Rejects False Advertising Lawsuit For “All Butter” Loaf Cake

    A federal judge in the Southern District of New York dismissed a fraud and misrepresentation action against Bimbo Bakeries USA, Inc., a food company whose brands include Sara Lee, Brownberry, and Entenmann's. Plaintiff Monica Boswell brought an action against Bimbo, alleging that the company violated several New York consumer protection statutes by fraudulently advertising one of its products as an “All Butter Loaf Cake” when, in reality, the cake includes other ingredients in addition to butter, such as soybean oil and artificial flavors. 

    Bimbo filed a motion to dismiss ...

    Malls and Shopping Centers Exempt From SafePass Requirements

    Less than one week into LA’s SafePass proof of vaccine requirements for businesses went into effect, the Los Angeles City Council (the “Council”) voted 10-0 to remove malls and shopping centers as covered businesses. Mall operators have pointed to the difficult of enforcing the ordinance because malls and shopping centers have so many different points of entry. It remains unclear when the revisions to the ordinance will go into effect. Malls and shopping centers remain covered businesses under the ordinance until the language is formally changed, but the ordinance is not ...

    SB 639: The Hidden Cost of Phasing Out Certificate Programs for Workers With Disabilities

    “It is the intent of the Legislature to afford all Californians, regardless of whether they have disabilities, with protections to ensure equal pay and equal treatment in the workplace.” These are the closing words of the preface to Senate Bill 639; a noble goal. However, the good intentions paving the way for this new law – equalizing the monetary playing field for employees with disabilities – may result in more harm than good for some of those very workers.

    Before SB 639 was passed, employers could apply to the Industrial Welfare Commission for a special license, renewable ...

    SafePassLA Now In Effect 

    On November 8, 2021, SafePassLA officially went into effect. The Los Angeles City ordinance requires patrons of covered locations to demonstrate proof of full vaccination against COVID-19 before entering indoor spaces. Specifically, covered locations include:

    • The indoor portions of all establishments where food or beverages are served, including but not limited to, restaurants, bars, fast-food establishments, coffee shops, tasting rooms, cafeterias, food courts, breweries, wineries, distilleries, banquet halls, and hotel ballrooms;
    •  Gyms and fitness venues ...
    New Law Enhances Labor Commissioner’s Ability to Lien Employer Real Property

    In 2013 the California Legislature passed Assembly Bill 1386, which amended Labor Code section 98.2, giving the Labor Commissioner additional means to collect wages and penalties on behalf of workers. Labor Code section 98.2 was modified so that any amount due under a final order by the Labor Commissioner permits the Labor Commissioner to record a Certificate of Lien against the employer’s real property.

    Fast forward to September 2021 and the passage of Senate Bill 572.  This bill adds section 90.8 to the Labor Code, which becomes effective January 1, 2022.  This statute will allow ...

    Update: Federal Court Halts OSHA Vaccine Requirement 

    This weekend a federal court in Louisiana issued a temporary stay effectively stopping enforcement of the Occupational Safety and Health Administration’s Emergency Temporary Standard requiring vaccination or weekly testing for all employers with 100 or more employees except for certain healthcare facilities and federal contractors. Following the announcement of the ETS by OSHA last week, at least 27 states filed lawsuits to challenge the rules. The Fifth Circuit Court of Appeals sitting in New Orleans issued the stay on the basis that there are “grave statutory and ...

    West Hollywood Establishes Highest Minimum Wage In The Nation 

    At a city council meeting which began on November 3, 2021, and ended on November 4, 2021, the West Hollywood City Council voted to increase the minimum wage for hourly workers in West Hollywood.  In response to significant pressure from local businesses, the council made last minute changes to the ordinance to require a phased-in approach for some businesses.  Specifically, large businesses with 50 or more employees will be required to raise the minimum wage from the current $14.00 per hour to $15.50 on January 1, 2022, with further increases scheduled for July 1, 2022 at $16.50, January ...

    OSHA Issues Vaccine and Testing Requirements For Large Employers

    On November 4, 2021, President Biden announced rules requiring COVID-19 vaccinations or weekly testing for companies with 100 or more employees.  These requirements will reach two-thirds of all private-sector workers in the United States.

    The U.S. Department of Labor’s Occupational Safety and Health Administration’s (“OSHA’s”) Emergency Temporary Standard (“ETS”) will be officially published in the Federal Register on November 5, 2021, but an unpublished version of the 490-page document is available now. The ETS applies to all employers with a total of 100 or ...

    FTC Continues Ramp Up of Enforcement Actions

    The Federal Trade Commission (“FTC”) continued a flurry of activity to put companies on notice of future enforcement activities and safeguard consumer financial information. All businesses that advertise to consumers and that have an online presence should be aware of the FTC’s initiatives.

    False Money-Making Claims

    On October 26, 2021, the FTC sent a Notice of Penalty Offenses Containing Money-Making Opportunities and Endorsements and Testimonials (the “Notice”) to over 1,100 companies. These companies encompass a wide variety of industries and cover ...

    Posted in Legal Bites
    Ninth Circuit Rejects Arrowhead Water Lawsuit

    On October 22, 2021, the Court of Appeal for the Ninth Circuit issued an unpublished opinion affirming dismissal of consumer false advertising claims against Nestlé’s Arrowhead brand water based on the mountain image at the front of the Arrowhead label. 

     The plaintiff argued that she believed the mountain printed on the front of the Arrowhead label to be "Arrowhead Mountain," and on the basis of that belief, determined that "NESTLÉ Product was [sourced exclusively] from the springs in the arrowhead mountain."

    The Court rejected this agreement and found that there was not ...

    Posted in Legal Bites
    Judge Dismisses Subway 100% Tuna Lawsuit For Now

    A federal judge earlier this month dismissed a misrepresentation lawsuit against Subway Restaurants, Inc. and multiple affiliates concerning the sandwich maker’s claims regarding its tuna. Plaintiffs Karen Dhanowa and Nilima Amin filed a putative class action complaint in the Northern District of California alleging that Subway committed fraud and violated several California consumer statutes by claiming, among other things, that its tuna fish products were “100% tuna” and contained “100% skipjack and yellowtail tuna.” Notably, the first amended complaint ...

    HHS Issues Guidance on HIPAA Privacy Rule and COVID-19 Vaccinations

    On September 30, 2021, the U.S. Department of Health and Human Services (“HHS”) Office of Civil Rights issued guidance to help the public and employers understand what privacy rules apply to disclosures and requests for information about whether a person has received a COVID-19 vaccine.

    The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) has a Privacy Rule that regulates covered entities, including health plans, health care clearinghouses and health care providers. According to HHS, “The HIPAA Privacy Rule establishes national standards to ...

    Posted in Legal Bites
    California Passes AB-286, Further Regulating Food Delivery Platforms

    On October 5, 2021, Governor Newsom approved AB-286, which adds further regulations for food delivery platforms. The law will take effect on January 1, 2022. Last year, California passed the Fair Food Delivery Act of 2020 (AB-2149), which prohibits food delivery platforms from arranging for the delivery of food delivery orders without the express authorization of the food facilities, and which went into effect on January 1, 2021.

    This bill makes it unlawful for a food delivery platform to charge a customer any purchase price for food or beverage that is higher than the price posted on ...

    Posted in Legal Bites
    FTC Sends Notice of Penalty About False Endorsements

    On October 13, 2021, the Federal Trade Commission (“FTC”) circulated a Notice of Penalty Offenses (“Notice”) to over 700 companies. These companies included as recipients of the Notice are large companies, advertising agencies and consumer product companies. 

    The Notice places the companies on notice that they could incur civil penalties of up to $43,792 per violation if they use endorsements in ways that are precluded by the FTC’s prior administrative cases.

    The FTC’s vote to authorize the Notice and its wide distribution was unanimous.

    The Notice states that ...

    Posted in Legal Bites
    FDA Issues New Sodium Guidelines

    On October 13, 2021, the U.S. Food and Drug Administration (“FDA”) released new voluntary guidance aimed at reducing average daily sodium intake by 12 percent over the next 2.5 years. The guidance sets voluntary target mean sodium concentrations and upper bound sodium concentrations for 163 food categories, including prepared foods, cheeses, sauces, frozen meals and baby food.

    The FDA stated that the guidance “is intended to provide measurable voluntary short-term (2.5-year) goals for sodium content in commercially processed, packaged and prepared foods to reduce ...

    Posted in Legal Bites
    California Enacts Three Restaurant Relief Measures

    On October 8, 2021, Governor Newsom approved three restaurant relief measures. These measures will affect outdoor dining and the ABC license process.  All three measures received bipartisan support and were supported by restaurant advocacy groups.

    AB 61: Business Pandemic Relief

    AB 61 authorizes the California Department of Alcoholic Beverage Control (“ABC”) to permit restaurants to serve alcohol in an expanded license area. The bill would also authorize the ABC to extend the period of time during which the COVID-19 permit is valid beyond 365 days if the licensee has applied ...

    Construction Defect Damages May Exceed Cost To Repair

    Construction defect cases often involve damage claims beyond simply the cost to repair the allegedly defective unit or component. These consequential damages may include damages for loss of use, expenses for mitigation and even attorney fees. For this reason, builders, suppliers, contractors and subcontractors who are faced with such claims should carefully review their insurance coverages, especially their CGL policies.

    At the threshold, a defendant seeking coverage under its CGL policy in connection with a construction defect claim must satisfy the policy’s ...

    LA County Proof of Vaccine Requirements Take Effect

    Today, October 7, 2021, Los Angeles County Public Health Officer Order’s vaccine requirements go into effect. These requirements were first announced as an executive order of the Public Health Officer and were ratified by the Los Angeles County Board of Supervisors on September 15, 2021.

    Under these requirements, proof of vaccination or a negative test result will be required to enter outdoor mega-events, and proof of at least one dose of the COVID-19 vaccine will be required to enter or work in indoor portions of bars, lounges, nightclubs, breweries, wineries and distilleries in ...

    Los Angeles Adopts Sweeping Vaccine Mandate

    On Wednesday, October 6, 2021, the Los Angeles City Council voted 11-2 to approve a new ordinance that requires proof of a COVID-19 vaccination to enter indoor restaurants, shopping centers, movie theaters, hair and nail salons, and a wide variety of other indoor venues. Grocery stores and pharmacies are not included in the ordinance. If religious or medical exemptions are given to an individual, proof of a negative COVID-19 test taken within 72 hours is needed for the individual to enter an indoor space. The ordinance will go into effect on November 4, 2021.

    Because the ordinance ...

    Posted in Legal Bites
    Ninth Circuit Holds that the Dynamex ABC Test Applies Retroactively, But Not Prop. 22

    On September 20, 2021, the Court of Appeals for the Ninth Circuit reversed Grubhub, Inc.’s lower court victory in a class action case involving the alleged misclassification of a former driver. The driver claimed he was misclassified as an independent contractor and asserted claims for minimum wage, overtime and expense reimbursement. The lower court denied class certification and entered a judgment in favor of Grubhub in February 2018. In so doing, the court applied the multi-factor Borello test to assess whether the driver qualified as an independent contractor. The judge ...

    LA City Council Moves Towards Sweeping Vaccine Requirements

    On September 29, 2021, the Los Angeles City Council debated a sweeping proof-of-vaccine requirement, with most Councilmembers indicating support. The ordinance will likely be passed upon its second reading next Tuesday.

    The ordinance would require customers to show proof of full COVID-19 vaccination status to enter a wide variety of public spaces, including restaurants, coffee shops, gyms and fitness venues, movie theaters, shopping malls, concert venues and personal care establishments.

    The City’s proposed rules would expand Los Angeles County’s existing ...

    Getting A Receiver In Aid Of Execution Just Got A Lot Harder

    Q: I have a large judgment against a wiley debtor. While I was able to execute on some of his bank accounts, the road to his other assets, which I know he owns or controls, has gone cold. A friend of mine told me I should ask my lawyer to get a “receiver in aid of execution” to collect the judgment. How hard is it to get such a receiver?

    A: It just got a lot harder. Prior to the adoption in 1982 of California’s Enforcement of Judgments Law (C.C.P. § 680.010 et. seq.), California Code of Civil Procedure (C.C.P.) § 564(4) provided the basis for appointing a receiver in aid of execution. It ...

    Companies Vulnerable to Data Breaches Are Now Vulnerable to Litigation

    Data breaches by large companies have been in the news for some time. Over the last several years several companies, including Marriott, Yahoo and Volkswagon, have been victimized by hackers who have broken into a company’s computer network. In some cases, the hackers have put the company’s confidential information on the internet. In other cases, the hackers have held the company’s information hostage through ransomware.

    While companies are rightly concerned about the security of their own networks, there is another risk. Recent court cases are testing the liability of ...

    Posted in Legal Bites
    Two Restaurant Relief Bills Pass California Legislature and Await Governor’s Signature

    Two restaurant relief measures have cleared the California State Senate and Assembly with bi-partisan support. The bills were both enrolled on September 13, 2021, and now await Governor Newsom’s signature.

    AB-61: Business Pandemic Relief

    AB-61 authorizes the California Department of Alcoholic Beverage Control (“ABC”) to permit restaurants to serve alcohol in an expanded license area. The bill would also authorize the ABC to extend the period of time during which the COVID-19 permit is valid beyond 365 days if the licensee has applied for permanent expansion of their ...

    Posted in Legal Bites
    USDA Solicits Public Comment on Labeling Meat and Poultry Products Derived from Animal Cells

    On September 2, 2021, the U.S. Department of Agriculture’s Food Safety and Inspection Service (“FSIS”) published an advanced notice of proposed rulemaking to solicit comments from the public regarding the labeling of meat and poultry products made using cultured cells derived from animals. FSIS stated that it would use those comments to make further regulatory requirements.

    FSIS also asked for economic data and consumer research to help increase its understanding of the animal cell culture technology industry and related issues regarding labeling and consumer ...

    Mandatory Arbitration Agreements are Unenforceable in California, Again

    In a year of tough decisions for California employers, the Ninth Circuit just issued another mixed bag of legal decisions to navigate, this time regarding the enforceability of mandatory arbitration agreements.

    CA Labor Code § 432.6 and Chamber of Commerce of the United States v. Bonta

    In October, 2019, California passed Assembly Bill 51, which became codified as Labor Code § 432.6, effective January 1, 2020. This law provided that employers could not require employees to sign a mandatory arbitration agreement as a condition of employment. In addition, it created civil and criminal ...

    Posted in Legal Bites
    SBA Announces Changes to EIDL Program, Including Cap Increase to $2M

    On September 9, 2021, the Small Business Administration (“SBA”) announced several changes to its Economic Injury Disaster Loan (“EIDL”) Program. 

    The changes include:

    • Increasing the COVID EIDL Cap to $2M. The SBA will lift the COVID EIDL cap from $500,000 to $2 million. Loan funds can be used for any normal operating expenses and working capital, including payroll, purchasing equipment and paying debt.
    • Deferred Payment Period. Small business owners will not have to begin COVID EIDL repayment until two years after loan origination. The SBA stated that this change was ...
    LA County Announces Proof-of-Vaccine Requirements for Bars and Large Outdoor Events

    On September 15, 2021, the Los Angeles County Board of Supervisors announced that proof of a COVID-19 vaccination will be required at indoor bars, wineries, breweries, nightclubs and lounges in Los Angeles County. This requirement will be announced in a Department of Public Health Order.

    The order will recommend, but not require, vaccine verification for employees and customers in indoor portions of restaurants.

    The Los Angeles County mandate will also apply to employees of covered establishments and require that both employees and customers have at least one vaccine dose by ...

    Posted in Legal Bites
    FTC Announces Expansion of Compulsory Process Resolutions to Eight Areas

    On September 14, 2021, the Federal Trade Commission (“FTC”) voted 3-2 to approve new compulsory process resolutions in eight areas.

    Compulsory process refers to the issuance of demands for documents and testimony, through the use of civil investigative demands and subpoenas. The FTC Act authorizes the FTC to use compulsory process in its investigations, which requires the recipient to produce information, and these orders are enforceable by courts.

    According to the press release, the “resolutions announced today will broaden the ability for FTC investigators and ...

    West Hollywood Imposes Vaccine Verification Requirement

    On September 10, 2021, the City of West Hollywood issued an Emergency Executive Order (the “Order”) implementing vaccine verification requirements for some businesses throughout the City. The West Hollywood City Council first discussed vaccine mandates for businesses in a July 21, 2021 meeting.

    The Order mandates restaurants, bars, nightclubs, health and fitness facilities, and personal care establishments to require all patrons ages 18 and older to show proof that they are fully vaccinated before entering any indoor portions of a facility. Additionally, business ...

    President Biden Issues COVID-19 Vaccine Mandate on Federal and Private Employers

    On September 9, 2021, President Biden signed two Executive Orders imposing sweeping new vaccine mandates on federal workers and contractors. This new mandate represents a shift in the White House’s policy on vaccinations, which had previously offered an alternative to those who wish to remain unvaccinated by allowing those individuals to wear masks while on federal property as long as they submitted to regular screening for COVID-19.

    All federal employees, contractors and subcontractors employed by the federal government shall be required to provide proof of vaccination ...

    Posted in Legal Bites
    California Legislature Passes AB-286 Third-Party Delivery Platform Law

    On September 1, 2021, the California State Assembly joined the California State Senate in passing Assembly Bill 286, which will regulate food delivery platforms throughout the state. The bill passed with bipartisan support in both chambers, with a 55-8 vote in the Assembly on September 1, and a 27-8 vote in the Senate on August 23, 2021. The bill was introduced in January 2021 and now awaits Governor Newsom’s signature.

    There are three main aspects of the bill: (1) it prohibits third-party platforms from charging more than the price set by the food facility; (2) it makes it unlawful for ...

    Posted in Legal Bites
    Ninth Circuit Decertifies Class in Coca-Cola False Advertising Case

    On August 31, 2021, the Court of Appeals for the Ninth Circuit issued an unpublished order revoking class certification of a consumer class in a Coca-Cola labeling case. The plaintiffs alleged that Coke’s advertising slogan of “no artificial flavors, no preservatives added since 1886” was misleading because Coke contains phosphoric acid.

    This decision reversed a class certification order from a California federal judge. The court held that the plaintiffs lacked standing to pursue injunctive relief because they had failed to demonstrate harm and thus had not adequately ...

    Ruling Breaks New Ground For CGL Policy Data Breach Coverage Hackings

    A recent case from the 5th U.S. Circuit Court of Appeals breaks new ground on the question of whether a commercial general liability policy provides coverage for damages arising from a data breach caused by a third-party hacker. Landry’s Incorporated v. Insurance Company of the State of Pennsylvania, 4 F. 4th 366 (5th Cir. 2021). In brief, the court in Landry’s held that there was coverage for a data breach where the insured was sued by a credit card processing company for breach of contract.

    Landry’s operated retail properties including restaurants, hotels and casinos ...

    Posted in The Real Dirt
    Unsettled Ground for Prescriptive and Equitable Easements

    Feeling entitled, or deserving or just plain covetous? You have discovered that you are encroaching on your neighbor's property. In California, two inconsistent doctrines can apply to allow you to continue using your neighbor's property, if the encroaching use has been long enough.

    Prescriptive easement doctrine is for those guilty of intentionally wanting to take their neighbor's land without regard to carelessness. To win a prescriptive easement claim, you must prove continuous and uninterrupted, adverse and hostile, open and notorious use over the real property of a ...

    LA County Issues Mask Mandate for Large Outdoor Events

    On August 17, 2021, the Los Angeles County Department of Public Health announced a mask mandate for large outdoor mega-events of more than 10,000 people. This is the first outdoor mask mandate since the County began its reopening attempt on June 15, 2021.

    All attendees at those events must now wear face masks at all times, except when actively eating or drinking. Event operators are required to prominently include information about the mask mandate throughout the event and on communications to guests. The County also has a recommendation (but not a mandate) that all attendees at ...

    Posted in Legal Bites
    Food Label Modernization Act of 2021 Introduced in House and Senate

    On August 4, 2021, Democratic Senators Richard Blumenthal, Sheldon Whitehouse and Ed Markey; and Democratic Representatives Frank Pallone, Jr. and Rosa DeLauro introduced the Food Labeling Modernization Act (“FLMA”) in both houses of Congress. Versions of this bill were introduced in 2015 and 2018, but were unsuccessful.

    The press release announcing the new legislation touted it as “an effort to help consumers select healthy products.” The legislation would direct the Secretary of Health and Human Services (“HHS”) to establish a single, standard ...

    L.A. City and County Consider Vaccine Requirement for Public Spaces

    On Wednesday, August 11, 2021, the Los Angeles City Council approved a motion to require people to have at least one dose of the COVID-10 vaccine before being admitted to public spaces, including restaurants, entertainment venues and retail stores. 

    The motion states: “the City Council instruct[s] the City Attorney to prepare and present an ordinance that would require eligible individuals to have received at least one dose of vaccination to enter indoor spaces, including but not limited to, restaurants, bars, retail establishments, fitness centers, spas and entertainment ...

    Posted in Legal Bites
    Attempts to Restore the Restaurant Revitalization Fund Falter

    While Congress has expressed bipartisan support for replenishing the depleted Restaurant Revitalization Fund (“RRF”), it has not been able to take action to do so. There are currently two bills pending to replenish the funds, and on August 7, 2021, a group of Senators attempted to add $48 billion to the RRF through a unanimous consent, which failed. The uncertain status of the RRF leaves hundreds of thousands of restaurants in limbo. This is particularly true of the approximately 3,000 priority applicants, who were approved for RRF grants and later notified that the SBA could ...

    Posted in Legal Bites
    SBA Drops Loan Necessity Questionnaire for PPP Loans

    On July 29, 2021, the Small Business Administration (“SBA”) updated its guidance to address borrower and lender questions about the implementation of the Paycheck Protection Program (“PPP”).

    The SBA announced that it was discontinuing use of the Loan Necessity Questionnaire (SBA Form 3509 or 3510) (the “Questionnaire”). The Questionnaire sought additional information for borrowers seeking loans of $2 million or more, including a liquidity assessment and business activity assessment.

    Eighty-two organizations, including the National Restaurant ...

    Reminder: Businesses Must Enforce Reinstated Los Angeles County COVID-19 Mask Requirements

    Keeping current on the frequent changes to COVID-19 business requirements can be very challenging. The return to indoor masking requirements on July 17, 2021, in Los Angeles County has been widely publicized. Even so, Los Angeles businesses may not be aware that the county is currently enforcing the indoor masking requirements through onsite inspections of county businesses. 

    In fact, during the short period between July 17, 2021 and July 23, 2021, Los Angeles County reports that its Department of Public Health inspectors visited 1,013 restaurants, 9 bars, 222 food markets, 22 ...

    Posted in Legal Bites
    Ninth Circuit Affirms California’s Proposition 12 Pork Ban

    On November 6, 2018, California voters passed Proposition 12. The law is set to go into effect on January 1, 2022. Among other things, the law “prohibits a business owner or operator from knowingly engaging in the sale within the state of shell eggs, liquid eggs, whole pork meat or whole veal meat, as defined, from animals housed in a cruel manner.”

    The National Pork Producers Council and the American Farm Bureau Federation filed a district court action seeking declaratory and injunctive relief on the ground that California’s Proposition 12 ban on the sale of whole pork meat (no ...

    When Were Receivers First Appointed In California?

    Q: I know receivers were appointed in England before even the merger of courts of law and equity, but when were receivers first appointed in California?

    A: It is hard to say when a receiver was first appointed in California, given records are not generally kept of superior court orders for long. However, the first reported appellate decision involving a receiver appears to be Von Schmidt et. al v. Huntington et. al., 1 Cal. 55, decided in the Court’s March 1850 term. The Supreme Court affirmed the lower court’s appointment of a receiver, in a corporate dissolution action, to ...

    Posted in Legal Bites
    Trader Joe’s Dodges Sticky Situation With Dismissal of Manuka Honey False Advertising Lawsuit

    The Ninth Circuit last month upheld a trial court’s decision to dismiss a false advertising lawsuit against Trader Joe’s concerning the store’s labeling of its Manuka honey. The case, Moore et al. v. Trader Joe’s Co., Case No. 19-16618 (9th Cir.), centered around allegations that Trader Joe’s violated multiple states’ consumer protection laws by falsely labeling its Manuka honey as “100% New Zealand Manuka Honey” when, in reality, only about 57-62% of the honey is derived from Manuka nectar.

    Manuka honey is created by bees that forage from the Manuka bush, a plant ...

    Posted in Legal Bites
    AB 61 Regulatory Relief for Restaurants: A Conversation with Assemblymember Jesse Gabriel

    On July 14, 2021, the Senate Health Committee approved Assembly Bill (“AB”) 61, which would provide regulatory flexibility to restaurants to expand outdoor dining. The bill now includes an urgency clause, meaning that it can be implemented immediately after it passes. The bill was first introduced on December 7, 2020. It now has 21 bipartisan co-authors.

    According to a press release, “AB 61 would provide much-needed regulatory flexibility to restaurants, including temporarily waiving requirements for fully enclosed kitchen and service areas, extending existing ABC ...

    Posted in Legal Bites
    FTC Finalizes “Made in USA” Rule Amidst Inter-Commission Conflict

    On July 1, 2021, the Federal Trade Commission (“FTC”) issued its final rule related to “Made in USA” and other unqualified U.S.-origin claims on product labels. The effective date of the rule is August 13, 2021.

    The rule comes almost one year after the FTC issued its Notice of Proposed Rulemaking (“Notice”) seeking public comments on the rule on July 16, 2020.

    The FTC stated that it had received over 700 comments from the public in response to the Notice. According to the FTC: “Commenters generally supported the rule, stating it provided much-needed clarity and would ...

    Posted in Legal Bites
    California Supreme Court Issues Retroactive Decision on Calculating Meal and Rest Break Premium Pay

    Since 2019, California employers have relied on Ferra v. Loews Hollywood Hotel, LLC, 40 Cal.App.5th 1239, for the proposition that only hourly wages would be used to calculate “premium pay” for meal or rest breaks under Labor Code section 226.7. In a serious blow to California employers, the California Supreme Court has reversed this ruling and held that non-discretionary bonus payments and commissions must be included in calculating these premium payments in the same manner as calculating for overtime pay. Adding insult to injury, the Court has held that its ruling will ...

    Employer Alert: Los Angeles County Revises Health Order to Reinstate Indoor Mask Requirement Regardless of Vaccination Status

    On July 16, 2021, the Los Angeles County Department of Public Health (LACDP) issued a revised health order available here (Order) requiring masks for everyone, regardless of vaccination status, in all indoor public settings, venues, gatherings and businesses. Examples of such locations include offices, retail, restaurants, theaters, family entertainment centers, meetings, etc.

    The Order also requires that individuals, businesses, venue operators or hosts of public indoor settings require all patrons to wear masks in all indoor settings, regardless of vaccination status ...

    Employer Alert: Los Angeles County Reinstates Indoor Mask Requirement Regardless of Vaccination Status

    Beginning Saturday, July 17, 2021, at 11:59 P.M., Los Angeles County will once again require all residents to wear masks in indoor public spaces, regardless of their vaccination status. The requirement will be reimposed due to rising Los Angeles County COVID-19 cases and the spread of the highly infectious Delta variant.

    Los Angeles County reported an average of 1,077 new cases daily during the 7-day period ending July 14, 2021, which is a 261% increase from the prior two-week period. An additional 1,537 cases were reported today, July 15th, representing an increase of over 80 ...

    Posted in Legal Bites
    LA County Reinstating Mask Mandate

    On July 15, 2021, Los Angeles County’s Department of Public Health (the “Department”) announced at a press conference that it would be issuing a new public health order requiring all residents, regardless of vaccination status, to wear masks in indoor public spaces. The order will go into effect at 11:59 pm on Saturday, July 17, 2021.   

    On July 13, 2021, the Department announced a substantial increase of COVID-19 cases in Los Angeles County, with 1,1103 new cases—an increase of 500% in one month.

    On June 28, 2021, the Department issued a recommendation that all residents remain ...

    Posted in Legal Bites
    House Appropriations Committee Directs FDA F&B Priorities

    On June 30, 2021, the House Committee on Appropriations (the “Committee”) issued a report accompanying a bill making appropriations for the U.S. Department of Agriculture, Food and Drug Administration (“FDA”), and related agencies for fiscal year 2022.

    The report includes the Committee’s review and direction as to the FDA’s work. While most of this guidance was focused on drug-related regulation, the Committee offered some specific directives on food and beverage regulation that may guide the FDA’s future work. The topics of interest in the report related to the ...

    When Can a Court Refuse To Appoint a Receiver Under Health and Safety Code Section 17980.7c?

    Q: I have handled a number of health and safety receiverships. A city I have worked with before asked me to look at a property and prepare a proposed remediation plan, so they could have me appointed receiver under Health and Safety Code §17980.7(c). The court denied the city’s motion, saying it knew where the property was located and the cost of remediation was not worth it, given the property’s value. Can the court do that?

    A: No. Under Health and Safety Code § 17980.7(c) there are only two requirements for the appointment of a receiver. First, “the court shall consider whether ...

    Posted in Legal Bites
    SBA Shutting Down RRF Portal on July 14

    On July 14, 2021, the Small Business Administration (“SBA”) will officially close its Restaurant Revitalization Fund (“RRF”) portal. This move raises questions about whether the RRF funds will be replenished, despite pending congressional action.

    The SBA stopped processing fund applications on May 24, 2021, after a huge influx of applications, seeking nearly double the funds available.

    As of June 30, 2021, the SBA reported that the RRF program received more than 278,000 submitted eligible applications representing over $72.2 billion in requested funds, and ...

    Posted in Legal Bites
    FDA Foods Program Releases Guidance Topics

    On June 29, 2021, the U.S. Food and Drug Administration’s (“FDA”) Center for Food Safety and Applied Nutrition and Office of Food Policy and Response released a list of draft and final guidance topics that are a priority for the FDA Foods Program to complete during the next 12 months. 

    The FDA anticipates publishing guidance for many of these documents by June 2022. The FDA stated that the agency “is taking this action to provide stakeholders increased transparency and additional insights into the foods program priorities. Guidance documents represent the FDA’s current ...

    EEOC Issues Updated COVID-19 Guidance Regarding Vaccination Incentives

    The Equal Employment Opportunity Commission (EEOC) has issued updated guidance regarding providing incentives to employees to encourage COVID-19 vaccination, examining various scenarios under the Americans with Disabilities Act (ADA) and the Genetic Information Discrimination Act of 2008 (GINA). The updated guidance can be found here under items K.16 - K.21.

    The guidance confirms that under the ADA, as long as the incentive is not so substantial as to be coercive, an employer may provide an incentive (which may include both rewards and punishments) to employees for ...

    Posted in Legal Bites
    Congress Considers Replenishment of Exhausted RRF Funds

    The much anticipated Restaurant Revitalization Fund (RRF) was deluged with applicants. According to Restaurant Dive, more than 362,000 applications were received in the first three weeks of the program for a total of $75 billion in funding. The SBA has since closed its portal to new applicants. The portal website states: “After an overwhelming response to the Restaurant Revitalization Fund, the application portal is now closed for new applications.”

    On June 8, 2021, a bipartisan group of Senators and U.S. Representatives introduced the Restaurant Revitalization Fund ...

    FAST Act (AB-257) Narrowly Defeated

    On June 3, 2021, AB-257, the Fast Food Accountability and Standards Recovery Act (the “FAST Act”) was defeated in the California Assembly, coming up three votes short of the 41 votes needed. 

    The FAST Act would have established a Fast Food Sector Council (the “Council”), comprised of 11 members appointed by the Governor, Speaker of the Assembly and Senate Rules Committee. Under the proposed bill, that Council would have been tasked with conducting a full review of the adequacy of fast food restaurant health safety and employment standards, and establishing industry-wide ...

    Posted in Legal Bites
    FTC Announces July 1 Open Meeting

    On June 24, 2021, the Federal Trade Commission (“FTC”) announced that it would be holding the first of a series of open meetings. Members of the public are invited to listen to the FTC’s discussion and submit public comment.

    The initial agenda includes the following:

    • Made in the USA Rule: The FTC will vote on whether to finalize the Made in the USA Rule.
    • Section 18 Rulemaking Procedures: The FTC will vote on whether to streamline the procedures for Section 18 rules prohibiting unfair or deceptive acts or practices.
    • “Statement of Enforcement Principles Regarding ‘Unfair ...
    DOL Proposes New Tip Credit Rule

    On June 23, 2021, the U.S. Department of Labor published a Notice of Proposed Rulemaking to limit the amount of non-tip producing work that a tipped employee can perform when an employer is taking a tip credit. 

    According to the DOL, the proposed rule “clarifies when an employee is working in a tipped occupation and when a worker has performed such a substantial amount of non-tipped labor that an employer can no longer take a tip credit and must pay the full federal minimum wage to the worker.” 

    Under the proposed rule, if a tipped employee spends either more than 20 percent of their ...

    Posted in Legal Bites
    Ninth Circuit Rejects Proposed False Advertising Settlement Agreement Seeking Disproportionate Attorneys’ Fees

    Earlier this month, the Ninth Circuit reversed approval of a class action settlement, finding several indications that the proposed settlement was the result of collusion between the parties and did not adequately serve the class. The case, Briseño et al. v. ConAgra Foods Inc., Case No. 19-56297 (9th Cir.), originally filed in 2011, centers around allegations that defendant ConAgra Food Inc., then-owner of Wesson Oil, falsely advertised its oil as “100% Natural” when in fact the oil contained ingredients made from GMOs.

    After several years of litigation, plaintiffs ...

    Cal/OSHA Approves Modified COVID-19 Workplace Regulations

    On June 17, 2021, the California Occupational Safety & Health Standards Board (the Cal/OSHA Board) voted to approve a set of new modified COVID-19-related workplace emergency regulations, found here. The new modified regulations will need to be approved within ten days by the state Office of Administrative Law, which is expected to approve the rules. Governor Newsom has also indicated that he may approve the rules immediately. 

    These regulations replace more stringent regulations that were inconsistent with the latest guidance issued by the Centers for Disease Control and ...

    Posted in Legal Bites
    FDA Issues Final Rule on Yogurt Standard of Identity

    On June 11, 2021, the FDA issued a final rule to amend the standard of identity for yogurt. The rule will become effective on July 12, 2021. 

    A standard of identity describes in detail what a food product must contain, how it must be proportioned and in some cases how it must be manufactured. The FDA has more than 280 standards for a wide variety of food products.  As part of the FDA’s Nutrition Innovation Strategy, the agency has been considering standards of identity and particularly looking to revoke or update standards when they are inconsistent with modern manufacturing processes or ...

    Posted in Legal Bites
    Ninth Circuit: Trader Joe’s Chicken Labeling Claims Federally Preempted

    On June 4, 2021, a panel of judges from the Ninth Circuit Court of Appeals affirmed the dismissal of consumer poultry labeling claims against Trader Joe’s on the ground that those claims were federally preempted. The consumer claims alleged that Trader Joe’s labels on poultry were misleading under California law because they had different percentages of retained water than was displayed on their labels. 

    Poultry labeling, including a retained water data collection process and label production, are regulated by the federal Poultry Products Inspection Act (“PPIA”) and the ...

    Posted in Legal Bites
    LA County Moves from Temporary to Permanent Outdoor Dining

    On Tuesday, June 8, 2021, the Los Angeles County Board of Supervisors approved a motion to establish permanent guidelines for outdoor dining and move from the temporary pandemic authorizations to a long-term plan.

    The motion requested several L.A. County agencies to work together to establish permanent Countywide guidelines for expanded options for outdoor dining spaces. This includes new guidelines for public sidewalks, alleys, and private on-site and off-site parking facilities.

    The Board also asked those agencies to develop a plan to transition all restaurants that have ...

    California Announces Rules for June 15 Reopening; Cal/OSHA Reconsiders Employer Requirements

    On June 9, 2021, the California Department of Public Health announced a new face coverings guidance that will go into effect statewide on June 15, 2021. In addition, Governor Newsom’s office announced that on June 15, 2021, California would be fully reopen with no capacity limits or distancing required by the state. The county-by-county color tier system will also be eliminated. However, individual county health departments may continue to impose restrictions under local public health orders.

    Under the State’s new guidance, fully vaccinated persons are not required to wear ...

    Posted in Legal Bites
    FDA Announces $134M Budget Increase for FY 2022

    On June 7, 2021, the FDA released its Fiscal Year 2022 budget request, outlining key investments for food safety. The request details how the FDA plans to use funds in FY 2022 to support food safety and nutrition. The budget provides increases to core food safety programs and outlines emerging issues of concern for the agency.

    The agency’s FY 2022 Budget provides $1.6 billion in budget authority for food safety, an increase of $134 million from the previous year.

    The agency’s press release states: “[o]f the increase of $134 million for food safety activities, $45 million is for ...

    Cal/OSHA Issues Modified COVID-19 Regulations

    On June 3, 2021, the California Occupational Safety & Health Standards Board approved new modified COVID-19-related emergency regulations. The new modified regulations, which are found here, will need to be approved by the state Office of Administrative Law within ten days. The OAL is expected to approve the rules.

    When approved, the new regulations will become effective on June 15, 2021, the same day on which Governor Newsom announced California would reopen. These regulations may be further refined in the coming weeks to take into account changes in circumstances, especially as ...

    California Extends ABC Regulatory Relief

    On June 3, 2021, California Governor Gavin Newsom announced the extension of some pandemic alcohol measures designed to help restaurants and bars. The press release states: “The Administration today extended relief measures that permit restaurants and bars to continue to benefit from their investments to expand outdoor operations in areas such as sidewalks and parking lots, and to continue the sale of to-go alcoholic beverages with food deliveries, among other successful pandemic adaptations. In addition, the Administration is urging local governments to facilitate ...

    U.S. Court of Appeals Upholds CalSavers Program

    The United States Court of Appeals (9th Circuit) recently upheld California’s CalSavers Retirement Savings Program (CalSavers), which provides retirement savings accounts to employees without employer retirement benefit plans. The Howard Jarvis Taxpayers Association sued to challenge the law establishing the CalSavers program arguing that it was superseded by federal retirement law, specifically the federal Employee Retirement Income Security Act of 1974 (ERISA). However, the U.S. Appeals court upheld the CalSavers program holding that it was not preempted by ERISA.

    Posted in Legal Bites
    Proposed Grubhub False Advertising Settlement Challenged By Plaintiffs In Competing Lawsuit

    A proposed class action settlement pending in the District Court of Colorado involving Grubhub, Inc. has been called into question by would-be intervenors from a similar action against Grubhub pending in the Northern District of Illinois. The Colorado case, CO Craft LLC dba Freshcraft v. GrubHub Inc., Case No. 1:20-cv-01327 (D. Colo) was filed by plaintiff Freshcraft on May 11, 2020, alleging a single cause of action against Grubhub for violation of the Lanham Act. Freshcraft alleges that Grubhub falsely advertised on its platform that certain restaurants not partnered with ...

    Posted in Legal Bites
    FDA Announces Intended Consumer Research on "Healthy" Claims

    On May 6, 2021, the FDA issued a procedural notice on the preliminary quantitative consumer research it plans to conduct on symbols that could be used in the future to convey the nutrient content claim “healthy.”

    This research is part of the FDA’s Nutrition Innovation Strategy, which seeks to reduce the burden of nutrition-related chronic diseases and to modernize claims. By using a symbol for a nutrient claim, the goal would be for consumers to have a quick signal about what benefits a food or beverage they choose might have.

    As part of its efforts to promote public health, FDA ...

    Insurance Coverage and Recovery Developments in the Post-COVID World

    This article provides a summary of a presentation Peter Selvin gave on April 22, 2021 to the Litigation Counsel of America. 

    PART 1: Business Interruption: COVID-19

    COVID-19 has impacted nearly every aspect of business and insurance is no exception. While infection rates continue to fall, there is a rise in business interruption insurance claims and litigation. This article highlights some of the emerging themes and notable developments in COVID-related insurance litigation claims.

    In March 2021, the Los Angeles Lakers filed a COVID-19 business interruption lawsuit against ...

    California Expands Business Relief Grants

    On May 13, 2021, California Governor Gavin Newsom announced an expansion of the state’s COVID-19 Small Business Relief Grant program from $2.5 billion to $4 billion. The expansion makes California’s business relief grants program the largest in the country.

    To date, 198,000 businesses have received grants under the program, for a total of $475,001,244. While the application portal is currently closed, it is expected to reopen after the new grant's funds have been processed. The Governor’s office announced the following initiatives for businesses:

    • Estimated $895 ...
    Posted in Legal Bites
    McCormick Poised to Settle “Natural” Spices Case for $3 Million

    Parties in another false advertising case surrounding the use of the term “natural” have filed for preliminary approval of a class action settlement. On May 7, 2021, the plaintiff in Megan Holve v. McCormick & Company, Inc., Case No. 6:16-cv-06702-FPG asked a Federal Judge in the Western District of New York to preliminarily approve the parties’ proposed class action settlement to resolve the nearly five-year-old litigation.

    Originally filed back in October 2016, plaintiff Holve, purporting to act on her behalf as well as on behalf of both a nationwide class and New York ...

    California To Wait Until June 15, 2021 To Adopt the CDC’s New Mask Guidelines

    On May 17, 2021, California’s Secretary of Health and Human Services, Dr. Mark Ghaly, announced that California would begin following the U.S. Centers for Disease Control and Prevention (the “CDC”)’s new guidelines regarding the lifting of mask restrictions for fully vaccinated individuals on June 15, 2021. These new guidelines provide that those who are fully vaccinated against the COVID-19 virus no longer need to wear masks outdoors or in most indoor settings.

    After serving as one of the major epicenters for the COVID-19 virus in the United States in the beginning of this ...

    Posted in Legal Bites
    City Inches Towards Making L.A. Al Fresco Program Permanent

    On May 12, 2021, the Los Angeles City Council (the “Council”) took the first step towards making the popular L.A. Al Fresco outdoor dining program permanent. The Council voted 14-0 to approve a motion that directs various city agencies to issue reports with recommendations on how to transition the program to permanent status.

    The Council instructed the Bureau of Engineering and Los Angeles Department of Transportation to “report in 60 days with recommendations to revise the Sidewalk Dining Program and the People St. Program, as appropriate, to expeditiously transition all ...

    CDC Loosens Mask Mandate for Fully Vaccinated People

    On May 13, 2021, the U.S. Centers for Disease Control and Prevention (the “CDC”) issued new guidance lifting mask restrictions for fully vaccinated individuals. Under the new guidance, people who are fully vaccinated may stop wearing masks or maintaining social distance in most outdoor and indoor settings. 

    The CDC’s summary of changes states that “fully vaccinated people no longer need to wear a mask or physically distance in any setting, except where required by federal, state, local, tribal, or territorial laws, rules, and regulations, including local business and ...

    California Assembly Bill No. 80: Tax Treatment of Forgiven Paycheck Protection Program Loans

    Our previous articles have summarized the Paycheck Protection Program (“PPP”) created under the Federal CARES Act: CARES Act: Paycheck Protection Program Loans, CARES Act: Loan Applications, CARES Act: Loan Forgiveness Applications and Consolidated Appropriations Act: Additional Paycheck Protection Program Loans.

    This post provides information regarding California Assembly Bill No. 80 (the “Bill”), which conforms California tax law to Federal tax law on PPP loans.

    The Bill received bi-partisan support, passing the California Assembly with a vote of 75-0 and ...

    The American Rescue Plan Act of 2021 Provides COBRA Premium Subsidies

    Employers know that the Consolidated Omnibus Budget Reconciliation Act (COBRA) provides an opportunity for group health plan continuation coverage to covered employees and their families upon the occurrence of a qualifying event, such as a termination of employment or a reduction in hours. The recently enacted American Rescue Plan Act of 2021 (ARP) provides COBRA limited premium subsidies and new enrollment rights to certain Assistance Eligible Individuals. An Assistance Eligible Individual would not be required to pay COBRA premiums from April 1, 2021 through September 30 ...

    Posted in Legal Bites
    California Supreme Court Signals the End for Rounding Meal Break Time

    As technology has advanced, employers routinely rely on electronic timekeeping software to ensure accurate record keeping. Such software often includes a setting to round employees’ time (typically to the nearest quarter hour) and is implemented as a result of either deliberate company policy or through inadvertent default. Regardless, employers should review these policies and settings following the California Supreme Court’s recent decision in Donohue v. AMN Services, LLC.

    In Donohue, the Court unequivocally held employers may no longer round an employee’s in and ...

    Posted in Legal Bites
    FTC Announces New Enforcement Actions for COVID-19

    In April 2021, the Federal Trade Commission (“FTC”) emphasized its commitment to protecting consumers from unsubstantiated claims of products advertised to prevent, treat or cure COVID-19. On April 29, 2021, the FTC announced an additional set of warning letters related to these types of claims. The FTC has now sent nearly 400 warning letters in ten sets to companies and individuals. According to the agency, “In the letters, the FTC states that one or more of the efficacy claims made by the marketers are unsubstantiated because they are not supported by scientific evidence ...

    LA County to Move into Yellow Tier

    On Wednesday, May 5, 2021, the Los Angeles County Public Health Department (the “Department”) is expected to issue a new Public Health Officer order to officially move into the least restrictive “yellow tier” of California’s color-coded reopening system. The criteria for entering the yellow tier is less than 2% positivity and fewer than 1 daily new case per 100,000 county residents. The Order would be effective on Thursday, May 6, 2021.

    On April 30, 2021, the Department made some modifications to the Public Health Order, lifting hours limitations on bars, breweries and ...

    Posted in Legal Bites
    The Increasing Popularity of Ghost Kitchens Raises Questions Over Restaurant Brands’ IP Protections

    Since the inception of the pandemic, “ghost kitchens” – or shared commercial spaces which host multiple restaurant brands only serving food via delivery or takeout – have presented a surprising silver lining for both restaurateurs and commercial real estate owners alike. For commercial real estate owners, ghost kitchens present an invaluable opportunity to market real estate spaces that have otherwise lost value with the decline in brick and mortar retail. For restaurateurs, ghost kitchens provide significant savings on the rent and labor costs associated with a ...

    DFEH Updates COVID-19 Vaccination Guidance

    California’s Department of Fair Employment and Housing (DFEH) has updated its COVID-19 vaccination guidance, replacing its prior guidance issued July 24, 2020.

    The DFEH’s updated guidance, available here, permits employers to require employees to receive a vaccine approved by the Food and Drug Administration (FDA), subject to certain exceptions and requirements. 

    Specifically, in instituting such a mandatory policy, an employer’s policies or practices cannot discriminate or harass employees or applicants based on a characteristic protected by the Fair Employment ...

    Posted in Legal Bites
    Federal Food Bills – Proposed Changes for the Food Industry

    During the first quarter of 2021, various federal bills were introduced which impact the food industry. This article provides a primer on some of these bills and their potential impact on the food industry.

    The Food Allergy Safety, Treatment, Education and Research (FASTER) Act (S.578), introduced by Senator Tim Scott on March 3, 2021, later passed by both the Senate and House of Representatives, and signed into law by President Biden on April 26, 2021:

    • The FASTER Act requires companies to declare the presence of sesame on food packaging labels by January 1, 2023 and was introduced and ...
    Posted in Legal Bites
    Restaurant Revitalization Fund Opening May 3

    On April 27, 2021, the Small Business Administration ("SBA") announced that the much-anticipated Restaurant Revitalization Fund would be opening on May 3, 2021 at 9 am PST/12 pm EST. Restaurant operators may register through the SBA’s RRF portal beginning on Friday, April 30 at 6 am PST/9 am EST.

    The SBA will host two webinars on Tuesday, April 27 and Wednesday, April 28 covering the Restaurant Revitalization Fund program details and how to submit an application. The two webinars will cover the same content. Registration is available here. The webinars are limited to the first ...

    Posted in Legal Bites
    LA Mayor Proposes Measures to Help Restaurants

    On Monday, April 19, 2021, Los Angeles Mayor Eric Garcetti delivered his 2021 State of the City speech and announced several initiatives designed to assist restaurants. 

    The proposals for restaurant relief included in Garcetti’s speech include:

    • $25 million program to write Comeback Checks of $5,000 to 5,000 small businesses.
    • A proposed ordinance to cut the time for alcohol permit approval for restaurants by 90% and to cut the cost of that permit by 70%.
    • Allowing restaurants to defer city fees of $8,000 or more for a three-year period.
    • Suspension of valet and off-site parking ...
    California Enacts COVID-19 Right of Recall Law in Certain Sectors

    Governor Newsom has signed into law Senate Bill 93, a state-wide right of recall, intended to assist California workers in sectors that have been especially hard hit by the COVID-19 pandemic. This new law, which is similar to earlier Los Angeles County and Los Angeles City COVID-19 ordinances, goes into effect immediately and will remain in effect through December 31, 2024. 

    California’s new right of recall law applies to certain hotels, private clubs, event centers, airport hospitality operations and providers of janitorial, maintenance or security services to office, retail ...

    Los Angeles County Revises Restaurant Protocols and Announces Live Event Rules

    On April 17, 2021, the Los Angeles Department of Public Health (“Department”) revised its protocol for restaurants to permit increased activities in light of the County’s Orange Tier reopening.

    The changes include:

    • Allowing restaurants to have live outdoor entertainment. Live entertainment operations are allowed outdoors only.  Performers must be at least 12 feet away from seated customer groups.
    • Allowing restaurants to host private events when the restaurant is not operating for regular business. Private events are subject to a separate protocol and restaurants ...
    Posted in Legal Bites
    SBA Releases Restaurant Revitalization Program Guidelines

    On Saturday, April 17, 2021, the Small Business Administration (“SBA”) released its much-anticipated guidelines for the Restaurant Revitalization Fund.

    On April 13, 2021, during a town hall with the Independent Restaurant Coalition, SBA associate administrator Patrick Kelley stated that the program was not robust enough to serve all eligible applicants and urged administrators to apply on the first day the program opens. He suggested that a demonstration of strong demand could lead to Congress opening additional funding for the program.

    Eligible Entities

    Eligible ...

    IRS Issues Guidance on Business Meal Deductions

    On April 8, 2021, the Treasury Department and the Internal Revenue Service issued guidance regarding the temporary 100-percent deduction for food and beverage purchased from restaurants.

    Beginning January 1, 2021, through December 31, 2022, businesses can deduct 100% of their food or beverage expenses paid to restaurants if the business owner (or an employee of the business) is present when food or beverages are provided, and as long as the expense is not lavish or extravagant under the circumstances.

    The guidance defines eligible restaurants to include businesses that ...

    Posted in Legal Bites
    Ninth Circuit Dismisses “100% Natural” Chicken Advertising Case

    The Ninth Circuit recently affirmed a district court decision dismissing a case for lack of standing, finding that an advocacy group must demonstrate that it affirmatively diverted resources to combat alleged false claims to maintain standing in a false advertising litigation.

    The case, Friends of the Earth, et al. v. Sanderson Farms, Inc., Case No. 3:17-cv-03592 (N.D. Cal.), was originally filed by multiple advocacy groups in 2017 against Sanderson Farms, Inc., a poultry farming company.  Plaintiffs alleged that defendant violated both the California False Advertising Law and ...

    Posted in Legal Bites
    FDA Announces Actions on Leafy Green Safety

    On April 6, 2021, the U.S. Food and Drug Administration (“FDA”) announced agency actions to advance the safety of leafy greens.

    First, the FDA announced that it was releasing a report of its investigation on the Fall 2020 outbreak of E. coli linked to the consumption of leafy greens. The report found that the outbreak, which caused 40 reported domestic illnesses, was linked via whole-genome sequencing (WGS) and geography to outbreaks traced back to the California growing region associated with the consumption of leafy greens in 2019 and 2018. The FDA investigated the outbreak ...

    California Announces Full Reopening on June 15

    On April 6, 2021, California Governor Gavin Newsom announced a plan to lift all COVID-19 virus restrictions by June 15, 2021. The full reopening is contingent on both (1) sufficient vaccine supply to ensure that all Californians age 16 and over who wish to be inoculated are able to do so and (2) stable and low hospitalization rates. The full reopening would mean an official end to California’s color-coded tier system.

    It remains unclear what restrictions may remain under the full reopening but Governor Newsom specified that some form of mask mandate will remain. The California ...

    Bad Faith Liability Can Arise Even Absent A Demand Within Policy Limits 

    In some circumstances an insurer’s duty to settle may arise even in the absence of a demand by the claimant within policy. The recent case of Planet Bingo, LLC v. The Burlington Insurance Company, 2021 DJDAR 2510 (March 18, 2021) is the latest decision to address this point.

    In Planet Bingo, the insured manufactured handheld gaming devices. Those devices were distributed in the U.K. by Leisure Electronic Limited. Leisure leased some of the Planet Bingo’s devices to Beacon Bingo, which operated a bingo hall in London.

    In September 2008 there was a fire at Beacon’s bingo hall ...

    LA County Moves to Orange Tier Reopenings on April 5

    Both Los Angeles and Orange County are now eligible to move from the Red Tier into the Orange Tier of COVID-19 reopening guidelines under the state’s Blueprint for a Safer Economy. 

    On March 30, 2021, the Los Angeles County Public Health Department announced that while it satisfied the numbers requirement to move into the Orange Tier, it would wait until April 5 to permit businesses to operate at increased capacity.

    On April 5, Los Angeles County will officially adopt Orange Tier reopening rules to the Public Health Officer Order. Under these new rules, the following changes will take ...

    Posted in Legal Bites
    Plaintiffs Look To Finalize $13 Million Settlement In Added Sugar Consumer Class Action

    Parties in an added-sugar class action pending in the Northern District of California are taking another shot at obtaining preliminary approval of a settlement reached between the parties. The case, Stephen Hadley et al. v. Kellogg Sales Co., Case No. 5:16-cv-04955, originally filed in 2016, alleges that Kellogg violated several California and New York laws by marketing many of their cereals with deceptive health and wellness claims that mask the cereals’ high added sugar content.  Plaintiffs specifically target roughly a dozen of Kellogg’s cereals. The challenged ...

    Employer Alert: California Labor Commissioner Issues New COVID-19 Supplemental Paid Sick Leave FAQ and Required Poster

    As reported here, on March 19, 2021, Governor Gavin Newsom signed into law Senate Bill 95. This new law requires all California employers (including those with collective bargaining agreements) with 25 or more employees to provide paid supplemental sick leave to employees who are unable to work or telework due to certain COVID-19 related reasons. In-home supportive service providers are also required to provide paid supplemental sick leave to their providers.

    The new COVID-19 supplemental sick leave must be provided on the oral or written request of the covered employee ...

    SB 95: California Provides Supplemental Paid Sick Leave for COVID-19

    On March 19, 2021, California Governor Gavin Newsom signed Senate Bill 95 providing a new form of COVID-19 related paid sick leave for many California workers. The law will become effective on March 29, 2021, and applies retroactively to sick leave taken beginning on or after January 1, 2021. All California employers with more than 25 employees and in-home supportive services providers are required to provide the supplemental sick leave benefits to employees. The law will remain in effect through September 30, 2021.

    SB 95 provides for COVID-19 supplemental paid sick leave for ...

    Posted in Legal Bites
    Los Angeles County Eases Up on COVID-19 Citations

    On March 16, 2021, the Los Angeles County Board of Supervisors (the “Board”) revised its protocol for issuing fines to businesses violating the County’s COVID-19 protocols, reversing course. These protocols were implemented in August 2020 at the Board’s direction, and have led to fines and temporary closures for a number of restaurants.

    In July 2020, the Board passed a motion directing the Department of Public Health (the “Department”) to take stricter enforcement measures to ensure greater levels of compliance with COVID-19 safety protocols.  In August 2020, the ...

    Posted in Legal Bites
    FDA Releases Food Safety and Nutrition Survey Results

    On March 16, 2021, the Food and Drug Administration (“FDA”) released the results of its 2019 Food Safety and Nutrition Survey (“FSANS”). FSANS is designed to assess consumers’ awareness, knowledge, understanding and reported behaviors relating to a variety of food safety and nutrition-related topics.

    Among the key findings of FSANS, the FDA reported

    • Most consumers are familiar with the Nutrition Facts label – 87% of respondents have looked at the Nutrition Facts label on food packages. The top four items that consumers look for on the label are: Calories, Total ...
    Posted in Legal Bites
    LA County’s New Reopening Rules for Businesses

    On March 15, 2021, Los Angeles County officially entered into the state’s Red Tier, permitting restaurants to offer limited capacity indoor dining, and permitting gyms, museums and galleries to open some indoor operations. The County issued several reopening protocols laying out the rules for businesses with the current reopening.

    Dining

    The County’s Department of Public Health issued a revised Public Health Order for Dining Protocols (the “Order”) with new protocols for indoor dining, outdoor dining and worker safety in light of the reopening.

    Indoor Dining

    With ...

    Posted in Legal Bites
    Judge Approves $15M Settlement in Added Sugar Consumer Class Action

    On February 24, 2021, a judge in the United States Court for the Northern District of California preliminarily approved a $15 million class-action settlement for Post Foods, based on the case Debbie Krommenhock et al. v. Post Foods, LLC, Case No. 3:16-cv-04958-WHO, which concerns representations made by Post Foods LLC in the labeling and advertising of several popular cereal brands, including Honey Bunches of Oats and Raisin Bran.

    Plaintiffs Debbie Krommenhock and Stephen Hadley filed a class action complaint against Post in August 2016 alleging that Post violated California ...

    L.A. County Red Tier Reopening Imminent

    On March 11, 2021, the Los Angeles County Department of Public Health (the “Department”) announced an anticipated reopening of certain activities between March 15 and March 17, as L.A. County moves to the lower risk Red Tier of the state’s reopening plan. The exact date of the reopening will depend on when the County hits the threshold of 2 million vaccine doses being administered to people in the most under-resourced communities across the County.

    The following activities will be permitted next week after L.A. County moves to the Red Tier:

    • Museum, zoos and aquariums can open ...
    Posted in Legal Bites
    Bi-Partisan Group of California Lawmakers Push Bar And Restaurant Recovery Act

    On February 4, 2020, California State Senator Scott Weiner, who represents San Francisco and parts of San Mateo County, introduced Senate Bill 314, the Bar and Restaurant Recovery Act (the “Act”), to modernize the bar and restaurant industry and provide more flexibility to facilitate the economic recovery of the industry from the impacts of the COVID-19 pandemic.

    The Act’s goal is to help the bar and restaurant industry bounce back from the pandemic by reducing the red tape, lengthy turnaround times and permit redundancies of the industry in order to provide more economic ...

    Posted in Legal Bites
    American Rescue Plan with Restaurant Relief Poised for Passage

    The American Rescue Plan Act (“the Act”) was passed by the Senate on March 6, 2021, and is now headed for ratification by the House of Representatives and signature by President Biden. The $1.9 trillion stimulus includes over $25 billion earmarked as direct aid to restaurants.

    Restaurant Revitalization Fund

    Section 6003 of the Act establishes a Restaurant Revitalization Fund, to be administered by the Administrator of the Small Business Administration. The Restaurant Revitalization Fund includes $25 billion earmarked for restaurant Revitalization Grants. The Act ...

    Appeals Court Upholds Expired Outdoor Dining Ban

    On March 1, 2021, the Court of Appeal, Second Appellate District ruled in favor of the Los Angeles County Department of Public Health (the “Department”) officials who halted outdoor dining in November 2020 during a spike in COVID-19 cases.

    After the Department announced a ban on all outdoor dining, the California Restaurant Association (“CRA”) filed a lawsuit. State Court Judge James Chalfant initially ruled in favor of the CRA on December 8, 2020, and held that the Department acted arbitrarily and failed to perform the required risk-benefit analysis before issuing the ...

    Are Defendants Entitled To A Jury Trial In A Voidable Transfer Case?

    Q: I am a defendant in a fraudulent transfer action brought by a state court receiver. Can I demand a jury trial? I don’t want the judge who appointed the receiver to try my case, because he is clearly biased!

    A: Whether you are entitled to a jury on a fraudulent transfer claim (now called a “voidable transfer” under California law— Civil Code § 3439 et. seq.) depends upon the specific relief being sought. If the action just seeks the recovery of money, it is a purely legal action, and you would be entitled to a jury. If, however, the action ...

    California Passes Pandemic Relief Measures Aimed at Supporting Business

    On February 23, 2021, California Governor Gavin Newsom signed a legislative package of six bills providing relief to individuals and businesses experiencing hardship due to the COVID-19 pandemic. Some of these measures are directly targeted towards the restaurant and hospitality industry.

    Small Business Grant Relief

    The new measures provide $2.1 billion in small business grants of up to $25,000. This is a significant increase over the $500 million that was initially approved for these grants in November 2020.

    Grants are available only for businesses and nonprofits with gross ...

    CalSavers Deadline Approaches for Mid-Sized Companies to Register or Certify as Exempt

    The CalSavers Retirement Savings Program (CalSavers) was established to assist the estimated 7.5 million California employees without employer retirement savings plans. Mandatory compliance is phased-in over time and depends on the size of the employer. The current phase requires all California employers with 51 to 100 employees to register with CalSavers or certify that they are exempt by June 30, 2021. More specifically, employers without employer-sponsored retirement plans must register to begin offering the state-mandated employer retirement plan to their employees ...

    LA City Council Joins County, Passing “Hero Pay” for Grocery Workers

    On February 24, 2021, the Los Angeles City Council voted 14-1 to pass an ordinance mandating that employers provide $5/hour in additional premium hazard pay for on-site grocery and drug retail workers.

    The ordinance is expected to go into effect the week of March 1, after it is signed by Mayor Eric Garcetti, who has already expressed support. The pay increase will go into effect for 120 days and then expire.

    The ordinance applies to grocery stores and drug retails stores with more than 300 employees nationwide and more than ten employees on-site in Los Angeles. Approximately 26,000 ...

    LA County Mandates “Hero Pay” for Grocery Workers

    On February 23, 2021, the Los Angeles County Board of Supervisors voted 4-1 to institute a $5 per hour “Hero Pay” increase for frontline grocery workers and drug retailers in unincorporated areas of Los Angeles County. The increase is effective immediately and will remain in effect for 120 days. The ordinance will increase pay for approximately 2,500 grocery workers in these unincorporated areas of the County.

    The motion was co-sponsored by Supervisors Hilda Solis and Holly Mitchell. The motion states: “Frontline grocery and drug retail workers have been met with COVID-19 ...

    'Notice-Prejudice Rule' Ruling Could Provide New Arguments

    The “notice-prejudice rule,” often applied in the context of occurrence-type policies, requires an insurer to prove that the insured’s late notice of a claim has substantially prejudiced its ability to investigate the insured’s claim. This principle has been applied in the context of both first-party policies. Pitzer College v. Indian Harbor Ins. Co., 8 Cal. 5th 93 (2019), applying the notice-prejudice rule to a consent provision in a first-party policy) and third-party policies written on an “occurrence” basis. See, e.g., Campbell v. Allstate Ins. Co., 60 Cal. 2d ...

    Posted in Legal Bites
    FDA/USDA: No Transmission of COVID-19 Through Food/Food Packaging

    On February 18, 2021, Acting FDA Commissioner Janet Woodcock and Acting USDA Secretary Kevin Shea issued a joint COVID-19 update statement that current epidemiologic and scientific information available to the FDA and USDA indicates no transmission of COVID-19 through food or food packaging.

    The press release states: “Our confidence in the safety of the U.S. food supply remains steadfast. Consumers should be reassured that we continue to believe, based on our understanding of currently available reliable scientific information, and supported by overwhelming ...

    Department of Labor Proposes Delay on Tip Regulations and Independent Contractor Rule

    On February 5, 2021, the Department of Labor (DOL) published two notices of proposed ruling to delay the effective date of two rules finalized by the DOL under the Trump Administration regarding tips and independent contractor rules. The proposed delays are designed to allow the DOL “additional opportunity for review and consideration” of both rules.

    The first rule is Tip Regulations Under the Fair Labor Standards Act (“Tip Regulations”), which was published on December 30, 2020, and set to go into effect on March 1, 2021. The proposed rule would delay the effective date of ...

    Posted in Legal Bites
    Ninth Circuit Revives P.F. Chang’s “Krab Mix” Lawsuit

    On February 9, 2021, a divided Ninth Circuit Panel held that consumer claims against the P.F. Chang’s restaurant chain based on the term “Krab Mix” in certain menu items could proceed. The Court reversed a lower court decision that had thrown out these claims.

    Plaintiff’s claims arose from his purchase of P.F. Chang’s sushi rolls that are identified on the menu as being made with a “Krab Mix.” Plaintiff claimed that based on the “Krab Mix” name, he believed the items contained a mix of real crab and imitation crab. Plaintiff made claims based on California’s Unfair ...

    Employer Alert: New Compensation Threshold for Computer Software Overtime Exemption

    Effective January 1, 2021, the California Department of Industrial Relations issued a new compensation threshold for exempt computer software employees, reflecting an increase of 2% from last year. 

    To qualify for the overtime exemption, computer software employees must be paid a salary of at least $98,907.70 annually ($8,242.32 monthly) or an hourly wage of at least $47.48.  In addition, a computer software employee must also meet the duties test set forth in California Labor Code Section 515.5, which are also included in all Wage Orders except Orders 14 and 16.

    More specifically ...

    Posted in Legal Bites
    Restaurant Rescue Plan Approved by Senate

    On February 4, 2021, the Senate voted 90-10 to approve a Restaurant Rescue Plan as an amendment to a larger budget resolution. Senate Amendment 261 was co-sponsored by Republican Senator Roger Wicker and Democratic Senator Kyrsten Sinema. The amendment is part of a budget resolution passed by the Senate on February 5 that paves the way for passage of President Joe Biden's pandemic relief package.

    The Restaurant Rescue Plan establishes a $25 billion grant program for restaurants hurt by the pandemic and was based on the RESTAURANTS Act. The $25 billion in grants fall short of the $125 ...

    Can Receivers Reject Leases For The Benefit of Creditors?

    Q: I am a receiver in two different cases, both of which have problems. I was appointed in a partnership dispute case, where the only asset is a marijuana dispensary. I have been running the dispensary, but because of COVID-19 and the lease obligations; it is not making money. I am also receiver for a bar, owned by an LLC, some of whose members filed an action to dissolve and wind-up the LLC, due to allegations of mismanagement. Because of COVID-19, the bar has been closed and I have not been operating it, although I have possession of it. Both the dispensary and the bar have some valuable assets ...

    A Reminder: The IRS Mileage Rates Have Changed

    The 2021 mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes have decreased from last year, or remained unchanged. Specifically, as of January 1, 2021, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) are:

    • 56 cents per mile driven for business use, down one and one-half cents from the rate for 2020;
    • 16 cents per mile driven for medical or moving purposes, down one cent from the rate for 2019; and
    • 14 cents per mile driven in service of charitable organizations, unchanged from ...
    Posted in Legal Bites
    Can Product Reviews Be Subject To Lanham Act Liability?

    On January 22, 2021, a divided Ninth Circuit panel ruled that a nutritional guide could constitute commercial speech subject to the Lanham Act.

    The Lanham Act is best known for being the primary federal trademark statute in the United States. In addition to the trademark provisions, Section 43(a) of the Lanham Act creates a cause of action for false advertising and prohibits any person from misrepresenting his or another person’s goods or services in “commercial advertising or promotion.”

    In this case, defendant NutriSearch Corporation published a guidebook that compared ...

    Negligent Retention, Hiring Rulings Show Importance of Policy Language

    Where an employee of a company commits an intentional act, such as a battery or sexual molestation, the managers of that company are often named as defendants on a theory of “negligent supervision”, “negligent retention” or some other form of vicarious liability. While the company’s liability policy of insurance may contain exclusions which bar coverage for loss arising from the employee’s intentional act, the question arises whether the negligence claims against the managers or the company are nevertheless covered by liability insurance.

    The threshold question ...

    Posted in Legal Bites
    LA Announces New Outdoor Dining Rules

    The Los Angeles County Public Health Department issued a new order outlining protocols for businesses to follow. These new rules are designed to decrease COVID transmission risk in restaurant settings.

    Some of these new rules for restaurants include:

    • Employees that may come in contact with customers must wear both a face covering and a face shield at all times when interacting with customers and when in customer service areas.
    • Outdoor dining table seating must be limited to no more than 6 people per table, all of whom must be from the same household.
    • All establishments must post signage ...
    President Biden Issues Early Executive Order on COVID-19 Worker Safety

    On January 21, 2021, President Biden issued an Executive Order on Protecting Worker Health and Safety that calls for a government review of worker safety standards for COVID-19.

    The Executive Order directs the Secretary of Labor to issue revised guidance to employers on workplace safety during the COVID-19 pandemic within two weeks. It further directs the Secretary of Labor to consider emergency temporary standards on COVID-19 and issue those standards by March 15, 2021.

    The Executive Order calls for a review of enforcement efforts previously undertaken by the Occupational ...

    California Lifts Regional Stay at Home Order

    On January 25, 2021, the California Department of Public Health announced that it was lifting the Regional Stay at Home Order for all regions statewide, including Southern California. Four-week ICU capacity projections for the three regions still under the order (Southern California, Bay Area and San Joaquin Valley) were above 15%.

    According to the Department, “this action allows all counties statewide to return to the rules and framework of the Blueprint for a Safer Economy and color-coded tiers that indicate which activities and businesses are open based on local case rates ...

    LA County to Reopen Outdoor Dining

    On January 25, 2021, Los Angeles County Director of Public Health Barbara Ferrer announced that the county would be permitting outdoor dining starting Friday, January 29. The county will also remove operation restrictions for non-essential businesses between 10 p.m. and 5 a.m. The County’s announcement followed Governor Gavin Newsom’s lifting of the state’s Regional Stay at Home Order earlier today.

    LA County Board of Supervisors Chair Hilda Solis released a statement that “Los Angeles County will essentially align with the state, by the end of the week, to allow for the ...

    Posted in Legal Bites
    FDA Clarifies Food Traceability Rule and Extends Comment Period

    On January 12, 2021, the Food and Drug Administration (“FDA”) announced two updates to stakeholders regarding the agency’s Food Traceability Proposed Rule. 

    The Proposed Rule was initially announced on September 12, 2020, and it establishes additional traceability recordkeeping requirements for companies that manufacture, process, pack or store foods that the FDA has included on its Food Traceability List.

    First, the FDA announced clarifying edits to the Food Traceability List. All of the specific edits are described in a memo: “Food Traceability List for ...

    Posted in Legal Bites
    FDA Announces 2024 Compliance Date for 2021-2022 Food Labeling Regulations

    On January 4, 2021, the Food and Drug Administration announced that it would set January 1, 2024 as the uniform compliance date for final food labeling regulations that are issued in calendar years 2021 and 2022.

    In its Federal Register publication of the rule, the FDA stated: “Use of a uniform compliance date provides for an orderly and economical industry adjustment to new labeling requirements by allowing sufficient lead time to plan for the use of existing label inventories and the development of new labeling materials.”

    If any food labeling regulation involves special ...

    Posted in Business Law
    Consolidated Appropriations Act: Additional Paycheck Protection Program Loans

    Our previous articles have summarized the Paycheck Protection Program (“PPP”) created under the Federal CARES Act: CARES Act: Paycheck Protection Program Loans, CARES Act: Loan Applications, and CARES Act: Loan Forgiveness Applications

    This client alert provides information regarding the additional funding and guidelines for the PPP created by the new Consolidated Appropriations Act of 2021 (the “2021 Act”). Given this subject’s urgency and the complexity of the 2021 Act, this is simply a short summary to provide you a starting point for exploring relief that may ...

    Employer Reminder: Minimum Wage Increases for 2021

    On January 1, 2021, the California minimum wage increased to $14.00 per hour for employers with at least 26 employees and $13.00 per hour for smaller employers. The state minimum wage also governs the exempt employee threshold salary, which has increased accordingly. The new minimum salary for employees who otherwise qualify to be exempt from overtime is $58,240 annually for employers with at least 26 employees and $54,080 annually for employers with fewer than 26 employees. 

    Further, several California municipalities will raise their minimum wage rates on July 1, 2021. Employers ...

    LA County Considers Mandated $5/Hour “Hero Pay” Increase For Grocery Workers

    On January 5, 2021, the Los Angeles County Board of Supervisors considered an urgency ordinance requiring grocery stores to pay workers an additional $5/hour as “Hero Pay” due to the COVID-19 pandemic. 

    Supervisors Hilda Solis and Holly Mitchell put forth the motion and noted that “as the County experiences a record-breaking wave of COVID-19 cases, grocery retailers have experienced an increase in outbreaks with nearly 500 businesses currently under investigation in the County alone. The inability to practice social distancing consistently at work due to large crowds has ...

    Los Angeles County Issues Mandatory Self-Quarantine for Non-Essential Travel

    Effective beginning December 31, 2020, the Los Angeles County Department of Public Health published a Mandatory Directive on Travel (Appendix W) and issued a Revised Temporary Order, both of which require a mandatory quarantine of at least 10 days after non-essential travel outside the Southern California Region (the counties of Imperial, Inyo, Los Angeles, Mono, Orange, Riverside, San Bernardino, San Diego, San Luis Obispo, Santa Barbara and Ventura). 

    The Order and Travel Directive apply to Los Angeles County residents and non-residents who enter Los Angeles County from ...

    Posted in Legal Bites
    New Dietary Guidelines "Make Every Bite Count"

    On December 28, 2020, the U.S. Department of Agriculture and the U.S. Department of Health and Human Services released 2020-2025 Dietary Guidelines for Americans

    Dietary Guidelines have been published by the USDA and HHS every five years since 1980. The 2020-2025 Dietary Guidelines are the first to include nutritional guidance for babies and toddlers.

    The final 2020-2025 Dietary Guidelines rejected guidance from the advisory committee’s scientific report with regard to alcohol consumption and sugar intake. The committee had recommended that alcohol consumption guidance ...

    Southern California Regional Stay at Home Order Extended

    On December 29, 2020, California Health and Human Services Secretary Dr. Mark Ghaly announced that the Southern California region would remain under a regional stay-at-home order indefinitely until ICU capacity goes above 15%. ICU capacity is currently at 0% in Southern California.

    The Regional Stay Home Order was first announced on December 3, 2020. The order prohibits private gatherings of any size, closes sector operations except for critical infrastructure and retail, and requires 100% masking and social distancing except for certain limited exceptions. The order sets a ...

    Posted in Legal Bites
    Sources of Foodborne Illness Report Released

    On December 18, 2020, the Interagency Food Safety Analytics Collaboration (IFSAC) issued its 2018 Annual Report on the Sources of Foodborne Illness. 

    The report collects and analyzes foodborne-illness outbreak data for four pathogens - Salmonella, Escherichia coli O157, Listeria monocytogenes, and Campylobacter – and specific foods and food categories that are responsible for foodborne illnesses in the United States. The CDC estimates that, together, these four pathogens cause nearly two million cases of foodborne illnesses in the U.S. each year.

    The report found:

      New Lawsuits Challenge State COVID-19 Measures

      A lawsuit has been filed against Cal/OSHA regarding its recently instituted regulations requiring employers to adopt numerous COVID-19 measures. In addition, a separate suit was filed against Governor Newsom for the outdoor dining ban that is part of recent COVID-19-related regional restrictions. 

      Specifically, the National Federation of Independent Business (NFIB) teamed with the National Retail Federation and three NFIB small business owner members to sue the California Division of Safety and Health (Cal/OSHA), the California agency that recently instituted extensive ...

      Posted in Legal Bites
      FDA, EPA and USDA Renew Inter-Agency Food Waste Reduction Initiative

      On December 17, 2020, three U.S. agencies: The U.S. Environmental Protection Agency (“EPA”), U.S. Food and Drug Administration (“FDA”) and U.S. Department of Agriculture (“USDA”) announced the renewal of the Formal Agreement Among EPA, FDA and USDA Relative to Cooperation and Coordination on Food Loss and Waste. The renewed agreement has a three-year term.

      The Winning on Reducing Food Waste Federal Interagency Strategy prioritizes action areas to reduce food loss and waste. As related activities and projects are completed through 2020, the EPA, USDA and FDA will ...

      DOL Announces Final Tip Pooling Rule

      On December 22, 2020, the Department of Labor (“DOL”) announced a final rule revising its tipped employee regulations. The final rule is designed to address and incorporate amendments made to section 3(m) of the Fair Labor Standards Act (“FLSA”) by the Consolidated Appropriations Act of 2018 (“CAA”). That amendment prohibits employers from keeping tips received by their employees, regardless of whether the employer takes a tip credit. It also prohibits employers from allowing managers or supervisors to keep any portion of employee’s tips.

      In this final rule, the ...

      Posted in Legal Bites
      What the $900 Billion Stimulus Bill Means for the Food, Beverage and Hospitality Industry

      On December 21, 2020, Congress agreed to a $900 billion stimulus bill, passed as The Consolidated Appropriations Act, 2021 (“the Act”). The 5,593-page Act includes funds designated for direct relief, additional money for forgivable Paycheck Protection Loans and tax relief measures, but does not include funding specifically for restaurants or hotels.

      • Paycheck Protection Program Second Draw Loans: The Act sets aside $300 billion in additional Paycheck Protection Loans. Of that, $15 billion is earmarked for live entertainment venues and $20 billion is set aside for ...
      DOL Inspector General Report Criticizes Agency’s Tip Rule Process

      On December 11, 2020, the U.S. Department of Labor’s Office of the Inspector General (“OIG”) released a report finding that the Department of Labor (“DOL”) did not demonstrate that it followed a sound process in promulgating its 2017 tip rule.

      The DOL published a Notice of Proposed Rulemaking of the 2017 tip rule on December 5, 2017. The 2017 tip rule rescinded portions of the DOL’s 2011 tip regulations under the Fair Labor Standards Act, which were passed by the Obama Administration. In issuing the 2017 tip rule, the DOL stated that the 2011 tip rule incorrectly construed ...

      The Perils of Playing Hard Ball

      A recent case from California, Barickman vs. Mercury Casualty, 2 Cal.App.5th 508 (2016) illustrates the perils that may arise when an insurance company, evidently playing hardball with its insured, refuses to deviate from its “form” releases.

      In Barickman, the Mercury’s insured (McDaniel) injured two individuals (Barickmand and McInteer) in a car accident in which McDaniel was found to have been intoxicated while driving his car. McDaniel was criminally prosecuted and there was the possibility that McDaniel, as part of any sentence in the criminal proceeding, might be ...

      Judge Issues Preliminary Injunction Against Los Angeles County Outdoor Dining Ban

      Yesterday Judge James Chalfant issued a preliminary injunction against Los Angeles County’s outdoor dining ban on the basis that the county acted arbitrarily and failed to perform the required risk-benefit analysis. The case was brought by the California Restaurant Association and Mark Geragos to challenge the outdoor dining ban imposed by the November 30th Los Angeles County stay-at-home order.

      The Court held that L.A. County was required to perform a complete risk-benefit analysis before enacting the ban and that it failed to do so. The Court’s ruling noted that the L.A ...

      Posted in Legal Bites
      Cal-OSHA Issues Mandatory Emergency COVID-19 Regulations

      On November 30, 2020, Cal-OSHA’s proposed temporary COVID-19-related emergency regulations became effective. The new regulations, which are found here, will remain in effect until October 2, 2021, unless they are extended.

      The new regulations apply to most California employees, only excluding employees working from home, an employee at a site where the employee does not have contact with others and employees covered by Cal-OSHA’s Aerosol Transmissible Diseases standard (applies to certain healthcare facilities and labs).

      Under the new regulations, employers must ...

      California Imposes Regional Stay-at-Home Order

      On December 3, 2020, California Governor Gavin Newsom announced a new regional stay-at-home order.

      Under the order, California is divided into five regions: Northern California, Greater Sacramento, Bay Area, San Joaquin Valley and Southern California. Regions where the ICU capacity has gone over 85% will be placed into a Stay-at-Home order for a minimum of three weeks. After the three-week period, reopening of closed services will be based on four-week projections of regional ICU capacity.

      Southern California and three other regions are anticipated to reach 85% or more ICU ...

      App Companies Victorious in Prop 22 Fight

      On November 4, 2020, Uber, Lyft and Door Dash secured a victory in their expensive campaign to categorize app-based drivers as independent contractors. 55% of California voters voted in favor of Proposition 22, which means that app-based drivers will be considered independent contractors, and not eligible for employee benefits or protections.  

      The Lead-Up: California’s Independent Contractor Muddle

      For the past few years, California businesses have reeled from a California court decision and new laws, which dramatically limit the use of independent contractors ...

      CDC Announces Alternatives to 14-Day COVID-19 Quarantine

      Today, December 2, 2020, the United States Centers for Disease Control and Prevention (CDC) announced alternatives to the 14-day recommended quarantine for those exposed to COVID-19.

      For individuals exposed to COVID-19 who have not experienced symptoms, the CDC advises that quarantine can now end after 10 days if no COVID-19 test is taken, or after 7 days with a negative COVID-19 test.

      However, the CDC advises continued monitoring of symptoms for the full 14 days after exposure to the virus "especially if quarantine is discontinued early."  The CDC also recommends the full 14-day ...

      California Privacy Rights and Enforcement Act of 2020

      The California Privacy Rights and Enforcement Act of 2020 (the “CPRA”) expands the privacy rights and protections provided to California consumers pursuant to existing state law, including the California Consumer Privacy Act of 2018 (the “CCPA”). Businesses that are subject to the CPRA must comply with various notice obligations and requirements related to the collection, deletion, sale and sharing of personal information.

      This client alert provides a summary of some of the CPRA’s changes to the CCPA, the creation of the California Privacy Protection Agency and the ...

      LA County Announces New Stay at Home Order November 30-December 20

      Los Angeles County’s Public Health Department announced a new stay at home order, which goes into effect November 30, 2020 and will remain in place until December 20, 2020.

      Under the new order, all public and private gatherings with individuals from more than one household are prohibited, except for faith-based services and protests.

      The order states that restaurants, bars, breweries and wineries remain closed for in-person dining and drinking “because of high rates of transmission in the community.” The order states that one reason for the closure of in-person dining is ...

      LA County Halts Outdoor Dining

      On November 22, 2020, the Los Angeles County Department of Public Health announced that it would be shutting down all outdoor dining for a minimum of three weeks. The order will take effect on Wednesday, November 25 at 10 pm, and will be in place for at least the next three weeks.

      The Public Health Department stated that “new COVID-19 cases remain at alarming levels and the number of people hospitalized continue to increase, the Los Angeles County Health Officer Order will be modified to restrict dining at restaurants, breweries, wineries and bars as the five-day average of new cases ...

      Liability Insurance Coverage: Basic Principles - Part Two

      There are certain core principles that must be applied in analyzing coverage under a liability insurance policy.

      This two-part article sets out those principles. It also explores some counter-intuitive situations in which such coverage may come into play.

      Examples of Coverage in Counter-Intuitive Situations

      • Patent infringement
      • Business and IP disputes
      • Cyber-related risks
      • Trade dress claims
      • Unfair competition claims

      Patent Infringement

      • See, e.g., com International, Inc. vs. American Dynasty Surplus Lines Ins. Co., 120 Wash. App. 610 (2004) (patent infringement covered ...
      California Announces 10pm Curfew for One Month

      On November 19, 2020, California Governor Gavin Newsom announced a mandatory overnight stay-at-home order. Under the order, Californians in the purple tier of the state’s reopening guidance, which now includes Los Angeles, Orange County, Ventura County and San Diego County, will be prohibited from leaving their homes for nonessential activity from 10pm to 5am. The restriction goes into effect on November 21, 2020 and is scheduled to last until December 21, 2020, although it may be extended.

      The order requires “that all gatherings with members of other households and all ...

      Security Officers Can Now Remain On-Call During Rest Breaks; What This Means for All California Employers

      If your workforce includes private security officers, then new Assembly Bill 1512 should come as great news to you.  Back in 2016, the California Supreme Court issued a controversial decision called Augustus v. ABM Security Services, Inc. which held that ABM’s security officers were not afforded legally compliant, off-duty rest breaks as long as they were required to carry pagers and respond to emergencies on an “as needed” basis.  Citing the “public interest that security officers are able to respond to emergency situations without delay”, California’s new AB 1512 ...

      LA County Sets 10pm Curfew, Cuts Capacity for Restaurants, Retail and Offices

      On November 17, 2020, the Los Angeles County Board of Supervisors determined at a closed meeting that it would be setting a 10pm curfew for restaurants, bars, breweries, wineries, non-essential retail businesses and essential offices. These businesses will not be allowed to be open to the public for entry from 10pm to 6am. At this point it is unclear whether this restriction will also apply to takeout and delivery options.

      The LA Times and Daily News reported that restaurants, breweries and wineries operating outdoors will be limited to 50% maximum outdoor capacity. All indoor ...

      More Reopening Rollbacks in California

      On November 16, 2020, California officials pulled an “emergency brake” and announced that the state would be rolling back reopenings in 28 counties across the state. These changes will go into effect on Tuesday, November 17. Los Angeles County has consistently remained in the purple tier, which prohibits indoor dining, closes bars and breweries, and allows malls and retail at 25% capacity.  However, San Diego County, Ventura County and Orange County were in Tier 2 and have now moved into a more restrictive tier.

      Under California’s COVID-19 tier system, Tier 1 ...

      California’s AB 2143 Modifies Prohibition of No-Rehire Agreements 

      Remember Assembly Bill 749 last year? Basically, AB 749, codified as Code of Civil Procedure section 1002.5, prohibited the use of no-rehire clauses in settlement agreements regarding disputes in which the worker had filed a complaint against the employer. It only provided a single narrow exception to allow no-rehire clauses if the employer made a good faith determination that the employee engaged in sexual harassment or sexual assault. Our article regarding AB 749 can be found here.

      Employers have been largely dissatisfied with AB 749. They argue that AB 749 is overly restrictive ...

      Liability Insurance Coverage: Basic Principles

      There are certain core principles that must be applied in analyzing coverage under a liability insurance policy.

      This two-part article sets out those principles. It also explores some counter-intuitive situations in which such coverage may come into play.


      Insurance Liability

      • Hidden opportunities to obtain coverage in liability cases
      • Sometimes counter-intuitive
      • Often obscured by jargon and complexity
      • What strategies will assist in uncovering these opportunities?

      The 8 Key Points

      1. Law Tilted in Favor of Policyholders

      Liability insurance provides protection (i.e ...

      California Continues Effort to Hold Employers Accountable for Diversity In the Workplace through AB 979 and SB 973

      Building upon California’s prior efforts to increase diversity in the workplace, Governor Newsom has signed into law Assembly Bill 979 and Senate Bill 973.  AB 979 requires greater diversity on corporate boards of directors while SB 973 imposes pay reporting requirements based on gender, race, and ethnicity. Both laws will become effective on January 1, 2021.

      AB 979 applies to publicly held corporations headquartered in California, requiring them to diversify their boards of directors with directors from “underrepresented communities”.  AB 979 defines “director from ...

      Posted in Legal Bites
      City Moves to Make L.A. Al Fresco Program Permanent

      After the success and positive feedback for its “L.A. Al Fresco” program from customers and restaurant owners, the Los Angeles City Council is moving to make the initiative permanent.

      The L.A. Al Fresco Program was first announced in May 2020, as an initiative to make pandemic restrictions easier for restaurants by streamlining the process for outdoor permits. LA Al Fresco endeavors to help local food purveyors reopen safely and allow customers and employees to maintain physical distancing by temporarily relaxing the rules that regulate outdoor dining. LA Al Fresco allows ...

      Litigation Practice Meets Covid – The View From California

      The Covid-19 pandemic has had a profound and likely lasting impact on the way litigation lawyers conduct their practice. Below are some practical tips for managing in this new environment.

      Civil Trial Scheduling

      While our local Superior Court has not made an official announcement to this effect, it has been our experience that civil trials will be continued into 2021. This is in part because of the backlog of criminal and unlawful detainer cases, which have priority. While law and motion hearings have continued to proceed, these are all done remotely in our local Superior and US ...

      Posted in Legal Bites
      No Mask, No Service? 

      On November 9, 2020, the City of Los Angeles adopted an ordinance permitting businesses to refuse entry to anyone entering the premises without a face covering. 

      The ordinance adds Section 200.91 to the Municipal Code, which states: “[a]ny business owner or operator in the City of Los Angeles is authorized to refuse admittance or service to any person who refuses or fails to wear a Face Covering when on the premises of the business or when seeking or receiving service.”

      A face covering is defined as “a face covering that covers the nose and mouth and is secured to the head with ties or ...

      Posted in Legal Bites
      LA County Considers COVID-19 Recovery Charge

      On October 27, 2020, the Los Angeles County Board of Supervisors approved a recommendation to consider allowing restaurants, breweries, and wineries to temporarily charge a “COVID-19 Recovery Charge” for on-site dining.  The motion was proposed by Supervisor Hilda L. Solis.

      In the motion, Supervisor Solis stated: “The COVID-19 pandemic has affected the independent hospitality industry and its workers throughout the county. As of 2019, 8.8% of all workers in Los Angeles County worked in food service establishments & drinking places, employing 398,800 people. This ...

      Overcoming Intellectual Property Exclusions In Insurance Policies

      A key challenge for policyholders seeking coverage under commercial general liability, directors and officers and other insurance policies is the presence of the so-called “intellectual property exclusion.” In a typical formulation, this provision excludes from coverage claims “based upon or arising out of any actual or alleged infringement, contributory infringement, misappropriation or theft of any intellectual property rights by the insured, including, but not limited to patent, copyright or trademark, service mark, trade dress, trade dress, trade secret, or ...

      The Food, Beverage and Hospitality Industry & the Internet: Recent Developments

      Below is a summary of recent developments for the Food, Beverage and Hospitality industry in terms of Internet laws and regulations. To learn more about these issues and how they affect the industry, join us on October 28, 2020 for our Industry Debrief on the CCPA, CPRA, Data Security and Other Risks.

      Consumer Privacy and the CCPA

      In June 2018, California enacted one of the most comprehensive privacy laws in the country, the California Consumer Privacy Act of 2018 (the “CCPA”). The CCPA went into effect on January 1, 2020, and started to be enforced by the California Attorney General ...

      CDC Redefines “Close Contact” with COVID-19 Infected Individual

      On Wednesday, October 22, 2020, the Centers for Disease Control and Prevention (CDC) expanded the definition of a “close contact” with a COVID-19 infected person to include brief interactions over a 24-hour period. This expanded definition has important implications for the workplace and impacts all COVID-19 state and county health orders.

      Previously, the CDC defined a “close contact” to mean spending at least 15 minutes within six feet of an infectious person.  The new definition states that cumulative contact of 15 minutes or more within six feet of an infectious person ...

      #MeToobin? When Home and Work Collide

      Within hours, the sad story of Jeffrey Toobin became common knowledge. For those of you just emerging from a yoga retreat or a Dodgers-only-World-Series media frenzy, Jeffrey Toobin is (or was, as it remains to be seen what will ultimately happen with his employment status) a legal analyst for CNN and a writer for the New Yorker magazine. Highly respected and knowledgeable, Toobin’s comments on current legal events and issues were often both enlightening and insightful. Until Monday, when Jeffrey Toobin took the occasion of a Zoom call populated with numerous other New Yorker

      Posted in Legal Bites
      California Imposes Food Safety Requirements on Delivery Apps

      On September 18, 2020, California Governor Gavin Newsom signed AB-3336 into law. This law sets new safety standards for third-party delivery apps, including sanitation and temperature standards. These standards are consistent with the requirements for restaurants and stores, but this is the first time that third-party delivery apps have been specifically required to follow them.

      The law is codified at Section 113930.5 to the Health and Safety Code, which deals specifically with the transportation of food and which applies only to third-party food delivery platforms. 

      The law ...

      Posted in Legal Bites
      LA County Orders Probe of Fast Food Worker Safety

      On October 13, 2020, the Los Angeles County Board of Supervisors voted to investigate the working conditions in the fast-food industry. This motion was proposed by Supervisor Hilda L. Solis, and authorizes a specific probe into complaints at one fast food location, and a larger investigation into industry conditions throughout the county.

      This investigation was prompted by complaints made about a McDonald’s location in Boyle Heights.  SEIU Local 721 issued a letter about working conditions at that location, including inadequate personal protective equipment and infrequent ...

      AB 1281 Extends Employee Personal Information Exemption from Consumer Privacy Act

      Assembly Bill 1281 extends to January 1, 2022, the exemption for employee personal information from most requirements of California’s Consumer Privacy Act.  Under last year’s AB 25, this exemption was set to expire on January 1, 2021.  Having been signed by Governor Newsom, AB 1281 will effectively replace AB 25 commencing on January 1, 2021.

      The exemption allows businesses to collect and use a person’s information within the context of that person’s role or former role at the business. Employers still have the obligation to provide the employee or applicant with ...

      An Interview With Peter Selvin: Dispute Resolution 

      Lexology GTDT Market Intelligence provides a unique perspective on evolving legal and regulatory landscapes in major jurisdictions around the world. This interview discusses dispute resolution in the United States. 

      1. What are the most popular dispute resolution methods for clients in your jurisdiction? Is there a clear preference for a particular method in commercial disputes? What is the balance between litigation and arbitration?

      The principal alternatives to court litigation are arbitration and mediation.

      As to arbitration, there has been considerable appellate ...

      Posted in Legal Bites
      FDA Announces Virtual Public Meetings on Food Traceability Rule

      The FDA recently announced that it would be holding three virtual public meetings entitled “Requirements for Additional Traceability Records for Certain Foods; Proposed Rule.”

      The purpose of the public meetings is to discuss the proposed rule entitled “Requirements for Additional Traceability Records for Certain Foods,” which was issued under the FDA Food Safety Modernization Act (FSMA).  

      These public meetings are intended to facilitate and support the public's evaluation and commenting process on the proposed rule.  Interested participants are asked to submit ...

      Employer Alert: SB 1383 Requires Small Employers to Provide Family, Medical and Child Bonding Leave and Expands Family Member Care Leave

      Effective January 1, 2021, Senate Bill 1383 will significantly expand the California Family Rights Act (CFRA) to cover employers with at least 5 employees.  Previously, CFRA leave was required only of employers with at least 50 employees within a 75-mile radius.  Further, SB 1383 expands the CFRA with respect to purposes for which leave may be taken.

      With the enactment of SB 1383, employers with only 5 employees or more will have to provide employees who meet certain minimum service requirements with up to 12 workweeks of unpaid protected leave during any 12-month period for a number of ...

      Can the Bankruptcy Court Appoint a Receiver?

      Q: I am a Chapter 7 bankruptcy trustee. One of the assets of the bankruptcy estate is a note, which is secured by an apartment building, owned by the debtor’s brother. The note is in default and I have learned there are health and safety issues at the building. Another asset is the debtor’s interest in a partnership, where the brother is the managing partner. The brother is selling off interests in real property owned by the partnership, but not remitting any of the proceeds to me. I intend to file adversary proceedings to judicially foreclose on the note and to recover the ...

      Rulings Disagree: Is Loss of Use of a Leasehold 'Property Damage'?

      Is a party’s loss of use of a leasehold or other interest in real property considered “property damage” within the meaning of a comprehensive general liability (CGL) policy? Two recent cases go in different directions on this point.

      The starting point is the CGL’s Coverage A which typically provides coverage for “bodily injury and property damage liability”. In turn, “property damage” is typically defined to include the “loss of use of tangible property that is not physically injured”. The key question addressed by the following cases is whether a party’s ...

      Posted in Legal Bites
      California Enacts New Law Regulating Food Delivery Apps

      On September 24, 2020, Governor Newsom enacted AB-2149, the Fair Food Delivery Act of 2020. The new law prohibits food delivery platforms from arranging for the delivery of food delivery orders without the express authorization of the food facilities. 

      The law amends Business and Professions Code Section 22.4 to state: “[a] food delivery platform shall not arrange for the delivery of an order from a food facility without first obtaining an agreement with the food facility expressly authorizing the food delivery platform to take orders and deliver meals prepared by the food ...

      Courts Wrestle With Coverage of Cyber-Related Claims

      Cyber insurance is designed to fill an enterprise's coverage gaps, where coverage under other forms of in­surance may not be triggered by these kind of losses. At the same time, and because cyber insurance is a relatively new prod­uct, there are few reported cases involving coverage disputes. Importantly, those cases highlight the need for policyholders to scru­tinize the menu of available coverage grants in any proposed cyber insurance policy.

      While to date there has been relative­ly few reported cases involving cyber in­surance coverage disputes, there has been much ...

      Posted in Legal Bites
      L.A. County to Reopen Breweries and Wineries

      On September 27, 2020, the Los Angeles Board of Supervisors approved a motion to reopen breweries and wineries by October 6, 2020.  The reopening requires breweries and wineries to abide by strict safety guidelines, including but not limited to: outside operations, limited hours of operation, required reservations, appropriate social distancing, and all appropriate safety measures.  The motion directs the Los Angeles County Department of Public Health to begin with permitting outdoor, reservation-only seating at breweries and then create a plan to increase capacity.

      This ...

      A Win For Employers: Governor Newsom Vetoes AB 3216

      Despite significant pressure from labor groups and others, Governor Gavin Newsom vetoed Assembly Bill 3216 yesterday.  If it had been signed, AB 3216 would have created a right of recall for laid-off employees of hotels and event venues, as well as those working in building maintenance.  The bill was criticized by the Chamber of Commerce and others who felt that the legislation sought to further burden industries who were already struggling as a result of the pandemic. Although AB 3216 is now off the table, employers should not forget that certain right to recall ordinances have already ...

      Posted in Legal Bites
      RESTAURANTS Act Added to Updated Stimulus Bill

      On September 28, 2020, Democrats in the U.S. House of Representatives unveiled an updated coronavirus relief stimulus bill (the updated Heroes Act) that includes the RESTAURANTS Act.  The text of the bill is over 2,100 pages.

      Section 607 of the proposed bill incorporates the RESTAURANTS Act, which establishes a $120 billion program administered by the Treasury Department to provide restaurants, bars, food trucks, taprooms, taverns, caterers, taprooms and similar businesses.  

      The grant amount would reflect the difference between the business’s 2019 revenues and ...

      AB 2257: California Rewrites Independent Contractor Law…Again

      As promised, Governor Newsom signed Assembly Bill 2257 which effectively rewrites Assembly Bill 5, the flawed law which sought to codify and clarify the California Supreme Court’s ruling in Dynamex Operations West, Inc. v. Superior Court and took effect on January 1, 2020.  AB 2257 became effective upon signature.

      At approximately 14 pages in length, neither employees nor employers are likely to find AB 2257 any less confusing than its predecessor.  It does, however, make it easier for several categories of professions to work as independent contractors if certain conditions are ...

      Posted in Legal Bites
      FDA Proposes Rule for Food Traceability

      On September 21, 2020, the Food and Drug Administration announced a proposed rule to establish additional traceability recordkeeping requirements for companies who manufacture, process, pack, or store foods that the FDA has included on its Food Traceability List. This is an effort by the agency to help control outbreaks of foodborne illness.

      The Food Traceability List was first created in 2014 and currently includes: shell eggs, cheeses, nut butters, cucumbers, fresh herbs, leafy greens, melons, peppers, sprouts, tomatoes, fruits and vegetables, bivalve mollusks (oysters ...

      Insureds Seek Coverage For Breaches Under Traditional Policies

      There have been a number of high-profile insurance coverage cases arising from losses due to cyber fraud – especially data breaches, "spoofing'' and payment instruction fraud. While cyber insurance is specifically designed to address these kinds of losses, insureds covered under traditional insurance products such as commercial general liability, errors and omission and crime poli­cies have continued to seek coverage under those policies for cyber-related losses.

      For example, in a case filed on Nov. 15, Target seeks recovery for its cyber fraud-related losses from its ...

      New Law Extends Workers' Compensation Benefits To COVID-19 Victims

      Governor Newsom has signed Senate Bill 1159, a law that effectively codifies and expands his earlier Executive Order N-62-20, which had expired on July 5, 2020. Effective immediately, this bill defines “injury” for an employee to include illness or death resulting from COVID-19 under specified circumstances. In particular, the employee must have tested positive for or was diagnosed with COVID-19 within 14 days after the employee performed services at the employee’s place of employment and the work must have been performed on or after March 19, 2020, and on or before July 5 ...

      Reminder: Certain COVID-19-Related Layoffs and Shutdowns Require Cal-Warn Act Notice

      When considering an employee layoff or business shutdown, as we reported here, employers should keep in mind that longer layoffs in California will trigger Cal-WARN Act rules. Unlike its federal counterpart, California’s WARN Act has no exception for unforeseen business circumstances and requires every facility that employs or employed 75 or more persons within the last 12 months to give 60 days’ written notice to the employees and certain government officials before any mass layoff that will result in a loss of employment for 50 or more people in any 30 day period. Cal-WARN also ...

      Posted in Legal Bites
      Will The FDA Enforce Its New Nutrition Labeling Rule? 

      On September 18, 2020, the U.S. Food and Drug Administration announced additional flexibility for manufacturers to comply with the agency’s updated Nutrition and Supplement Facts labeling requirements. Those requirements go into effect on January 1, 2021. 

      The Nutrition and Supplement Facts labeling requirement marks a significant change in requirements for conventional foods and dietary supplements to provide updated nutrition information on the label to assist consumers in maintaining healthy dietary practices. The final rule updates the list of nutrients that are ...

      Posted in Legal Bites
      California Enacts COVID-19 Reporting Requirements for Employers

      On September 17, 2020, California Governor Gavin Newsom signed AB-685, which creates new COVID-19 reporting requirements for employers, increases mandatory public disclosure of COVID-19 outbreaks, and expands the powers of Cal/OSHA to cite and shut down employers with worksite infections in a streamlined process.

      The law requires all public and private employers that find out about workplace exposure to COVID-19 to provide written notification to employees and contractors who were on the premises at the same worksite during the infectious period within one business day of ...

      California Enacts Small Business Bills

      On September 9, 2020, California Governor Gavin Newsom signed three bills into law that were designed to provide support for small businesses, including restaurants and other food and beverage companies. 

      SB 1447 authorizes a $100 million hiring tax credit program for qualified small businesses. The hiring credit will be equal to $1,000 for each net increase in qualified employees, up to $100,000 for each qualified small business employer.  To qualify for the credit, the business’ gross income must have declined at least 50% over this time last year.

      AB 1577 excludes Paycheck ...

      Posted in The Real Dirt
      Not a Fraudulent Transfer...Even With Intent To Defraud?

      Until a recent appellate ruling, it appeared that, under California law, if a debtor made a transfer without receiving “reasonably equivalent value” in exchange, that transfer, by itself, could be — but need not be — a basis for finding there was “actual fraud” rendering the transfer voidable under the California Uniform Voidable Transfer Act (“UVTA”).

      Not anymore. In Universal Home Improvement, Inc., et al. v. Robertson, et al., 51 Cal. App. 5th 116 (June 24, 2020, modified July 21, 2020), the 1st District Court of Appeal held that, “[t]he ‘badges of fraud’ do ...

      Appellate Rulings Depart From Treaty Interpretation Norms 

      International treaties and conventions such as the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, November 15, 1965, 20 U.S.T. 361, T.I.A.S. No. 6638 (“the Hague Service Convention”), and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, 21 U.S.T. 2517, T.I.A.S. No. 6998 (“the New York Convention”) are considered to be federal law and hence prevail over inconsistent state common law. U.S. Const., art. VI, cl. 2: American Ins. Assoc. v. Garamendi, 539 U.S. 396 (2003). For ...

      California Expands Sick Leave and Mandates Handwashing Breaks for Food Sector Employees

      On September 9, 2020, California Governor Newsom signed AB-1867 as emergency legislation, meaning the law became effective upon his signature, with no waiting period. The law has three distinct parts: it expands California’s supplemental sick leave provisions for food sector workers, creates a new handwashing break requirement for food sector employees, and creates a pilot mediation program for small employers.

      AB-1867 is part of California’s larger effort to fill perceived gaps in paid sick leave mandates due to COVID-19.  In April 2020, Governor Newsom issued Executive ...

      Posted in Legal Bites
      Riverside County First to Implement California Home Cooking Legislation

      In September 2018, the California legislature passed AB-626, The Homemade Food Operations Act. The law was passed with widespread bipartisan support. AB-626 created a framework under which small-scale home cooks could legally sell food made in their kitchens to the public. The law defines a microenterprise home kitchen as a “food facility that is operated by a resident in a private home where food is stored, handled, and prepared for, and may be served to consumers” with no more than one full-time employee. Microenterprise home kitchens could generate up to $50,000 in gross ...

      California’s DFEH Issues Online Harassment Prevention Training for Supervisors

      By January 1, 2021, all California employers with five or more employees are required to have provided interactive harassment prevention training to all employees in California, both supervisory and non-supervisory. 

      Recently, California’s Department of Fair Employment and Housing (DFEH) released supervisory on-line harassment prevention training, which can be found here. Supervisory employees must receive at least two hours interactive harassment prevention training, which must be provided every two years, and within six months of hire or promotion to supervisory ...

      Posted in Legal Bites
      Made in USA Proposed Rule: FTC Commissioners’ Statements Show Rift as Comment Period Closes

      On June 22, 2020, the Federal Trade Commission issued a proposed Made in USA Rule regulating how businesses can advertise that their products are made in the U.S., and giving the agency discretion to impose civil penalties.

      The FTC’s Made in the U.S.A. enforcement program is based on Section 5 of the FTC Act, which governs deceptive acts and practices in commerce. It applies to a host of advertising and other claims about the U.S. origin of products. In 1994, Congress codified Section 5a, titled “Labels on products”. Section 5a applies to “a product with a ‘Made in U.S.” label ...

      California’s New Reopening Plan

      On August 31, 2020, California introduced a statewide blueprint for reopening during the COVID-19 pandemic designed to provide clear guidance and timelines for which industries may safely open. 

      The new system is color-coded and has four tiers, with Tier 1 being the highest risk of community disease transmission and Tier 4 the lowest risk. The four tiers are based on two factors: (1) the county’s positivity rate; and (2) the daily new cases for each 100,000 residents.

      The tiers are outlined below:

      • Tier 1 (purple/widespread): higher than 8% testing positivity rate; more than 7 daily ...
      Can Companies Be Liable If Third-Party Contractors Suffer Data Breaches?

      The California Consumer Privacy Act became effective on Jan. 1. Included among its provisions is the grant of a private right of action on behalf of any consumer “whose nonencrypted and nonredacted personal information … is subject to an unauthorized access and exfiltration, theft or disclosure as a result of the business’s violation of the duty to implement and maintain reasonable security procedures and practices.” Civil Code Section 1798.150.

      An interesting question is whether a company may face liability under this statute (or based on common law theories) where one ...

      Posted in Legal Bites
      LA City Council Extends Delivery Fee Cap

      On August 26, 2020, the Los Angeles City Council unanimously voted to extend the 15% cap on delivery fees charged to restaurants.  The fee cap was originally adopted on June 10, 2020, and was set to expire on August 31, 2020.

      The approved amendment to the Limit on Third-Party Food Delivery Service Fees Ordinance No. 186665 states that “the current sunset date of Aug 31, 2020 be amended to 90 days after restaurants are able to resume indoor dining capacity at 100 percent and that the ordinance would be in effect at any point if the restaurants are required to reduce indoor capacity due to the ...

      Employer Alert: U.S. Department of Labor Issues New FMLA Forms

      The U.S. Department of Labor has issued new, revised model Family and Medical Leave Act (FMLA) forms and notices.  The new FMLA forms and notices are intended to be more streamlined and convenient, and they include more explanatory language on various FMLA rights and requirements. 

      As an examples of the new explanatory language, the Rights and Responsibilities Notice adds information on the substitution of paid leave, the medical certifications of a serious health condition define the term “serious health condition,” and the Eligibility Notice defines the terms “spouse” ...

      Posted in Legal Bites
      “L.A. Al Fresco” Program Extended to End of 2020

      The City of Los Angeles announced that it has extended its “L.A. Al Fresco” program until the end of 2020. The program was designed to help restaurants reopen during the COVID-19 pandemic by offering a streamlined permitting program to turn sidewalks, parking lots, and other spaces into outdoor dining areas.

      Mayor Garcetti announced that 1,486 restaurants have received Al Fresco permits so far, including many small businesses. The most recent stage of the Al Fresco program, which began on June 26, 2020, has directed 55% of program resources to BIPOC (Black, Indigenous, people of ...

      Ruling May Shed Light On Physical Losses and COVID-19

      In the context of the numerous lawsuits have recently filed by policyholders seeking compensation for lost business income occasioned by the pending pandemic, a key issue will be whether those policyholders have suffered “direct physical loss or damage” to their businesses. A case decided earlier this year (albeit in a different factual context) sheds some light on whether this requirement can be satisfied in the present circumstances.

      In Nat’l Ink & Stitch, LLC vs. State Auto Prop. & Cas. Ins. Co.,  2020 WL 374460 (D. Md. Jan. 23, 2020), plaintiff policyholder was the victim of ...

      Posted in Legal Bites
      RESTAURANTS Act Gains Momentum

      A bi-partisan bill to aid restaurants is gaining momentum, with over 180 co-sponsors and additional endorsements announced in the past few weeks.  The bill is officially titled the Real Economic Support That Acknowledges Unique Restaurant Assistance Needed To Survive Act of 2020, but is better known as the RESTAURANTS Act of 2020 (“the Act”).

      The Act was introduced on a bipartisan basis in the Senate by Senator Roger Wicker and in the House of Representatives by Congressman Earl Blumenauer. The Act currently has 182 co-sponsors in the House. The National Restaurant Association ...

      Posted in Legal Bites
      FDA Issues New Gluten-Free Labeling Rule

      The FDA recently published a final rule to establish requirements for “gluten-free” labeling for fermented, hydrolyzed and distilled food.  The rule will go into effect on October 13, 2020, with a compliance date of August 13, 2021.

      Federal regulations define the term “gluten-free” to mean that the food bearing the claim does not contain: (1) an ingredient that is a gluten-containing grain; (2) an ingredient that is derived from a gluten-containing grain and that has not been processed to remove gluten; or (3) an ingredient that is derived from a gluten-containing grain and ...

      Exceptions to Insurers’ Right to Rescind for Inaccurate Information

      Life insurers faced with a claim for benefits within two years after policy inception will often conduct a post-claim investigation to ascertain whether the statements made by an applicant about his or her medical history and health habits were accurate. In those cases where an insurer determines that those statements were inaccurate, the insurer may seek to rescind the policy.

      But there are exceptions to the principle that inaccurate information in an application automatically gives the insurer an absolute right to rescind. Thus, while the general rule is that an insurer may ...

      Nevada Enacts New Hospitality Bill 

      On August 11, 2020, Nevada Governor Steve Sisolak signed Senate Bill 4, which sets new safety standards for the hospitality industry, provides some protections for hospitality workers, and provides for immunity for businesses who comply with statutory requirements. 

      In passing the law, the Governor noted the importance of the travel and tourism industry to the state.  Due to the pandemic, the hospitality industry lost over 130,000 jobs in April and May alone. 

      The law creates new safety requirements for the hospitality industry in Nevada. Public accommodation facilities, which ...

      President Trump Issues COVID-19 Executive Orders Impacting Employers

      On August 8, 2020, U.S. President Donald Trump signed a series of executive orders regarding the COVID-19 pandemic, which may impact certain employers: 

      Deferral of certain payroll tax obligations for the period from September 1, 2020 through December 31, 2020: The order directs the Secretary of the Treasury to defer certain employee payroll taxes for bi-weekly wages that are generally less than $4,000.00 (under approximately $104,000.00 annually).

      This order delays the 6.2% of wages that employers currently withhold from employee wages in every paycheck that is then paid to ...

      Los Angeles County Proposes that Employees Report COVID-19 Violations through Public Health Commissions

      On July 21, 2020, the Los Angeles County Board of Supervisors approved a motion to enforce the monitoring of compliance with County health orders by encouraging workers to directly report health code violations through employee “public health councils.” Supervisors Sheila Kuehl and Mark Ridley-Thomas co-authored the motion, which could have a significant impact by placing employees, rather than public health inspectors, at the front lines of enforcing public health orders.

      The Board noted that workplace transmission has been a significant factor contributing to the ...

      Posted in Legal Bites
      USDA Announces New Rule to Fight Organic Fraud

      On August 5, 2020, the Agricultural Marketing Service of the U.S. Department of Agriculture published a proposed rule designed to strengthen the agency’s oversight and enforcement of the production, handling, and sale of organic agricultural products.  Currently, organic products are eligible for a USDA seal, but there have been concerns of fraud due to the complexity of the organic produce supply chain.  For instance, in August 2019, the U.S. Attorney’s Office in Iowa announced that four individuals were sentenced for their role in a $120 million organic fraud scheme, in which ...

      Posted in Legal Bites
      USDA's 2020 Dietary Guidelines

      The U.S. Department of Agriculture released an online-only first print of the Scientific Report of the 2020 Dietary Guidelines Advisory Committee.

      The 2020 Scientific Report has two unique features that are new from previous years. First, the Committee took a “lifespan approach” in reviewing evidence. The Committee reviewed the period from birth to age 24 months and also conducted a review of diet and health issues in pregnancy and lactation. Second, the Committee focuses on dietary patterns based on growing evidence that components of a dietary pattern may have interactive ...

      CalSaver Deadline Approaches for Large Companies to Register or Certify as Exempt

      By September 30, 2020, all California companies with more than 100 employees must register with the CalSavers Retirement Savings Program (CalSavers) or certify that they are exempt.

      Employers without employer retirement plans must register to begin offering the state-mandated employer retirement plan to their employees.  Those employers offering retirement plans to their employees need only certify as exempt.  

      The link to the CalSaver website to register or certify as exempt is here.

      Smaller employers have phased-in deadlines to register or certify as exempt. Employers with ...

      Los Angeles County Proposes that Employees Report COVID-19 Violations through Public Health Commissions

      On July 21, 2020, the Los Angeles County Board of Supervisors approved a motion to enforce the monitoring of compliance with County health orders by encouraging workers to directly report health code violations through employee “public health councils.” Supervisors Sheila Kuehl and Mark Ridley-Thomas co-authored the motion, which could have a significant impact by placing employees, rather than public health inspectors, at the front lines of enforcing public health orders.

      The Board noted that workplace transmission has been a significant factor contributing to the ...

      Posted in Legal Bites
      New Outdoor Dining Permits Available for LA County Restaurants

      The Los Angeles County Department of Public Works recently released information about its COVID-19 Temporary Outdoor Dining Program. The program is designed for restaurants in unincorporated Los Angeles County that are interested in temporarily expanding dining seating into private walkway and parking lots. More than 2,653.5 square miles or 65 percent of Los Angeles County is unincorporated.

      The Department provides streamlined applications for restaurants interested in offering dining services on a public sidewalk, in the on-street parking area, in a public alley, or on a ...

      Posted in Legal Bites
      Your Food Delivery Worker May Soon Be Certified

      On July 21, 2020, the Los Angeles County Board of Supervisors announced that it would be considering a county-wide requirement for food delivery workers to obtain a food handler certification. The Board noted that food delivery network companies, including Instacart and Uber Eats, are essential businesses during the COVID-19 pandemic, and they rely on independent gig workers. 

      The Motion, put forward by Supervisors Hilda Solis and Sheila Kuehl, sought more information on the feasibility and costs of requiring these workers to obtain a food handler certification in order to ...

      Posted in Legal Bites
      Grocery Stores and Restaurants Taking a Bite Out of Climate Change and Food Waste

      Save the planet and feed the children? No, these are not the aspirations of a beauty contestant but the objective of legislation that was passed in the Golden State.  In 2016, Governor Jerry Brown signed into law SB 1383. The law is designed to fight climate change by aiming to reduce methane gas emissions produced by organic waste in landfills by 75 percent by 2025.  The law provides regulation changes necessary to reduce food waste by implementing programs to recover food that would otherwise be thrown away and getting it to organizations that help fight hunger.  The target aims to recover ...

      U.S. Department of Labor Issues New Model COBRA Notices and Extends COBRA Deadlines

      The United States Department of Labor (DOL) issued new model COBRA Notices primarily to highlight that an individual may enroll in Medicare instead of COBRA continuation coverage after his or her group health plan coverage ends. The new COBRA model notices point out that it may be advantageous to enroll in Medicare before, or instead of, electing COBRA. They also explain that if an individual is eligible for both COBRA and Medicare, electing COBRA coverage may impact enrollment into Medicare as well as certain costs to the individual. 

      The model general notice for single-employer ...

      Posted in Legal Bites
      Quick Service Restaurants Required to Make Composting/Recycling Bins Available to Customers for Food Waste

      On July 1, 2020, a 2019 California law requiring restaurants, malls and other businesses to make composting and recycling bins accessible to customers officially went into effect. Full-service restaurants are exempt from the bill if employees sort organic waste. However, quick or limited-service restaurants and all other businesses that generate organic waste and subscribe to recycling or composting services must make bins accessible to customers.

      Assembly Bill 827 mandates that businesses that are already required to subscribe to recycling or composting services under ...

      Posted in Legal Bites
      California’s Single-Use Plastic Bag Ban Is Back

      Governor Gavin Newsom’s temporary suspension of California’s ban on single-use plastic bags at grocery stores was allowed to expire, effectively fully reinstating the ban and requiring grocery stores to charge customers at least 10 cents a bag for plastic bags, and to permit customers to bring reusable bags. 

      Newsom issued an executive order on April 22, 2020 to suspend the state’s 2016 plastic bag ban for 60 days based on concerns about the COVID-19 virus spreading from shoppers bringing reusable bags into grocery stores. The order expired on June 22, 2020. 

      The order suspended ...

      Posted in Legal Bites
      California Closes Bars and Indoor Dining Statewide

      On July 13, 2020, Governor Gavin Newsom announced that restaurants across the state must cease indoor operations.  All bars, both indoor and outdoor, are ordered to close statewide. Restaurants may continue to offer outdoor dining and takeout.  Additionally, all indoor operations at wineries and tasting rooms are ordered to cease. Previously, indoor dining and bars were closed in many of the state’s most populous counties, including Los Angeles.

      In addition to restaurants, the state is ordering thirty counties to close indoor operations at fitness centers, malls, offices for ...

      California Issues Guidance For Restaurants Providing Outdoor Dining, Takeout, Drive-Through and Delivery 

      Adding to an already impressive list of industry specific guidelines, the California Department of Health and the Department of Industrial Relations/Cal-OSHA have issued an Industry Guidance for Restaurants Providing Outdoor Dining, Takeout, Drive-Through, and Delivery. Restaurants are instructed to consult the COVID-19 County Roadmap for more information on reopening in particular counties within the state. In addition, the guidance reminds all business owners that the guidance is not dispositive and that other state and local health orders and guidelines may apply ...

      Reopening Rollback!

      On July 13, 2020, Governor Gavin Newsom announced a significant rollback of California’s reopening and ordered 30 of the most populous counties in the state to cease indoor operations. The order includes closing indoor operations at malls, offices for non-critical sectors, places of worships, hair salons, fitness centers and personal care services. The affected counties as of July 13, 2020 include Los Angeles, San Diego, Ventura, Santa Barbara and Orange. A full list is available here

      Additionally, Newsom issued a statewide order closing indoor operations for restaurants ...

      Posted in Legal Bites
      LA County Cracks Down on Restaurants Violating COVID-19 Health Orders

      On July 7, 2020, the Los Angeles County Board of Supervisors passed a motion to fine LA County businesses, including restaurants, for violations of COVID-19 public health orders, and to shut businesses down for non-compliance in as little as two health inspector visits. The motion was proposed by Supervisors Shelia Kuehl and Janice Hahn. 

      In explaining the urgency of passing the motion, the proposal states: “on the weekend of June 27-28, inspectors found that 49% of bars and 33% of restaurants were not adhering to physical distancing protocols indoors and that 54% of bars and 44% of ...

      Posted in Legal Bites
      FTC Issues Proposed Rule for Made in USA Labeling

      On June 22, 2020, the Federal Trade Commission issued a proposed Made in USA Rule regarding when businesses can advertise that their products are made in the U.S., and giving the agency discretion to impose civil penalties.  The proposed rule has not yet been published in the Federal Register, but the agency has invited businesses to file public comments regarding their feedback.

      Under the Rule, advertisers would be prohibited from making unqualified Made in USA claims unless the following three factors are met.  First, final assembly or processing of the product occurs in the United ...

      Posted in Legal Bites
      California Orders Restaurants to Halt Indoor Dining

      On July 1, 2020, Governor Gavin Newsom ordered restaurants in nineteen California counties, including Los Angeles County, to cease indoor operations for at least three weeks, until July 22, 2020.

      The nineteen counties affected by the Governor’s order represent 70% of the California population. They are Contra Costa, Fresno, Glenn, Imperial, Kern, Kings, Los Angeles, Merced, Orange, Riverside, Sacramento, San Bernardino, San Joaquin, Santa Barbara, Santa Clara, Solano, Stanislaus, Tulare and Ventura counties.

      In addition to restaurants, the order requires that wineries ...

      Governor Newsom Closes Indoor Dining in Los Angeles County and 18 Other Counties

      In his press conference today, July 1, 2020, Governor Gavin Newsom ordered restaurants in Los Angeles County and 18 other CA counties to cease indoor dining operations for at least the next 3 weeks. The order was in response to a large increase in COVID-19 positivity and hospitalizations in these counties.

      Restaurants may remain open for outdoor dining, pick-up or delivery. On Sunday, June 28th, the State also ordered bars to close in Los Angeles and 6 other counties.

      In addition to indoor dining, wineries and tasting rooms, movie theaters, indoor family entertainment businesses ...

      Posted in Legal Bites
      Bars, Tasting Rooms and Breweries Ordered to Close

      On June 28, 2020, California Governor Gavin Newsom ordered that bars in seven California counties close. These counties are: Los Angeles, Fresno, Kern, San Joaquin, Tulare, Kings and Imperial. 

      The state has also recommended, but not ordered that eight other counties issue local health orders closing bars: Contra Costa, Santa Clara, Sacramento, Riverside, San Bernardino, Ventura, Santa Barbara and Stanislaus.

      The order and recommendations are a result of an increase in new cases and hospitalizations across the state.

      Following the order, the Los Angeles County Department of ...

      Posted in Legal Bites
      FDA Permits Temporary Flexible Food Labeling

      Food manufacturers are playing a crucial role during the COVID-19 crisis by supporting various essential businesses and keeping products on the shelves for consumers. The pandemic has disrupted their day-to-day operations and required new protocols for sanitation, social distancing in the workplace, and the distribution of products that are high in demand. Additionally, food manufacturers are required to comply with strict labeling regulations designed to keep consumers fully informed about the contents of their food. These regulations required that manufacturers alter ...

      Business Interruption Insurance Coverage: A Guide for Restaurants

      Restaurants whose operations have been shut down due to the coronavirus crisis are looking to their business interruption or business income insurance policies for relief, and have found resistance from insurance companies paying these claims.

      As a general matter, in order to trigger coverage those policies require (1) direct physical loss or damage; (2) to covered property: (3) arising from a covered peril; and (4) resulting in the suspension of the business’ operations.

      In cases where coverage is triggered, an insured business may be entitled to recover the net income it would ...

      California Privacy Rights Act Qualifies for November Ballot

      California's Secretary of State announced that the California Privacy Rights Act (“CPRA”) has qualified for the state's November ballot. Real estate mogul, Alastair Mactaggart, has done it again.  After successfully getting the California Consumer Privacy Act of 2018 (“CCPA”) passed by Sacramento in record time for fear that the CCPA would be on the November 2018 ballot, Mactaggart has once again obtained the required 623,212 signatures to do the same with the CPRA in 2020. If passed, the CPRA would build on the underlying principles of the CCPA by permitting consumers to ...

      Posted in Legal Bites
      California Legislature Advances Bill to Regulate Food Delivery Platforms

      California’s legislative season is in full swing, and the California State Assembly and State Senate are advancing bills that will affect the food, beverage, and hospitality industry, with a focus on the restaurant industry.

      State legislators have shown an interest in regulating food delivery platforms. Several cities, including San Francisco and Los Angeles, have capped delivery fees that these platforms, including Grubhub, Door Dash, Uber Eats and Postmates, can charge restaurants at least for the duration of the COVID-19 pandemic.

      Concerns have also been raised by ...

      California DFEH Online Harassment Prevention Training for Non-Supervisors Now Available—and It's Free!

      By January 1, 2021, California employers with five or more employees are required to have provided interactive harassment prevention training to all employees in California, both supervisory and non-supervisory. After considerable delay, California’s Department of Fair Employment and Housing (DFEH) recently released online training to meet the harassment training requirement for non-supervisors. The training is provided at no cost to employers. 

      The non-supervisory online harassment prevention training can be found here. Online training for non-supervisors is ...

      Supreme Court Decides LGBTQ Are Protected From Workplace Discrimination

      In a landmark 6-3 ruling, the Supreme Court of the United States held that workplace discrimination on the basis of an employee’s LGBTQ status is in violation of Title VII of the Civil Rights Act of 1964.  The Court’s opinion can be found here.

      Until now, workers in more than half the states lacked legal protection from employment discrimination based on their LGBTQ status.  The Court’s decision rests on a strict reading of Title VII’s prohibition of discrimination on the basis of “sex”.  It concludes that extending that “sex” prohibition to include discrimination on the ...

      Los Angeles County Issues Reopening Protocols for Non-Essential Businesses

      Los Angeles County issued protocols that the non-essential businesses listed below must follow in connection with reopening. 

      Prior to reopening, each of these businesses must implement and complete the applicable protocol found below, and post a copy of the completed protocol at all public entrances to its facility.

      Additionally, each protocol requires certain signage be posted to alert the public about various COVID-19 safety measures that must be followed, and that similar information be included on the business website.  In some cases, businesses must communicate to their ...

      California Extends Paid Family Leave Benefit Period from 6 to 8 Weeks

      Beginning July 1, 2020, the maximum benefit period under California’s Paid Family Leave (PFL) program will increase from 6 weeks to 8 weeks during any 12-month period.  The PFL program, which is a part of California’s state disability insurance program, provides partial wage replacement benefits to workers who take time off from work:

      • To care for a seriously ill child, spouse, parent, grandparent, grandchild, sibling, or domestic partner; or
      • To bond with a minor child within one year of the birth or placement of the child through foster care or adoption.

      The PFL program does not ...

      California Consumer Privacy Act: Training and Record-Keeping

      The fourth and final part of this CCPA client alert series focuses on certain training and record-keeping requirements pursuant to the CCPA.

      The California Consumer Privacy Act of 2018 (the “CCPA”) and the related proposed Attorney General Regulations (the “Regulations”) provide California consumers with increased privacy rights and protections with respect to their personal information. Businesses that are subject to the CCPA must comply with various notice obligations and requirements related to the collection, deletion and sale of personal information. The ...

      California Consumer Privacy Act: Service Providers

      Part three of this CCPA client alert series focuses on the obligations for service providers pursuant to the CCPA.

      The California Consumer Privacy Act of 2018 (the “CCPA”) and the related proposed Attorney General Regulations (the “Regulations”) provide California consumers with increased privacy rights and protections with respect to their personal information. Businesses that are subject to the CCPA must comply with various notice obligations and requirements related to the collection, deletion and sale of personal information. The California Attorney General ...

      Posted in Legal Bites
      “L.A. Al Fresco” Program Launched

      The City of Los Angeles has launched an “L.A. Al Fresco” Program aimed at helping restaurants reopen while following COVID-19 physical distancing guidelines. 

      The program will allow restaurants to use their sidewalk and private parking lots spaces to increase their outdoor dining capacity.  Through the program, the City will offer streamlined, immediate approval for eligible restaurants to provide outdoor dining in sidewalks and private parking lots.  The approval will also allow restaurants to serve alcohol in these areas.

      L.A. Al Fresco was launched on May 29, 2020 and the ...

      California Consumer Privacy Act: Handling Consumer Requests

      Part two of this CCPA client alert series focuses on how to verify and respond to consumer requests.

      The California Consumer Privacy Act of 2018 (the “CCPA”) and the related proposed Attorney General Regulations (the “Regulations”) provide California consumers with increased privacy rights and protections with respect to their personal information. Businesses that are subject to the CCPA must comply with various notice obligations and requirements related to the collection, deletion and sale of personal information. The California Attorney General intends to begin ...

      California Issues Guidance To Reopen Schools

      Running out of things to do during the COVID-19 crisis? 

      You are in luck. Yesterday the California Department of Education released a lengthy, 55 page guidance on the reopening of public schools. You can find the guidebook for the safe reopening of California's public schools here. Enjoy!

      This blog is presented under protest by the law firm of Ervin Cohen & Jessup LLP. It is essentially the random thoughts and opinions of someone who lives in the trenches of the war that often is employment law–he/she may well be a little shell-shocked. So if you are thinking “woohoo, I just landed some ...

      Posted in Taxing Matters
      Like-Kind Exchanges In A COVID-19 World (And What To Do About The Sharon Mitchell Decision)

      COVID-19 is wreaking havoc worldwide. It has even infected the real estate industry, particularly the tax aspects of operating in the real estate industry such as Section 1031 like-kind exchanges.

      The basics of like-kind exchanges remain unchanged, notwithstanding COVID-19: No gain is recognized if real property held for productive use in a trade or business or for investment is exchanged solely for real property of a like kind to be held for such purposes. But with deferred and reverse exchanges being the norm and simultaneous exchanges being the exception, it is now virtually ...

      California Consumer Privacy Act: Covered Businesses and Required Notices

      The California Consumer Privacy Act of 2018 (the “CCPA”) and the related proposed Attorney General Regulations (the “Regulations”) provide California consumers with increased privacy rights and protections with respect to their personal information. Businesses that are subject to the CCPA must comply with various notice obligations and requirements related to the collection, deletion and sale of personal information. The California Attorney General intends to begin enforcing the CCPA and the Regulations on July 1, 2020.

      This client alert provides a summary of the ...

      California Insurance Department Issues Civil Unrest Insurance Coverage Fact Sheet

      To assist California business owners with insurance coverage questions concerning damages relating to the current civil unrest, the Department of Insurance issued a Fact Sheet, found here.

      The Fact Sheet includes the types of coverage that may apply to damages due to civil unrest and tips for businesses with claims.

      This blog is presented under protest by the law firm of Ervin Cohen & Jessup LLP. It is essentially the random thoughts and opinions of someone who lives in the trenches of the war that often is employment law–he/she may well be a little shell-shocked. So if you are thinking ...

      Posted in Legal Bites
      LA City Council Caps Delivery Fees at 15%

      On June 3, 2020, the Los Angeles City Council adopted an ordinance capping third-party food delivery services fees at 15% for the duration of the COVID-19 public health emergency. The ordinance will become part of the City’s Municipal Code.

      The new ordinance makes it unlawful for a third-party food delivery service to charge a restaurant a fee per online order of more than 15% of the purchase price of the order. The ordinance is designed to protect the restaurant industry during the COVID-19 pandemic, when dine-in was prohibited. The ordinance is set to expire 90 days after the ...

      Los Angeles City and County Issue Dine-In Restaurant Guidelines for Reopening

      On Friday, May 29th, both the City of Los Angeles and the County of Los Angeles announced that dine-in restaurants are permitted to reopen. Both the city and county have also issued guidelines for restaurants to follow in the reopening of their dine-in operations.

      The County of Los Angeles’ protocols for the reopening of on-site dining for restaurants and other permanent retail food operations are found here.

      At this time, bars are not permitted to reopen except for food take-out orders, but they are covered in the city’s guidelines for planning purposes. Further, the State of ...

      Los Angeles County Announces Dine-In Restaurants, Hair Salons and Barbershops May Reopen

      Today, May 29, 2020, the County of Los Angeles announced that it will move further into Phase 2 reopening by permitting dine-in restaurants, hair salons and barber shops to reopen.  This decision came after the County learned it received a variance from the State of California to allow this action. Los Angeles County has moved at a much slower pace than most California counties due to its higher number of COVID-19 cases and deaths.

       Los Angeles County also announced it will be posting new restaurant guidelines later today.  Restaurants may open for in-house dining when the County posts ...

      Los Angeles County Enacts COVID-19 Worker Protection Ordinances

      The Los Angeles County Board of Supervisors has followed the lead of the Los Angeles City Council by passing COVID-19 right of recall and worker retention ordinances that are similar to the City of Los Angeles COVID-19 recall and retention ordinances passed on April 29, 2020. The county right of recall ordinance requires certain janitorial, maintenance, security service and hospitality employers, when rehiring, to offer jobs based on seniority to certain workers laid off during the COVID-19 pandemic. Both ordinances are intended to assist workers in unincorporated areas of Los ...

      Posted in Business Law
      CARES Act: Loan Forgiveness Applications

      Our previous articles summarized the new Paycheck Protection Program (“PPP”) created under the Federal CARES Act: CARES Act: Loan Applications and CARES Act: Paycheck Protection Program Loans

      This client alert provides new information regarding a key aspect of the PPP program, namely the criteria which must be met to have repayment of all or part of a PPP loan forgiven. This is simply a summary of some key points, so check with your attorney at ECJ for the critical details governing PPP loan forgiveness.

      The Treasury Department has published an application form for loan ...

      Governor Newsom Relaxes California Guidelines for Business Reopening

      On Monday, May 18, 2020, Governor Gavin Newson announced relaxed state guidelines for Phase 2 reopening of dine-in restaurants, offices, outdoor museums, shopping centers and malls. The relaxed guidelines would permit 53 of California’s 58 counties to move into Phase 2 reopening. However, with its higher infection and death rate, it is not expected that Los Angeles County will be ready for Phase 2 in the immediate future. 

      Instead of the prior guideline of having no deaths within the last 14 days, under the new state guidelines, COVID-19 hospitalizations cannot increase more than ...

      In Case You Missed It: New State Guidelines For Reopening Dine-In Restaurants, Offices and Malls

      This week Governor Newsom announced new guidelines for the Phase 2 reopening of dine-in restaurants, offices, outdoor museums, shopping centers and malls. The date for reopening of these establishments will be determined by the COVID-19-related circumstances of the county in which the business is located. To reopen dine-in restaurants, offices and malls, a county must receive a variance from the state, through self-certification and state approval. 

      Specifically, a California county seeking to start Phase 2 must prove to the state: that it has no new COVID-19 case per 10,000 ...

      Los Angeles County Issues New Order Permitting Certain Businesses To Reopen

      On Wednesday, May 13, 2020, Los Angeles County issued an updated “Safer at Home” order that amends and supersedes prior Los Angeles County Health Officer orders. The new order is intended to partially move Los Angeles County into the second stage of reopening businesses.

      The businesses now permitted to reopen can do so only for curbside, door side, or other outdoor or outside pick-up, or delivery.  Members of the public cannot be permitted inside these businesses.  Businesses permitted to open on this basis are retailers not located in indoor malls or shopping centers, and ...

      DOL Extends COBRA Deadlines In Response to COVID-19 National Emergency

      On May 4, the U.S. Department of Labor (DOL) and Internal Revenue Service (IRS) jointly issued a new final rule that temporarily extends time frames in which eligible employees can elect COBRA health insurance coverage and begin making COBRA premium payments. The final rule extends COBRA deadlines to 60 days after the end of the declared COVID-19 national emergency, or a different date if the DOL and IRS provide a different date in future guidance.

      To help participants and beneficiaries understand the new rule, the DOL also posted a new set of FAQs.     

      This blog is presented under protest by ...

      California Extends Workers’ Compensation to COVID-19

      Earlier today, Gov. Gavin Newsom signed an executive order extending workers’ compensation insurance coverage to essential workers who test positive for coronavirus or are diagnosed with COVID-19 by a physician. The order establishes a rebuttable presumption that any essential worker contracted the virus on the job and is, therefore, eligible for workers’ compensation benefits. This presumption effectively places the burden of proof on companies or insurers to prove that the essential worker did not get sick at work in order to permissibly deny coverage. The order applies ...

      Los Angeles Enacts COVID-19 Right of Recall and Retention Ordinances

      On Wednesday, April 29, 2020, the Los Angeles City Council passed a COVID-19 Right of Recall Ordinance requiring certain hospitality, janitorial, property management and tourism employers, when rehiring, to offer jobs based on seniority to certain workers laid off during the COVID-19 pandemic.  At the same time, the council also passed a COVID-19 Worker Retention Ordinance. Both ordinances are intended to assist workers in sectors which have been especially hard hit by the coronavirus crisis and both ordinances had been approved in concept in the prior week subject only to ...

      Large Food Sector Employers Must Provide Supplemental Paid COVID-19 Sick Leave

      To address fears that food sector workers are more likely to work when sick, Governor Gavin Newsom recently issued Executive Order N-51-20, which requires large food sector employers (500+ employees in U.S.) to provide up to 2 weeks of supplemental paid sick leave to workers, including independent contractors, who are unable to work due to the following COVID-19-related reasons:

      • the worker is subject to a federal, state, or local quarantine or isolation order related to COVID-19;
      • the worker is advised by a health care provider to self-quarantine or self-isolate due to concerns ...
      Action Alert: Los Angeles County Right of Recall and Worker Retention Ordinance

      On Tuesday, May 12th, the Los Angeles County Board of Supervisors will be considering a countywide Right of Recall and Worker Retention ordinance. As with the Citywide Right of Recall and Worker Retention ordinances, these policies would negatively impact businesses, prevent them from making decisions based on their financial situation, and lengthen our road to recovery after the COVID-19 pandemic.

      Click here to read the coalition letter from the Valley Industry & Commerce Association.

      Call and email the Board of Supervisors

      Supervisor Hilda Solis: First District; ...

      Los Angeles County Expands Paid Sick Leave Requirements For COVID-19

      In a move which largely mirrors the steps taken by the City of Los Angeles, the Los Angeles County Board of Supervisors has voted to extend certain paid sick leave requirements of the Families First Coronavirus Response Act to employees working within Los Angeles County for private employers that employ 500 or more persons in the United States. The ordinance is effective immediately and will expire on December 31, 2020. 

      The ordinance applies to all persons who perform work for a covered employer within the County of Los Angeles and specifies that all such persons are presumed to be ...

      Los Angeles City Council Votes for Worker Retention and Recall Rules

      On Wednesday, April 22nd, the Los Angeles City Council voted to have a right of recall ordinance drafted that would require certain hospitality, janitorial, property management and tourism employers when rehiring to notify workers laid off during the COVID-19 pandemic.

      Under the proposed ordinance, a business would be required to provide notices to laid-off workers that it is rehiring, and to rehire based on seniority. Workers would have a 10-day period in which to respond, and an employer would have 15 days to respond to employee claims that they had inadequate opportunity to be ...

      Taking Employees’ Temperatures During the COVID-19 Pandemic

      Employers can take employees’ temperatures to respond to and manage the COVID-19 pandemic. The Equal Employment Opportunity Commission has stated in its updated guidance that the COVID-19 crisis permits employers to measure employees’ body temperatures before allowing them to enter the worksite. Indeed, the Centers for Disease Control recommends in its community mitigation framework that workplaces in areas with “minimal to moderate risk” implement regular temperature and respiratory checks. 

      How to Conduct Temperature Checks

      As for the precise temperature to ...

      Action Alert - The LA City Council Is Attempting to Place Unprecedented Hiring Rules on the Private Sector

      As we recently reported, the Los Angeles City Council is considering implementing hiring restrictions and requirements on the private sector.  If passed, these ordinances with exponentially increase the difficulties already faced by businesses throughout Los Angeles as a result of the COVID-19 crisis.  There are several motions pending, each of which will adversely impact employers.  Given the importance of the issue, we are reposting the following from the Beverly Hills Chamber of Commerce:

      Action Alert! On Wednesday, April 22 at 10 am, the Los Angeles City Council is meeting to ...

      Action Alert: Los Angeles City Council Wants to Assert Control Over Businesses

      The message below has been reposted from the Valley Industry & Commerce Association.

      On Wednesday, April 22, the Los Angeles City Council will be considering a Right of Recall ordinance that is exclusively directed towards businesses in the hospitality industry - including hotels, janitorial, stadiums, airport services and event centers.

      Hospitality Right of Recall and Worker Retention Ordinance

      The Hospitality Recall Ordinance would:

      • Require businesses that have discharged employees to offer those discharged employees all positions which become available for which the ...
      Coronavirus And The Reluctant Employee

      You have a business that is permitted to continue operations and is not subject to a “stay at home” order.  You have informed employees of this fact.  You have even provided employees with a letter setting forth specific information on why they are allowed to continue working and traveling to and from work to show authorities or anyone else who might ask.  Nevertheless, you have one or more employees who do not want to work because of COVID-19 and are asking to stay home.  What do you do?

      If you are a business with 500 or fewer employees, you first need to find out why these employees are asking to ...

      Calculating Paid Leave Under The Families First Coronavirus Response Act

      To calculate the amount to be paid for employee leave under the Families First Coronavirus Response Act, it is clear that employees who take advantage of FFCRA paid leave must be paid what they would ordinarily earn in a workweek. Their ordinary workweek earnings are based on their regular rate of pay, including the base rate for any overtime hours worked, but not any premium pay. An employee should only receive paid leave for the hours they are normally scheduled to work. Accordingly, an employer must first determine both the regular rate of pay and the appropriate work schedule in order ...

      What Small Businesses Need To Know About The Families First Coronavirus Response Act

      If your business has fewer than 50 employees, you may qualify for the small business exemption to a portion of the Families First Coronavirus Response Act (FFCRA).  Specifically, small businesses with fewer than 50 employees may be exempt from the requirement to provide leave due to school closings or childcare unavailability if those FFCRA leave requirements would jeopardize the viability of the business as a going concern.  In other words, the small business exemption only excuses the employer from providing paid leave for reason no. 5 on the official FFCRA Notice, which all ...

      Posted in Taxing Matters
      CARES Act: Tax Relief for Businesses

      The Coronavirus Aid, Relief, and Economic Assistance Security Act (“CARES Act”), signed into law on March 27, 2020, provides significant relief provisions for small businesses by making changes to certain tax provisions enacted under the 2017 Tax Cuts and Jobs Act (“TCJA”). This client alert briefly summarizes these changes which may provide relief to businesses immediately, prospectively and retroactively. In addition, we will share some insights on the practical applications of these rules to help you identify which may be relevant to your business.

      • Net Operating ...
      City Council Approves Expansion Of Paid Sick Leave Requirements For COVID-19

      The Los Angeles City Council has voted to extend the requirements of the Families First Coronavirus Response Act to employees working within the City of Los Angeles for employers that employ 500 or more persons in the United States. The ordinance applies to all employees who have been employed with the same employer from February 3, 2020 through March 4, 2020, and provides up to 80 hours of paid sick leave benefits to full-time workers calculated based on the employee’s average two week pay over the period of February 3, 2020 through March 4, 2020. Employees who work less than 40 hours per ...

      Posted in Business Law
      CARES Act: Loan Applications

      On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law, and it includes significant relief provisions for small businesses. Our previous articles summarized the new Paycheck Protection Program (“PPP”) and the expansion of the Economic Injury Disaster Loan (“EIDL”) Program

      This client alert provides new information regarding PPP loan and EIDL applications. Given this subject’s urgency and the complexity of the CARES Act, this is simply a short summary to provide you a starting point for exploring relief which ...

      Posted in Business Law
      CARES Act: Economic Injury Disaster Loans

      On March 6, 2020, Congress passed an act deeming the COVID-19 pandemic a disaster eligible for the SBA’s Economic Injury Disaster Loan (“EIDL”) Program.  On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law, providing significant relief provisions for small businesses, including user-friendly modifications to the EIDL Program.   

      This client alert briefly summarizes certain provisions which greatly expand, for the period between January 31 and December 31, 2020 (the “Covered Period”), the number of ...

      Posted in Business Law
      CARES Act: Paycheck Protection Program Loans

      The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), signed into law on March 27, 2020, provides significant relief provisions for small businesses. This client alert briefly summarizes certain provisions of a newly-created loan program—the “Paycheck Protection Program”—which may help your business weather this storm. Given this subject’s urgency and the complexity of the Act, this is simply a short summary to provide you a starting point for exploring relief which may be available to you. Check with your attorney at ECJ for the critical details ...

      My grandmother used to say that one of the biggest lies told in America was the statement: “I’m from the government, and I’m here to help”. Grandma was a bit of a pessimist. But the Department of Labor has issued, and continues to add segments to, a very helpful and rather lengthy question and answer page that provides guidance for employers on implementing the paid sick and family leave requirements under the new Families First Coronavirus Response Act, set to take effect on April 1, 2020. This information is particularly useful in light of the fact that the DOL has not yet provided ...

      CARES Act Provides Relief For COVID-19 Individuals and Businesses

      At 880 pages in length, “comprehensive” does not seem to do it justice. But the Coronavirus Aid, Relief and Economic Security Act is, in a word, comprehensive. Coming on the heels of the Families First Coronavirus Response Act which focused primarily on relief for employees, the CARES Act seeks to provide both individuals and businesses with immediate relief, and a path forward, as we look to a future following the COVID-19 pandemic.

      Individual Relief

      Many individuals will receive a check directly from the government. Specifically, individual adults making less than $75,000 in ...

      Business Interruption Insurance Coverage in the Age of Coronavirus

      Businesses whose operations have been shut down due to the coronavirus crisis rightly look to their business interruption or business income policies for relief. As a general matter, in order to trigger coverage those policies require (1) direct physical loss or damage; (2) to covered property: (3) arising from a covered peril; and (4) resulting in the suspension of the business’ operations.

      In cases where coverage is triggered, an insured business may be entitled to recover the net income it would have received but for the interruption and its operating expenses during the time ...

      Special Action Alert  - Oppose LA City Council's Attempt to Require Companies to Hire and Layoff Based on Seniority

      The below message has been posted with permission from the Beverly Hills Chamber of Commerce. 

      Tomorrow, Friday, March 27th, the Los Angeles City Council is having an emergency remote meeting to consider a new policy to require businesses to lay-off and rehire employees businesses based on seniority.  Under this proposal, businesses need to have “just cause” to terminate an employee, businesses must lay off employees based on seniority and if businesses recall employees it must be done based on seniority.

      Click here to see Item No. 2 on the LA City Council ...

      Employers Must Use This Notice for the Families First Coronavirus Response Act

      The Department of Labor released the required notice for the Families First Coronavirus Response Act today.  All employers covered by the FFCRA must post the notice in a conspicuous place to advise all current employees of their rights under the Act.  The FFCRA, which was passed by Congress and signed by President Trump last week, expands employee leave laws in response to the COVID-19 crisis.  (For more information on the FFCRA, see earlier “What Employers Need To Know About The Families-First Coronavirus Response Act” article on this blog.) 

      Since many workforces are currently ...

      To assist California employers in understanding the possible application of benefits available to workers in response to the COVID-19 crisis under both state and federal law, we provide the following handy chart:

      Click Here to view a print-friendly version of the chart. 

      Posted in ECJ Blogs
      Coronavirus Advice for Creditors

      During this unprecedented time of uncertainty, landlords, financial institutions, vendors, suppliers, and other creditors will undoubtedly be affected. Due to the closure of most businesses which are considered non-essential, it is inevitable that ordinary business obligations such as rent, payments for equipment or inventory financing, employees, and creditors will not be made. It is just a matter of time before business owners default, and creditors will be faced with a problem that unless immediately addressed will only become larger. Some of the obvious signs that a ...

      COVID-19: How to Determine If Your Business Should Remain Open 

      There is a fair amount of confusion among California businesses regarding Governor Newsom’s “stay home” order and which facilities should remain open.  Unfortunately, Executive Order N-33-20 does not provide much guidance. It does, however, refer to the list of federal government's critical infrastructure sectors posted by the Department of Homeland Security and except those individuals “needed to maintain the continuity of operations” of those sectors. In addition, the state’s website clarifies that critical government services, schools, childcare, and ...

      What Employers Need To Know About The Families First Coronavirus Response Act

      The coronavirus pandemic has presented challenges for employers trying to remain responsive to the crisis but also struggling to absorb the burden it has imposed on their businesses. With much anxiety, employers have also been anticipating a new law, H.R. 6201, to go into effect that would expand family and medical leave requirements to cover COVID-19. As of yesterday, Congress passed and President Trump signed the final version of H.R. 6201, titled the Families First Coronavirus Response Act.

      The Act will take effect on April 1, 2020 and will remain effective until December 31 ...

      Coronavirus And The Magic Of The Furlough

      As employers struggle to cope with the impact of coronavirus 2019 (COVID-19), we have encountered a surprising number of employers who have been led to believe that a “furlough” is an employer option that can be implemented without regard for various laws that might otherwise apply. It is not. To be blunt, while the term “furlough” seems to be a more employee-friendly word for what many employers are doing, there is no magic to it. Indeed, until the California Legislature or Congress pass more comprehensive COVID-19 relief legislation, employers must still comply with all ...

      Urgent: Governor Newsom Issues Executive Order to Address Cal-Warn Concerns In Coronavirus Crisis 

      In an effort to address some of the issues presented by California’s WARN Act in connection with the COVID-19 crisis, Governor Newsom has issued Executive Order N-31-20 partially suspending certain provisions of Cal-WARN.  As we reported here, the wording of California’s WARN Act exposes employers temporarily closing or engaging in layoffs due to COVID-19 to liability for back pay, the value of benefits, penalties of $500 per day and attorneys’ fees.  Unlike the federal WARN Act, California’s version has no exception for unforeseen business circumstances and requires ...

      What Employers Should Know About The Coronavirus 

      Given the level of concern regarding the coronavirus, providing employees with reliable information and establishing both a prevention plan and a plan to follow if illness occurs is a good way to avoid panic and help ensure a healthy workplace. 

      The Centers for Disease Control (CDC) recently held a press conference to provide an update on the current status of the coronavirus (COVID-19). The CDC published a fact sheet as well as steps to follow if you are sick with the coronavirus. Both publications can be distributed to employees along with a memo outlining steps for prevention and ...

      Proposed Fair Scheduling Act of 2020 Will Impose Fines and Additional Pay for the Failure to Provide Advance Notice of Worker Schedules

      Senate Bill 850, also referred to as the Fair Scheduling Act of 2020, would require grocery stores, restaurants and retail stores to provide employees with 21-day work schedules, at least seven calendar days in advance.

      Employers must pay a worker not exempt from overtime a “modification pay” for each previously scheduled shift that the employer cancels or moves to another date or time, each previously unscheduled shift that the employer requires an employee to work, and for each on-call shift for which an employee is required to be available but is not called into work.  If less ...

      California Legislature Scrambles to Amend AB 5, The Independent Contractor Disaster

      Assembly Bill 5 became effective on January 1, 2020. The law purports to prevent the misclassification of employees as independent contractors by codifying the ABC test established by the California Supreme Court case of Dynamex Operations West, Inc. v. Superior Court of Los Angeles (2018) 4 Cal.5th 903, along with several other tests and requirements which apply to various types of business relationships. In short, the law is very confusing.  Indeed, by all accounts, AB 5 is flawed, perhaps seriously so. Several lawsuits have been filed to challenge its terms and the California ...

      Can A Receiver Legally Divert Mail?

      Q:  A bank obtained a judgment against me, as a result of a failed business venture. While I have a house, there is no equity above my homestead exemption. I’ve little else, although the bank’s attorney has repeatedly accused me of hiding assets and having interests in businesses and assets owned by my brother and uncle. The bank’s attorney was able to convince a judge to appoint a receiver “in aid of execution” to help the bank collect its judgment. I just found out the receiver has diverted all the mail that is delivered to my house, including not only mail addressed to me, but also ...

      New Law Requires that California Employers Provide Two Different Notices of Any Deadline to Withdraw Funds from A Flexible Spending Account

      Effective January 1, 2020, Assembly Bill 1554 requires that California employers notify employees who participate in a flexible spending account, including a dependent care flexible spending account, a health flexible spending account or adoption assistance flexible spending account, of any deadline to withdraw funds before the end of the plan year. More specifically, the law requires that two different forms of notices be delivered, one of which may be electronic. The forms of notice may include, but are not limited to the following: email, telephone, text message, postal mail ...

      Breaking News: Federal Court Grants Preliminary Injunction To Block AB 51 Employment Arbitration Law

      U.S. District Court Judge Kimberly Mueller just granted a preliminary injunction to block Assembly Bill 51 throughout future court proceedings, which will examine the enforceability of the new law.  This is welcome news for California employers because it means that the status quo remains in effect: Employers can continue to require arbitration agreements as a condition of employment for their employees unless and until the court rules otherwise.   

      To recap the brief but controversial history of this new law, AB 51 was originally supposed to become effective on January 1, 2020 but ...

      A Reminder: The IRS Mileage Rates Have Changed

      The 2020 mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes have decreased from last year, or remained unchanged. Specifically, as of January 1, 2020, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) are:

      • 57.5 cents per mile driven for business use, down one half of a cent from the rate for 2019;
      • 17 cents per mile driven for medical or moving purposes, down three cents from the rate for 2019; and
      • 14 cents per mile driven in service of charitable organizations.

      The IRS ...

      Update: AB 51 Employment Arbitration Law Remains On Hold

      Assembly Bill 51, the controversial law that would have prevented employers from requiring employees to enter arbitration agreements, has been put on hold until at least January 31, 2020.  As reported in this blog last week, the law was supposed to go into effect on January 1st, but before that could happen U.S. District Judge Kimberly Mueller issued a temporary restraining order (TRO) pending a hearing on a motion brought by a coalition of businesses that sought to prevent the bill from taking effect.

      The motion hearing took place last Friday, January 10th.  During the hearing, Judge ...

      Judge Orders Emergency Halt of AB 5 for Truck Drivers

      A federal judge issued a temporary restraining order on Tuesday, December 31st, to halt enforcement of California’s Assembly Bill 5 (AB 5), regarding truck drivers, only hours before the law went into effect on January 1, 2020.  AB 5, often referred to as the gig worker law, codifies and expands the “ABC” test set forth in Dynamex Operations West, Inc. v. Superior Court, making it much harder for companies to claim workers are independent contractors.

      Although AB 5 exempts a number of professions and services from the ABC test, truck drivers are not included among the exemptions ...

      Judge Orders Emergency Halt of AB 51 Employment Arbitration Law

      A federal judge issued a temporary restraining order on Monday, December 30, to halt enforcement of California’s Assembly Bill 51 (AB 51), which was scheduled to go into effect on January 1, 2020. AB 51 would have prevented employers from requiring employees to enter arbitration agreements as a condition of their employment for claims brought under California’s Fair Employment and Housing Act and the Labor Code. AB 51 also would allow workers to pursue damages and attorneys’ fees and open employers up to criminal enforcement of up to six months imprisonment for violating AB ...

      SB 707: California Continues to Attack Arbitration Agreements

      Although popular with employers as a method to expedite the resolution of disputes and reduce costs, arbitration is unpopular with plaintiff’s lawyers and, apparently, the California Legislature. As we wrote about here, Assembly Bill 51 prohibits employers from requiring that employees submit disputes to binding arbitration as a condition of employment. The attack on arbitration agreements continues with Senate Bill 707, set to become law on January 1, 2020. 

      SB 707 applies to employment or consumer arbitration agreements and requires that the drafting party pay any fees and ...

      20 Steps To Avoid Employment Lawsuits

      I have been asked by more than one frustrated California employer how to avoid or reduce employment lawsuits. It is not an easy question to answer as there are many variables that go into generating employment law claims. However, in no particular order, what follows is a list of strategies and steps to consider to implement an effective claim reduction plan:

      1. Document, document, document: Documenting employee issues and the employer’s response is a big part of disproving claims. Indeed, a consistent practice of documenting issues can even be used to indicate that something did not ...
      AB 749: Because California Needs More Lawsuits

      Assembly Bill 749 is an unnecessary law that will only serve to incentivize more lawsuits between former employees and employers.  Effective on January 1, 2020, AB 749 will prohibit an agreement to settle an employment dispute from containing a provision that prohibits a settling party from working for the employer against which he or she filed a claim, or any parent company, subsidiary, division, affiliate, or contractor of the employer. The law states that provisions in settlements signed after January 1, 2020 will be void as a matter of law and against public policy.

      AB 749 seems ...

      Unlimited Vacation Policies: Are They Right For Your Business?

      I am frequently asked about the pros and cons of having an unlimited vacation policy. To begin, I do not think it works for every category of worker, nor does it work for every type of company. When it does work, it usually is applied only to executive or professional types of workers, and only then in an atmosphere where such workers are employed in situations where co-workers or clients depend on consistent performance, such that there is always pressure to perform and deliver services in a timely fashion. Workers who work autonomously for extended periods of time may not be as ...

      Ask the Receiver: Using the Barton Rule or the Younger Doctrine to Dismiss Cases When Sued as Receiver

      Q: I am a health and safety receiver appointed over property that had numerous code violations and was rat infested. The court ordered me to bring the property into the code compliance and, eventually, to sell the property to pay for the repairs and my fees. The owner has now sued the city and me in federal court alleging her civil rights were violated and to prevent me from selling the property. What is the best way to get rid of her federal lawsuit?

      A: This seems to happen often in health and safety receivership cases. The defendants must be reading the same online posts. The normal method ...

      California Court of Appeal Concludes Premium Wage Must Be Paid at the Base Hourly Rate

      In Ferra v. Loews Hollywood Hotel, LLC, the California Court of Appeal considered the method for determining the amount of the one hour of pay at the employee’s “regular rate of compensation” for each workday in which an employer fails to provide a meal, rest or recovery period as required by Labor Code Section 226.7. In recent years, plaintiffs have argued in class actions that the method for determining the “regular rate of compensation” under 226.7 must be the same as that used for calculating the “regular rate of pay” for overtime purposes under Labor Code Section 510 ...

      California Bans Mandatory Employment Arbitration Agreements

      Effective January 1, 2020, Assembly Bill 51 will prohibit employers from requiring employees to waive forum or procedure rights under the Fair Employment and Housing Act or the Labor Code in favor of arbitration as a condition of employment, continued employment or the receipt of any employment-related benefit. AB 51 also prohibits an employer from retaliating against any employee who refuses to consent to the waiver of such rights. For the sake of clarity, the new law states that an agreement that permits an opt-out of a waiver or which requires any affirmative action on the part of the ...

      Ask the Receiver: Can you be liable for your opponent's attorney's fees if you lose a receivership motion?

      Q: I am a partner in a partnership. Because of what I contend were misdeeds and mismanagement by the managing partner, I filed suit to dissolve the partnership and for damages. I immediately filed a motion to have a receiver appointed to run the partnership business and safeguard the partnership assets during litigation. Unfortunately, the judge denied my motion because she stated receiverships are harsh and costly remedies and that at such an early stage in the proceeding a receivership was premature. My partner has now filed a motion seeking attorney’s fees based on his ...

      Employer Alert:  AB 1804 Requires Immediate Reporting of Serious Occupational Injury, Illness or Death By Phone or Online

      On August 30, 2019, Governor Newsom signed into law AB 1804, which requires employers to immediately report any serious occupational illness, injury or death to the California Division of Occupational Safety and Health, by telephone or by an online mechanism to be established for this purpose.  Until the online mechanism is available, employers may report by telephone or email.  Failure to report is subject to a $5,000 civil penalty.  This new law becomes effective January 1, 2020.

      This requirement is in addition to the existing employer requirement to report any workplace injury or ...

      Great News for Employers: The Harassment Training Deadline Has Been Extended!

      On August 30, 2019, Governor Newsom signed into law SB 778, which delays by one year the new harassment training requirement imposed by last year’s SB 1343.  As a result, employers with five or more employees or independent contractors will have until January 1, 2021, rather than January 1, 2020, to provide harassment training to all managerial and non-managerial employees within six months of hire or promotion.  In addition, harassment training must be provided to temporary or seasonal employees, employees hired for less than six months, independent contractors, volunteers ...

      Partner Kelly Scott Quoted in Law360 Regarding the CROWN Act and Its Impact on Employers

      Kelly O. Scott, Partner and head of Ervin Cohen & Jessup’s Employment Law Department, was recently quoted in the Law360 article entitled, “Hair Bias Bans Mean Employer Grooming Rules Need Review.” The article takes a closer look at the CROWN Act (Create a Respectful and Open Workplace for Natural Hair), which was signed into California law on July 3, 2019, by Governor Gavin Newsom. California and New York, which enacted a similar law, became the first two states to recognize the connection between racial discrimination and policies that limit appearances, including natural ...

      California Court of Appeal Agrees Employer Does Not Have To Pay For Shoes...This Time

      Krista Townley was a server at BJ’s Restaurants, Inc. As a server, Townley was required to wear black, slip-resistant close-toed shoes pursuant to company policy.  Townley purchased a pair of canvas shoes that complied with the policy.  She was not reimbursed by BJ’s. What happened next?  You guessed it: Townley filed a class and representative action under the Private Attorneys General Act of 2004 (Lab. Code, § 2698 et seq.) which sought civil penalties on behalf of herself and other "aggrieved employees" for Labor Code violations.

      In her lawsuit, Townley claimed that an ...

      Business Guide to the California Consumer Privacy Act of 2018: Five Steps in Preparation for Compliance

      Does your business collect personal information from California residents?  A person’s name, address, email address, social security number, and driver’s license number are all considered personal information. What about digital information? Does your website track consumers’ browsing histories, search histories, or their interactions with your website or digital advertisements? How about information related to a consumer’s employment history or education? All of the aforementioned are deemed to constitute personal information under the California Consumer ...

      Employer Reminder: California Employers Without Employee Retirement Plans Must Offer State Retirement Program

      Beginning as early as June 30, 2020, California employers with 5 or more California-based employees not already offering an employer-sponsored retirement plan will have to begin offering a retirement savings program, either through the private market or by facilitating access to CalSavers, the state-run program.

      The CalSavers program, established under SB 1234 in 2012, is intended to assist the estimated 7.5 million California employees without employer retirement savings plans. A pilot program was undertaken in late 2018, and beginning July 1, 2019, eligible ...

      Additional EEO-1 Data Must Be Submitted By September 30

      Employers with at least 100 employees, and federal contractors with contract of at least $50,000 and 50 or more employees, are well aware of the EEO-1 report requirement. EEO-1 reports are due on March 31 of each year and include data on employee race/ethnicity and gender, called “Component 1” data.  Component 1 data is submitted through a web portal maintained by the Equal Employment Opportunity Commission and is used by the EEOC and the Office of Federal Contract Compliance Programs to gauge compliance with federal equal opportunity laws. This year’s deadline was extended ...

      California Consumer Privacy Act Update: Ongoing Efforts by the Attorney General and California Senate To Refine the CCPA Through Rulemaking and Amendments

      As required by the California Consumer Privacy Act of 2018 (the “CCPA”), the California Attorney General’s Office (the “AG”) is hard at work crafting regulations related to the CCPA to be implemented by July 1, 2020.  The CCPA will go into effect on January 1, 2020, but the AG’s enforcement will not be initiated until later that year.  In the meantime, consumers and businesses alike are anxiously awaiting the AG’s first draft of the regulations.  The AG’s regulations are intended to clarify certain ambiguities in the CCPA and outline and implement rules for businesses to ...

      In a Ponzi Scheme Are Referral and Broker Fees Recoverable?

      Q: I am a receiver in a Ponzi scheme case. While I know I can sue to recover excess payments made to investors in the scheme, the false profit they were paid, per Donell v. Kowell, 533 F3d 762 (9th Cir. 2008), in my case large sums were paid as referral or broker fees to get investors to invest. Are those payments recoverable in the Ninth Circuit?

      A: Yes. While there has been split in cases across the county on the issue, the majority view has been such payments are fraudulent transfers, because no “value” is given for the services rendered. Compare, Warfield v. Byron, 436 F3d 551, 560 (5th Cir ...

      Employer Alert: New Law Prohibits Employment Discrimination Based on Natural Hairstyles

      On July 3, 2019, Governor Gavin Newsom signed into law Senate Bill 188, the Crown Act (Create a Respectful and Open Workplace for Natural Hair).

      The text of the law includes an explanation for its purpose. In pertinent part, SB 188 states that the “history of our nation is riddled with laws and societal norms that equated ‘blackness,’ and the associated physical traits, for example, dark skin, kinky and curly hair to a badge of inferiority, sometimes subject to separate and unequal treatment.” It goes on to state that the societal understanding of “professionalism was, and ...

      Employer Alert: City of Los Angeles Minimum Wage Increase on July 1st

      On July 1st, the City of Los Angeles will raise the minimum wage for employers with at least 26 employees to $14.25, and for employers with fewer than 26 employees to $13.25.

      In determining whether this increase applies to a particular employee, employers should know that it is not where an employee lives, nor where an employer is based, that determines the minimum wage that must be paid.  Rather, it is where the employee works that matters.  All employees working in a particular week for at least 2 hours within the City of Los Angeles are entitled to payment of the applicable minimum wage under ...

      Department of Fair Employment and Housing Issues New Family Leave Form

      The California Department of Fair Employment and Housing (DFEH) recently issued a new Certification of Health Care Provider form that employers may use for medical certification when an employee requests leave under the California Family Rights Act (CFRA) or the Family and Medical Leave Act (FMLA), due to the employee’s or the employee’s family member’s serious health condition.

      This form is particularly useful to California employers for the reason that, unlike the Department of Labor FMLA health care provider certification forms, the DFEH form excludes questions ...

      The Proper Procedure for A Receiver Hiring Counsel to be Paid by the Receivership Estate

      Q: I am a receiver, but not an attorney. During the receivership some legal matters came up and I used my in-house counsel and an outside attorney to handle the matters. My order of appointment states I can hire attorneys, but does not specifically state who. I have filed my final account and report and the defendant is objecting, stating my attorneys are not entitled to be paid because there was no court order specifically authorizing their employment. Was that necessary?

      A: Yes. California Rules of Court, Rule 3.1180 states: “A receiver must not employ an attorney without the approval ...

      Employer Alert: Expansion of Reporting Time Pay Rule

      A recent California Court of Appeal ruling significantly expands the conditions under which the reporting time pay rule in California will apply. Skylar Ward v. Tilly’s, Inc. involved retail clothing store workers who were assigned on-call shifts, but did not know if they must report to work for each shift until they made a required call to the employer two (2) hours in advance of the shift.

      Under all California Wage Orders, including Wage Order No. 7 that applies to retail workers, reporting time pay must be paid for each workday an employee is required to report for work and does ...

      Department of Fair Employment and Housing Issues Harassment Training Toolkit

      Senate Bill 1343, which became effective on January 1, 2019, requires that every California employer with at least five employees or independent contractors provide two hours of interactive harassment and abusive conduct prevention training for their managers and supervisors, and conduct this training thereafter every two years and within six months of a person’s placement into a supervisory or management position. SB 1343 also requires that these employers provide interactive harassment training to their non-supervisory employees of at least one hour, and thereafter ...

      Good News for Employers: Express Consent Required for Class Arbitration

      Last year, the United States Supreme Court ruled that class action waivers in employment arbitration agreements are enforceable.  But, the ruling did not address an agreement that is silent or ambiguous regarding the intent to proceed as a class.

      This issue was recently resolved by Lamps Plus v. Varela, in which the United States Supreme Court held that under the Federal Arbitration Act, a court may not compel class arbitration unless the parties have expressed their clear consent.

      This case involved an arbitration clause that was ambiguous regarding the parties’ intent to ...

      Department of Labor Proposes New Minimum Salary Levels

      The United States Department of Labor (DOL) recently announced a proposal to increase the minimum salary required to qualify as exempt from overtime under the federal Fair Labor Standards Act (FLSA). The new rule would apply to the executive, administrative, and professional exemptions. Specifically, the proposed increase would raise the minimum annual salary required for exempt status from $23,360 to $35,308, and increase the weekly salary rate from $455 to $679.  Employers would be permitted to include “nondiscretionary bonuses and incentive payments” for up to 10% of the ...

      Attorney General Rulemaking: Phase 2 of the California Consumer Privacy Act

      As you know by now, the California Consumer Privacy Act of 2018 (“CCPA”) is California’s groundbreaking legislation that grants California residents unprecedented rights and protections regarding the collection and use of their personal information. While the breadth and scope of the CCPA is readily transparent, California’s Attorney General (“AG”) is still in the process of adopting regulations to help implement the act. The AG is currently accepting comments in a series of public forums that began in January, and the California Department of Justice recently ...

      State Law Dictates Who May File Bankruptcy For A Corporation

      A prior Ask the Receiver discussed Sino Clean Energy Inc. by and through Baowen Ren v. Seiden, 565 B.R. 677 (Nev. 2017), where a  district court’s affirmed of a bankruptcy court’s order dismissing a bankruptcy case. A state court receiver for a corporation removed the corporation’s board of directors and replaced them. The unhappy, removed, board members filed a bankruptcy petition for the corporation. The district court held state law determines who is authorized to file bankruptcy for a corporation. It rejected the petitioner’s argument that states cannot ...

      A Reminder: The IRS Mileage Rates Have Changed

      The 2019 mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical, or moving purposes have increased from last year, or remained unchanged. Specifically, as of January 1, 2019, the standard mileage rates for the use of a car (also vans, pickups, or panel trucks) are:

      • 58 cents per mile for business miles driven, up three and one-half cents from 2018;
      • 20 cents per mile driven for medical or moving purposes, up two cents from 2018; and
      • 14 cents per mile driven in service of charitable organizations.

      The IRS standard mileage rate for ...

      Employer Alert: Minimum Wage Increases

      On January 1, 2019, the state minimum wage increased to $12.00 per hour for employers with at least 26 employees, and $11.00 per hour for smaller employers.  The state minimum wage governs the exempt employee threshold salary, which has increased accordingly.  The new minimum salary for employees exempt from overtime is $49,920 annually for employers with at least 26 employees, and $45,760 annually for employers with fewer than 26 employees.

      Further, a number of California municipalities will raise their minimum wage rates on July 1, 2019.  Employers should take care to note these ...

      Employer Alert: New Compensation Threshold for Computer Software Overtime Exemption

      Effective January 1, 2019, the California Department of Industrial Relations issued a new compensation threshold for exempt computer software employees, reflecting an increase of 4.2% from last year.

      To qualify for the overtime exemption, computer software employees must be paid a salary of at least $94,603.25 annually ($7,883.62 monthly), or an hourly wage of at least $45.41.  In addition, a computer software employee must also meet the duties test set forth in California Labor Code Section 515.5, which are also included in all Wage Orders except Orders 14 and 16.

      More ...

      How Receivers Should Deal With Secret Liens

       Q: I am the receiver for a small grocery store and restaurant owned by an uncooperative divorcing couple. I am in the process of selling the store and restaurant and paying claims. I have been contacted by a few parties who say they have liens that need to be satisfied. I have run a UCC search and obtained a title report and I don’t see the liens they claim. I told this to one of their lawyers and he said his clients have “secret liens.” What in the world are “secret liens” and how am I supposed to know about them and deal with them?

      A: Unfortunately there are numerous “secret ...

      Employer Alert:  SB 1343 Extends Harassment Training Requirements to Small Employers and Non-Supervisory Employees

      Under current California law, organizations with 50 or more employees or independent contractors must provide two hours of interactive harassment and abusive conduct prevention training for their managers and supervisors every two years and within six months of placement into a supervisory or management position.  The training required must include information and practical guidance regarding the federal and state statutory provisions concerning the prohibition against, and the prevention and correction of, sexual harassment, as well as the remedies available to victims ...

      A Brief Summary of the Music Modernization Act

      On October 11, 2018, President Trump signed the Orrin G. Hatch-Bob Goodlatte Music Modernization Act (the “MMA”).[1] 

      The MMA was unanimously approved in both chambers of Congress before the President’s signature and marks the first major copyright legislation since the Sonny Bono Copyright Term Extension Act of 1998 (aka the Mickey Mouse Protection Act). The MMA is actually a collection of three separate laws (the MMA, the CLASSICS Act, and the AMP Act) designed to address three specific areas of music law that have been rife with uncertainty since the Copyright Act of 1976 ...

      Employer Alert: New Fair Credit Reporting Act Summary of Consumer Rights Form Required for Background Checks

      Beginning September 21, 2018, employers must use the newly issued model Summary of Your Rights Under the Fair Credit Reporting Act form (or their own form based on the model) when providing the required written notice to an employee or a job applicant that a background check will be conducted. The revised federal form is also required if an employer plans to take adverse action against an employee or applicant based on the report.  

      The revised form includes notification of the newly granted right under the Economic Growth, Regulatory Relief and Consumer Protection Act passed by Congress ...

      The Three Stages of Technology Procurement

      Technology procurement is quickly evolving from a tactical, organization-wide undertaking to one that is more strategic and catering to multiple units within a company’s infrastructure. More businesses are taking advantage of things like Bellwether procurement software as a way to improve their procurement process. As a result, the skill set of the CTO, CIO, General Counsel and other members of the procurement team must follow suit. Upgrades used to be about minimizing costs and lowering risks. But those were the old days. Now, the procurement team responsible for software ...

      National Labor Relations Board Proposes Relaxed Rule on Joint Employment

      On September 13th, the National Labor Relations Board (NLRB) announced that it will propose a new joint employer rule that represents a relaxation of the current standard for determining if businesses are joint employers.  Under the current rule, known as the Brown-Ferris rule, the definition of joint employer is expansive, so that an employer having only indirect or potential control over another employer’s workers can be found to be a joint employer. 

      Under the proposed rule, an employer may be found to be a joint employer of another employer’s employees only if it possesses and ...

      Strategies for Navigating IT Infrastructure Upgrades

      Upgrading a large complex portion of a company’s (“Newco’s”) IT infrastructure can be a daunting task.  However, as its business grows, Newco will want and need to add new capabilities and enhance existing service offerings.  Here is a brief overview of some strategies for helping Newco navigate the process including software and hardware procurement, finding the right systems integrator, negotiating Service Level Agreements (“SLAs”), and ensuring timely on-budget implementation.  

      Software and Hardware Procurement

      Newco will want to work closely with the Systems ...

      Employer Alert: U.S. Department of Labor Updates FMLA Forms

      The U.S. Department of Labor recently issued updated model Family and Medical Leave Act (“FMLA”) forms, with an expiration date of August 31, 2021.  Other than the expiration date, these forms are identical to the prior forms expiring on August 31, 2018. The newly issued forms with the August 31, 2021 expiration date should be used in place of the prior forms.  Note that the expiration date is found on the top-right corner of the forms. Note also that  the Certification of Health Care Provider for Employee’s Serious Health Condition should be modified by California employers to avoid ...

      California close to Banning Employment Arbitration Agreements 

      The California Legislature is poised to dispense with a cost-effective and expedient method of resolving employment disputes.  Specifically, Assembly Bill 3080 seeks to prohibit any person or business from conditioning employment, or any employment-related benefit, on any applicant for employment or employee agreeing to the binding arbitration of disputes that involve any alleged violation of any provision of the California Fair Employment and Housing Act.  The bill also includes a prohibition against arbitration agreements that would require an employee to opt out of ...

      Assembly Bill 2613 Seeks to Expand Personal Personal Liability for Individual Managers in California 

      Assembly Bill 2613 seeks to expand the persons potentially liable to any “person acting on behalf of an employer.” More specifically, liability would attach when an employee is not paid sums owed when due under Labor Code sections 201.3, 204, 204b, 204.1, 204.11, 204.2, 205, and 205.5, and the failure to pay is not the result of “an isolated or unintentional payroll error due to a clerical or inadvertent mistake.” AB 2613 would amend Labor Code section 210 to require an employer or person acting on behalf of an employer to pay a penalty of $200 to each and every affected employee for ...

      Can A Federal Court Invalidate A State Court Receivership

       

      Q: I was appointed receiver in a health and safety case, brought by a city, over a rundown motel and an adjacent rundown office building. The owner of the property, who has been fighting the city, has now filed an action in federal court against the city alleging that the city has violated his constitutional rights and is asking the federal court to set aside the receivership order. Can a federal court do that?

      A: The short answer is no. Federal courts, generally, have no power to invalidate or set aside state court orders. Federal courts also, generally, do not have power to review the ...

      Employer Alert: Updated Affordable Care Act Notices Replace Earlier Versions

      The U.S. Department of Labor recently issued updated Affordable Care Act model notice forms (OMB No.1210-0149).  The new forms contain an expiration date of 5/31/2020, and replace all earlier versions.  Employers must provide these notices, which inform employees whether the employer offers a health plan, to all new employees within 14 days of hire.

      There are two versions of the model notice form: one is for employers who do offer a health plan to some or all employees, while the other is for employers who do not offer a health plan.  Both versions of the updated form can be found here.

      Posted in The Real Dirt
      What Lawyers Should Know (But Mostly Don’t) About Financial Elder Abuse Claims

      Partner, Ervin Cohen & Jessup

      The financial elder abuse and fraud cases playing out in court right now surrounding Marvel Comics icon Stan Lee trace back to state laws enacted many years ago like the California Elder Abuse Act, designed to protect those over 65. However, many lawyers remain unfamiliar with them.

      Here are 11 pointers on the California Elder Abuse Act for practitioners who may encounter financial elder abuse — the most common and fastest growing form of elder abuse.

      First: The act contains a unilateral attorney’s fee and costs provision. If an abused elder prevails ...

      Proposed Law will Make it Easier to File Discrimination and Harassment Claims Against California Employers

      Senate Bill 1300 (Jackson) seeks to expand liability in discrimination and harassment by lowering the legal standard for legal claims.  Currently, only harassment that is “severe or pervasive” is actionable.  As such, the law is not designed to allow claimants to bring claims based on a single offensive remark or act.  SB 1300 creates a new private right of action for failure to prevent harassment or discrimination which is written to significantly lower that standard by providing that a claimant need only prove “that the conduct would meet the legal standard for harassment or ...

      Selling Real Property In A Federal Receivership

      Q: I am a federal receiver. One of the assets in the estate is a small office building. I want to list it with a broker and sell it. My attorney told me that before I can sell the property through a broker I have to have the court appoint three (3) appraisers to appraise the property and then the sales price has to be at least two-thirds (2/3) of the appraised value. This is madness. Is there any way around this? Do I need a new attorney?

      A: No, you don’t need a new attorney. Your attorney correctly informed you of some of the requirements for a federal receiver to sell real property at a private sale ...

      California’s New Privacy Bill of Rights: How The California Consumer Privacy Act of 2018 Will Empower Consumers and Create New Burdens For Data Driven Businesses

      California now has the most sweeping and comprehensive privacy rights law in the country — The California Consumer Privacy Act of 2018 (the “Act”).  Some might say the Act is the result of Cambridge Analytica misusing the data of tens of millions of Facebook users.  Others would suggest that the Act is merely the natural and logical progression of inalienable rights of privacy in the digital age.  Whatever the reason, California’s Privacy Bill of Rights for consumers will forever change the way businesses collect and use personal information (“PI”).

      Here’s the good news ...

      Receiver's Appointing Order Language Controls Who Can File A Corporate Bankruptcy

      Q: I was appointed receiver for a corporation. My order of appointment gives me, and me alone, the power to file bankruptcy for the corporation. The former president of the corporation is threatening to file a bankruptcy petition for the corporation in an apparent attempt to oust me. Can he do that?

      A: The answer depends on the specific language of your order of appointment. If it specifically vests you, and only you, with the power to file a voluntary bankruptcy for the corporation, then the former president has no right to do so. A number of recent cases have pointed out there is a major ...

      Great News for Employers: U.S. Supreme Court Upholds Arbitration Class Action Waivers

      On Monday, May 21, 2018, in a 5-4 opinion, the United States Supreme Court issued a long-awaited decision in the case, Epic Systems Corp. v. Lewis, on the issue of the enforceability of class action waivers in arbitration agreements that bar employees from joining together in class action claims, holding such waivers to be enforceable.  Employers now have the benefit of including class action waivers in arbitration agreements without the uncertainty of the last several years, when jurisdictions differed regarding their enforceability.

      The challenge to enforceability in the case ...

      Receiver's Use Of An Elisor When A Party On Title Won't Sign Documents

      Q: I am a receiver in a family law matter. There is a property held in the name of an LLC, wholly owned by one of the parties. The court has authorized me to sell the property, but the party on title refuses to sign the escrow documents and deed. While I could bring a contempt motion, that is a long, drawn out and expensive undertaking. My broker asked me why I couldn’t just ask the court to appoint me or the clerk as an elisor to sign the documents and deed. What is an elisor?

      A: An “elisor” is person appointed by the court to perform functions like the execution of a deed or document. A court ...

      Are All Independent Contractors Now Employees? 

      Last week the California Supreme Court issued a decision that changes the way California employers do business.  In Dynamex Operations West, Inc. v. Superior Court,  the Court held that a three factor test called the “ABC test” must be applied to determine if an independent contractor is actually an employee subject to the California Wage Orders.  The Court described the test as follows: “Under this test, a worker is properly considered an independent contractor to whom a wage order does not apply only if the hiring entity establishes: (A) that the worker is free from the control and ...

      EEOC Extends EEO-1 Filing Deadline

      All employers with 100 or more employees, affiliated companies who collectively employ 100 or more employees, and government contractors with 50 or more employees are required to file EEO-1 reports annually with the Equal Employment Opportunity Commission or, in the case of government contractors, the Office of Federal Contract Compliance Programs.  The report requires company employment data to be categorized by race/ethnicity, gender and job category.  These reports are usually due by March 31st of the next calendar year.  For 2017, however, the filing deadline has been ...

      A Reminder: The IRS Mileage Rates Have Changed

      The 2018 mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes have increased slightly from last year, or remained unchanged. Specifically, as of Jan. 1, 2018, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) are:

      • 54.5 cents per mile for business miles driven, up one cent from 2017;
      • 18 cents per mile driven for medical or moving purposes, up one cent from 2017; and
      • 14 cents per mile driven in service of charitable organizations

      The IRS standard mileage rate for business is ...

      A Reminder: Home Care Workers Will Be Entitled to Paid Sick Leave Beginning July 1, 2018

      Under California’s Healthy Workplaces, Healthy Families Act of 2014, in-home supportive services (IHSS) workers were specifically excluded from eligibility to receive paid sick leave.  However, beginning July 1, 2018, Senate Bill 3, enacted in 2016, will end the exclusion and extend paid sick leave to IHSS workers. IHSS workers will initially not be entitled to reach the three days or 24 hours of paid sick leave other eligible California workers may receive.  Rather, SB 3 provides that IHSS workers may earn a “full amount” of paid sick leave in which will be increased as the state ...

      Assembly Bill 1710 Expands Military Personnel Employment Protections

      Effective January 1, 2018, AB 1710 amends Section 394 of the Military and Veterans Code by including protection against discrimination in all terms, conditions or privileges of employment due to membership or service in the military.  This applies to all military service and personnel including the National Guard, and expands existing anti-discrimination measures for military personnel.

      The new law also includes criminal and civil penalties for violations.

      Employers are reminded to train employees to comply with this law and other existing anti-discrimination laws ...

      Sexual Harassment Training Must Now Include Gender Identity, Gender Expression and Sexual Orientation

      In light of the substantial media attention given to sexual harassment issues in recent months, employers should anticipate new legislation on this topic. Senate Bill 396, however, was drafted before the increased focus on these issues began.  As of January 1, 2018, the enactment of the Transgender Work Opportunity Act (SB 396) makes California the first state to require that harassment trainings cover the topics of gender identity, gender expression and sexual orientation.

      The Department of Fair Employment and Housing (DFEH) already required sexual harassment training for ...

      New and Proposed Tax Legislation Present New Difficulties for Employers Attempting to Settle Sexual Harassment Claims

      Most employers have heard of the Tax Cuts and Jobs Act, signed into law on December 22, 2017, and have contemplated what it may mean for them.  What has been largely overlooked, however, is a denial of deduction buried deep in section 162(q) of the Internal Revenue Code, which may have a significant impact on employers’ ability to settle lawsuits based on sexual harassment or sexual abuse.  Referred to as the “Harvey Weinstein Tax” (even though it is not a tax), section 162(q) provides:

      • No deduction shall be allowed … for (1) any settlement or payment related to sexual harassment or ...
      California Legislature Increases Benefits for Employees on Family Leave and State Disability

      For periods of disability commencing on or after January 1, 2018, Assembly Bill 908 will increase the benefits provided to individuals in the Paid Family Leave and State Disability Insurance programs.  AB 908 raises the level of benefits from the previous level of 55 percent of an applicant’s wages to 60 or 70 percent of the applicant’s wages depending on the applicant’s income.  Low income employees are eligible for the maximum benefit level of 70 percent.  AB 908 also removes the prior seven-day period that employees had to wait in order to gain eligibility for family temporary ...

      Assembly Bill 2886 Extends SDI Appeal Deadlines

      Beginning March 1, 2018, Assembly Bill 2886 amends the Unemployment Insurance Code to extend the period that an individual may appeal a determination regarding eligibility to receive State Disability Insurance (SDI) benefits, a computation made regarding benefits, or a notice of overpayment of benefits,  from within 20 days from mailing or personal service of the determination to within 30 days of such date.  The 30-day period may be extended for good cause, which is defined to include mistake, inadvertence, surprise or excusable neglect.

      Further, prior to March 1, 2018, AB 2886 ...

      California Extends Family Leave Requirements to Smaller Employers

      Effective as of January 1, 2018, Senate Bill 63 provides that employers with 20 or more employees within a 75-mile radius must grant an employee’s request to take up to 12 weeks of unpaid parental leave to bond with a new child within one year of the child’s birth, adoption or foster care placement.  In addition, employers must provide continuance of group health coverage during the leave period on the same basis as would have been provided had the employee continued to work.  These coverage costs can be recovered if the employee fails to return from the leave and the failure is for a reason ...

      New Law Increases Cal/OSHA Penalties and Changes Division of Labor Standards Enforcement Rules

      Senate Bill 96, the California state budget bill, includes some employment-related “trailer bills” that accompany the main budget bill, including the following:

      Cal/OSHA Penalty Increases:

      SB 96 increases penalties for repeated Cal/OSHA violations from $70,000 to $124,709.  In addition, the civil penalty maximum is increased from $7,000 to $12,471 for each non-serious violation and each violation of posting, recordkeeping or notice requirements.

      The bill also permits those maximum penalty amounts to be increased on January 1, 2018, and each January 1st thereafter based ...

      Who Should Sign a Proof of Claim Form - Lawyer or Client?

      Question: I represent a creditor who had sued an entity before it was put into receivership. The court has established a claims procedure, and the receiver has sent out claim forms. Can I sign the claim form on behalf of my client or is it better to have my client sign?

      Answer: Receivership cases and bankruptcy cases often require creditors to file proofs of claim. Because it may be easier, quicker and cheaper, attorneys for creditors sometimes sign and file the proofs of claim. While this is explicitly allowed in bankruptcy cases under Bankruptcy Rule 3001(b), and there is no ...

      New Law Phases In Overtime Increases for Agricultural Workers

      Beginning on January 1, 2019,  Assembly Bill 1066 phases in overtime for agricultural workers over a four year period, ultimately making these workers eligible for overtime pay at one and one-half (1-½) times their regular rate after eight hours per day, rather than the current ten hours. Employers who employ 25 or fewer employees will have an additional three years to comply with the phasing-in of these overtime requirements and will be required to meet the same phased in standards mentioned below commencing on January 1, 2022.

      More specifically, in 2019, employers with more than 25 ...

      Senate Bill 621 Gives Part-Time Educators Their Proportional Share

      Senate Bill 621 will become effective on January 1, 2018.  The bill amends Labor Code section 515.8 and is intended to address the ambiguities in Assembly Bill 2230 which was enacted last year.  AB 2230 had set a new earnings standards for designating private school teachers as exempt from overtime which were based on the employee earning a monthly salary equivalent to the greater of no less than the lowest salary offered by any school district or the equivalent of no less than 70% of the lowest schedule salary offered by the school district or county office of education in which the private ...

      Can a Receiver Keep Fees If the Underlying Judgement is Reversed on Appeal?

      Question: I have been appointed receiver to collect a judgment. The judgment is on appeal. I am concerned that if the judgment is reversed my fees might be in jeopardy. Am I entitled to keep the fees I have been paid even if the underlying judgment is reversed?

      Answer: You should be o.k., so long as the court which appointed you had jurisdiction to do so. In a recent bankruptcy case, In Re Patrick Cox, 2017 W.L. 1058263 (Bankr. S. D. Texas 2017), the State of Texas obtained a $46 million judgment against the debtor in state court prior to the debtor filing bankruptcy. The state court ...

      New Law Holds Contractors Liable for Subcontractors’ Non-Payment of Wages

      Assembly Bill 1701 (AB 1701) provides a “direct contractor” is liable for the wages, benefits and contributions (plus interest) owed by its subcontractor(s), even if the subcontractor has been paid for the work.  A “direct contractor” is defined to mean a contractor that has a direct contractual relationship with an owner; a “subcontractor” is defined as a contractor without a direct contractual relationship with an owner.  The law applies to all private construction contracts entered into on or after January 1, 2018.  

      AB 1701 does not, however, provide wage claimants ...

      New Law Prohibits Prior Salary Inquiries and Requires Pay Scale Disclosure on Request

      Effective January 1, 2018, California Assembly Bill 168 (AB 168) prohibits asking job applicants about their salary history (including other forms of compensation and benefits), or otherwise seeking this information.  Further, employers may not rely on salary history as a factor in determining whether to offer employment to an applicant, or the salary the employer will offer an applicant.  Although the law permits employers to consider salary history if an applicant voluntarily and without prompting discloses this information, employers should proceed cautiously based on a ...

      Repealing DACA Comes at a High Price to Employers

      The Trump Administration’s termination of the Deferred Action for Childhood Arrivals (DACA) program could have a negative, costly impact on employers.  The DACA program protects nearly 800,000 undocumented immigrants who arrived as children from deportation and gives them legal status to work in the U.S.  Unless the employee can show some other valid form of employment eligibility, employers will need to terminate DACA recipients once their currently valid employment authorization document, Form I-766, expires.  Some estimates show that the end of DACA will cost employers ...

      Alert: Employers Should Distribute Updated Sexual Harassment Brochure or Poster

      The California Department of Fair Employment and Housing (DFEH) recently issued an updated sexual harassment brochure (DFEH-185), which replaces the prior version. The DFEH also provided this information in an easy-to-print poster form (DFEH-185P).

      Either the new poster or updated brochure will fulfill the employer’s obligation to provide employees with an information sheet regarding sexual harassment under state law.  Employers should provide all new employees with the updated brochure or new poster upon hire, and current employees should also be provided the newly ...

      Employer Alert: Reporting Requirements for All New or Rehired California Employees

      All California employers must report their newly hired or rehired employees who work in California to the California Employment Development Department (EDD).  Reporting is done using the EDD’s Report of New Employees form, which was recently updated and can be found HERE (along with instructions for completion).

      Reporting is aimed at locating parents not providing child financial support as obligated.  For general information regarding reporting requirements, including how to report, multi-state employers, etc., check the EDD’s New Employment Registry site found HERE.

      How Does a Receiver Sell the Homesteaded Home of a Judgment Debtor to Satisfy a Judgment?

      Question: I am a receiver appointed to collect a substantial judgment. The judgment debtor’s home has appreciated since the entry of the judgment five years ago. Can I list the house with a broker and, once a buyer is located, petition the court to approve the sale? The judgment debtor claims he has a homestead exemption and that I can only sell the house if I comply with homestead statute, which requires the sale be in accordance with the provisions for execution sales. Is that correct? I thought, as receiver, I can sell property using other methods, so long as I get court approval.

      Answer:

      White House Suspends EEO-1 Pay Data Reporting

      Last week the White House Office of Management and Budget (OMB) announced the suspension and review of the new EEO-1 pay data reporting requirement for EEO-1 reports due on March 31, 2018.

      For years, employers with at least 100 employees have been required to complete and submit EEO-1 reports of their employees by race, ethnicity and gender.  Last year the EEO-1 report was expanded to include employee hours and pay data.  The intent of the pay data reporting requirement was to disclose pay gaps so that possible pay discrimination practices could be investigated.

      While the pay data ...

      Employer Alert: Department of Labor Withdraws Guidance on Independent Contractors and Joint Employment

      The U.S. Department of Labor (DOL) recently announced that the Obama-era administrative interpretations regarding joint employment and the classification of a worker as an independent contractor or employee has been withdrawn.

      The guidance regarding the independent contractor classification had indicated that most workers were employees, and not independent contractors.  As for the interpretation of joint employment, which can arise when people work for 2 or more entities which share control over the individuals’ work, the withdrawn guidance had reflected that the ...

      Reminder: Employers Must Provide Notice of Victim Rights to Employees

      As a reminder, all California employers must provide the newly issued Rights of Victims of Domestic Violence, Sexual Assault and Stalking notice to new employees upon hire and to current employees on request.

      You can find the new notice HERE in English, and HERE in Spanish.

      The notice informs employees who are victims of domestic violence, sexual assault, or stalking of various rights and protections, including the right to: unpaid time off to obtain legal relief (e.g., a restraining order); freedom from employer retaliation or discrimination due to their victim status; and ...

      What Happens to a Creditor's Claim If It Received Notice and Fails to File by the Claim's Bar Date?

      Question: I am a receiver in a fraud case where there are a lot of investors, trade creditors and secured creditors. Pursuant to my request, the court established a claims procedure and set a deadline for all creditors to file claims with me. A creditor with a lien on one of the estate’s assets did not file a claim, despite my sending it a claim form and notice of the claim filing deadline. Is the creditor entitled to participate in the distribution of estate assets? Does the answer change if it files a late claim? Does the creditor lose its security interest because it did not timely file a ...

      Employer Alert: Must Use Newly Issued I-9 by September 18th

      On July 17, 2017, the U.S. Department of Homeland Security issued a revised version of Form I-9, Employment Eligibility Verification.  

      By September 18, 2017, employers must begin using this revised Form I-9 for all new hires, reverifications and rehires.  It is not necessary to redo previously completed I-9’s, unless an employee’s employment authorization or documentation of employment has expired.

      Until September 18, 2017, employers have a choice:  they may continue to use the I-9 form with a revision date of “11/14/16N”, or begin using the new, revised form.

      The new ...

      In an operating receivership, do creditors need to be served with motions?

      Question: In an operating receivership , do creditors need to be served motions?

      Answer: The answer is "no" if the receivership is in state court; the answer is "maybe" if the receivership is in federal court. In a state court receivership, unlike in a bankruptcy case, notice of motions need only be sent to the parties to the receivership case. Creditors having claims against the entity in receivership or the receivership estate are not parties, and hence are not entitled to notice, unless they formally intervene. See generally, C.C.P. §1004, which refers to service on "parties ...

      California Places New Limits on Employer Use of Criminal History

      New regulations issued by the California Fair Employment and Housing Council (FEHC) impose additional limitations on an employer’s use of criminal history information, and expand the types of criminal history that employers are prohibited from considering.  Effective July 1, 2017, these regulations prohibit an employer from considering criminal history in employment decisions if doing so would result in an adverse impact on individuals within a protected class, such as race, sex, or national origin.  An applicant or employee has the burden of proving adverse impact, but if ...

      Reminder: Los Angeles and Santa Monica Minimum Wage Increases on July 1st

      As a reminder, the minimum wage in the City of Los Angeles and in the City of Santa Monica will increase to $12.00 an hour on July 1, 2017, for employers with 26 or more employees.  The minimum wage for employers in these cities with fewer than 26 employees will increase to $10.50 an hour on July 1, 2017.

      There is another increase set for July 1, 2018, in the City of Los Angeles and Santa Monica that will raise the minimum wage to $13.25 an hour for employers with 26 or more employees. For smaller employers in these cities, the increase on July 1, 2018, will be to $12.00 an hour.

      Employers in the City of ...

      Can a Receiver be Sued for Not Paying a Pre-Receiver Creditor?

      Question: I am the Receiver for a condo project. A pre-receivership creditor has threatened to sue me because I won’t pay for the services he provided the defendant. I have explained to the creditor that the receivership is not liable for pre-receivership debts of the defendant and that all the assets in the receivership are security for the plaintiff (bank). The creditor has said he does not care, that if I don’t pay him he will sue me and that the court must allow his lawsuit to go forward. Is he correct?

      Answer: You did not indicate whether your receivership is in federal or state ...

      QUESTION:  I have seen a number of receivers file motions purporting to be interim versions of final accounts and reports, seeking orders approving fees and costs part-way through a receivership. Given that California Rule of Court 3.1183(a) states that all interim fees are reviewable and may be adjusted at the hearing on the Final Account and Report, is there really any point to this practice? Is an order approving interim fees worth the paper it’s written on?  

      ANSWER:  Up until earlier this year I would have doubted it. Rule of Court 3.1183(a) states interim fees are just that: interim ...

      Fair Chance Initiative Posting Required 

      The recent Los Angeles Fair Chance Initiative for Hiring requires, among other things, that employers post a notice of the ordinance at job sites and workplaces.  The City of Los Angeles has now provided the notice that must be posted along with guidelines and other information regarding the ordinance.  The notice should be placed in a conspicuous location that employees and job applicants can access

      This blog is presented under protest by the law firm of Ervin Cohen & Jessup LLP.  It is essentially the random thoughts and opinions of someone who lives in the trenches of the war that often is ...

      McGill v. Citibank, N.A.

      I have received a few questions from employers about the recent California Supreme Court decision in McGill v. Citibank, N.A..  The McGill case isn’t an employment law case, but rather deals with a consumer class action.  In McGill, the California Supreme Court held that an arbitration provision that attempted to entirely waive an individual’s right to seek public injunctive relief (pursuant to the Consumers Legal Remedies Act (CLRA), unfair competition law (UCL), and false advertising law) is unenforceable. In so holding, the Court noted that CLRA expressly declares that the ...

      The Difference Between Bankruptcy & Receivership Payment of Legal Fees to Defend Fee Applications

      QUESTION: I was appointed receiver for an apartment building. I operated the property for six months, then the defendant filed bankruptcy. I filed a claim, as a superseded custodian, under 11 U.S.C. § 543. The debtor objected to my fees and made various other crazy objections. I had to hire counsel to defend my fees and to deal with all the objections. Debtor’s counsel now claims my counsel and I are not entitled to be paid for having to defend my fee request. Is that correct?

      ANSWER: The Supreme Court has held that fees incurred in defending fee applications in bankruptcy cases are not ...

      AB 2532 Eliminates the Requirement that Private Employers Contracting with State and Local Agencies Verify an Individual’s Status Before Providing Services

      Effective January 1, 2017, Assembly Bill 2532 eliminates the requirement that private employers contracting with state and local government agencies to provide specified employment services verify an individual’s legal status or authorization to work prior to providing services to that individual, as required by federal procedures.  AB 2532 also repeals posting requirements that notices be placed in prominent locations stating that only persons authorized to work in the United States be permitted to use the agency’s or the organization’s employment services. 

      This ...

      A Reminder: The Domestic Worker Bill of Rights is Permanent

      Effective January 1, 2017, Senate Bill 1015 removes the 2017 sunset provision of 2013’s Assembly Bill 241, the Domestic Worker Bill of Rights, which granted overtime protections to California’s privately hired domestic workers who are personal attendants.  The law is therefore permanent.  Under the Domestic Worker Bill of Rights, daily overtime is required after 9 hours worked in one day and weekly overtime after 45 hours are worked in one week.

      This blog is presented under protest by the law firm of Ervin Cohen & Jessup LLP.  It is essentially the random thoughts and opinions of ...

      A prior Ask the Receiver® discussed the Fifth Circuit case Janvey v. The Golf Channel, Inc., 780 F. 3d 641 (5th Cir. 2015) (“Golf Channel I”). There the court found The Golf Channel liable to return $6,000,000 paid to it for advertising services it provided, that were used to help solicit investors in the Allen Stanford Ponzi scheme. The court found the advertising did not provide “reasonably equivalent value,” from the standpoint of the Stanford creditors, and, therefore, could not be used to support The Golf Channel’s defense to the receiver’s fraudulent transfer ...

      New Law Requires Gender Neutral Restrooms

      Existing law requires businesses that serve the public or are open to the public and maintain toilet facilities to make those facilities available to the public free of charge. Existing law also states that publicly and privately owned establishments where the public congregates must maintain a sufficient number of temporary or permanent toilet facilities to meet the needs of the public at peak hours. These laws also require that each business establishment provide, within reasonable access, a sufficient number of toilet facilities for the use of the employees.

      Effective March 1 ...

      A Reminder: The IRS Requires Employers to Obtain Informed Consent to Email W-2s

      Unless you reside in a cave (in which case you likely will not be reading this), you are aware that we are moving towards a paperless society.  However, assumptions about providing documents electronically can be dangerous, and privacy rights must also be respected.  With respect to issuing Form W-2, IRS Publication 15-A provides the following:

      Furnishing Form W-2 to employees electronically. You may set up a system to furnish Form W-2 electronically. Each employee participating must consent (either electronically or by paper document) to receive his or her Form W-2 ...

      New Law Requires Written Notice to Employees on Hire (and Existing Employees upon Request) of Rights of Victims of Domestic Violence, Sexual Assault, or Stalking

      California law already prohibits employers with 25 or more employees from discriminating or retaliating against employees who take time off work for specified purposes related domestic violence, sexual assault, or stalking.  Assembly Bill 2337 (AB 2337) amends Labor Code section 230.1 to require that employers provide written notice of these rights to all new hires and, upon request, to current employees.  The bill also requires the Labor Commissioner to develop a form that an employer can elect to use to comply with this requirement, and when developed, to post it online.  The notice ...

      Do Settlement Agreements Need to Be Approved by the Court?

      QUESTION:  As receiver,  I sued a third party to collect funds owed to the entity in receivership.  I have settled the lawsuit.  The defendant’s attorney insists that I get court approval of the settlement. What a pain. Am I required to get court approval of the deal I cut? If so, which court needs to approve the settlement and what do I have to establish to get the settlement approved?

      ANSWER:  Sorry, but yes, you do need to get court approval of the settlement unless the court previously gave you authority to settle litigation without subsequent court approval.  The court that has to approve the ...

      California Issues New Minimum Wage Poster 

      Employers should post California’s recently issued 2017 minimum wage poster found at   https://www.dir.ca.gov/IWC/MW-2017.pdf .  The new poster reflects that the state minimum wage for employers with 26 or more employees increases to $10.50 on January 1, 2017, and to $11.00 on January 1, 2018.  For employers with 25 or fewer employees, the minimum wage remains at $10.00 until January 1, 2018, when it increases to $10.50.

      The poster also contains 2017 and 2018 maximum lodging and meal credits that may be used to meet part of the employer’s minimum wage obligation for live-in ...

      New Law Bans the Box in Los Angeles 

      Effective January 22, 2017, the Los Angeles Fair Chance Initiative for Hiring will prohibit most employers in the City of Los Angeles from inquiring about a job applicant’s possible criminal history until an initial job offer is made.  Part of a national trend of “ban the box” laws, the ordinance bans the “check the box” or other questions on a job application regarding criminal convictions and prohibits employers from inquiring about such convictions by any other means until a conditional employment offer is made.  With limited exceptions, the ordinance applies to ...

      QUESTION:  I have been appointed receiver to enforce a judgment. I filed a motion in the case which I served on counsel for the plaintiff (the judgment creditor) and counsel for the defendant (the judgment debtor).  The court denied my motion, without prejudice, stating that I need to serve the judgment creditor himself and that service on his counsel was not good enough.  What’s going on? I thought service on counsel for a party constituted service on the party.  

      ANSWER:  Prior to the entry of judgment you are correct. Service on counsel who has appeared for a party in an action constitutes ...

      Posted in Taxing Matters

      Even though property acquired during marriage is presumed to be community property, for property tax change in ownership purposes the Los Angeles County Property Tax Assessor’s Office believes otherwise.  Fortunately, the Assessment Appeals Board strongly disagreed with the Assessor.

      Spouses domiciled in California and owning California real property as community property, either directly or indirectly through an entity, have a reasonable expectation that the property tax consequences arising from their dealings with that property will be governed by their status as ...

      Important Update: Increased Exemption Salary Rule Blocked by Injunction

      On Tuesday, a U.S. District Court judge in Texas issued a nationwide preliminary injunction delaying the U.S. Department of Labor rule that would have dramatically increased the minimum salary threshold to qualify as exempt from overtime on December 1st.  The rule would have raised the annual salary required for exempt status from $23,660 to $47,476, which was expected to result in millions of employees becoming eligible for overtime pay because their salary would not meet the new threshold.   The judge’s decision stated that the Obama administration overstepped its authority by ...

      QUESTION:  I am getting ready to close my receivership and distribute the funds in the estate to the two parties.  I have just learned that the Social Security number one of the parties gave me is not his.  What should I do?

      ANSWER:  As a receiver you are the agent of the court.  As such, you must not be a party to any conduct that may not be legal.  You should bring this issue to the court’s attention by filing a request for instructions as to what you should do with the funds under your custody and whether you should notify the IRS and FTB about what is clearly a violation of the law by one of the parties to ...

      New I-9 Form Promises to be Fun for Everyone

      Just kidding.  It may not be fun, but the new Form I-9 issued by the United States Citizenship and Immigration Services (USCIS) may be used immediately. Finalized on November 14, 2016, the new version of the Form is available here https://www.uscis.gov/i-9 . Employers will not be permitted to use the old version of Form I-9 (dated 03/08/2013) as of January 22, 2017.   The new version asks for “other last names used” rather than “other names used,” and streamlines certification for certain foreign nationals.  Other changes include: the addition of prompts to ensure information is ...

      New Law Expands California’s Heat Illness Regulations to Include Indoor Employees

      Existing regulations establish heat illness prevention standards for outdoor workers.  The regulations include requirements for providing sufficient drinking water at no charge to the employee, allowing for recovery or “cool down” periods, providing shade when the temperature exceeds 80 degrees Fahrenheit, and creating written safety standards.Senate Bill 1167 expands California’s heat illness regulations to protect indoor employees.  The bill requires the Division of Occupational Safety and Health to propose by July 1, 2019, a heat illness and injury prevention ...

      QUESTION:  I am a receiver in a case where the court issued an injunction staying all litigation and creditor action against the entity and assets in receivership. A secured creditor wants to foreclose on one of the estate’s assets. Can it do that? What is the procedure for the creditor to obtain relief from the stay?

      ANSWER: The first thing to remember is that receiverships are not bankruptcy cases. Too often, parties to receivership cases analogize to bankruptcy proceedings. While this is understandable, e, especially given the local rules in some courts which provide the receiver ...

      Assembly Bill 1843 Prohibits Employers from Inquiring about Juvenile Convictions or Using Juvenile Proceedings In Employment

      Effective January 1, 2017, Assembly Bill 1843 prohibits hiring-related inquiries concerning juvenile convictions or from using information regarding juvenile court actions or custodial detentions as a factor in determining any condition of employment.  The new law expands upon recent legislation that restricted the use of expunged, sealed or dismissed juvenile convictions, and is representative of a nationwide trend of restricting inquiries regarding prior convictions.

      This blog is presented under protest by the law firm of Ervin Cohen & Jessup LLP.  It is essentially the ...

      QUESTION:   If I discover possible criminal wrongdoing, am I, as receiver, required to report it to authorities?

      ANSWER:

      The answer depends on whether you are a federal receiver or state court receiver. 18 U.S.C. § 3057(a) provides: “Any judge, receiver, or trustee having reasonable grounds for believing that any violation under chapter 9 of this title or other laws of the United States relating to insolvent debtors, receiverships or reorganization plans has been committed, or that an investigation should be had in connection therewith, shall report to the appropriate United ...

      Senate Bill 1001 Amends the California Labor Code to Expand Protection from Unfair Immigration-Related Practices

      Continuing a recent legislative trend, Senate Bill 1001 expands existing prohibitions regarding unfair immigration-related practices.  Specifically, this bill amends the California Labor Code to provide a civil remedy for an applicant or employee against any unfair immigration-related practice as defined by Labor Code section 1019.  Such “unfair immigration-related practices” include an employer requesting more or different documents than required under federal law for verification purposes, using the federal E-Verify system to check the status of a person at a time ...

      New Laws Expand California’s Equal Pay Act to Include Race and Limit Use of Prior Salary

      The Wage Equality Act of 2016 (Senate Bill 1063) expands California’s Equal Pay Act to target race and ethnicity-related wage differentials. This bill picks up where last year’s Equal Pay Act (which bolstered prohibitions on gender-based pay differentials) left off by adding a new Labor Code provision precluding wage differentials based on race or ethnicity.  Under the Wage Equality Act, employers will be required to demonstrate that a reasonably-applied factor accounts for any pay differential between employees of different races or ethnicities for doing substantially ...

      EEOC Issues First Retaliation Guidance in Almost 20 Years

      The Equal Employment Opportunity Commission (EEOC) recently issued its first enforcement guidance on employment-related retaliation in almost 20 years. The Final Guidance is in response to numerous court rulings on retaliation and the almost doubling of EEOC charges claiming retaliation, making retaliation the most frequently alleged basis of discrimination in the workplace.

      The Final Guidance applies to retaliation under Equal Employment Opportunity (EEO) laws including: the Americans with Disabilities Act (ADA), the Rehabilitation  Act,  the Age Discrimination in ...

      Los Angeles Moves Toward Prohibiting Criminal Conviction Inquiry Prior to Job Offer

      Consistent with a national trend, the Los Angeles City Council’s Economic Development Committee voted last week in favor of a new law prohibiting most employers from inquiring about a job applicant’s possible criminal history until an initial job offer is made and allowing applicants to appeal an adverse decision.  The proposed law, known as the Los Angeles Fair Chance Initiative for Hiring (Ban the Box), will next be heard by the Entertainment and Facilities Committee and if approved, would then be considered by the full City Council.

      Referred to as a “ban the box” law, the ...

      San Francisco First U.S. City to Require Fully Paid Parental Leave

      On January 1, 2017, the City of San Francisco’s paid parental leave ordinance becomes effective for employers with 50 or more employees.  These employers will be required to pay the difference between a new parent’s weekly wage and benefits paid from California’s Paid Family Leave Program for 6 weeks, almost doubling the amount they were eligible to receive under the PFL program.  The law becomes effective for employers with 35 or more employees on July 1, 2017, and on January 1, 2018 for employers with 20 or more employees.  A cap is placed on the employer-paid benefit ...

      New Law Combats Wage Theft by Granting Local Governments Subpoena Power

      In response to the increasing number of cities and counties that have enacted minimum wage ordinances setting wage rates at levels higher than state and federal requirements, last year Assembly Bill 970 was added to the Labor Code allowing the California Labor Commissioner the right to enforce local minimum wage and overtime provisions.  This year the California Legislature looked to enforcement at the local level and passed Senate Bill 1342. Specifically, SB 1342 increases local enforcement to combat wage theft by authorizing cities and counties to issue subpoenas in cases of ...

      AB 2535 Expands Exceptions to Tracking Hours Requirements on Itemized Wage Statements

      Prompted, in part, by a 2015 federal court decision which held that employers must state the total hours worked by outside sales persons, Assembly Bill 2535 amends Labor Code section 226 to further clarify the categories of workers whose wage statements need not show total hours worked.  The amendment specifies that salaried persons exempt from overtime under statute (Labor Code section 515) or an order of the Industrial Welfare Commission need not have hours included on wage statements.  In addition, the amendment lists the following categories of workers for which employers do not ...

      Safe Harbor for Violations of Disability Access Under the Unruh Act

      Senate Bill 269 provides a “safe harbor”  period for some businesses to correct certain violations related to construction-related disability access under the Unruh Act.  The bill reduces fines for certain technical violations corrected within 15 days of notice or service of the complaint, whichever is earlier, and where a business has had a Certified Access Specialist (CASp) inspect the property.  In addition, lower fines apply to smaller businesses which employed 25 or fewer employees on average over past 3 years, and which have averaged gross receipts of less than $3,500,00 ...

      New Law May Reduce Amount Subject to Wage Garnishment

      In case you missed it, Senate Bill 501, a law which became effective on July 1, 2016, may reduce the prohibited amount of weekly disposable earnings that may be garnished depending on where the employee works.

      Specifically, SB 501 adjusts the existing statutory scheme, which limits the amount of an individual judgment debtor’s weekly disposable income subject to garnishment to the lesser of 25% of the disposable earnings or the amount by which the individual’s disposal earnings exceed 40 times the state minimum wage, to now include the possibility of a higher local minimum wage ...

      Beginning January 1, 2017, Assembly Bill 1245 requires that employers with 10 or more employees must file all unemployment insurance reports and returns using the e-file system. Also, these employers must remit contributions for unemployment insurance premiums by electronic funds transfer. The law will extend to all employers on January 1, 2018. Businesses without the necessary technology may be exempted, but must request a waiver.

      This alert is intended to note current legal trends in commercial lending and risk management issues. No alert should be construed as representing ...

      Senate Bill 667 Extends Claim Period Under State Disability Insurance Program

      Effective July 1, 2016, Senate Bill 667 extends from 2 weeks to 60 days the period of time that an employee can reopen a disability insurance claim without having a new 7 day consecutive day waiting period of wage loss. This legislation is intended to assist employees returning to work after a 2 week or longer period of disability, who then suffer a recurrence of the same or related condition, and would have had to undergo a second 7 day waiting period before receiving benefits under current law.

      This alert is intended to note current legal trends in commercial lending and risk management ...

      New Workplace Smoking Prohibitions Include E-Cigarettes

      So you think vaping is the key to reducing workplace stress? Think again. Senate Bill 5 expands no smoking prohibitions to include e-cigarettes (vaping), vaporizer carts and expands the definition of “tobacco products” to include all forms of tobacco or nicotine, except for approved cessation products, such as nicotine gum. Assembly Bill 7 expands the prohibition on smoking in the workplace to include owner-operated business, including a business where the owner is the only employee. Even though vaping equipment such as cartridges from Hamilton Devices CCELL are readily ...

      EEOC Issues Final Rules on Wellness Programs

      The EEOC issued final rules under the Americans with Disabilities Act (ADA) regarding employer-sponsored wellness programs which require disability-related information or medical exams, as well as final rules under the Genetic Information Nondiscrimination Act (GINA), regarding all employer-sponsored wellness programs.  Employers should review the final rules, as the EEOC makes apparent that compliance with The Health Insurance Portability and Accountability Act (HIPAA) nondiscrimination rules does not necessarily place an employer in compliance under the ADA or ...

      EEOC Issues Guidance Regarding Leave as an Accommodation Under the ADA

      The U.S. Equal Employment Opportunity Commission (EEOC) recently issued a guidance to employers regarding an employer’s obligation under the Americans with Disabilities Act (ADA) to provide unpaid leave or extend a paid leave on an unpaid basis beyond its original term as a reasonable accommodation under the ADA, provided no undue hardship would result for the employer.

      The EEOC clearly views providing unpaid leave as an accommodation to be a significant issue that may require employers to change their usual practices when needed.  Specifically, the EEOC advises that if an ...

      Private Attorney General Act Amendment Permits More Government Oversight of Claims

      Buried in an appropriations bill designed to address no fewer than 42 separate issues is a small, but important item for California employers. In  response to requests for legislative restrictions on the Private Attorneys General Act of 2004 (PAGA), the legislature passed State Bill 836, the Governor’s budget bill.  SB 836 includes an amendment to PAGA which provides the Labor Workforce Development Agency (LWDA) with increased oversight of PAGA actions by allowing the LWDA additional time to review and investigate PAGA claims.  There are new requirements for online filing ...

      Question: Unauthorized Transfers of Receivership Property: Void, Voidable or Ok?

      Answer: In a recent unpublished bankruptcy appellate panel decision (In Re Domum Locis, LLC, 2015 WL 4697747 (9th Cir. BAP 2015)), the BAP reversed the bankruptcy court’s published decision in which the bankruptcy court held that a transfer of property in receivership by the defendant without permission of the receivership court, was void. In Re Domum Locis, LLC, 521 B.R. 661 (Bankr. C.D. Cal. 2014). The bankruptcy court’s decision was discussed in the Winter/Spring 2015 ...

      Question: I have seen various instances where receivers have requested that funds from returned or uncashed checks from a distribution be redistributed to other claimants or used to pay administrative fees or costs. Is this proper? Can the receiver get in trouble for not simply escheating the funds?

      Answer: In California, what a receiver is to do with unclaimed funds is specifically governed by California Code of Civil Procedure § 570. It provides: “A receiver having any funds in his hands belonging to a person whose whereabouts are unknown to him, shall ...

      Employers Must Remember to Raise Minimum Wage in Los Angeles County

      Like the City of Los Angeles, Los Angeles County raised the minimum wage for employers with 26 or more employees to $10.50 starting July 1, 2016. The rule will apply to all workers who work at least 2 hours in the unincorporated areas of Los Angeles County in a given week.

      The Los Angeles County website provides a method to determine if a business is in an unincorporated area of the county.

      The Los Angeles County poster can be found here.

       

      This publication is published by the law firm of Ervin Cohen & Jessup LLP. The publication is intended to present an overview of current legal trends; no article ...

      Question: Do you need a confirmation hearing when a receiver is appointed ex parte and are there any exceptions?

      Answer: Yes and no. In early practice in California, the appointment of a receiver on an ex parte basis was treated similar to an application for a temporary restraining order, pending the issuance of a preliminary injunction. As in that situation, where a plaintiff sought the appointment of a receiver on an ex parte basis, the appointment was only temporary, pending a hearing on an order to show cause why the appointment of the receiver should not be made ...

      New Minimum Wage For Pasadena Starting July 1, 2016

      In a move which matches its counterparts in Los Angeles and Santa Monica, the City of Pasadena is set to increase its minimum wage for employers with 26 or more employees to $10.50 on July 1, 2016, while smaller employers have until July 1, 2017.  The increase applies to employees who work at least 2 hours in a week in Pasadena, as follows:

      Employers with 26 or more employees shall pay a wage of no less than the hourly rates set forth:
      1. On July 1, 2016, the hourly wage shall be $10.50
      2. On July 1, 2017, the hourly wage shall be $12.00
      3. On July 1, 2018, the hourly wage shall be $13.25

      Employers with 25

      A Reminder: Increased Minimum Wages for Santa Monica and Los Angeles 

      An increase in temperatures will not be the only increase employers will see this July: employers in the City of Los Angeles and in the City of Santa Monica are reminded that minimum wages will increase starting on July 1, 2016.  Both the Santa Monica and Los Angeles ordinances apply to any employee who works at least two hours or more within the geographic boundaries of the city within a particular week.  Each ordinance includes a phased increase to reach $15.00 per hour in 2020 for most businesses, with a one year delay to 2021 for businesses with 25 or fewer employees and for qualifying ...

      Today President Obama signed the Defend Trade Secrets Act of 2016 into law, culminating a three year, bipartisan effort to create a federal trade secret law that can be used by private parties in civil litigation. Until now, federal trade secrets claims could only be brought by the Attorney General of the United States. Private litigants were subject to trade secret laws which vary from state to state, with 48 states enacting some form of the Uniform Trade Secrets Act (New York and Massachusetts were the hold outs).

      The DTSA creates a system which includes uniform standards for ...

      New Law Expands California's Paid Family Leave and State Disability Insurance

      Approximately 15 years ago California became the first state to provide paid time off to workers to care for a new child or ailing family member.  The law, which is funded by required worker contributions, provides for up to 6 weeks of wage replacement in connection with certain qualifying events, which events include the temporary disability of an individual worker, caring for certain family members, bonding with a minor child within one year of

      birth, or the placement of a child in connection with foster care or adoption.  This week Governor Jerry Brown expanded that law by signing ...

      Governor Brown Signs New Minimum Wage Increase Into Law

      On Monday Governor Brown signed Senate Bill 3, a bill which will gradually increase minimum wages in California in a manner that is very similar to the Los Angeles ordinance, except that the state increases will not be complete until 2023 (the Los Angeles increases begin on July 1, 2016 with a $10.50 per hour requirement for businesses with 26 or more employees and will continue until the rate reaches $15 per hour on July 1, 2020; Los Angeles allows that smaller businesses with 25 or fewer employees will have an additional year to match the increases).   The first increase starts next year on ...

      A trial set for January 26 will confront whether Sears should be held liable for emotional distress of customers and employees who allegedly suffered from a Sears employee installing peepholes and video cameras in women’s changing rooms in a North Hollywood Sears location. The Daily Journal reached out Kelly Scott, ECJ’s Employment Law head, to get perspective from an employer’s standpoint in the article titled “Sears faces liability for peeping tom employee.”

      This blog is presented under protest by the law firm of Ervin Cohen & Jessup LLP. It is essentially the random ...

      QUESTION: I heard California’s fraudulent transfer law is being changed. How will the changes affect my ability to pursue fraudulent transfers as a receiver?

      ANSWER: Earlier this year the California legislature, based on a proposal made by the National Conference of Commissioners on Uniform State Laws (“Uniform Law Commission”), adopted amendments to California’s Uniform Fraudulent Transfer Act (Civil Code §3439 et. seq.) which take effect on January 1, 2016. While most of the changes are not significant, they will take getting used to. The major change is there will no ...

      Don’t Put Away Those Party Supplies Just Yet: The New IRS Mileage Rates Are Here!

      For the first time in human history, or at least a very long time, the mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes have declined. Specifically, beginning on Jan. 1, 2016, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

      • 54 cents per mile for business miles driven, down from 57.5 cents for 2015
      • 19 cents per mile driven for medical or moving purposes, down from 23 cents for 2015
      • 14 cents per mile driven in service of charitable organizations

      The IRS standard ...

      As we start a new year, employers should check all of their employment practices to make sure they are compliant with current laws and regulations. One of the many changes made in 2016 were comprehensive amendments made by the Fair Employment & Housing Council to the California Code of Regulations regarding the California Family Rights Act (CFRA). The regulations took effect on July 1, 2015 and were intended to conform the CFRA more closely with its federal counterpart, the Family and Medical Leave Act (FMLA), and to clarify some areas of uncertainty. Among other things, the ...

      Wage Garnishment Rules Will Change in 2016

      Senate Bill 501 changes the amount of an employee’s weekly earnings that would be exempt from a wage garnishment order in California. Currently the amount subject to garnishment cannot exceed the lesser of 25% of the employee’s disposable earnings and the amount by which the individual’s disposable earnings for the week exceed 40 times the state minimum wage in effect at the time the earnings are payable. Beginning on July 1, 2016, the maximum amount subject to garnishment will change to the lesser of 25% of the employee’s disposable earnings for the week or 50% of the amount by ...

      New Law Extends Retaliation Protections to Family Members

      Assembly Bill 1509 amends sections 98.6, 1102.5, and 6310 of the California Labor Code by extending certain retaliatory protections afforded to employees to their family members who work for the same employer. Under existing law, employers are prohibited from discharging an employee or taking an adverse action against an employee or applicant for employment because the employee or applicant has engaged in protected conduct, such as filing a written complaint with a government agency based on employment conditions. Effective January 1, 2016, such retaliatory protections will ...

      New Law Gives Labor Commissioner Authority to Enforce Local Overtime and Minimum Wage Laws

      By amending sections 558, 1197, and 1197.1 of the California Labor Code, Assembly Bill 970 authorizes the Labor Commissioner to investigate and, at the request of local government, enforce local laws regarding overtime hours or minimum wage provisions. The Labor Commissioner may issue citations and penalties for violations, except when local government has already issued a citation for the same violation. In addition, AB 970 amends section 2802 of the California Labor Code by authorizing the Labor Commissioner to issue citations and penalties to employers for violating the ...

      AB 622 Restricts the Use of E-Verify

      Assembly Bill 622, which takes effect on January 1, 2016, adds section 2814 to the California Labor Code. Section 2814 prohibits employers from using E-Verify to check the employment authorization status of an existing employee or an applicant who has not been offered employment, except as required by federal law or as a condition of receiving federal funds. Furthermore, upon using the E-Verify system, if the employer receives a tentative non-confirmation issued by the Social Security Administration or the United States Department of Homeland Security which indicates the ...

      QUESTION: The last Ask the Receiver article discussed whether, in federal court, an order approving a receiver’s sale of assets is appealable. While the discussion was interesting, it was not too helpful to me because I am a state court receiver. What is the rule in California state court? Are orders approving a receiver’s sale appealable?

      ANSWER: As the prior Ask the Receiver article indicated, in federal court the appealability of orders in a receivership are limited to three types of orders: (1) orders appointing a receiver; (2) orders refusing to windup a receivership; and ...

      Effective upon signing, Assembly Bill 1506 amends the Private Attorneys General Act of 2004, commonly known as “PAGA”, in a manner that should benefit employers and employees alike and reduce lengthy litigation. Among other things, PAGA permits employees to bring civil actions for violations of California Labor Code section 226(a)(6) and (8), which require an employer to provide its employees with specified information regarding their wages, including the inclusive dates of the period for which the employee is paid and the name and address of the legal entity that is the ...

      Healthy Workplaces, Healthy Families Act Clarified

      Assembly Bill 304 was enacted on an emergency basis shortly after California’s paid sick leave law, known as the Healthy Workplaces, Healthy Families Act of 2014, became effective on July 1, 2015. There were good reasons for the amendment: the paid sick leave law was confusing and difficult to implement. Effective immediately, AB 304 seeks to clarify some aspects of the sick leave law and provides employers with greater options regarding implementation. Specifically, AB 304 permits employers to use a sick leave accrual rate other than the one hour for every 30 hours worked rate ...

      Senate Bill 579 expands Labor Code Section 230.8, providing additional circumstances under which employers with 25 or more employees must provide school or child care activities leave. Beginning January 1, 2016, employees may take leave of up to 40 hours per year, not to exceed eight hours per month, to find, enroll and re-enroll a child in school or with a licensed child care provider, and to handle certain child care emergencies and school emergencies that prohibit the child from attending or require that the child be picked up from school. The leave will extend to a parent ...

      QUESTION: I purchased assets from a receiver. The court approved the sale over the objection of one of the defendants. The sale has now closed. I was just informed that the defendant is appealing the order approving the sale. Can the defendant set aside the sale to me or am I safe?

      ANSWER: In United States v. Antiques Limited Partnership, 760 F.3d 668 (7th Cir. 2014), the federal government sued to enforce tax assessments against a husband and wife and partnerships they controlled to which they transferred property. A receiver was appointed to manage the partnerships and to sell their ...

      Effective January 1, 2016, Assembly Bill 1513 establishes Labor Code Section 226.2, which requires that employers paying piece-rate compensation must pay employees for rest and recovery periods and other nonproductive time separately from any piece-rate compensation, and that wage statements reflect these payments. The hourly rate paid for rest and recovery periods must be the greater of the applicable minimum wage, or the employee’s average hourly wage for all time worked excluding rest and recovery periods or overtime, and the rate paid for other nonproductive time must ...

      New Law Targets Supervisors for Wage Liability

      Senate Bill 588, referred to as the wage theft bill, significantly expands individual liability for wage and hour violations by authorizing the Labor Commissioner to hold a hearing to recover civil penalties for wage and hour violations against not only the employer, but also a person acting on behalf of an employer, which includes an owner, director, officer, or managing agent of the employer. These persons may now be held liable for violating or causing a violation of any provision regulating minimum wages or hours and days of work in any Wage Order or the Labor Code. SB 588 also makes it ...

      The Fair Pay Act: An Equal Pay Game-Changer

      It was little commented upon as it worked its way through the legislature, being just one of thousands of laws proposed each year, but make no mistake about it—Senate Bill 358, The Fair Pay Act, is an important new law for California employees and employers. Prompted by the continuing wage gap between men and women, SB 358 is designed to improve a California law that has existed since 1949. Prior to the enactment of SB 358, employees claiming that they received unequal pay based on their gender had to demonstrate that they weren’t paid at the same rate as someone of the opposite sex at ...

      Effective January 1, 2016, Assembly Bill 987 prohibits an employer from retaliating or otherwise discriminating against a person for requesting accommodation of his or her disability or religious beliefs, regardless of whether the accommodation request was granted. This legislation was in response to the California Court of Appeal decision in Rope v. Auto-Chlor System of Washington, Inc., in which the court held that a request for reasonable accommodation was not a protected activity under the California Fair Employment and Housing Act, and therefore a claim of retaliation ...

      Can A Receiver Be Appointed To Take Possession And Safeguard Transferred Property Pending Trial Of A Fraudulent Transfer Action?

      QUESTION: I know receivers often bring actions to set aside fraudulent transfers and recover the property transferred, but can a receiver be appointed in a fraudulent transfer lawsuit to take possession of and safeguard transferred property pending trial?

      ANSWER: Yes, a receiver can be appointed in a fraudulent transfer lawsuit to take charge of the asset transferred or its proceeds, or an injunction can be obtained to prevent further transfers of the asset or its proceeds. These remedies are especially useful when the property involved is income producing. California’s, as ...

      Senate Bill 600 expands the protections of the Unruh Civil Rights Act, a law designed to protect consumers. The Unruh Civil Rights Act already provides that all persons within the jurisdiction of this state are entitled to full and equal accommodations in all business establishments regardless of their sex, race, color, religion, ancestry, national origin, disability, medical condition, genetic information, marital status, or sexual orientation. SB 600 extends these protections by prohibiting discrimination by businesses based on citizenship, primary language or ...

      Higher Wages for Computer Software Employees for 2016

      The Department of Industrial Relations recently announced an increase in the minimum hourly wage required for certain computer software workers who are exempt from overtime under California Labor Code section 515.5. Specifically, the DIR raised the computer software employee minimum hourly rate of pay exemption from $41.27 to $41.85, the minimum monthly salary exemption from $7,165.12 to $7,265.43, and the minimum annual salary exemption from $85,981.40 to $87,185.14. The increases become effective on January 1, 2016 and are based on the 1.4% increase in the California ...

      Minimum Wage Increases: Not a Simple Topic for Discussion

      On October 15th, 2015, I was part of a panel/roundtable discussion regarding minimum wages. The panel was presented by the Government Affairs Committee of the Beverly Hills Chamber of Commerce at the request of the City of Beverly Hills. The specific purpose of the panel was to discuss a potential increase in the minimum wage for the City of Beverly Hills in response to the recent ordinance passed by the City of Los Angeles, which ordinance will gradually increase the minimum wage for businesses with 26 or more employees to $15 an hour by July of 2020 (smaller employers and nonprofits have ...

      New NLRB Ruling is Indicative of Significant Change in Federal Employment Law

      Since last Thursday, the Internet has been buzzing with news of the National Labor Relations Board’s decision in Browning-Ferris Industries of California, Inc., which held that a Silicon Valley recycling center was a “joint employer” along with the staffing agency that provided the center’s workers. In so doing, the Board established a new standard for determining the existence of joint employers.

      The Board began by stating that two or more entities may be joint employers of the same employees if they “share or co-determine those matters governing the essential terms ...

      Posted in The Real Dirt

      You’ve been approached by a wireless carrier to lease space on your building or property—now what? While rent is an important consideration, you should keep in mind other ways to generate revenue in the future, including limiting the carrier’s right to perform equipment modifications without your consent and requesting revenue sharing for future subtenants.

      In addition to the rent, there are non-monetary terms to consider, such as Right of First Refusal provisions that limit your ability to sell the rental stream to a buyout company or automatic renewal terms that extend the ...

      Can a Magistrate Appoint a Receiver?

      QUESTION:  Can a magistrate appoint a receiver?

      ANSWER: While an arbitrator cannot appoint a receiver, Marsh v. Williams, 23 Cal. App 4th 238 (1994), a magistrate can.

      A district judge may designate a magistrate judge to hear and determine any non-dispositive civil matter. 20U.S.C. § 636(b)(1)(A). With respect to dispositive motions, a district judge may designate a magistrate judge to conduct hearings, including evidentiary hearings, and to submit to the district judge proposed findings of fact and recommendations.28 U.S.C. § 636(b)(1)(B). Dispositive motions include those ...

      Global warming, a decaying infrastructure, budget problems, pollution, endangered species; these are all serious problems. In a world full of serious problems, lesser tragedies frequently go unnoticed. Like the plight of the American cheerleader. These men and women generally promote their teams for little or no pay, have no benefits, and are afforded none of the basic rights enjoyed by hourly employees. For a while it seemed as if no one would hear their choreographed cries for help. But fear not, readers, for the California Legislature has stepped in to save the day.

      Assembly Bill ...

      Posted in Taxing Matters

      In CCA 201517006 (dated 10/9/14 and released 4/24/15), the general partner of a publicly traded partnership (PTP) had, in addition to its capital interest, a profits interest in the PTP called “incentive distribution rights” (IDRs). We know the IDRs are a profits interest because they “did not carry any interest in partnership capital [on the date of the issuance of the IDRs] but entitled [the general partner] to share in future partnership profits and quarterly distributions”. What is not clear in the CCA is why the IDRs received the benefits of the Safe Harbor of Revenue ...

      New FMLA Forms Issued by Department of Labor

      The US Department of Labor recently revised the model Family and Medical Leave Act notices and medical certification forms to be given to employees in connection with the FMLA. The forms are not substantially changed from the prior versions, but do make clear that the employer is not seeking information about genetic tests, genetic services or the manifestation of disease or disorder in an employee’s family members. The forms and notices are accessible on the DOL website here and are set to expire on May 31, 2018.

      California employers who use the form for employees requesting leave ...

      Is the Transfer of a Receivership Estate Asset Without Court Approval, Void or Voidable?

      QUESTION: I am a receiver and I have just learned that the defendant purported to sell property I am receiver over. I contacted counsel for the defendant and for the buyer and demanded that the property be returned to me. The buyer’s attorney said his client would not reconvey the property, that the sale was good, and that I should bring a contempt action against the defendant if the defendant violated my order of appointment by selling the property. Is this correct?

      ANSWER: A recent case, In Re Domun Locis LLC, 521 B.R. 661 (Bankr. C.D. Cal. 2014), decided by bankruptcy Judge Kwan, dealt ...

      Supreme Court Denies Review of PAGA Waiver Case… Again

      In a move that will undoubtedly frustrate California employers, the United States Supreme Court has denied review of Bridgestone Retail Operations v. Milton Brown, a California Supreme Court case which held that Private Attorney General Act waivers in employment arbitration agreements are not enforceable. The refusal to review this case comes on the heels of the U.S. Supreme Court’s decision to deny review of Iskanian v. CLS Transportation, the first case which sought review by the Court of this issue. The petitions seeking review of the Bridgestone and Iskanian cases ...

      The Nuts and Bolts of Digital Advertising

      “We have the best mobile app on the market!” “Subscribe now and win an Apple watch!” “Download our software and we guarantee an increase in your business within 30 days!” That all sounds quite wonderful, actually. Where do I sign up? As a consumer, these statements pique my interest. However, if you are the company promoting your products through these kinds of digital advertisements, you may want to choose your words more carefully. While the Internet and an ever expanding universe of technology platforms are connecting companies and consumers at an unimaginable rate ...

      Another Bill Seeks To Increase California’s Minimum Wage

      For the third year in a row, the California Senate is seeking to increase California's minimum wage with automatic adjustments for inflation. Specifically, Senate Bill 3 proposes to raise minimum wage to $11 per hour on January 1, 2016, $13 per hour on January 1, 2017 and will automatically adjust thereafter commencing on January 1, 2019. The bill has already been approved by the senate and will now proceed to the State Assembly for review. Prior efforts to legislate automatic adjustments of the minimum wage have failed, although Assembly Bill 10 was signed into law after ...

      Fore! Ponzi Scheme Lands The Golf Channel In The Rough

      Receivers handling Ponzi schemes and fraud cases are familiar with the concept of suing the “winners” in the scheme to recover transfers made to them in excess of their investment. Such suits are based on the theory that the excess payments are fraudulent transfers. Indeed, it is generally accepted that where a Ponzi scheme is involved, no value is given for the excess payments received by investors. Donell v. Kowell, 533 F.3d 762 (9th Cir. 2008). Cases are split on whether parties that aided the fraud, such as brokers or sales people, can be held liable for payments they received. A ...

      One of the more interesting laws to emerge from the 2014 legislative session was Assembly Bill 1792. AB 1792 amends and adds sections to the Government Code, Unemployment Insurance Code and Welfare and Institutions Code. Specifically, the law requires the State of California to compile information on the use of public assistance programs, including the average cost of state and federally funded benefits provided to each individual receiving benefits. “Public assistance program” is defined specifically as the Medi-Cal program. Beginning in January of 2016, the law requires ...

      A hot topic for legislators throughout the United States, last fall California became the second state to require paid sick leave. Effective July 1, 2015, California’s Healthy Workplaces, Healthy Families Act of 2014 provides that all employees working in California for 30 or more days within a year from the commencement of employment are entitled to paid sick leave, which means that temporary and part-time employees may be eligible. Sick leave must either (i) accrue at the rate of no less than one hour for every 30 hours worked, or (ii) total at least three days or 24 hours and be ...

      QUESTION: I purchased assets from a receiver. The court approved the sale over the objection of one of the defendants. The sale has now closed. I was just informed that the defendant is appealing the order approving the sale. Can the defendant set aside the sale to me or am I safe?

      ANSWER: In United States v. Antiques Limited Partnership, 760 F. 3rd 668 (7th Cir. 2014) the federal government sued to enforce tax assessments against a husband and wife and partnerships they controlled and transferred property to. A receiver was appointed to manage the partnerships and to sell their assets to ...

      Wage Recovery Penalties Continue to Increase

      Continuing in a trend that started in 2013, the California Legislature focused considerable time and effort on expanding liability and increasing penalties under several existing laws for 2015. Assembly Bill 1723 amended Labor Code section 1197.1 by expanding the penalty for the failure to pay employees minimum wage to include penalties under Labor Code section 203 in addition to liquidated damages in the amount of the unpaid wages, recovery of the unpaid wages and pay period violations for each employee of $100.00 for the first pay period and $250.00 per pay period thereafter. AB ...

      Assembly Bill 1897 is essentially an effort to hold employers who contract for labor accountable for wage and hour violations, something the legislature has sought to do in various failed legislative attempts over the last several years. Specifically, AB 1897 adds section 2810.3 to the Labor Code and requires client employers to share all civil legal responsibility and liability with labor contractors. “Client employer” is defined to exclude businesses with a workforce of less than 25 workers and employers who employ five or fewer workers through a labor contractor at any ...

      Interns and Volunteers Protected from Workplace Harassment, Discrimination and Retaliation

      We’ve written about the abuse of interns previously. At the time, we were focused on the all-too-common practice of using unpaid interns to augment the workforce, a violation of labor law that occurs frequently in the entertainment industry. But whether paid or unpaid, it is clear that interns and volunteers must be treated with the same dignity and respect as are paid employees and independent contractors.

      Indeed, Assembly Bill 1443 recently amended the Fair Employment and Housing Act to prohibit discrimination in the selection, termination, training or treatment of unpaid ...

      A Reminder: Employers Must Train Supervisors on the Prevention of Abusive Conduct

      Assembly Bill 2053 expanded the existing requirement for sexual harassment training under Government Code section 12950.1 to include training on the prevention of abusive conduct. Effective January 1, 2015, the law applies to every California employer that employs 50 or more persons or receives the services of 50 or more persons pursuant to a contract. “Abusive conduct” is defined as conduct that a reasonable person would find hostile and offensive and is otherwise unrelated to legitimate business interests. Abusive conduct may include derogatory remarks, insults ...

      Can a Receiver Reject a Lease like a Bankruptcy Trustee?

      QUESTION: I am a receiver for an operating entity. It has three offices. The rent for one of the offices is excessive and the business does not need all the space. I have approached the landlord about giving back some of the space or terminating the lease, but no dice. Can I reject the lease like a bankruptcy trustee?

      ANSWER: While trustees and receivers are different, there are many similarities. The Bankruptcy Code adopted many provisions from prior receivership practice. The power to assume or reject a lease is one of them. A receiver is not stuck with a defendant’s leases just ...

      QUESTION: I am a receiver appointed pursuant to stipulation in an action pending in superior court between a husband and a wife over the operation of a business they own. After operating the business for many months, I agreed to a settlement with the husband resolving many of the disputed issues. The wife disagreed with the proposed settlement and moved to transfer the litigation to the family law court. After the action was transferred, the judge in the family court ruled that the original judge who appointed me had no jurisdiction to do so and that the appointment was “void.” The ...

      Posted in The Real Dirt

      An angry client calls: "I have been sued." But this time, there is absolutely no basis in law or fact for the lawsuit.

      The client asks: "Can I get the case dismissed and recover my attorney's fees against the lawyer and opposing party who sued me?"

      I might answer that being sued is like having a wedding. You pay a lot and get involved in a very protracted, expensive affair, which may not end well even under the best of circumstances. On top of the pain and rigors of litigation, do you really want to pursue an action for malicious prosecution against your adversary after prevailing to try to win back ...

      EEOC Reports Statistics on Employee Filings for 2014

      At the beginning of every year, the Equal Employment Opportunity Commission reports statistics on types of charges filed by employees and former employees over the course of the preceding year. These statistics help employers self-audit and focus on policies and practices they need to revisit to avoid becoming part of the following year’s statistics. The charge numbers released by the EEOC for 2014 show the following breakdowns by bases alleged in descending order.

      • Retaliation under all statutes: 37,955 (42.8 percent of all charges filed); nearly half of all charges filed!

      Most California employers know that they have to reimburse employees for business-related expenses. Indeed, California Labor Code section 2802(a) provides that an employer “shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties…” This requirement has led prudent employers to reimburse employees not only for such obvious costs as travel or mileage expenses, but for less obvious expenses such as the cost to dry clean a uniform that cannot be laundered. What California ...

      Fine, but make sure that you do so correctly. Many employers prefer to reimburse employees for healthcare insurance premiums rather than hassle with providing coverage under a group healthcare plan. In so doing, these employers assume that this payment is excluded from the employee’s gross income. However, this assumption is both incorrect and potentially expensive.

      In light of the Patient Protection and Affordable Care Act (ACA), the Internal Revenue Service (IRS) has determined that, unless ACA requirements are satisfied, such reimbursements for individual healthcare ...

      New Mileage Rates for 2015

      Oil prices may be going down, but reimbursement rates are going up. On January 1, 2015, the IRS standard mileage deduction rate increased from 56¢ to 57.5¢ per mile for business miles driven. However, the rate for medical or moving purpose mileage decreased from 23.5¢ to 23¢. The rate for miles driven in service of a charitable organization remained set at 14¢ per mile. The business rate is based on an annual study of the fixed and variable costs of operating an automobile. The medical and moving rate is based on the variable costs. The charitable rate is based on statute.

      Because ...

      Many businesses shut down for specific periods of time over the holidays. Often this is due to a reduction in the amount of available work and/or a reduction in available staffing. In some cases, such as the entertainment industry, it is a standard practice. However, most businesses are not aware that these types of temporary closings or layoffs can be a trap for the unwary employer. Indeed, the California Division of Labor Standards Enforcement (DLSE) generally maintains that a temporary layoff must be treated as a termination unless the employee is given a return to work date within ...

      QUESTION: I am a receiver for a partnership. While most of the partnership assets are in California, I have discovered the partnership owns a storage facility in Nevada and mining equipment in Arizona. Can I take over and operate the storage facility and/or seize and sell the mining equipment based on my California order of appointment or do I need to do something special?

      ANSWER: The “something special” you need to do will depend on whether you were appointed by the superior court or the district court. If you are state court receiver, your authority over the business activity and ...

      QUESTION: Can a receiver be appointed to sell intellectual property to satisfy a judgment?

      ANSWER: Yes. A receiver in aid of execution is an excellent way of liquidating intellectual property assets to satisfy a judgment. Because these types of intellectual property assets are intangibles, a writ of execution cannot be used. It is important, however, to do it the correct way so that a buyer will be able to prove the chain of title needed in any later infringement action. A method approved in California is to obtain an order compelling the judgment debtor to assign the copyright ...

      Each year, the IRS issues contribution limits for Health Savings Accounts for the upcoming year. The 2015 contribution limits are outlined below.

      • The maximum contribution for individual coverage is $3,350;
      • The maximum contribution for family coverage is $6,650; and
      • In addition to the annual contribution, if you are 55 or older, you may add up to $1,000 in additional monies as part of a "catch up" contribution.

      This blog is presented under protest by the law firm of Ervin Cohen & Jessup LLP.  It is essentially the random thoughts and opinions of someone who lives in the trenches of the war ...

      Bankruptcy Bleak House—The Limited Ability of Bankruptcy Courts to Enter Final Judgments

      In Stern V. Marshall, ____ U.S ___, 131 S. Ct. 2594 (2011), the Supreme Court held that bankruptcy courts cannot issue final judgments on state law counterclaims even though they are “core proceeding”. Stern V. Marshall is the bankruptcy courts’ equivalent of Dickens’ “Bleak House”. Like in “Bleak House”, by the time the litigation concluded, all the initial participants were dead. Although the litigants are deceased, the case continues to haunt the bankruptcy court system. Stern V. Marshall’s meaning and effects are still being litigated. Indeed, there have ...

      QUESTION: I have concluded my work as a receiver in a case, and the parties have requested that I enter into a stipulation with them waiving my final account and report discharging me as a receiver so they can avoid the cost and delay of my preparing a final account and report and the hearing on same. Is this a good practice?

      ANSWER: Although in the past parties would sometimes enter into stipulations with a receiver to waive his or her final account and report and stipulate to the receiver’s discharge, so as to avoid the cost involved, in 2002, Rule of Court 1908 was adopted, which changed the ...

      QUESTION: I am a receiver for a shopping center. I want to enter into a five year lease for one of the stores. Is there a statute or rule that limits the term of leases a receiver can execute?

      ANSWER: There is no California statute or case that limits the term of leases a receiver can execute. However, limits are often placed on the term of such leases by the order appointing the receiver and often depend on the type of receiver appointed, i.e., a rents, issues and profits receiver versus an equity receiver. You don’t indicate which you are. In rents cases, the practice developed, at least in ...

      The National Labor Relations Board (NLRB) recently ratified all the decisions made by the NLRB, including those made in administrative and personnel matters, during the period of time when it did not have a proper quorum. This was the period from January 4, 2012 to August 5, 2013, during which the United States Supreme Court held in NLRB v. Noel Canning, that the NLRB did not have a proper quorum due to improper recess appointments. The NLRB ratified its prior actions in an attempt to eliminate any questions concerning the validity of the decisions it made during this period. Will ...

      The Receiver is Thinking of Filing a Bankruptcy Petition for a Corporation in Receivership. As Counsel, if this Happens, are My Fees in Jeopardy?

      QUESTION: I am counsel to a receiver for a corporation and things aren’t going too well. The receiver is thinking of filing a bankruptcy petition for the corporation. If this happens, are my fees in jeopardy?

      ANSWER: They might be. Generally when a bankruptcy petition is filed for an entity in receivership, the receiver becomes a “custodian” under the Bankruptcy Code. 11 U.S.C. §101(11). As a custodian the receiver has certain duties as set forth in 11 U.S.C. §543, including delivering property in his or her possession, custody or control to the trustee and filing an accounting of ...

      As is increasingly reported, there is a battle raging in today’s marketplace between companies with new technology platforms and content creators from the entertainment community. On the one hand, are computer science engineers and programmers developing new and better code, creating more complex algorithms, and building ever expanding server farms at a breakneck pace, all to give the consumer cheaper, faster, and more mobile access to music, movies and television. On the other hand, are musicians, writers, movie and television producers and broadcasters, all trying to ...

      Ever wonder how your employees would handle a life-threatening situation? Well, four supervisors of the West Kern Water District apparently did. And they didn’t just wonder; concerned about robberies in the area and following staff training, on July 29, 2011, they decided to test their cashiers by staging an armed robbery of the District’s office.

      The supervisors put on quite a show. They kept their plans secret until one of the supervisors entered the District's office wearing a ski mask and sunglasses. He approached cashier Kathy Lee, slammed a paper bag on the counter in front ...

      That may be what the NLRB and others are thinking right now. Remember all those rather aggressive decisions made by the NLRB about a couple of years ago? It is as if they never happened. In a unanimous decision, the United States Supreme Court has invalidated all decisions of the NLRB since January 2012, when President Obama appointed 3 of the 5 member NLRB during a time when Congress was convening every 3 days, to July 2013, when the Senate confirmed a 5 member board. In National Labor Relations Board v. Noel Canning, the Supreme Court held that the president lacked authority to make the ...

      Finally! The California Supreme Court recently fell in line with the United States Supreme Court on the enforceability of class action waivers in arbitration agreements by upholding their enforceability. Previously, the California Supreme Court had held in Gentry v. Superior Court that class action waivers in employment agreements were invalid in certain circumstances. Subsequently, the United States Supreme Court decided the AT&T Mobility v. Concepcion case, which in effect upheld class action waivers, with the Court reasoning that a state procedure that is incompatible ...

      QUESTION: I am an equity receiver and I am setting up a claims procedure. I know some creditors and investors have filed suit against third parties to recover their losses. Can I consider these possible third party recoveries in fashioning the claims procedure and ultimately paying claims? a receiver appointed by a court in California in a contentious case. One of creditors has threatened to sue me in Nevada were he is located. How can this creditor sue me? I am a receiver appointed by the Court!

      ANSWER: Yes. This issue is not new but was recently highlighted by the Ninth Circuit in ...

      California Minimum Wage Increases July 1st!

      Any California employer that has been in hiding the last six months or more may not be aware that California’s minimum wage increases to $9 per hour from the existing minimum wage of $8 per hour on July 1, 2014. In addition to paying more money to minimum wage hourly workers, the increase will impact other employee pay requirements. Specifically, minimum salary requirements for the administrative, executive or professional exemptions from overtime will increase to $3,120 per month (or $37,440 annually), from $2,773.33 per month (or $33,280 annually). Further, inside sales ...

      QUESTION: I am a receiver appointed by a court in California in a contentious case. One of creditors has threatened to sue me in Nevada were he is located. How can this creditor sue me? I am a receiver appointed by the Court!

      ANSWER: Welcome to the gritty world of receiverships. While you are a court appointed receiver, and may personally have quasi-judicial immunity, you can still be sued. Your question is unclear as to why the creditor wants to sue you and whether he intends to sue you in your official capacity as receiver or individually. Generally, receivers do have quasi-judicial ...

      Introductory Periods Must Be Reconsidered in Light of Insurance Waiting Time Rules

      Most employers have an “introductory” or “probationary” period for new full-time employees. This period is usually defined as a set period of time following the date of hire, usually 90 days in length, during which a new employee is considered to be on “introductory status” and the employee and the employer get acquainted. During the introductory period, new employees are eligible only for certain benefits, such as Workers' Compensation insurance and Social Security. Employers usually inform new hires that the period may be extended if the employer determines that ...

      QUESTION: I am a receiver. I filed a fraudulent transfer action against the mother of the defendant in the main case in which I was appointed. I only discovered six weeks ago that the defendant had transferred hundreds of thousands of dollars to his mother, approximately 4½ years ago, in order to, I believe, hide assets from creditors pursuing him. Counsel for the mother claims that the causes of action I am asserting against the mother are barred by the statute of limitations. How can that be when I only just obtained the documents showing the transfers to the mother?

      ANSWER: For actual ...

      QUESTION: My cousin, who is a lawyer, asked me to act as a receiver in a case where he represents the plaintiff. Is there some prohibition on my doing so? Am I ineligible to act as receiver because of our family relationship?


      ANSWER: In California, Code of Civil Procedure § 566(a) sets forth who is ineligible to be appointed a receiver. It provides: “No party, or attorney for a party, or a person interested in an action, or related to any judge of the court by consanguinity or affinity within the third degree, can be appointed receiver therein without the written consent of the parties, filed ...

      QUESTION: I have noticed language in a number of receivership orders providing that the receivership entities’ officers and directors are removed and their powers are vested in the receiver and further enjoining the officers and directors from filing a bankruptcy petition on behalf of the entity placed in receivership. Are such provisions effective in preventing former management from commencing a bankruptcy for the receivership entity and, if a petition is filed, can the receiver easily have the case dismissed because the persons filing the bankruptcy petition have no ...

      We recently posted information concerning OSHA’s new training requirements that are designed to align its Hazard Communication Standard with the United Nations’ Globally Harmonized System of Classification and Labeling of Chemicals (see post here). Since that time, I have been asked if the requirements apply to office environments. The short answer is that the requirements apply to every employer that has hazardous chemicals in the workplace. OSHA estimates that this includes about 5 million employers in the United States, a figure which undoubtedly includes more than a ...

      QUESTION: I have been appointed receiver in a case where the defendant appealed my appointment. If the appeal is successful, and the receivership is terminated, how do I get paid?


      ANSWER: As a general rule, fees and costs of a receiver and his or her professionals are administrative expenses, chargeable against the assets in the receivership estate. The assets in the estate are liable for those fees and costs even if the underlying litigation is dismissed or judgment is rendered for the defendants. Venza v. Venza, 101 Cal. App. 2d 678, 680 (1951). The receivership court has discretion ...

      One of the laws that was passed in California in 2013 that did not receive much media attention was Assembly Bill 1386. AB 1386 amended Labor Code section 98.2 to give the Labor Commissioner additional means to collect wages and penalties on behalf of workers. Existing law had authorized the Labor Commissioner to issue orders, decisions, or awards in connection with employee complaints governed by the Labor Code. As amended by AB 1386, Labor Code section 98.2 now provides that any amount due under a final Labor Commissioner order, decision, or award permits the Labor Commissioner to ...

      QUESTION: The court has approved my final account and report, discharged me as receiver and exonerated my bond in a difficult, litigious case I am glad to have over. An elder receiver I know told me I could still be liable for acts or omissions that occurred in the case even though I have been discharged and my bond exonerated. Is this true?

      ANSWER: As the saying goes: “Listen to your elders”. There are situations where you may still have liability for actions taken or not taken during your term as receiver; even personal liability. Although there is a dearth of case law on this subject, the ...

      QUESTION: I have been appointed receiver in a case involving contentious litigation over a business. The defendant has appealed my order of appointment. The defendant has also repeatedly violated the injunction issued along with my appointing order and has refused to turn over or account for receivership property. Because of the defendant’s conduct, at my request, the court issued an order to show cause why the defendant should not be held in contempt. Given the defendant’s conduct, is there an argument that his appeal should be dismissed because he has refused to comply with the ...

      Money, that is. It is a motivation shared by employers and employees alike. It is the reason why employers are in business and why employees work for employers. And it is often the primary reason for a lawsuit.None of this will surprise savvy employers. But what often comes as a surprise to employers is that the plaintiff is not usually the person driving employment litigation. Whether it is a class action or a single plaintiff dispute, as the saying goes, if you “follow the money” more often than not it is the plaintiffs’ counsel that is in command of the lawsuit, from start to finish.

      Severance Pay As Wages: Business As Usual

      Confirming what most employers have long assumed to be true, this week the U.S. Supreme Court held that severance payments made to terminated employees are “wages” subject to the Federal Insurance Contributions Act (FICA) tax withholding requirements. Specifically, United States v. Quality Stores, Inc. was a bankruptcy case which involved an attempt by Quality Stores to claw back taxes paid in connection with severance to workers. The issue on appeal was whether supplemental unemployment compensation benefits, which was how both the taxing authorities and Quality Stores ...

      Secretary of Labor Directed to Update Federal Overtime Rules

      In a brief memorandum recently issued to the Secretary of Labor, President Obama directed the Department of Labor (DOL) to update federal overtime rules. As noted in the memorandum, the Fair Labor Standards Act (FLSA) provides basic rights and wage protections for American workers, including Federal minimum wage and overtime. Most workers covered under the FLSA must receive overtime pay of at least 1.5 times their regular pay rate for hours worked in excess of 40 hours per week (Alaska, California and Colorado have established additional requirements, including daily ...

      QUESTION: Before the Commercial Code was amended a few years ago, it provided that a receiver becomes a lien creditor over personal property in the receivership estate and can avoid unperfected security interests in such property. I can’t find that provision in the amended code. Does it still exist, and if so where is it?

      ANSWER: The concept of a receiver becoming a lien creditor upon his appointment, with the ability to avoid unperfected security interests in property of the estate, still exists in the amended Commercial Code; it’s just harder to find than it used to ...

      A Reminder: The Standard Mileage Rates for 2014 Have Changed

      On January 1, 2014, the IRS standard mileage deduction rate decreased from 56.5¢ to 56¢ per mile for business miles driven. The rate for medical or moving purpose mileage also decreased from 24¢ to 23.5¢. The rate for miles driven in service of a charitable organization remained set at 14¢ per mile. The business rate is based on an annual study of the fixed and variable costs of operating an automobile. The medical and moving rate is based on the variable costs. The charitable rate is based on statute.These rates impact all California employers because California requires that all ...

      QUESTION: Should receivers appear only through counsel to avoid civil liability?

      ANSWER: In Re Shattuck, 411 B.R. 378 (10th Cir. BAP 2009), which held that a receiver, who is not a lawyer, cannot appear in federal court without a lawyer. The decision was based not only on 28 U.S.C. §1654 but also on the fact that a receiver acting in a representative capacity and, not being a lawyer, cannot represent third parties or entities. In thinking further about this issue it dawned on me, like the boy who suddenly realized “the emperor has no clothes”, what authority does a California ...

      When they are not properly paid. A number of law firms and corporate employers consider paralegals to be exempt from overtime. At the federal level, the Department of Labor (DOL) has stated that most paralegals lack sufficient specialized education to qualify for the learned professional exemption and are therefore not exempt from overtime. In this regard, the State of California generally applies more strict standards and will likely follow the DOL.Nor is it likely that paralegals could qualify as exempt from overtime under the other most common exemptions. Specifically ...

      The Department of Treasury and the Internal Revenue Service recently released final regulations for employer responsibility provisions of the Affordable Care Act (ACA) that will delay parts of the employer mandate that require businesses with more than 50 employees working 30 hours or more per week to provide affordable health insurance coverage to workers. The final regulations are designed to allow a gradual phase-in of certain responsibility provisions that will assist employers in complying with and providing coverage during the transitional year of 2015.Specifically ...

      QUESTION: I have been a receiver for quite some time and know how the system works. I have a case without much money currently in it. Instead of hiring counsel, can I file pleadings in the bankruptcy court or the district court, on behalf of the receivership estate, or do I need to employ counsel to do so?

      ANSWER: A new appellate decision calls into question the ability of a receiver, and, in fact a bankruptcy trustee, to file pleadings and represent the estate (receivership or bankruptcy) in federal court. The case holds that only attorneys can appear and sign pleadings on behalf of the ...

      Posted in Taxing Matters

      The Supreme Court has agreed to review the Sixth Circuit Court of Appeals decision in United States v. Quality Stores which held that severance payments to involuntarily terminated employees were supplemental unemployment compensation benefit payments, rather than wages, that were not subject to FICA tax. The Supreme Court is not expected to issue its decision on this matter until this summer.

      Employers who paid FICA tax on severance pay on an employment tax return for 2010 or later should consider filing protective refund claims in order to ensure that they receive a refund of the ...

      When it’s a service charge. On June 25, 2012, the Internal Revenue Service (IRS) issued Revenue Ruling 2012-34 which provides guidance to employers and employees on the difference between tips and service charges as well as on certain reporting requirements. The ruling states, among other things, that service charges paid to employees are taxable as regular wages and not as tips. Although the IRS delayed enforcement of Revenue Ruling 2012-34 to allow businesses time to make adjustments to comport with the new guidelines, the IRS will begin enforcement of classifying service ...

      QUESTION: I just received notice that the lender to one of my clients is seeking to have a receiver appointed over my client’s shopping center. I think the proposed receiver is in the lender’s pocket and will not be neutral. The lender has used her many times, and in negotiations to restructure my client’s debt, comments were made that if an agreement could not be reached the lender would have “its receiver” take over and run the property. Is there anything I can do to prevent the lender’s receiver from being appointed if I cannot defeat the receivership’s motion?

      ANSWER:

      QUESTION: When I am appointed receiver is there anyone in particular that I need to notify?

      ANSWER: There are a number of statutes which require a receiver to notify certain agencies of the receiver’s appointment. In particular, California Revenue & Taxation Code §18650 requires the receiver to notify the Franchise Tax Board of his or her appointment. Similarly, Internal Revenue Code §§6036 and 6903 require a receiver to notify the Internal Revenue Service of his or her appointment; as does California Unemployment Insurance Code §1090. IRS Form 56 may be used to provide such ...

      New Minimum Wage Poster Required

      All California employers should by now be using the new minimum wage law poster released by the California Industrial Welfare Commission. The poster serves to notify all employees of the planned minimum wage increases that will apply to most employees. Specifically, the poster states that the current $8.00 minimum wage will increase to $9.00 on July 1, 2014, and again to $10.00 on January 1, 2016, a 25% increase over 18 months. The poster also provides information on increased meal and lodging credits against wages that are available when an employer and employee voluntarily ...

      A few months ago I posted a blog article that outlined the basic rules on when a terminated or resigning employee must be paid his or her final wages in the State of California (“Payments Upon Termination of Employment: Is Anyone Still Confused?”).  However, while an employer may now understand when an employee must be paid, where and how should the payment take place? Should the payment be mailed to the employee who has abandoned his or her job or is it permissible for the employer to hold the final paycheck until it is contacted by the former employee? Can the final paycheck be delivered ...

      QUESTION: My order of appointment states that I have the power to commence litigation. Do I need a separate order from the receivership court if I want to sue someone?

      ANSWER: A receiver’s “order of appointment,” along with any applicable statutes, vests the receiver with his or her powers. The order of appointment can provide that a receiver has the power to file suit without the need for a specific court order which provides for the litigation to be filed. That permission can be relied upon. Harting v. Cebrain, 10 Cal. App. 2d. 10, 17 (1935) [“The order appointing the receiver ...

      Over the next few years, the Occupational Safety and Health Administration (OSHA) will be phasing in certain safety requirements designed to align its Hazard Communication Standard with the United Nations’ Globally Harmonized System of Classification and Labeling of Chemicals. These include new labeling elements and a standardized format for Safety Data Sheets (SDS) (formerly known as “Material Safety Data Sheets”). The changes will improve worker understanding of the hazards associated with hazardous chemicals in the workplace.

      The first compliance deadline ...

      Subscribe

      Recent Posts

      Blogs

      Contributors

      Archives

      Jump to PageX

      ECJ uses cookies to enhance your experience on our website, to better understand how our website is used and to help provide security. By using our website you agree to our use of cookies. For more information see our Privacy Policy and our Terms of Use.