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Archive for July, 2015

California’s Paid Sick Leave Law – A New Headache for California Employers

Posted on: July 22nd, 2015

By: Kacie L. Manisco

California’s newly enacted Healthy Workplaces, Healthy Families Act of 2014 (HWHFA) can be added to the lengthy list of laws creating major headaches for California employers. The statute, which requires virtually all California employers to provide employees with paid sick time off to care for themselves or their family members, imposes onerous, often unclear, obligations on California employers.

Accrual and Use

The HWHFA, which took effect on July 1, 2015, enables employees to accrue at least one hour of paid sick time for every 30 hours worked, which totals a little more than eight days per year. Employers, however, can cap accrual at six days or 48 hours and limit the use of paid sick leave to 24 hours or three days in one year. An unofficial interpretation from the Labor Commissioner’s office is to provide covered sick leave at the more generous measure of 24 hours or three days, which means an employee who works 16 hour shifts would actually be able to use up to 48 hours (three days) of paid sick leave. Similarly, an employee who works 16-hour shifts would be capped at 96 hours (6 days) of paid sick leave. This becomes complex for employees with fluctuating hours and shift lengths, as employers either need to implement a different cap for each individual employee taking into consideration the particular employee’s longest shift, or provide one generous cap for all employees.  Fortunately, employers also have the option of disregarding the accrual method and instead frontloading each employee with three days or 24 hours of paid sick leave at the beginning of each 12-month period. Of course, that 12-month period started July 1, 2015 and, practically speaking, most employers would prefer to fill the sick leave bank at the beginning of each calendar year. Accordingly, many of our clients have opted to place three days or 24 hours of paid sick time into the employee’s leave bank on January 1, 2016, and every January 1st thereafter. Employees will not be able to carry over the unused sick days provided to them on July 1, 2015; rather, each employee will get three new sick days. Needless to say, this is more generous than what the law requires if an employee uses any paid sick time off between now and the beginning of the year, but employers are electing this method due to its administrative ease.

Record-Keeping and Notice Requirements

The statute additionally requires the employer show the amount of sick leave an employee has “available” on their pay stub or a document issued the same day as their paycheck. Although not clear in the text of the HWHFA, “available” means sick time the employee has to use, not sick time the employee has accrued.  Employers must also display a poster notifying employees of the sick leave law in a conspicuous location at the work place, and provide all new employees with an individualized Notice to Employee that includes paid sick leave information. The notice can be found here. It is also available in Spanish.

Interaction with Existing Personnel Policies

In addition to creating a sick leave policy that complies with all the nuances of the HWHFA, employers should carefully consider the statute’s interaction with existing personnel policies. For example, the HWHFA prohibits an employer from disciplining an employee for using sick days accrued under the statute. Accordingly, if an employer has disciplinary procedures in place in the event of an unexcused absence, an employee who invokes their accrued sick time for protected reasons will be shielded from adverse action. Likewise, attendance policies requiring employees to give a certain amount of advanced notice in the event of an absence will need to be revised, as the HWHFA limits employers to requiring only “reasonable advance notification” of an employee’s use of sick leave and, where a sick leave absence is unforeseeable, an employer may only require notice when “practicable.” Employers should consider drafting attendance policies that impose discipline for absences that take place after an employee has exhausted all accrued paid sick days.

Along those same lines, while not explicitly addressed in the HWHFA, the Labor Commissioner has cautioned employers that requiring employees to submit documentation as a condition for payment of sick leave can arguably interfere with the employee’s use of paid sick leave. But, this conflicts with the Family Medical Leave Act’s (FMLA) express provision allowing employers to request medical certification from an employee who requests FMLA leave. If employers have a policy mandating or allowing use of accrued sick time before taking the remainder of the FMLA leave unpaid, employers may not ask for medical certification until after all accrued paid sick days have been used.

Interaction with City Sick Leave Ordinances

The intricacies of the HWHFA become even more complex for those employers with employees working in the cities of Oakland, Emeryville, and San Francisco. All three cities have enacted their own sick leave laws that impose additional requirements on employers. For example, all three laws expand the definition of “family members” to allow care for a “designated person” if the employee does not have a spouse or registered domestic partner. The Emeryville law broadens the definition of “family member” even further by allowing time off to care for guide dogs and signal dogs, or a family member’s guide dog or signal dog. Most importantly, these cities do not allow for frontloading of sick leave time. Queue the complicated accrual cap scenario discussed above.

Enforcement and Relief for Violations

The California Labor Commissioner has the authority to investigate alleged HWHFA violations, and we can expect it to come down hard on non-compliant employers. Potential relief for violations may include reinstatement, back pay and administrative penalties. The labor commissioner or the attorney general may also file a civil action and seek legal or equitable relief, attorney’s fees and costs. It is therefore critical employers not only create a sick leave policy that is compliant with the HWHFA and any applicable city ordinance, but that employers revise all existing personnel policies to comply with the law(s) as well.

FCC Issues TCPA Declaratory Ruling and Order

Posted on: July 20th, 2015

By: Matt Foree

As reported previously, on June 18, 2015, the Federal Communications Commission (FCC) issued a press release about its new declaratory rulings.  The FCC recently published its 138-page Declaratory Ruling and Order (“Declaratory Ruling”), which was intended to address 21 pending petitions.

The Declaratory Ruling clarifies the FCC’s position on several issues, including the definition of “automatic telephone dialing system” under the Telephone Consumer Protection Act (TCPA), requirements for the prior express consent defense, the treatment of calls made to reassigned telephone numbers, and the use of call-blocking technology.  The FCC asserts that, through the Declaratory Ruling, it has strengthened the core protections of the TCPA, has empowered consumers to stop unwanted calls, and recognizes the legitimate interests of callers.  Although many hoped that the FCC would take the opportunity to apply common sense to the TCPA to curtail excessive litigation, the FCC’s ruling indicates that it may expand TCPA litigation.

Business organizations have already reacted negatively to the Declaratory Ruling.  Immediately after its filing, ACA International, the Association of Credit and Collection Professionals (ACA International), which submitted one of the petitions pending before the FCC, filed a lawsuit in the U.S. Court of Appeals for the D.C. Circuit seeking additional review of the Declaratory Ruling.  As ACA International’s CEO Patrick J. Morris stated, “The FCC’s ruling is at odds with the plain language of the TCPA, the original intent of Congress, and common sense.  Unfortunately, ACA must now turn to the courts in order to challenge the FCC’s attempt to expand its own power and sidestep Congress.”

Since the filing of ACA International’s appeal, two other entities have filed suit to challenge the FCC’s new TCPA interpretations.  The Professional Association for Customer Engagement, Inc. a nonprofit trade organization, filed a petition for review of the ruling with the Seventh Circuit Court of Appeals.  Sirius XM Radio, Inc. also filed a petition for review in the U.S. Court of Appeals for the D.C. Circuit.

The above entities seek judicial review of the FCC’s ruling regarding the treatment of “capacity” related to the definition of an “automatic telephone dialing system” under the TCPA, the FCC’s treatment of predictive dialers, and the FCC’s treatment of prior express consent, including issues related to reassigned telephone numbers.  They also allege that the Declaratory Ruling is arbitrary, capricious, and an abuse of discretion.

It remains to be seen how the lawsuits challenging the ruling will be resolved, but if the Declaratory Ruling is upheld, businesses might be facing even more TCPA lawsuits.

Franchisor: Enforce the Agreement or be On the Hook

Posted on: July 17th, 2015

By: Jeff Grate

Recently, in defending a franchisor allegedly responsible for the negligence of its franchisee, an interesting issue arose out of the  denial of the franchisor’s motion for summary judgment. Before preparing our motion, we understood the existing case law to be well settled and straight forward. That is, the franchisor is not liable for the negligent acts of the franchisee as long as the franchisor does not exercise control over the operation of the franchisee’s business on a day-to-day basis or assume any responsibility for the franchisee’s debts. Of course, the franchisor may impose requirements and standards under the franchise agreement and may assure compliance by conducting regular  inspections and imposing penalties. In general, monitoring compliance with the franchise agreement is simple and subjective. Unfortunately, due to the complexity of the inspections, sometimes something as seemingly unimportant as the posting of a sign identifying the business as a franchise is overlooked.

In our case, the franchise agreement, among other things,  required that the franchisee conspicuously post a sign identifying the corporate owner of the franchise and informing all patrons that the business was being operated under the trade name of the franchisor. According to the director, this was done. Unfortunately, when suit was filed, the business was operating under another name, as it had its franchise revoked. As part of the revocation, all proprietary materials were confiscated by the franchisor and the franchisee discarded all records not required to be kept under state law.  In short, there was not any hard evidence that, at the time of the incident, the franchisee had posted the required notice or that the franchisor took steps to assure that one was posted. The franchisor’s inspection reports did not indicate that the franchisee complied with  this requirement.

In opposing the franchisor’s motion, plaintiff claimed that she was unaware the business was an independently owned and operated  franchise and  represented that she never would have patronized the business had she known. In ruling on our motion, the trial court focused on whether the plaintiff was informed or should have had knowledge that she was dealing with an independently owned business, as opposed to the more widely known franchisor. In denying our motion the court felt that, in the face of scant evidence that the required sign was conspicuously posted, there was a question of fact as to whether the franchisor operated as such. On appeal,  the denial of our motion was reversed, with the Court of Appeals stressing that although the required sign was not posted, plaintiff should have been aware that the business was being operated as a franchise, as the enrollment contract signed by the plaintiff identified the franchisee. All other evidence showed that the franchisor enforced the agreement.

This entire experience highlights that something as basic as not posting a sign can result in tort liability for a franchisor. This case also illustrates the attitude of the lower courts in interpreting simple objective requirements of a franchise agreement. It emphasizes that a franchisor must actively enforce all provisions, especially the simple straightforward ones, or face the possibility being liable for the franchisee’s negligence. A franchisor must make certain that its franchisee informs the general public that the franchisee is just that.

NLRB Focus on Employee Handbooks of Employers

Posted on: July 17th, 2015

By: Joyce M. Mocek

Over the last several months, the National Labor Relations Board (NLRB) has targeted employee handbooks and policies of both union and non-union employers, determining that their policies and procedures constitute “unfair labor practices.”   The NLRB continues to expand its interpretations of the type of actions that constitute such practices, recently holding that dress code, personal hygiene and social media policies in a car dealership’s employee handbook were “unfair labor practices.”

Under Section 7 of 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….”  Section 8 of the NLRA states that it shall be an “unfair labor practice” for an employer to “interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in Section 7.”

On March 18, 2015, the NLRB issued Memorandum GC-15004, a 30 page document that included provisions of employee handbooks and policies with specific examples of language that it determined was a violation of Section 7 of the NLRA.  The NLRB applied a standard of what employees would “reasonably” believe to be an intrusion of their rights.   These decisions attacked language such as “Be respectful of others and the Company” and held that general provisions such as this to be unlawful because they could be considered to ban criticism or negative discussions.   Further expanding their reach, recently, the NLRB determined that a car dealership’s employees had a right to display union messaging and insignia in the workplace although the company’s handbook language prohibited such displays, and held that the company’s social media policy was too restrictive.

These decisions illustrate the continuing focus of the NLRB to target the employee handbooks and policies of both union and non-union employers, and the necessity to review handbook policies and procedures to ensure compliance with these requirements and decisions.


Georgia Utility Update – July 2015

Posted on: July 13th, 2015

Hearing in Vogtle Review Provides New Information on Project’s Cost

 By: Bobby Baker

          At the June 23rd hearing on the 12th Vogtle Construction Monitoring Review the Public Service Commission (“PSC”) Staff expert witnesses provided new information regarding the actual financial impact of the current 39 month delay in the construction schedule for Vogtle Units 3 and 4.  While it is hardly newsworthy to report that the Project has fallen further behind schedule and the overall costs have increased, the PSC’s witnesses explained how the cost increases impact each residential ratepayer, quantified the total revenue requirement for the Project and refuted the Company’s claims regarding the alleged benefits of the Project.

          Staff Witness Philip Hayet testified that the current 39 month delay would add $319.00 or $6.26 per month to the average residential ratepayer’s bill beginning in April 2016 and continuing to June 2020 in the form of higher fuel costs and Nuclear Construction Cost Recovery (“NCCR”) tariff payments.  Of the additional $319.00 in costs, 59% of the increase or $187.00 would be through higher NCCR monthly charges.  The cost increase is especially significant to businesses because the $319.00 increase was for the average residential customer who uses 1,000 kilowatt hours per month.  Obviously, electric customers with higher monthly electric usage would be paying significantly more in fuel and NCCR costs.

          During cross examination concerning the current cost projection of $7.5 billion for Georgia Power Company’s share of the Project it was disclosed for the first time that the total revenue requirement just for Georgia Power’s share of the Project would be $30 billion.  Knowing that the total revenue requirement for the project is four times the construction costs gives consumers an ability to evaluate the total Project costs.  The current total revenue requirement for the Project is approximately $65 billion.

          In the past few Vogtle reviews it was revealed that the cost for every day of delay is $2 million.  This calculation was further clarified when it was explained that it did not contain payment of any taxes.  The gross up on the $2 million daily cost with taxes would be approximately $2.92 million.

          Finally, the PSC Staff witness refuted the Company’s claims regarding the alleged ratepayer benefits of the Project by testifying that the remaining $2.7 billion in alleged benefits claimed by the Company had shrunk down to no more than $208 million.  This figure would be further reduced to negative $300 million if 50% of the production tax credits were removed from the calculation.  Based on the Project’s current schedule it is highly unlikely that Unit 4 will be on line by December 31, 2020 to be eligible to receive $522 million in production tax credits.

          While the testimony at the June 23 hearing was not reassuring to ratepayers, it did provide a clearer financial picture regarding the true costs of Vogtle Units 3 and 4, and reaffirmed the fact that the Project would see more construction delays.