Attention (Again) California Restaurant Employers: Congress Changes the Tip Pool Rules

Author: Sean Gentry

Earlier in the year, we reported that the Department of Labor was proposing to rescind prior Federal restrictions on tip-pool arrangements, and that we expect a related decision from the U.S. Supreme Court on those rules.

In a somewhat unexpected turn, Congress decided to directly intervene on the tip-sharing agreements under the Fair Labor Standards Act as a part of a recently-passed spending bill.

Under the new federal law, employers with regularly tipped employees may include a broader group of employees in employer-mandated tip-pool arrangements, including any employees who provide “direct table service” or who are in the “chain of service.”

Read More >

Changes to the Prop 65 Warnings are Due in August- Does it Apply to You?

Author: Wendy Hillger

Proposition 65 requires the State of California to maintain a list of chemicals that can cause cancer, birth defects or other reproductive harm.   These warnings apply to landlords, business owners, bars/restaurants, and other retailers.  Businesses with 10 or more employees that expose individuals to listed chemicals through their products or operations generally must provide warnings.  At present, approximately 900 chemicals are required to be disclosed, such as additives or ingredients in pesticides, common household products, food, drugs, dyes, or solvents. Additionally, listed chemicals may also be used in manufacturing and construction, or they may be byproducts of chemical processes, such as motor vehicle exhaust.  These chemicals can be in the products that Californians purchase, in their homes or workplaces, or that are released into the environment.Read More >

Employer Arbitration Clauses Can Waive Class Action Claim

Author: Sean B. Gentry

The U.S. Supreme Court recently ruled that employers can use arbitration clauses in employment contracts to limit their employees’ right to file or participate in class actions lawsuits on wage and hour claims. Employers can require their employees to pursue most types of employment claims in arbitration instead of court and can prevent employees from banding together to more efficiently litigate their claims as a group. For employers that have been waiting to see how the law settled on this matter, or that have been wondering about the validity of arbitration agreements already in place with their employees, it is now clear that these agreements will be enforced as long as they meet certain standards of fairness.

This case, entitled Epic Systems Corp. v. Lewis, resolved a number of conflicting Circuit Court opinions on this issue that stemmed from the National Labor Relations Board decision 2012 in D.R. Horton, Inc., which found that individual employment arbitration agreements were incompatible with the collection rights of employee under the National Labor Relations Act and that the NLRA was not preempted by the Federal Arbitration Act. However, a 5-4 majority of the Supreme Court disagreed with that finding and instead held that the FAA preempted the NLRA.

Read More >

The Masterpiece Cakeshop Case Is Not an Invitation to Discriminate

Author: Sean B. Gentry

Yes, as the media widely reported, the U.S. Supreme Court sided with the baker in the case about a Colorado cake maker turning away business from a same-sex couple after he told them that he did not design custom cakes for gay couples.  However, rather than making a significant nation-wide ruling, the Court simply held that the Colorado Civil Rights Commission’s consideration of the baker’s case was “compromised” and it had treated him unfairly.  Thus, the ruling in no way opened the door to discrimination for businesses against any persons with protected, immutable characteristics.

In fact, Justice Kennedy wrote that it is “unexceptional” that Colorado law “can protect gay persons in acquiring products and services on the same terms and conditions that are offered to other members of the public.”  The problem was that the Commission did not apply the law “in a manner that is neutral toward religion.”Read More >

New Federal Sick Time and Paid Leave Law for Coronavirus

By Sean Gentry

In response to the health concerns and shelter in place orders affecting individuals and business through the United States, the federal government has passed new paid sick time laws that all employers need to be aware of, called the Families First Coronavirus Response Act (FFCRA or Act).

This law goes into effect for April 2020 and continues through December 31, 2020.  It affects all employers with 500 or fewer employees.  In general, this law requires affected employers to provide their employees who cannot work (or remote work) with paid sick leave or expanded family and medical leave for specified reasons related to COVID-19.  Covered employers must provide to all employees:

    • Two weeks (up to 80 hours, or a part-time employee’s two-week equivalent) of paid sick leave at the employee’s regular rate of pay where the employee is unable to work because the employee is quarantined (pursuant to Federal, State, or local government order or advice of a health care provider), and/or experiencing COVID-19 symptoms and seeking a medical diagnosis.

      OR

 

  • Two weeks (up to 80 hours, or a part-time employee’s two-week equivalent) of paid sick leave at two-thirds the employee’s regular rate of pay because the employee is unable to work because of a bona fide need to care for an individual subject to quarantine, or care for a child (under 18 years of age) whose school or child care provider is closed or unavailable for reasons related to COVID-19, and/or the employee is experiencing a substantially similar condition.

For the first category, the amount of sick time to be paid is 100% of the employee’s income up to a maximum of $511 daily and $5,110 total.

For the second category, the amount of sick time to be paid is 2/3rd of the employee’s income up to a maximum of $200 daily and $2,000 total.

However, in the case of employees caring for their child whose school or place of care is closed (or child care provider is unavailable) due to COVID-19 related reasons, then up to 12 weeks (i.e., 10 more weeks) of paid sick leave and expanded family and medical leave is available and paid at 2/3rd of the employee’s income up to a maximum of $200 daily and $12,000 total.

Employees are eligible for the extra 10 weeks of paid leave only if they have been employed for at least 30 days prior to their leave request.  Employees are eligible for the paid sick time regardless of length of employment.

The Department of Labor (DOL) has explained that “unable to work” means the employer has work for you and one of the COVID-19 qualifying reasons set forth above prevents you from being able to perform that work, either under normal circumstances at your normal worksite or by means of Remote work (“telework”).

Therefore, it appears that the sick leave requirements do not apply when no work is available.  In that case, please refer to the EDD website* with regard to various considerations for unemployment insurance benefits that may be applicable for employees whose businesses have been forced to reduce hours substantially, make furloughs, or make layoffs due to Coronavirus and the shelter in place orders.

The law prohibits employers from requiring an employee to find a replacement when using qualifying paid sick leave.  On the other hand, the paid sick time stops beginning with the employee’s next scheduled shift immediately following the conclusion of the need for paid sick time.  In other words, an employee must return to work as soon as the need for leave ends, even if the employee has not used all of the paid sick time available under the FFCRA.

Small businesses with fewer than 50 employees may qualify for exemption from the requirement to provide leave due to school closings or childcare unavailability if the leave requirements would jeopardize the viability of the business.  To elect this small business exemption, you should document why your business with fewer than 50 employees needs the exemption.  However, the DOL has not yet released the criteria for the exemption, which will apparently be addressed in more detail in forthcoming regulations.  The DOL does not need you to send any materials to them when seeking a small business exemption for paid sick leave and expanded family and medical leave.

A link to the poster that all employers should share with their employees—and post in the location where similar posters are displayed once it is safe to do so—can be found here:

https://www.dol.gov/sites/dolgov/files/WHD/posters/FFCRA_Poster_WH1422_Non-Federal.pdf

Employers covered by the FFCRA qualify for dollar-for-dollar reimbursement through tax credits for all qualifying wages paid under the FFCRA, for amounts paid to an employee who takes eligible leave, up to the maximums listed above.  Applicable tax credits also extend to amounts paid or incurred to maintain health insurance coverage.  For more information on this part, please see the Department of the Treasury’s website, for example here:

https://home.treasury.gov/news/press-releases/sm952

For more information about the FFCRA, you can visit the Department of Labor’s information pages here:

https://www.dol.gov/agencies/whd/pandemic/ffcra-employer-paid-leave

https://www.dol.gov/agencies/whd/pandemic/ffcra-questions

Please note also that permitted uses of job-protected leave under the Family and Medical Leave Act (FMLA) were separately addressed under the Emergency Family and Medical Leave Act in response to COVID-19, which may be the topic of a separate article.

* Information from the EDD about unemployment benefits, options available for both employers and employees, and Coronavirus in California in general, please see the EDD’s website here:

https://www.edd.ca.gov/about_edd/coronavirus-2019.htm

https://www.edd.ca.gov/about_edd/coronavirus-2019/faqs.htm

Prop 22 Ruled Unconstitutional. Now What?

Written by:

Alex Guney

Last month, an Alameda Superior Court Judge ruled that Proposition 22 was unconstitutional and unenforceable.  While app-based drivers may have won this battle, their war to be classified as employees is far from over—especially as Uber, Lyft, and other gig service providers attempt to enact legislation similar to Prop 22 across the county.

Prop 22 was a successful ballot initiative that defined app-based drivers as independent contractors, and not employees, if certain conditions were met.  The ballot initiative was in direct response to Assembly Bill 5, which codified a presumption that a worker is an employee, unless the hiring entity could prove three circumstances were present (dubbed the ABC test).  The ABC test was developed by the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court and threated the gig business model, which depended on the app-based drivers being classified as independent contractors.

Prop 22 provided a new framework for determining when an app-based driver may be classified as an independent contractor. Specifically, if the company (1) does not unilaterally set specific requirements for the dates and times of day, or minimum number of hours, the driver must work; (2) does not require the driver to accept specific service requests; and (3) does not restrict the driver from working for other companies (ride-share or otherwise), then the app-based driver may be classified as an independent contractor.  Bus. & Prof. Code § 7451.

In February of this year, a group of Uber and Lyft drivers, along with the Service Employees International Union, filed a petition for writ of mandate, asking a California court to rule that Prop 22 violates the State’s Constitution. Judge Frank Roesch of the Alameda Superior Court agreed with the drivers and ruled that Prop 22 is unconstitutional and unenforceable. First, the court ruled that Prop 22 imposed an unconstitutional limitation on the Legislature’s ability to exercise its plenary power to determine which workers must be covered by the workers’ compensation system.  Second, Prop 22 applied conditions to the Legislature’s ability to amend the new law, which the court also found unconstitutional.  Because the limitation on the Legislature’s ability to exercise control over the workers’ compensation system could not be severed from the remainder of the statute, “the entirety of Proposition 22 is unenforceable.”

In practical effect, the court’s order may be a victory for app-based drivers in name only.  It is very likely that the proponents of Prop 22 will appeal that court’s order, and in turn, request that the effects of the court’s order be stayed during the pendency of the appeal.  This means that Prop 22 will remain in effect while the case makes its way through the appeals process.  But the order ruling Prop 22 unconstitutional would not have resolved the issue of how to classify app-based drivers.  Even absent Prop 22, determination of whether app-based drivers are independent contractors would revert back to the ABC test.  On the journey to be classified as employees, the ETA for app-based drivers is TBD.

To sign up for Ad Astra Law Group’s mailing list, please go HERE.

For Ad Astra Law Group’s blog, please go HERE.

How do you Choose the Right Lawyer?

By:

Katy Young

The answer to that question can determine whether you get proper representation or not. Most people have no understanding of how to choose a lawyer to represent them. Common ways to find an attorney are to ask friends or family for recommendations, use a lawyer referral service, or good old Google. Asking for a referral to an attorney can certainly help get you on the right track, but what do you do if you don’t know anyone who knows anyone? Lawyer referral services through local bar associations can be clunky to deal with, so most people search the internet. But what if the internet doesn’t know the answer?

Yes, believe it or not, sometimes the internet does not have the answer. That is especially true when you are experiencing a dispute. If you are having a business dispute, you might Google “business law” and your geographic area. If a real estate dispute, you might Google “real estate lawyer” plus your city. By the same token, many people experiencing employment disputes Google for “employment law” or “employment lawyer.” While these all seem like reasonable search terms, the problem is that Google doesn’t know the difference between a lawyer who handles disputes and a lawyer who does not. To get a more accurate result, you would have to search “business litigation” or “real estate litigator” to get to the kind of lawyer that handles disputes. The other kind of lawyer is a transactional lawyer, one who does not go into a courtroom, but Google results assume that’s what you mean when you search “business law.” Most people are not familiar with the differences between litigators and transactional attorneys. Google barely does and yields some imperfect results.

So the first step in choosing the right lawyer is determining what type of lawyer you need. Do you need a lawyer who handles disputes and goes to court (a litigator) or one who handles non-dispute work such as transactions, contract drafting, and regulatory advising (a transactional attorney)? Once you know, then you can refine your Google search. You will be able to search “business litigation attorney san Francisco” for example, and get to us. If you just search “business law San Francisco” you get a swath of results that include the kind of lawyer you don’t need. As a firm, we do not expend any resources on Google adwords because Google is so bad at this distinction. Any time we dedicated resources to search engine optimization to make it easier for clients to find us, we get inundated with phone calls from people who want us to draft a contract or advise them on regulations, which is not what we do. Ad Astra is solely dedicated to dispute work, we are ONLY litigators. We appreciate the ability to refer out that potential transactional business to our friends, thereby helping the potential client get to a lawyer that will be a better fit for them, but we stay in our lane…and we’re damn good at it, too.

Now that you know more than Google about the difference between types of lawyers, we hope you will find the right one for you. If it’s a fighter you need, give us a call. Otherwise, we’ll refer you to a friend.

Protect Your Business: Tips on Website Privacy and Accessibility Compliance

With 2024 soon wrapping up, businesses of all shapes and sizes should be mindful to add website privacy and disability compliance to their list of New Years’ resolutions. In recent developments in California, a trend has emerged of consumers filing class action lawsuits against businesses for violations of California disability and privacy laws on their websites. This novel threat serves as a reminder to business owners to remain up to date with the latest compliance software and to stay vigilant in preventing the risk of litigation.

Lawsuits targeting businesses engaged in e-commerce have spiked significantly in the past few years. In 2023, 4,605 accessibility lawsuits were filed nationwide, representing nearly 42% increase compared to 2022, a trend that persisted in 2024. These lawsuits, typically filed under Title III of the Americans with Disabilities Act (“ADA”) and the California Unruh Civil Rights Act, allege that consumer-facing websites constitute “public accommodations” within the definition of Title III of the ADA, and target businesses whose website(s) discriminate against persons with disabilities allegedly failing to provide sufficient accessibility components.

A similar trend has emerged with plaintiffs filing lawsuits against businesses for violations of the California Invasion of Privacy Act. These lawsuits claim that the software installed on business websites acts as an illegal “pen register,” which is a device or a process that record or decode dialing, routing, addressing, signaling information. Plaintiffs in these suits typically claim that these businesses’ websites deploy pen register scripts which track and monitor consumers’ online activity across multiple browsing sessions, and wrongfully collect, store, or aggregate users’ personally identifiable information.

Even meritless lawsuits can prove to be incredibly costly and burdensome for businesses of all sizes and in all industries. To mitigate or avoid the risk of litigation, businessowners can take certain measures to ensure their websites are ADA compliant, accessible, AND in line with California privacy laws:

  • Subscribe and install an ADA-compliance software program on the company’s website which provides accessibility components for individuals with audible and visual impairments and conduct regular audits of the website to identify any accessibility-compliance gaps;
  • Add a cookie opt-out notification banner to the company’s homepage with options to (1) accept all cookies; (2) decline all cookies, or (3) allow the user to manage cookie preferences, linking to a separate page to allow the user to select the types of cookies to which they consent, and;
  • Identify and audit any tracking scripts installed on a business’s website to assess what type of information those scripts are collecting and to ensure no personally identifiable information is collected.

This list is just an example of some of the steps businessowners can take to ensure their websites are legally compliant and to help avoid the risk of litigation. Businessowners should retain counsel to fully assess their risk and exposure to litigation and to help tailor each business’s website to ensure full compliance.

Social Media and the Law: Defendant Breaches a Contract and Draws Fire via Twitter

Author: Katy Young

This month, I sat in on a microconference on forensics put on by DTI, Inc.- a major litigation support company that we use frequently for discovery matters. The presenters spent an hour discussing the evidentiary considerations of social media. As I listened, I was reminded of a fun case that I worked on years ago when I was a solo practitioner.

In that case, I represented a woman who had made a contract by email with a former friend/business partner of hers who had moved to Germany to get an MBA from a university there. The two parties to the contract had once been very close friends and they made a film together in New York. My client’s friend/ex business partner owed her monies from the fallout of the filmmaking process and they made a contract by email. The contract stated that he would pay her when he returned from Germany and obtained a job back in the U.S.

The parties lost contact for years, but all of the sudden, the person who owed my client money under the contract posted on Twitter “First day at my new job at Deutche Bank…damn it feels good to be a banker! #paid”. At this point, my client knew that he was back in the U.S. and clearly had a good job and would be able to resume payments as agreed. She was able to find out through social media that he had moved to Berkeley, CA, but we still could not locate him for the purpose of serving upon him the breach of contract lawsuit I had filed. Not to leave his loyal followers in the lurch about his exciting life, this man went on to tweet about his next new job “First day at Robert Half in San Francisco!” Someone responded to his tweet asking where the office is and he responded “50 California.” It just so happened that I worked at 50 California for many years and I was very familiar with the reception practices for the company called Robert Half in that building. I had once interviewed there, so I knew that although Robert Half is a huge company, they have a central reception agency on a low floor. I called my process server and directed him to go to the central reception floor at 50 California and tell the receptionist that he has a package for the new employee and give the defendant’s name. My process server did just that, the defendant came bounding out to reception excited to receive a package and was personally served with the lawsuit.

The case settled at mediation a couple of months later. The defendant was dumbfounded as to how we located him. A word to the wise: if you are trying to stay under the radar, Twitter is your enemy.

Ninth Circuit Opinion Confirms That Websites Should Probably Have Clickwrap Agreements To Bind Their Customers

Written by Keenan W. Ng

Recently, the Ninth Circuit in Nguyen v. Barnes &Noble, Inc. held that “where a website makes its terms of use available via a conspicuous hyperlink on every page of the website but otherwise provides no notice to users nor prompts them to take any affirmative action to demonstrate assent, even close proximity of the hyperlink to relevant buttons users must click on—without more—is insufficient to give rise to constructive notice.”

In 2011, plaintiff purchased two Hewlett-Packard Touchpads from the Barnes & Noble website during a fire sale. Unfortunately, despite receiving a confirming email of his purchase, plaintiff’s order was cancelled due to high demand. Plaintiff filed suit alleging he had to purchase another tablet at a higher price. Defendant argued that plaintiff must arbitrate the matter per the browsewrap terms of use agreement.

Read More >