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Archive for April, 2016

San Francisco Mandates Paid Parental Leave

Posted on: April 28th, 2016

By: Kacie Manisco

The United States is the only developed country in the world that does not provide paid parental leave. In addition, unless an employer is covered under the Family Medical Leave Act (“FMLA”) or the California Family Rights Act (“CFRA”) – meaning the employer has at least 50 employees within a 75 mile radius – there is no law that requires a California employer to provide any baby bonding parental leave, paid or unpaid (though employees who suffer pregnancy-related disabilities may be entitled to leave for those disabilities under California’s Pregnancy Disability Leave law.)  Of course, many California employers voluntarily provide maternity leave (and in some cases paternity leave) despite that they are not legally required to do so.

Under California’s Paid Family Leave Law, (“PFLL”) employees who take leave after the birth or adoption of a child are eligible to receive wage replacement benefits of up to 55% of their normal wages for six weeks. The PFLL benefit is administered by California’s Employment Development Department (“EDD”).  Keep in mind, PFLL is a misnomer, as this law does not actually entitle employees to the leave itself. Rather, PFLL entitles employees to the wage replacement benefit when they are otherwise granted a leave.

On April 21, 2016, San Francisco Mayor Ed Lee signed an ordinance making San Francisco the first U.S. City to mandate fully paid parental leave for covered employees.  Like the PFLL, this ordinance does not require employers grant the parental leave itself; rather, it requires employers supplement the wage replacement benefit new parents receive from the EDD pursuant to the PFLL.

Supplemental Compensation Under San Francisco’s Paid Parental Leave Law

San Francisco’s new ordinance  requires covered employers to provide “supplemental compensation” in an amount such that the PFLL compensation, plus the supplemental compensation, equals 100% of the employee’s gross weekly wage. Accordingly, the ordinance will require employers to pay the remaining 45% of the employee’s weekly wages during the six week period that the employee is receiving PFLL benefits.*

Covered Employees

A “covered employee” entitled to supplemental compensation under San Francisco’s new ordinance is an employee:

Who began employment with the employer at least 180 days prior to the start of the leave period;
Who performs at least eight hours of work per week for the employer in San Francisco;
At least 40% of whose total weekly hours worked for the employer are in San Francisco; and
Who is eligible to receive wage replacement benefits under PFLL for the purposes of bonding with a new child.

Covered Employers and Employer Phase-In

“Covered employers” are businesses with 20 or more employees located anywhere, so long as at least one employee works in San Francisco. The new law will go into effect on January 1, 2017 for covered employers with more than 50 employees, July 1, 2017 for covered employers with more than 35 employees, and on January 1, 2018 for covered employers with at least 20 or more employees.

Posting & Record Keeping Requirements

Covered employers must conspicuously post an Office of Labor Standards Enforcement (“OLSE”) notice informing employees of their rights at each workplace or job site where any covered employee works. Notices must be posted in English, Spanish, Chinese, and any language spoken by at least five percent of employees at the workplace or job site.

Covered employers must also keep records documenting any supplemental parental leave compensation paid for three years.

Protection from Retaliation

The ordinance protects employees from discrimination and retaliation for exercising their rights to supplemental parental leave compensation. A covered employer that takes adverse action against an employee within 90 days of the employee engaging in a protected activity (i.e., filing a complaint or cooperating with an investigation) must overcome a rebuttable presumption of retaliation.

Enforcement and Relief for Violations

San Francisco’s OLSE has authority to investigate alleged violations and enforce the ordinance administratively through a hearing. Potential relief for violations may include payment of unlawfully withheld supplemental compensation, as well as penalties and interest.  The law further provides a private right of action for violations.

While the United States is the only developed country in the world that does not provide paid parental leave,  San Francisco’s legislation is the first step in bringing the country up to speed with all other industrialized nations that have paid leave laws. San Francisco’s new ordinance is one of several recent pro-employee initiatives in the State of California, including recently signed legislation that will gradually increase the state minimum wage to $15.00 per hour by the year 2022 (by comparison, the Federal minimum wage rate is currently $7.25).

*On April 11, 2016, California Governor Jerry Brown signed into law a Bill, taking effect January 1, 2018, that will increase the amount of wage replacement benefits paid to employees under the PFLL from the current level of 55%, to 70% for low-income workers and to 60% for all other workers. Accordingly, San Francisco employers will be required to provide supplemental compensation at a lesser rate of 30%-40% in 2018.

Tennessee Amends Data Breach Notification Statute

Posted on: April 14th, 2016

By: Kacie Manisco and David Cole

On March 24, 2016, Tennessee Governor Bill Haslam signed into law a bill amending the state’s Data Breach Notification Statute.  The amendments, which will go into effect on July 1, 2016, bring significant changes to how businesses must respond to data breaches involving information of Tennessee residents.

First, the amended statute now requires that notification be provided to residents affected by a data breach within 45-days after discovery of the breach. Prior to this amendment, Tennessee’s statute, similar to the data breach statutes of a majority of states, only mandated that disclosure of a data breach be made in the “most expedient time possible” and “without unreasonable delay.”  Now, Tennessee has become the eighth state to enact legislation that sets a specific time period for notification to affected individuals.   In addition, the new law does not permit delays for remediation or investigation of a breach unless a law enforcement agency determines that notification will impede a criminal investigation, and even then, notice must be made within 45 days after law enforcement determines that notification will no longer compromise an investigation.

Second, the amendment expands the definition of “unauthorized person.”  Tennessee requires any information holder to disclose a breach of the security of the system to any resident of Tennessee whose personal information was, or is reasonably believed to have been, acquired by an unauthorized person.  Like other states, Tennessee used to exclude from the definition of a data breach any “good faith acquisition of personal information by an employee or agent” of the information holder.  Under the amendment, however, an unauthorized person now includes “an employee of the information holder who is discovered by the information holder to have obtained personal information and intentionally used it for an unlawful purpose.”

Lastly, the amended statute changes the definition of the term “breach of the security system” to remove the word “encrypted.”  This is being described by some as the first instance in which a state has removed its safe harbor provision for the loss of encrypted information.  However, a close examination of the statute shows that this amendment is non-substantive because the statute still provides that only a breach of “personal information,” which remains defined as unencrypted personal information, will trigger the breach notification requirement.

As we have discussed before, these changes highlight the importance of being prepared ahead of time before a breach occurs, which includes having data breach response plan in place that will help you timely comply with notice obligations like these.  We have created our FMG Cyber Toolkit to help our clients for this very reason.  Please contact one of our Cyber, Data Security, and Privacy practice group attorneys for more information about developing a plan for your organization.



Second Amendment Right to Bear Arms Includes Stun Guns

Posted on: April 7th, 2016


By: M. Michelle Youngblood

Picture it: a mother of two gets off work and walks outside to find her violent ex-boyfriend, against whom she has obtained several restraining orders, waiting on her.  He begins screaming at her, threatening her.  This mother, fearing for her safety – a reasonable fear, based on his past behavior and current conduct – displays a stun gun.  She tells him that she doesn’t want to use it, but she will if he doesn’t leave her alone.  It works.  The ex-boyfriend departs without further incident.  Most people would describe this incident as a success:  it ended without violence, and no one was hurt.  So who was the criminal in this scene:  the violent ex-boyfriend, threatening and intimidating the mother of his children?  Or the mother, who successfully defended herself without violence?  Under Massachusetts law, the answer is the mother, because mere possession of a stun gun is illegal.  Mass. Gen. Laws, ch. 140, § 131J (2014) (the “Stun Gun Ban”).

The mother in the situation described above, Jaime Caetano, was stopped by police a couple of months after this incident. She still carried the stun gun.  She was arrested and ultimately convicted for violating the Stun Gun Ban.  She challenged the constitutionality of the Stun Gun Ban to the Supreme Judicial Court of Massachusetts (the “SJC”), which found that a stun gun is not protected by the Second Amendment to the U.S. Constitution, and therefore, the Stun Gun Ban was not unconstitutional.

Recently, in a brief per curiam decision, the U.S. Supreme Court reversed the SJC and held the Massachusetts Stun Gun Ban to be unconstitutional. Caetano v. Massachusetts, 577 U.S.__ (2016).  The Supreme Court’s decision examined all of the three (3) explanations the SJC gave, finding that each was inconsistent with the Supreme Court’s holdings in District of Columbia v. Heller, 554 U.S. 570 (2008).  Justice Samuel Alito, joined by Justice Clarence Thomas, wrote a lengthy concurrence, providing factual details of the underlying case and a more thorough analysis of existing Second Amendment law.

The Supreme Court held that Second Amendment protection extends to weapons that did not exist at the time the Second Amendment was written, whether or not such weapons are useful in warfare.  In this case, that includes stun guns.

U.S. Women’s Soccer Team Seeks Pay Equality

Posted on: April 7th, 2016

By:  Joyce M. Mocek

Recently five team captains of the US Women’s Soccer Team, on behalf of the entire team, filed a complaint with the EEOC against the US Soccer Federation alleging pay inequality and discrimination. The complaint seeks equal pay for the women soccer players.  They contend that they receive 28% or 62% less than the men soccer players depending on the type of game. The women soccer players were paid $2 million when they won the 2015 Championship, yet the men’s team received $9 million in the 2014 World Cup despite losing in the round of 16. The US Women’s Soccer Team contends that they are both more successful and profitable than the men’s team, yet they do not receive equal pay.

The Equal Pay Act prohibits sex-based wage discrimination between men and women who perform jobs that require substantially equal skill, effort and responsibilities which are performed under similar working conditions. Title VII also prohibits discrimination based on sex in pay or benefits. The complaint filed by the US Women’s Soccer Team with the EEOC seeks equal pay as the men’s team. The US Soccer Federation has not yet responded to the complaint. The complaint reflects the continuing focus and need to reduce the pay gap between men and women performing jobs that require substantially equal skill, effort and responsibility. This trend reinforces the need of employers to continue to monitor and evaluate the pay of all employees to ensure compliance with the laws.

Accident at Wrigley Field and What that Means in the Insurance World

Posted on: April 4th, 2016

By: Jessica Samford

As “March Madness” comes to an end, many are gearing up for “America’s [original] Pastime”—baseball. The baseball stadiums themselves need to be ready for the new season and fans, and the iconic Wrigley Field has been undergoing some major construction during its offseason and is in in the middle of a four-year, four-phase plan known as the “1060 Project”  to expand and preserve the home of the Chicago Cubs.  Just weeks before the ballpark is to hold its first game of the season, it was reported that a subcontractor, a woman in her mid-thirties, was injured in an “accident” when metal piping fell on her while she was working on the basement level of the stadium.

In the insurance world, “accident” is a term that is often used in insurance policies but rarely defined in the policies themselves.  Typically, insurance policies have their own definition section to define certain terms—“bodily injury,” for example—so how is the meaning of “accident” determined if it is not defined?  This brings us to our next installment of the FMG insurance law blog’s glossary of key insurance concepts.  The first two installments discussed the concepts of “fortuity” and “stop-loss”  in insurance policies, and today we will address how “accident” is interpreted in triggering coverage in some insurance policies and states.

A standard commercial general liability insurance policy provides coverage for certain occurrences, where “occurrence” is defined as an “accident” including continuous or repeated exposure to substantially the same general harmful conditions and where “accident” is left undefined.  Surprisingly, courts in most states—including Illinois, South Carolina, Georgia, and Florida—simply use dictionary definitions because the state’s contract law provides that terms, even if undefined in the policy, should be given their plain and ordinary meaning.  Merriam-Webster’s Dictionary defines “accident” as “an unforeseen and unplanned event or circumstance.”  Other dictionary definitions of “accident” include “an unexpected happening without intent or design” and “an event or change occurring without intent or volition through carelessness, unawareness, ignorance, or a combination of causes and producing a unfortunate result.”

All these definitions emphasize the unintentional nature of the event, and as a result, many courts find that assault, battery, unfair business practices, embezzlement, fraud, and other intentional harms are inconsistent with the meaning of “accident.”  For example, in Missouri, breach of contract may not fall within the term “accident” especially in a construction context because the performance of the contract is usually within a contractor’s control and a failure to perform in accordance with the contract cannot be described as an undesigned or unexpected event according to the courts.  In Georgia, however, even though construction work was done intentionally, the courts have found that faulty workmanship can be considered an “accident” giving rise to coverage when the construction work later causes unforeseen or unexpected damage.

The term “accident” also brings to mind auto accidents where there is usually no issue as to whether an auto accident was unintentional, save for an instance of road rage perhaps.  In typical auto liability policies, however, “accidentis included in the definitions section and is often defined as including continuous or repeated exposure to the same conditions resulting in “bodily injury” or “property damage” from the ownership, maintenance or use of a covered “auto.”

Going back to the “accident” reported at Wrigley Field, whether insurance coverage would be triggered is less clear without additional information as to the circumstances surrounding the falling pipes.  Were these pipes already installed and did they fall due to negligent construction?  Were these pipes to be installed during current construction and did they fall unintentionally?  The answers to these questions could result in a court finding broader coverage than the insurance carrier may have intended.  Undefined terms in an insurance policy allow for flexibility in interpretation when courts apply plain meanings derived from dictionary definitions and consequently allow for more uncertainty.  Insurance carriers should be wary of striking the right balance when crafting the terms of insurance policies to insure certain risks in certain states.