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Corporation Shareholder Rights to Inspect and Participate

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The California Corporations Code, as well as common law not found in the statutes, provide for shareholder inspection and participation rights in a corporation.

California Corporations Code section 1601(a)(1) provides that any shareholder is entitled to inspect and copy the following, at any reasonable time during usual business hours for a purpose reasonably related to such holder’s interest as a shareholder or holder of a voting trust certificate.

  1. the record of shareholders
  2. the accounting books and records
  3. minutes of proceedings of
    • the shareholders and
    • the board and
    • committees of the board.

The holders of 5% of any class of shares of the corporation may request, at specified intervals during the fiscal year, income statements and balance sheets and, if no annual report has been sent, the statements required by Corp. Code section 1501 (a).

The definition of “accounting books and records” is not defined explicitly in the Corporations Code. Other sections impose duties of financial disclosure that show the meaning of accounting books and records—balance sheet, income statement, and statement of cashflows.  The corporation does not have to allow inspection of the General Ledger at entry level, or line item level balance sheet showing what each principal has loaned the Company, if the balance sheet shows a summary of those loans as a consolidated number. The inspection must be allowed at any reasonable time, so, the shareholder might access monthly information rather than just annual data, if the shareholder repeats the requests more than once annually.

Corp. Code section 1501(a) is an example of the type of accounting books and records that a shareholder may inspect. (Jara v. Suprema Meats, Inc. (2004) 121 Cal. App. 4th 1238.) Section 1501 requires that the directors of a corporation send to shareholders an annual report on the business and financial condition of the corporation.[1] Corp. Code section 1501(a)(1) provides that the report must contain a balance sheet and an income statement and statement of cashflows for the fiscal year, accompanied by a report of independent accountants or a certificate of an authorized officer that the statement was prepared without audit from the books and records of the corporation.

So even if waived in the smaller corporation’s bylaws, this section informs the definition of accounting books and records.

The inspection of books and records does not mean the shareholder is entitled to unfettered access to corporate confidences and secrets. (National Football League Properties, Inc. v. Superior Court (1998) 65 Cal.App.4th 100, 107 [no shareholder inspection of attorney-client privileged material.]) The shareholder’s inspection must have a proper purpose “reasonably related to shareholder’s interest as a shareholder.”  (Corp. C. §1601(a).) So in most instances, the limited books and records inspection described here will fulfill the corporation’s duties to the shareholders. The “purpose” must be to determine the condition of the corporation and the value of shareholders’  interests therein.[1] For instance, inspection was permitted by the California Supreme Court in Schnabel v. Superior Ct. (1993) 5 Cal. 4th 704, 715, the purpose being to “ascertain the value of the stock” in a divorce case.

Meeting minutes are open to inspection (Corp. C.§ 1601[a]), even if they contain information about salaries and bonuses. Some privileges will apply, and possibly third party financial privacy could protect the actual dollar amounts and recipients. (National Football League Properties, supra.) But the information will probably be detected in the accounting books and records. Accessing historic minutes is probably required by section 1601. The section makes no exception for minutes created prior to the shareholder’s acquisition of stock.

Shareholders have rights around dissolution. The corporation can voluntarily dissolve only  upon the vote of shareholders holding shares representing 50% or more of the voting power of the corporation. Any 5% of the shareholders can petition for court involvement in a voluntary dissolution. Any 33.3% of shareholders can petition for involuntary dissolution, and the shares of the alleged wrongdoers don’t count.

Shareholders have rights around meetings as well. Shareholders have a right to attend shareholder meetings, which must occur at least annually for the election of directors. (Corp. Code § 600.) Although shareholders have no right to attend directors’ meetings, they have a right to inspect the minutes upon demand, at a reasonable time.

This subject is purposefully vague, and the courts are there to protect shareholder legitimate interests.  We have litigated cases in the past where the Board of Directors did not want to share certain requested information as it believed the information would be used for wrongful purposes, such as for competition. Such litigation is costly, time consuming and bad for morale.  However, for fully transparent corporations, the sharing of books and records and other legitimately requested reviews works just fine.

[1]This obligation can be waived in the bylaws of a corporation with fewer than 100 shareholders of record.

[2]One extreme example is Hobbs v. Tom Reed Gold Mining Co. (1913) 164 Cal. 497, 500-501, which is now considered limited by section 1601 because it allowed a shareholder to inspect the company’s Arizona gold mine. Hobbs set forth the common law definition of proper purpose: to determine whether company operations were carried on with skill and good judgment. In Hobbs, The California Supreme Court permitted the gold mine inspection “for the protection of his interest or for his information as to the condition of the corporation and the value of his interest therein.” (Hobbs supra at 501.) Section 1601 would not permit the mine inspection, but, the basis for the inspection–to protect the shareholder’s interest and the value of his stock—still applies.

Article By: Kathleen J. Smith

Kathleen J. Smith is an experienced civil litigator. Kathi advises clients on and handles all types of civil litigation, including employment matters, wage and hour, business, real estate, trademark disputes, class action defense, trust and probate, and homeowners association disputes. Kathi is experienced in all types of dispute resolution, from mediation to arbitration to civil trial.

Fiduciary Responsibilities and Your Business

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As the owner of a corporation, you have certain responsibilities to other parties that must be fulfilled. Although being a sole proprietor gives you more leeway, a sole proprietorship lacks any liability protection for its owner.  Business owners who use corporations or LLC’s for their business structure must be familiar with fiduciary responsibilities. These obligations extend to corporate officers and even managers in some situations. So, what are fiduciary responsibilities for business owners and corporate officers?

What are Fiduciary Duties?

A fiduciary duty is a legal requirement that applies to anyone who has a relationship of trust with another person or organization. While fiduciary responsibilities extend to more than just the business context, they are often associated with corporations and partnerships. 

Other examples of this type of relationship include:

  • Trustee and beneficiaries
  • Investment manager and participants in an investment plan
  • Banker and customers
  • Attorney and client

In these relationships, the fiduciary often accepts legal ownership or control of property or an asset that belongs to someone else. In the business context, corporate owners and managers have this type of obligation to stockholders and investors in the business.

An Overview of Fiduciary Responsibilities

Several duties apply to those in fiduciary roles, such a corporate director or officer. Below is a general overview of responsibilities that likely apply to corporate owners and officers.

  1. Obedience – Officers and directors must carry out their roles according to the requirements of the corporate bylaws, articles of incorporation, and other controlling documents. They are obligated to follow voting procedures and executed decisions made by the stockholders or investors. They must also fulfill their obligations under state and federal law.
  2. Loyalty – Business owners and officers have a duty of loyalty to the corporation and their shareholders. This means they must put the interest of the shareholders and the company ahead of any personal aspirations or goals. Any conflict of interest should be decided in favor of the business, and officers cannot use information gained in their roles in a way that would harm the company.
  3. Care- Diligence and care are essential duties in the corporate context. If corporate officers make decisions without thoroughly investigating the implications of those decisions, that could seriously endanger the company. They should act as prudent investors and decision makers and consider how the stockholders are affected in making every important decision involving the company. 
  4. Good Faith and Fair Dealing – Officers, directors, and owners are required to act with honesty, fairness, and good faith in everything they do for the business. This requirement applies to daily operations of the company as well as significant decision-making functions. This duty dovetails with the obligations of obedience, loyalty and care.
  5. Disclosure – Those who make important decisions for the business must disclose relevant information about those decisions to others. The duty of disclosure is often referred to as a “duty of candor.”  Officers, owners, and directors not only have a duty to their shareholders, but to the other key decision makers as well. There is also a duty to disclose potential conflicts of interest which coincides with the duties of loyalty, good faith and fair dealing.

The Takeaway

Given the significant fiduciary responsibilities associated with running a business, owners, directors, officers and managers should contact our office for proper legal representation in fulfilling these important duties.

By: Theodore Schneider, Esq.

Theodore Schneider assists his clients in Ventura County and surrounding areas, with respect to all aspects of personnel matters, including employee discipline, wrongful termination, retaliation, discrimination, hostile work environment, sexual harassment, leaves of absence, Americans with Disabilities Act, Fair Employment and Housing Act, Fair Labor Standards Act, and the California Labor Code. Ted also drafts and reviews employee handbooks and employment policies for his clients. Email Ted at tschneider@rstlegal.com.

What are Letters Testamentary?

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An individual who has been named as a personal representative or executor in a will has a number of important duties. These include gathering the deceased person’s property and transferring it to the beneficiaries through a court-supervised process known as probate. In order to initiate this proceeding, the executor must first obtain what are referred to as letters testamentary. This document gives the executor the legal authority to administer the deceased person’s estate. 

While the process varies from state to state, the executor must petition the probate court in the county in which the decedent lived. This typically requires submitting the death certificate and completing a short application. The application includes a sworn statement that the person has been named as the executor in the will, as well as an estimate of the estate’s property and debts. 

The probate court will then hold a hearing to verify that the individual meets the qualifications to act as executor. Generally he or she must be a mentally competent adult and not be a convicted felon. If approved, the court will issue letters testamentary and officially open probate.

In short, the letters allow the executor to collect the assets of the deceased which may be held by  another person or an institution such as a bank. Since banks and other institutions may want to keep the document on file, it is necessary to obtain multiple certified copies. The executor can also carry out his or her other duties such as inventorying and appraising assets, paying debts, and transferring property to beneficiaries, according to the terms of the will.

Letters of Administration

In the event a person dies without a valid will in place, an heir of the decedent, typically a legal relative, needs to petition the probate court for letters of administration. In this situation, the court will hold a hearing to appoint this individual to act as the estate administrator, issue the letters and open probate. The administrator then manages and distributes the assets according to the state’s intestacy laws which generally give priority to spouses, children and parents.

If you have any questions regarding estate planning, please do not hesitate to contact an Estate Planning Attorney at Schneiders & Associates, LLP for advice and counsel.

By: Roy Schneider, Esq.

Roy Schneider to Discuss Ethics at CLU’s Fifty and Better Summer Lecture Series

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Roy Schneider will lecture at CLU’s Fifty and Better Lecture Series on the topic, “How Does Ethical Decisions We Make Impact our Businesses and Personal Lives?” The lecture will explore ethics; the definition, whether ethics and morality are the same, reasons people sometimes make clearly unethical choices, compliance with law and ethical considerations (i.e., can law mandate ethical behavior?), theories of ethical behavior and how ethics works in making ethical choices in business and personal decisions. In this lecture we will address the questions of whether ethics and morality change over time – is ethics universal or situational? Many are familiar with the McDonald’s hot coffee case and the debate it sparked. We will explore this and other new and interesting cases, helping to better understand business decisions affecting us as consumers, and how to make better ethical decisions in our daily lives and in our relationships with others.

Date & Time: June 21, 2022, 1:00-3pm PDT

Click here to register!

LLC Operating Agreements Will Save You

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Business partners, seeking to make their fortunes, form their LLCs at a moment when they expect to work together indefinitely, with good will between them and nothing but cooperation as their modus operandi. At this time in a business partnership, the idea of distrusting their business partner and needing to dissolve the LLC is furthest from their minds. Commerce demand their attention, and they may forget to sign their operating agreement after they register their LLC with the California Secretary of State. What happens when dissension leads one partner to reject the terms of the unsigned OA, simply because they never signed it. Answer: they probably have to honor it anyway.

LLC Operating Agreements (“OA”) are governed by the law of contracts. The National Conference of Commissioners on Uniform State Laws, Uniform Limited Liability Company Act (2006)(Last Amended 2013) With Prefatory Note and Comments, 2014, at p. 15, states in the discussion of the definition of “Operating Agreement” the following:

An operating agreement is a contract, and therefore all statutory language pertaining to the operating agreement must be understood in the context of the law of contracts.

Every contract requires consenting parties. (See California Civil Code §§1550, 1565; 1 Witkin, Summary 11th Contracts § 116 [2021].) A party’s consent is gathered from the reasonable meaning of her words and acts, and not from any unexpressed intentions or understanding. (1 Witkin, Summary 11th Contracts § 116 [2021].) For instance, your partner’s consent is demonstrated when they comply with a term in the OA—like asking the co-member to consent to a transfer of their membership to their trust. Or perhaps your partner will cite the OA in a legal document, like, when the LLC applies for a bank loan.

Such consent can also be evidence of ratification of the unsigned OA. Ratification arises when your partner benefits from the bank loan based on their signed Certificate of Incumbency. If your LLC stands to receive income as a result of a loan– perhaps enabling investment funds to be leveraged geometrically with borrowed funds—then ratification can arise.

California Civil Code section 2310 states:

RATIFICATION OF AGENT’S ACT

A ratification can be made only in the manner that would have been necessary to confer an original authority for the act ratified, or where an oral authorization would suffice, by accepting or retaining the benefit of the act, with notice thereof.

In Rakestraw v. Rodrigues (1972) 8 Cal. 3d 67, ratification was found where signer Rakestraw, whose signature was forged on a deed of trust, did nothing to repudiate the challenged signature because she anticipated receiving monetary benefits from the mortgaged property. In Rakestraw, the court found that the forger was acting as agent for principal Rakestraw. On that basis, the court held that any requirement that the ratification be done in writing was inapplicable. (Rakestraw at 76.) Written ratification required under California Civil Code section 2310 was not intended to apply to a ratification as between a principal and agent. (Rakestraw at 77, citing Sunset-Sternau Food Co. v. Bonzi (1964) 60 Cal.2d 834.)

Consent and ratification are two classic contract principles that support validation of the unsigned OA. If your partner is repudiating your unsigned OA, look back over the years for indicia and evidence of consent and ratification. It’s probably there.

By: Kathleen J. Smith, Esq.

Kathleen J. Smith is an experienced civil litigator. Kathi advises clients on and handles all types of civil litigation, including employment matters, wage and hour, business, real estate, trademark disputes, class action defense, trust and probate, and homeowners association disputes. Kathi is experienced in all types of dispute resolution, from mediation to arbitration to civil trial.

To find out more about LLC operating agreements, please feel free to contact the knowledgeable attorneys at Schneiders & Associates, LLP. We will be pleased to answer any questions you may have, and make sure you are comfortable with our law firm. For more information please call or email our Oxnard office.

HIGHLIGHTS FROM 2022 COVID-19 SUPPLEMENTAL PAID SICK LEAVE

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It’s time for another update on the current COVID-19 legislation and what impact the 2022 Supplemental Paid Sick Leave (“SPSL”) will have on California employers. California’s new SPSL officially took effect on February 19, 2022; however, it is retroactive to January 1, 2022. The SPSL provides for two separate 40-hour banks of leave: one for testing and isolating, and a second bank for employees or family members who test positive for COVID-19.

Below we have highlighted some of the more relevant sections that employers need to familiarize themselves with in order to avoid the potential for liability stemming from its handling of COVID-19 leaves of absence.

  1. How long will the SPSL govern employers’ obligations to its employees and their family members who are affected by COVID-19?

The SPSL is in effect from January 1, 2022 through September 30, 2022.

  • To which Employers does the SPSL apply?

All employers with 26 or more employees.

  • What are the scenarios in which an employee can request leave under the SPSL?

The 2022 SPSL provides for two separate banks of leave, both of which may total 40 hours.

First, SPSL is available to employees who cannot work (including working remotely) due to the any of the three following reasons: (a) Caring for themselves. This includes the employee who is subject to an isolation period or quarantine related to COVID-19, has been advised by a medical professional to isolate or quarantine, or who is experiencing COVID-19 symptoms. (b) Caring for a family member. An employee who is caring for a family member who is subject to an isolation period or quarantine related to COVID-19, has been advised by a medical professional to isolate or quarantine, or who is experiencing COVID-19 symptoms. (c) Vaccine or booster. An employee or a family member of an employee who has an appointment for a COVID-19 vaccine or booster, or experiences vaccine-related side effects.

Second, an employee or family member of an employee who tests positive for COVID-19.

  • When does an employer have to make the leave available to employees who request time off due to COVID-19?

Immediately upon written or oral request by the employee.

  • What notice must an employer provide to its employees?

Employers are required to display the 2022 COVID-19 SPSL poster at the workplace where employees can easily locate and read it. For example, employers should post the SPSL poster in the breakroom or other common areas where similar health and safety information is located.

If an employee works off-site or works remotely, then the employer must send the required information via email (or other electronic means such as an employee portal or dashboard).

  • Can the employee ask for retroactive pay SPSL if they took a leave prior to February 19, 2022?

Yes. If employees used sick leave prior to February 19, 2022, and did not receive compensation, they are entitled to pay, at their regular, straight-time wage. In order to qualify for the entire 80 hours of leave (40 hours in each of the two banks of leave), an employee must have worked an average of at least 40 hours per week in the two weeks prior to taking the leave.

If the employee receives retroactive pay for leave taken for a qualifying reason prior to February 19, 2022, then the employer can reduce the number of hours from that employee’s corresponding bank of hours.

  • What information must be contained in the employee’s paystub if they take leave pursuant to the 2022 COVID-19 SPSL?

If an employee takes leave under the SPSL, those hours must be itemized on the employee’s wage statement (paystub) for the pay period during which the leave was taken. This itemized line must be separate and distinct from other forms of leave available to the employee, including the 24 hours of “regular sick leave” and any accrued vacation. 

  • What type of COVID-19 test is required for an employee to qualify for leave under the SPSL?

Any COVID-19 test is acceptable, including an over-the-counter “at-home” (rapid test) or a test from a testing facility.

  • Can the employer require documentation from a medical professional when an employee requests to take leave for a qualifying reason?

Yes, in three situations.

First, if the employee is requesting retroactive pay from the period of January 1, 2022 through February 19, 2022.

Second, when an employee uses more than three days (or 24 hours) of leave for a single vaccination or booster appointment. A note from a medical professional stating that the side effects lasted longer than three days will suffice.

Third, when the employee seeks leave from the 40-hour bank designated for employees (or their family member(s)) who tested positive for COVID-19. If the employee fails to provide a positive test within a reasonable time, the employer can deny pay for the leave taken by the employee.

  1. Are there limits to how much SPSL an employee can use for receiving the vaccine or booster?

Yes, as described above, the maximum leave an employee can use for a vaccination or vaccine appointment is 24 hours. The employee does not have to use his or her 24 hours consecutively. For example, an employee could use four hours to receive a vaccine and then return to work if they are not suffering any died effects from the vaccination. The same employee could use the remaining 36 hours for subsequent vaccination or booster appointments, or if they suffer side effects from either of the latter appointments.

By: Christopher Correa, Esq.

California Approves COVID-19 Sick Pay for Employees

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AB 84/SB 114 – COVID-19 Supplemental Paid Sick Leave (SPSL)

California lawmakers passed legislation to reinstate COVID-19 Supplemental Paid Sick Leave, providing most California employees with up to two weeks of sick pay if an employee or family member tests positive for COVID-19.

“As the Omicron surge intensified, workers screamed from the rooftops about the desperate need to reinstate COVID paid sick leave,” California Labor Federation Executive Secretary-Treasurer Art Pulaski said in a statement. “The governor and Legislature heard frontline workers loud and clear, and we appreciate them acting with urgency to get this done. Once again, California shows it’s a national leader on worker protections and COVID mitigation.”

Here is what employers need to know:

  • Applies to employers with 26 or more employees.
  • Retroactive to January 1, 2022 and will and will expire on September 30, 2022.
  • Requires employers to provide up to two weeks of SPSL to recover from COVID-19 or care for a family member.
  • Employees are entitled to 40 hours of SPSL for the following reasons:
  1. The covered employee is subject to a quarantine or isolation period related to COVID-19 as defined by an order or guidance of the State Department of Public Health, the federal Centers for Disease Control and Prevention (CDC), or a local public health officer who has jurisdiction over the workplace.
  2. The covered employee has been advised by a health care provider to isolate or quarantine due to COVID-19.
  3. The covered employee is attending an appointment for themselves or a family member to receive a vaccine or a vaccine booster for protection against COVID-19, limited to three days or 24 hours.
  4. The covered employee is experiencing symptoms or caring for a family member experiencing symptoms, related to a COVID-19 vaccine or vaccine booster that prevents the employee from being able to work or telework.
  5. The covered employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis.
  6. The covered employee is caring for a family member who is subject to an order or guidance or who has been advised to isolate or quarantine.
  7. The covered employee is caring for a child, whose school or place of care is closed or otherwise unavailable for reasons related to COVID-19 on the premises.
  8. An additional 40 hours for an employee or family member tests positive.
  9. Maximum of 80 hours of leave. Part time employees receive a pro-rated amount of time.

Governor Gavin Newsome is expected to sign legislation this week, enacting the new law. If you have questions about COVID-19 Supplemental Paid Sick Leave or other new laws affecting your business, contact our employment law experts at Schneiders and Associates, L.L.P. at (805) 764-6370 or visit our website at www.rstlegal.com

The text of the bills can be found at:

https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202120220AB84

https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202120220SB114

By: Theodore Schneider, Esq.

Theodore Schneider assists his clients in Ventura County and surrounding areas, with respect to all aspects of personnel matters, including employee discipline, wrongful termination, retaliation, discrimination, hostile work environment, sexual harassment, leaves of absence, Americans with Disabilities Act, Fair Employment and Housing Act, Fair Labor Standards Act, and the California Labor Code. Ted also drafts and reviews employee handbooks and employment policies for his clients. Email Ted at tschneider@rstlegal.com.

“22 for 2022” – Twenty-Two New Employment Laws to be Aware of as We Head into 2022!

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Ring in the new year by preparing your business for new California workplace laws! The past year has had human resource professionals scrambling to keep up. The California Legislature passed several laws that will affect California employers. Our employment law attorneys have listed “22 for 2022” new employment laws that you need to know about as we head into the new year. Hold on to your seats!

SB 93: Rehiring and Retention Law

SB 93 requires that employers in certain industries, particularly the hospitality industry, make written job offers to employees whom they laid off because of COVID-19. Employees have five business days to respond, and employers must keep records for three years.

AB 1003: Wage theft

AB 1003 makes intentional theft of wages in an amount greater than $950 from any one employee or $2350 in from 2 or more employees in any consecutive 12-month period punishable as grand theft, which is punishable either as a misdemeanor or felony. Examples of wage theft include being paid less than minimum wage per hour, not being allowed to take meal and rest breaks, owners or mangers taking tips, bounced checks, to name a few.

AB 1033: Expansion for CFRA Leave to Include Parents-in-Law

Employers must grant eligible employees up to 12 weeks of job-protected time off from work annually for the purposes of providing care to a parent-in-law with a serious medical condition under the California Family Rights Act (CFRA).

AB 685: Noticing Requirements

AB 685 establishes employer reporting and noticing requirements upon notice of a potential exposure to COVID-19 at the workplace. If an employer receives a notice of a potential exposure to COVID-19, the employer must, within one business day, provide written notice to all employees and the employers of subcontracted employees that were on the premises at the same worksite, provide information regarding benefits, and notify all employees of the disinfection and safety plan.

AB 654: Employer Reporting Requirements Revised

AB 654 expands the types of employers who are exempt from COVID-19 outbreak reporting requirements. Employers such as community clinics, adult day health centers, community care facilities, and child daycare facilities are exempt from COVID-19 outbreak reporting required under AB 685.

AB 2537 and SB 275: PPE Requirement

AB 2537 and SB 275 requires that employers provide certain employees (those working in hospitals) with Personal Protective Equipment (PPE) and maintain a three-month stockpile and provide inventory information to Cal/OSHA upon request.

SB 331: Limits NDAs and Settlement Agreement Terms in Employment Cases

SB 331 further limits the use of non-disclosure agreements (NDAs) and settlement agreement terms when settling employment legal claims involving harassment, discrimination, or retaliation.

SB 1159: COVID-19 Workers’ Compensation

SB 1159 expands access to workers’ compensation so that first responders, health care workers and people who test positive due to an outbreak at work get support, including necessary medical care and wage replacement benefits. Employers are required to notify their insurance carriers and/or third-party administrators, in writing, of all known employee COVID-19 positive cases, whether the case is work-related or not, within 3 business days.

SB 807: Personnel Records Retention

SB 807 extends the current personnel records retention requirement to 4 years.

SB 1383: California Family Rights Act (CFRA) Expanded to Cover Businesses with Five or More Employees

SB 1383 expands CFRA to employers with five or more employees and expands the scope of “family members” for whom employees take leave to include many additional categories. The new law replaces the new Parent Leave Act. The new law allows for the ability to care for a “family member” with a serious health condition: Family members expanded to include siblings, grandparents, grandchildren, and domestic partners. The definition of “child” is expanded to include adult children.

AB 2399: Paid Family Leave for Active Military Duty

AB 2399 extends the definition of Paid Family Leave under the state’s Unemployment Insurance Code to include coverage for active military members and their families. It provides wage replacement benefits for employees to take time off to care for a seriously ill family member.

AB 2043: Occupational Safety and Health, Agricultural Employers and Employees

AB 2043 requires employers to disseminate information of best practices for COVID-19 infection prevention to agricultural employees, in both English and Spanish. It also requires that Cal/OSHA work with employers and employees on outreach campaigns targeting agricultural employees. The law only applies during the state of emergency.

AB 1867: Supplemental Paid Sick Leave

AB 1867 expands supplemental paid sick leave for COVID-19- related reasons for employers not covered by the federal Families First Coronavirus Response Act (FFCRA) – employers with 500 or more employees, as well as health care providers and first responders.

Vaquez v. Jan-Pro Franchising International, Inc. (Cal. Sup. Court, Jan. 14, 2021)

In the case of Vaquez v. Jan-Pro Franchising International, Inc., the California Supreme Court ruled that the independent contractor ABC test in Dynamex Operations West, Inc. v. Superior Court (Dynamex) applies retroactively to all cases “not yet final” as of the date of the Dynamex decision. A business that relied in good faith on Borello can now be liable for not following the ABC test before the Dynamex decision was ever issued.

AB 1512: Security Guard Rest Breaks

AB 1512 changes the law to provide that security guards may be required to remain on the premises during rest periods and to remain on call during the rest period.

AB 3075: Expansion of Successor Liability for Labor Code Judgements

AB 3075 provides that “[a] successor to a judgment debtor shall be liable for any wages, damages, and penalties owed to any of the judgment debtor’s former workforce pursuant to a final judgement, after the time to appeal therefrom has expired and for which no appeal therefrom is pending.” AB 3075 also adds new obligations for a company when submitting its statement of information with the California Secretary of State, to state whether “any member or any manager has an outstanding final judgment issued by the Division of Labor Standards Enforcement or a court of law, for which no appeal therefrom is pending, for the violation of any wage order or provision of the Labor Code.”

Brown v. TGS Management Co., LLC (2020)

Brown v. TGS Management, LLC (2020) the California Court of Appeal decision holds that an employee confidentiality agreement may be voided as a de facto unlawful non-compete agreement if it has the effect of preventing the employee from working in the industry.

AB 1947: Complaints with DLSE

Effective date: January 1, 2021. This legislation extends the statute of limitations to file a complaint with the State of California’s Division of Labor Standards Enforcement from six months after the occurrence of the alleged violation(s) to within one year after the occurrence of the alleged violation(s).

SB 973: New Pay Data Reporting Obligations for Employers with 100 or More Employees

SB 973 requires employers with 100 or more employees and who are required under federal law to file an annual federal Employer Information Report (EEO-1) to submit an annual pay data report to the California Department of Fair Employment and Housing (DFEH). The report must include the number of employees and the hours they worked by race, ethnicity and gender in 10 federally identified job categories and whose annual earnings fall within the pay bands used by the U.S. Bureau of Labor Statistics in the Occupational Employment Statistics survey. Since SB 973 was enacted on September 30, 2020, private emloyers with 100 or more employees must submit their pay data reports to the DFEH by March 31, 2021, and annually thereafter.

AB 2143 – Loosened Restrictions on “No Re-Hire” Provisions in Employment Settlement Agreements

AB 2143 requires that the aggrieved former employee must have filed the claim in good faith in order for the prohibition against “no-rehire” provisions apply. AB 2143 Expands this “no-rehire” exception to allow no-rehire provisions when the former employee engaged in any criminal conduct, rather than limiting the exception to sexual harassment or sexual assault. To qualify for the “good faith determination” exception, an employer’s determination must have been made and documented before the aggrieved person filed the claim or complaint.

California Proposition 22 (Prop 22): Exempts App-Based Drivers from AB 5

Prop 22 allows app-based ride share and food delivery companies to treat workers as independent contractors, even though they do not qualify as such under the AB 5’s “ABC” Test. Workers are only independent contractors if the workers have freedom to determine dates and times of work, and the company does not restrict the driver from performing rideshare or delivery services for other companies.

Employee Handbooks

There are several new laws that require employers of all sizes to update their employee handbooks. Employee handbook revisions should address remote work rules, COVID-19 specific workplace safety plans, expanded leave rights (CFRA), and changes to crime victims leave and organ and bone marrow donation. Contact our employment law attorneys at Schneiders & Associates for a review of your current handbook.

By: Christopher Correa, Esq.

This summary of new laws will be discussed on January 25, 2022 by Schneiders & Associates Partners Roy and Ted Schneider. Roy and Ted will present the 2022 Annual Employment Law Update – an in-depth discussion and further explanation of new laws, via Zoom. Please register for this free webinar at www.rstlegal.com. We hope to see you there to answer all your new employment law related questions!

Please note, this webinar is approved for one hour of MCLE credit.

Schneiders & Associates Offers Free Employment Law Update Webinar!

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The new year will be full of changes. Prepare for 2022 with our help! Join us for a FREE virtual employment law update seminar to learn about new employment law changes in 2022, including COVID-19 employment law updates. Partners Roy and Ted Schneider will discuss in detail, the changes the new year will bring and help you prepare for the road ahead! Tuesday, January 25, 2022 11:00 a.m. – 12:00 p.m. Via Zoom. Register today! Please note: MCLE credit is available for this seminar. Attorneys that wish to receive MCLE credit may contact Angela Mumme via email at amumme@rstlegal.com to register.

Can I Implement a Mandatory Vaccine Policy for My Employees – And What is a Mandatory Vaccine Policy?

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It is likely that President Biden’s administration will implement a mandatory vaccine policy for all private-sector employers with 100 or more employees. Failure to comply with the policy will result in significant fines (up to $13,600 per violation). This sounds simple on its face, but what if you do not have 100 employees; or, what if one of your employees refuses to get vaccinated?

                If you employ less than 100 employees, you can still implement a mandatory vaccine policy, as long as it complies with state and federal laws prohibiting discrimination based on a medical condition or disability or a sincerely held religious belief. This requires the employer to engage in an interactive dialogue with the employee in an effort to find a reasonable accommodation for the employee’s disability or sincerely held religious belief.

                A mandatory vaccine policy does not mean that every employee must be vaccinated. An employee can refuse to get vaccinated and may still be entitled to keep his or her job. The new policy requires that all employees receive the COVID-19 vaccine and any FDA-approved boosters, or that the employee must produce a negative test at least once a week. Unvaccinated employees will also be required to wear a mask indoors, as well as any other locations that the local, state, or federal rules require masks. (For example, LA and Ventura Counties are currently requiring all people to wear a mask indoors, regardless of their vaccination status.)

                At this point, it is unclear who bears the cost of the testing kits, but early opinions appear to put the burden on the employer to provide testing kits or pay for unvaccinated employees to get tested by a healthcare provider or pharmacy. Furthermore, the employer must exercise some control over the testing procedure and accuracy of the results. You cannot permit the unvaccinated employee to test himself or herself at home and self-report the results upon arriving at work.

                While this may not present a burden on larger employers, the cost of test kits could tip the balance in favor of smaller employers telling the unvaccinated employee (or applicant) to seek employment elsewhere. The cost factor is not enough by itself to end the interactive dialogue, but it will be helpful to the small business owners’ analysis.

                For now, the Equal Employment Opportunity Commission (EEOC) and Department of Fair Employment and Housing (DFEH) are using a number of factors to determine whether a potential accommodation is reasonable or puts an undue burden on the employer. These include: the nature and cost of the accommodation; the employer’s financial resources, the number of employees at a facility, and the effect on expenses at that facility; the employer’s operation type, the geographic separateness, and effect on administrative or fiscal relationship of the facility making the accommodation; and the impact of the accommodation on the worksite.

                Some employees may be able to perform their jobs remotely. Others may work alone or outdoors and geographically away from other employees or clients and customers.

If you are an employer and have questions regarding vaccine mandates in the workplace and wish to speak with an Employment Law expert, contact our Ventura County office, at 805-764-6370.

By: Christopher Correa, Esq.

Christopher Correa, Attorney

About Christopher Correa

Chris is an expert in COVID-19 employment related issues, such as paid time off, and getting employees back to work safely. Chris advises employers about their rights and obligations as businesses begin to reopen.

Email Christopher at ccorrea@rstlegal.com.