May 2017 - Issue 63

Remembering David Spence

Annual Meeting of the Board of Directors

Doc Hendley, Keynote Speaker at Risk Management Educational Forum – Registration Now Open

Claim Resolution Process for Public Works Projects – Assembly Bill 626

Legislative Update

Join Social Media Conversations with the Authority  

Palm Desert Capitalizes on Arts and Culture

Supreme Court Lets Flores Ruling Stand, Requiring Some Employers to Include Cash In Lieu of Benefits in Calculating Overtime Pay

Immunity Protects Deputy From Suit Over Shooting—Court

Preparing Facilities for Summer

News: Worthy

Remembering David Spence

by Jonathan Shull, Chief Executive Officer

David Spence, Secretary of the Executive Committee, passed away from an apparentDave Spence heart attack at his home on May 16. He was 80 years old. 

I had the opportunity to spend time with Dave the weekend prior to his passing at the Contract Cities Annual Municipal Seminar.  He served as past President of the California Contract Cities Association and was well known to its members.  I recall standing alongside Dave at the Seminar and watching him greet those around him. Having been born and raised in Southern Ohio, Dave radiated his Midwest hospitality with friends and colleagues alike and was known for his infectious laugh.

He served for almost 20 years on the Authority’s Executive Committee and was the Committee’s Secretary at the time of his death. He was first elected to the La Cañada Flintridge City Council in 1992. During his 25 years on the council, he was appointed mayor six times. In 2016, he completed his precedent-setting sixth term as Mayor and was bestowed the title and distinction of “Super Mayor” by the City Council and staff.  Dave also represented the community on many regional governmental agencies and with organizations including the National League of Cities, Southern California Association of Governments, and the Los Angeles County Liability Trust Fund Claims Board and Oversight Committee.

Since its beginning, the Authority has placed an emphasis on meeting the needs of members. Over the years, Dave strongly supported the Executive Committee’s commitment to dedicate resources to enhance programs and services available to members. 

Dave was an incredible contributor to the success of our organization. Few could be categorized as being a stronger believer in the ideals of the Authority. For me, he was a great boss and a good friend. I am terribly saddened by his passing. He will be greatly missed by me personally and by our organization.

“David Spence was an invaluable source of wisdom, guidance and support, both to the La Cañada Flintridge community and to me personally,” said La Cañada Flintridge Mayor Michael T. Davitt. “His tireless dedication and legacy of excellence set the standard for our community.” 

Dave was preceded in death by his wife, Alice. He is survived by his two sons, Steve and Andy, and his current love, Jacky Hollingsworth.


News: Worthy

Annual Meeting of the Board of Directors

by Jonathan R. Shull, Chief Executive Officer

The Annual Meeting of the Board of Directors will be held Wednesday, July 19, 2017 at 7:00 p.m. 

Those attending will have the opportunity meet the Executive Committee and Authority staff, and network with the members of the California JPIA. The business meeting will present information about the Authority's objectives, vision, and accomplishments over the past year, including recognition of the winners of the 2017 Risk Management Awards.

In addition, voting delegates will elect three Executive Committee members.  Also, the Board of Directors will elect one member from the Executive Committee to serve as President for a two-year term. 

The meeting will be held at the Authority’s La Palma campus at 8081 Moody Street.  A buffet dinner will be served al fresco at 5:30 p.m. with the Board of Directors meeting immediately following.  Voting delegates and up to one additional member representative are eligible to receive lodging and travel reimbursement for attending the meeting.  A $100 stipend will be provided to the voting delegate or alternate of each member agency attending the meeting.

On an annual basis, the California JPIA asks members to certify designated California JPIA Director and Alternate(s) prior to the annual Board of Directors meeting.  Please click here to complete the certification.  Registration for the Annual Meeting of the Board of Directors will open in June.  For questions or assistance please contact Denise Covell, Administrative Assistant.

I hope you will be able to join us.


News: Worthy

Doc Hendley, Keynote Speaker at Risk Management Educational Forum – Registration Now Open

Registration is now open for the 22nd Annual Risk Management Educational Forum, entitled Risk Management: Facing the Future Together, to be held at The Fess ParkerForum 2017 Resort in Santa Barbara from October 11-13, 2017.   

Come prepared to be inspired by this year’s keynote speaker, Doc Hendley. Doc is a CNN Hero and President and founder of the organization Wine to Water, bringing a knowledge of civil and human rights, global affairs and empowerment to his inspirational presentations.

Motivated by his quest to bring clean water to those who need it, Doc Hendley inspires others with his story of not only founding a charity but working at the sharp end of it in Darfur, the world's most dangerous region. He explains how relationshipsDoc Hendley have the power to transcend perceived barriers, taking things that once seemed impossible and making them inevitable. He also explains his philosophy of maximizing whatever is available to make the very most of every opportunity.

For 2017, the Authority’s Executive Committee has again waived registration for members.  Lodging scholarships will be available on a limited basis.  Non-member registration fee is $475.00.  Click here to begin your registration.

For questions, email us at forum@cjpia.org.


News: Worthy

Claim Resolution Process for Public Works Projects – Assembly Bill 626  

By Maria Galvan, Risk Manager

Public works contract disputes are now affected by a new California law. In September 2016, Governor Brown signed Assembly Bill 626, which was codified in Public Contract Code Section 9204. For contracts entered on or after January 1, 2017, AB 626 establishes a claim resolution process that applies to any claim by a contractor in connection with a public works project. A public works project is defined as the erection, construction, alteration, repair, or improvement of any public structure, building, road, or other public improvement of any kind. The bill also outlines the procedure by which a subcontractor may make a claim through the contractor.

AB 626 defines a claim as a separate demand by the contractor for one or more of the following: a time extension for relief from damages or penalties for delay, payment of money or damages arising from work done pursuant to the contract for a public work, or payment of an amount disputed by the public entity, as specified.

AB 626 requires a public entity, upon receipt of a claim sent by registered or certified mail, to review it and, within 45 days, provide a written statement identifying the disputed and undisputed portions of the claim. A claim would be deemed rejected in its entirety if a public entity fails to issue the written statement.

The 45-day period could be extended by mutual agreement. If a public entity needs approval from its governing body to provide the claimant a written statement identifying the disputed portion of the claim, and the governing body does not meet within the 45 days or within the mutually agreed-to extension of time following receipt of a claim sent by registered mail or certified mail, the public entity has up to three days following the next duly publicly noticed meeting of the governing body after the 45-day period, or extension expires, to provide the claimant a written statement identifying the disputed portion and undisputed portion.

The bill also requires any payment due on the undisputed portion of the claim to be processed within 60 days.

If a claimant disputes the public entity’s written response or if the public entity fails to respond to a claim within the time prescribed, the claimant may demand in writing an informal conference to meet and confer for settlement of issues in dispute. The public entity must schedule a meet and confer conference within 30 days for settlement of the dispute. Any disputed portion of the claim that remains in dispute after the meet and confer conference is subject to nonbinding mediation, as specified. If mediation does not resolve the parties’ dispute, the public entity can require arbitration of disputes under private arbitration or the Public Works Contract Arbitration Program. Unpaid claim amounts which are not paid in a timely manner shall accrue interest at 7% per annum.

Text of AB 626’s provisions, or a summary, need to be included in the plans or specifications for any public work contract which may give rise to a claim. Members are advised to work with their city attorney or legal counsel.

Members should be aware of the following exclusion under the Memoranda of Coverage for the primary and excess liability programs, as it pertains to claims based on contractual obligations:

  1. Any Claim, liability, alleged liability, loss, cost, or expense including Tort Liability:
    1. Arising out of or as a consequence of an actual or alleged breach of any contract or agreement;
    2. For any amount actually or allegedly due under the terms of any contract or agreement; or
    3. Arising out of or as a consequence of the failure, refusal, or inability of a Protected Party or anyone acting on behalf of a Protected Party to enter into or renew any contract or agreement.

If you have questions, please contact your assigned Risk Manager.


News: Worthy

Legislative Update

By Abraham Han, Administrate Analyst

In an April 2017 newsletter article, the Authority provided legislative updates regarding key bills that could potentially have an impact on local government agencies.

The Authority would like to highlight opposition to AB 1250 (Jones-Sawyer), a bill that would create onerous requirements for cities and counties to contract out for services. As currently written, AB 1250 presents enormous difficulties for both local agencies and potential contractors by imposing burdens that overreach in terms of allowing local governance for contracting services.      

AB 1250 (Jones-Sawyer). Counties and cities: contracts for personal services

Position: Oppose unless amended.

Summary: This bill would place substantial burdens on local agencies by adding unreasonable paperwork burdens and reporting requirements relating to personal services contracts to impede and impact local control and governance. This bill would establish specific standards for the use of personal services contracts by counties and cities. Beginning January 1, 2018, the bill would allow a county or county, or a city or city agency, to contract for personal services currently or customarily performed by country employees, as applicable, when specific conditions are met. Among other things, the bill would require the county or city to clearly demonstrate that the proposed contract will result in actual overall cost savings to the county or city and also to show that the contract does not cause the displacement of county or city workers. Such requirements have the potential to be costly and time-consuming for local agencies, and the requirements may deter potential contractors from wanting to engage in services with a local agency. For these reasons, the Authority opposes AB 1250.

Through the Authority’s continued involvement with the California Association of Joint Powers Authorities (CAJPA), the Authority has identified additional bills below that members may want to monitor and review.

AB 553 (Daly). Workers’ compensation: return-to-work program.

Position: Oppose.

Summary: Existing law requires the director to determine eligibility for payments and the amount of payments, as specified. This bill would require the director to have the program distribute the $120,000,000 annually to eligible workers, as specified, and would require, commencing with the end of the 2017 calendar year, that any remaining program funds available after the above-described supplemental payments are distributed pro rata to those eligible workers, subject to a $25,000 limit per calendar year. This bill would require full payout of all remaining funds in the 100 percent employer funded catastrophic injury Return to Work fund, without any triggering event beyond the fact that some money remains after funding all claims each year.

AB 570 (Gonzalez Fletcher). Workers’ compensation; permanent disability apportionment.

Position: Oppose.

Summary: Current law requires apportionment of permanent disability to be based on causation, and a physician who prepares a report addressing the issue of permanent disability due to a claimed industrial injury is required to address the issue of causation of the permanent disability. This bill would prohibit apportionment, in the case of a physical injury occurring on or after January 1, 2018, from being based on pregnancy, childbirth, or other medical conditions related to pregnancy or childbirth. This bill would undermine the workers’ compensation system use of apportionment and would unnecessarily open the way to claims of discriminatory apportionment, effectively wiping out many of the legitimate medical factors on which apportionment to causation is based.

AB 989 (Cooper and Obernolte). Income tax: health savings accounts.

Position: Support.

Summary: The Personal Income Tax Law authorizes various deductions in computing income that is subject to tax under that law. This bill, for taxable years beginning on or after January 1, 2019, would allow a deduction in computing adjusted gross income in connection with health savings accounts in conformity with federal law. In general, the deduction would be an amount equal to the aggregate amount paid in cash during the taxable year by, or on behalf of, an eligible individual, as defined, to a health savings account of that individual, as provided. This bill pertaining to health savings accounts (HSAs) would provide needed savings to public and private sector employees and employers. HSAs allow individuals to save tax-free dollars to pay for near-term medical expenses and also save for future longer-term costs, in particular, medical care costs that occur after retirement.

AB 1298 (Santiago). Public safety officers: procedural rights.

Position: Oppose.

Summary: The Public Safety Officers Procedural Bill of Rights Act requires that certain conditions be met when any public safety officer is under investigation and subjected to interrogation by his or her commanding officer, or any other member of the employing public safety department, that could lead to punitive action. Existing law also governs the admissibility of testimony and evidence in these actions. This bill would unnecessarily increase costs and impede the ability to discipline or remove public safety officers. This bill would require, when any public safety officer is under investigation and subject to interrogation by his or her commanding officer, or any other member of the employing public safety department, on the allegation of making a false statement, that any administrative finding of the false statement shall require proof based on clear and convincing evidence. The bill would specify that this provision would apply only to allegations of false statements and would not apply to or affect any other allegation or charge against the public safety officer.

SB 772 (Leyva). Occupational safety and health: regulations.

Position: Oppose.

Summary: Current law exempts a standard or amendment to any standard adopted by the Occupational Safety and Health Standards Board that is substantially the same as a federal standard from specified provisions of the existing Administrative Procedure Act, including a requirement that a state agency proposing to adopt, amend, or repeal a major regulation, as defined, on or after November 1, 2013, prepare a standardized regulatory impact analysis in the manner prescribed by the Department of Finance. This bill seeks to eliminate regulatory impact analysis, including a cost/benefit analysis, when creating new occupational safety and health standards and regulations. This bill would exempt any occupational safety and health standard and order from the standardized regulatory impact analysis requirement.

In addition to the above bills, some bills were previously highlighted in an April newsletter article. Below is a brief list of those bills, along with the Authority’s position for each bill (including whether the position has changed).

AB 44 (Reyes). Workers’ compensation: medical treatment: terrorist attacks: workplace violence.

Position: Neutral (previously “oppose”). AB 44 has been amended to require employers to provide immediate access to a nurse case manager to their employees injured in the course of employment by an act of domestic terrorism. Because of this, the Authority’s position has shifted to neutral.

AB 182 (Waldron). Heroin and Opioid Public Education (HOPE) Act.

Position: Support.

AB 221 (Gray). Workers’ compensation; liability for payment.

Position: Neutral (previously “oppose”). The intent of AB 221 was made clearer, which is to target a particular model of fraud within the workers’ compensation system that focuses on cumulative trauma injury claims. Because of this, the Authority’s position has shifted to neutral.

AB 241 (Dababneh). Personal information: privacy: state and local agency breach.

Position: Oppose.

AB 383 (Chau). Civil actions: discovery status conference.

Position: Support.

AB 913 (Gray). Construction-related accessibility claims: extremely high-frequency litigants.

Position: Support.

AB 1024 (Kiley). Grand juries: peace officers: proceedings.

Position: Oppose.

AB 1548 (Fong). Occupational safety and health: penalties.

Position: Support.

SB 467 (Wilk). Civil actions: appearance by electronic means.

Position: Support.

SB 524 (Vidak). Employment: violations: good faith defense.

Position: Support.

The Authority will continue to monitor these bills and others identified by CAJPA as the legislative session continues.

If you have any questions, please contact Abraham Han, Administrative Analyst.


News:  Worthy

Join Social Media Conversations with the Authority  

In order to reach new members and better connect with current members, the Authority has an active presence on social media. Members can find information on various topics on the social media channels listed below. 

Connect with our latest topics:  Social Media Logo

Facebook 
“With summer just around the corner, is your agency prepared for the numerous public and private events that will use agency-owned premises? Our Special Events Program coverage provides liability insurance for special events or short-term activities, including weddings, art festivals, parades, block parties, yoga classes, and member-sponsored events such as job fairs, carnivals, and swap meets.” Like, comment and share:
https://www.facebook.com/California-JPIA-650664764970940/

LinkedIn Page
“As the recent WannaCry ransomware attack has shown, it is crucial for agencies to update their computer security systems on a regular basis and keep staff trained in detecting and avoiding malware." Follow us, comment and share about risk management:
https://www.linkedin.com/company/california-joint-powers-insurance-authority/

LinkedIn Discussion Group
“Has your agency developed internal policies to address disclosure requirements for personal accounts or private electronic devices, per the California Public Records Act (CPRA)?” Join the conversation, or pose a question or idea about risk management and the California JPIA:
https://www.linkedin.com/groups/6786001

Twitter
“Who should receive the 5th Annual California JPIA Capstone Award? We want 2 know! Learn more & submit your nomination: http://tinyurl.com/lzjnfxv.” Tweet, retweet and follow the California JPIA:
https://twitter.com/californiajpia/

For information on how to join these sites or participate in discussions, please contact Courtney Morrison, Administrative Analyst, by email or by phone at (562) 467-8779.


Re: Members

Palm Desert Capitalizes on Arts and Culture

(Posted by Western City Magazine May 10, 2017)

The City of Palm Desert won the League of California Cities Award for Excellence in the Economic Development Through the Arts category of the 2016 Helen Putnam07a Palm Desert Award for Excellence program. For more about the award program, visit http://www.helenputnam.org/.

The City of Palm Desert is located in the heart of the Coachella Valley, a fast-growing Southern California region that includes the cities of Palm Springs, La Quinta and Indio. In addition to Palm Desert’s 49,335 year-round residents, about 32,000 seasonal visitors and part-time residents come to bask in the sunshine that the community typically enjoys 350 days of each year. Since incorporating in 1973, the city has become an educational, retail and cultural center for the region.

The Arts and Culture: A Key Resource

Like many California cities, Palm Desert faced economic challenges due to the 2008 economic downturn and the state’s dissolution of redevelopment in 2012. In response, the Palm Desert City Council made economic development a priority through its 2012 Economic Development Strategic Plan and a 2013 citywide strategic plan titled Envision Palm Desert — Forward Together. Both plans spotlight arts and culture as integral to the city and as strong resources for economic development. 

Palm Desert has a wide range of cultural assets and events, and the city identified several that could be augmented to create a monthly event. The overarching goal was to increase economic activity by attracting tourists who would shop, dine and stay in Palm Desert, generating revenue for local businesses and for the city through sales and transient occupancy taxes.

The Evolution of a Collaborative Event

Called First Weekend Palm Desert, the event is held Friday through Sunday on the first weekend of each month from November through May. Launched in 2013–14, First Weekend built on existing art gallery receptions, performing arts events, festivals, concerts, classic car shows and culinary programming occurring on a monthly basis in the city. Some of these regularly scheduled events were already being held on the first weekend of the month, and others were adjusted to coincide with First Weekend. 

Since its launch, First Weekend has grown to include unique large-scale events. In addition to providing direct economic benefits, First Weekend and its many free monthly activities have made Palm Desert a more desirable place to live, work and visit.

As part of the 2013–14 fiscal year budget, the city’s Economic Development, Marketing and Promotions and Public Art departments, along with a representative from the Palm Springs Art Museum in Palm Desert, worked with a local marketing firm to develop the initial framework, branding and marketing materials for First Weekend. The team identified potential community partners and invited them to cross-promote and share programming.

Diverse Programming Attracts Crowds

For the 2015–16 season, the city and its partners developed featured events. These large-scale events conceived and produced specifically for First Weekend have played a key role in its success. The city’s partners typically produce the featured events, which serve as the anchor of each First Weekend. These events are spotlighted in each month’s marketing and public relations campaigns, increasing visibility and brand recognition for First Weekend.

The 2015–16 season kicked off in November 2015 with STREET, a free party featuring street-inspired art, music, food and fashion. Westfield Palm Desert hosted and produced STREET with sponsorship from the city. Attended by more than 2,000 people, STREET generated increased revenues and partnerships with local arts organizations. It also launched the mall’s Westfield Walls mural program, which showcases regionally inspired art by renowned artists. Westfield Palm Desert General Manager Diana Grasso says, “STREET gives us a fun and innovative way to offer added value for our existing customers and provide an engaging introduction to first-time visitors. It’s been an exciting success for Westfield and the community.”

The city produced the Swing ’N Hops Street Party in February 2016. One block of El Paseo, Palm Desert’s shopping thoroughfare, was closed to traffic for a street festival featuring music, swing dancing, food, beverages, art and more. The lively event attracted more than 2,500 people, who shopped and dined on El Paseo and created a spike in sales for many local businesses.

First Weekend Reaches New Audiences

The Palm Springs Art Museum in Palm Desert hosts monthly First Weekend events on Fridays, when it averages a 450 percent increase in visitors compared with other Fridays. Museum Managing Director Arlene Amick says, “This collaboration has offered us a unique opportunity to engage directly with the community through First Weekend programming and reach an entirely new audience.”

Other featured events have included the Coachella Valley Wildflower Festival; Galen 5K; Passport to Art, Design and Food; and Brew at the Zoo. More than 20 smaller-scale events each month augment the featured events.

To date, the city has partnered annually with nearly 40 organizations of all sizes, including nonprofit organizations, universities and commercial entities. Palm Desert’s partners include Coachella Valley Art Scene, Desert Willow Golf Resort, El Paseo Business District, El Paseo Cruise Night, Living Desert Zoo and Gardens, McCallum Theatre, Palm Springs Art Museum in Palm Desert and more than 25 art galleries and businesses.

Event Helps Generate Additional Revenue

Palm Desert Mayor Jan Harnik describes First Weekend as a natural fit for Palm Desert. “Our community’s abundant arts and cultural offerings were already adding value and beauty to our lives,” says Harnik. “Now it is becoming clear that arts and culture can also provide significant economic benefits. First Weekend Palm Desert is a big part of that.”

First Weekend Palm Desert has helped increase the city’s sales tax and transient occupancy tax (TOT) revenues. In fiscal year 2012–13, sales tax revenue totaled $16.7 million; in FY 2015–16, sales tax revenue increased by 13 percent to $18.9 million. The gains in TOT were even greater — in FY 2012–13, TOT revenue totaled $9.2 million; in FY 2015–16 it increased by 22 percent to $11.3 million.

As First Weekend plans its fifth season for 2017–18, this successful economic development tool has promoted the city’s visibility as a cultural center in the Coachella Valley. It has also enhanced a sense of community for people of all ages and interests through innovative cultural programming. The collaborative efforts of the city and its First Weekend partners have distinguished Palm Desert as a monthly destination for arts and culture that draws people from throughout the region and beyond. 


The Court Report

Supreme Court Lets Flores Ruling Stand, Requiring Some Employers to Include Cash In Lieu of Benefits in Calculating Overtime Pay

(Posted on Lexology, May 19, 2017)

On May 15, 2017, the U.S. Supreme Court denied the City of San Gabriel’s ("City") petition for review of the Ninth Circuit Court of Appeals’ decision in Flores v. City of San Gabriel, 824 F.3d 890 (9th Cir. 2016). In Flores, the Ninth Circuit held that an employer must include cash payments made in lieu of benefits when calculating an employee’s overtime pay under the FLSA. While Flores is now controlling law within the Ninth Circuit, the case leaves open as many questions as it answers.

What We Know After Flores Cash-in-lieu of benefits payments must be included when calculating regular rate of pay and overtime rates.

The City offered a benefits plan, providing employees with a set monetary amount to purchase dental, vision and medical benefits. Employees were required to use a portion of this money to purchase vision and dental benefits, but could choose to use the remainder of the funds either to purchase medical benefits or to receive cash payments. The City did not include these cash-in-lieu of benefits payments in its determination of employees’ regular rate of pay, and thus did not incorporate these payments in its calculation of the employees’ overtime rates or overtime wages. The Ninth Circuit held that these cash-in-lieu of benefits payments must be included when calculating regular rates of pay and overtime rates.

Any payments made to an employee for performing work must be included when calculating regular rates of pay or overtime rates, regardless of whether the payment is tied to particular hours of work.

The City argued that the payments in-lieu-of benefits were not tied to hours worked and, as such, should be excluded from the calculation of the regular rate and overtime rate under section 207(e)(2) of the FLSA. The court rejected that argument and held that the question of whether the payments must be included in the calculation of the regular and overtime rate "does not turn on whether the payment is tied to an hourly wage, but instead turns on whether the payment is a form of compensation for performing work."

A benefits plan which allows for more than "incidental" cash payments to employees is not a bona fide benefits plan under the FLSA.

The court held that in order to exclude payments made to a benefits plan from the calculation of the regular rate, the benefits plan had to be a bona fide plan under the FLSA. In order to be a bona fide plan, the plan could not allow more than "incidental" cash payments to employees. In Flores, the court found that the City’s cash-in-lieu of benefits payments constituted 40 percent of its overall payments under its plan, such that these payments were not incidental. Thus, the benefits plan was not a bona fide benefits plan.

Any employer payments made to a plan that is not a bona fide benefits plan must be included in the calculation of the regular and overtime rates of pay.

As the court held that the benefits plan in Flores was not a bona fide plan, the court held that all payments made by the employer to the plan had to be included in the calculation of the regular and overtime rates.

In order to avoid a finding of a willful violation of the FLSA, which can result in an additional year of liability, the employer must take affirmative action to assure it is in compliance with the FLSA.

Under FLSA section 255(a), the statute’s two-year statute of limitations may be extended to three years if an employer’s violation is "willful." In Flores, the court held that an employer commits a willful violation if the employer remains "on notice of its FLSA requirements, yet [takes] no affirmative action to assure compliance with them." Based on this standard, the court ruled the City’s conduct was willful because, despite knowing the FLSA applied, there was no evidence the City took any affirmative action to ensure that its classification of the cash-in-lieu of benefits payments complied with the FLSA. The court held that a simple initial determination by human resources that the payment should not be included in the calculation of overtime rates was not sufficient.

In order to establish the defense of good faith and avoid liquidated damages in any FLSA action, the employer must show that it took steps necessary to ensure compliance with the FLSA.

Under FLSA section 216(b), an employer who violates the FLSA is liable for liquidated damages in an amount equal to the amount of any unpaid wages or overtime compensation, unless the employer shows it acted in good faith and had reasonable grounds to believe its actions did not violate the FLSA. The City’s evidence that its human resources department designated the cash-in-lieu of payment as excludable was not sufficient, because there was no evidence of any inquiry as to whether the exclusion was appropriate.

What We Do Not Know After Flores What percentage of cash-in-lieu of benefits payments is considered "incidental" so that a plan will constitute a bona fide benefits plan under section 207(e)(4)?

The Ninth Circuit rejected a Department of Labor Opinion Letter which held that where more than 20% of the total contributions go directly to the employee as wages, the payments are not an "incidental" part of the plan. The Ninth Circuit also held that the City’s plan which resulted in cash payments of more than 40% was not incidental. However, the court did not set forth the threshold at which these payments become more than "incidental" so that the plan is no longer a bona fide plan for which payments can be excluded from the regular and overtime rates.

Can cash-in-lieu of benefits payments be made in some other way, such as through a contribution to a deferred compensation plan?

The Flores case dealt with a plan that provided for a significant amount of cash payments to employees, and did not address whether other methods of reimbursement for opting out of insurance would have to be included in the calculation of regular and overtime rates.

What is the impact of a contract or MOU which provides for the calculation of overtime?

Flores applies only to the calculation of an overtime rate under the FLSA, not to the calculation of any overtime rate required by contract or a MOU. However, if the contract or MOU is based on the regular rate under the FLSA, the holding in Flores would apply. On the other hand, if the contract or MOU requires inclusion of items in the calculation of the overtime rate which are not required under the FLSA, resulting in an equal or higher overtime rate, there would be no additional overtime due.

What does an employer have to do to avoid a finding of a willful violation of the FLSA and to show good faith?

While the court in Flores found that the actions engaged in by the City were not sufficient to ensure compliance with the FLSA, the court did not set forth what level of inquiry is necessary to avoid a finding of willfulness and/or to prove good faith so as to avoid liquidated damages. However, actions such as a review of policies and procedures, an audit of FLSA compliance and obtaining advice as to FLSA compliance, would provide evidence as to steps taken to ensure compliance with the FLSA.

Steps to Take in Light of Flores

  • For employees receiving cash-in-lieu of benefits, the amount paid for this benefit should be included in the calculation of the regular and overtime rate for purposes of the calculation of overtime.
  • Analyze your benefits plan to determine if it is a bona fide plan so that non-cash payments do not have to be included in the calculation of the regular rate of all employees in the plan.
    • Determine the percentage of the total payments made that are cash payments to determine whether the cash payments are "incidental." As discussed above, there is no bright line for this determination, but the court has held that 40% is too high.
  • If the plan is not a bona fide plan, than all payments made to the plan must be included in the calculation of the regular and overtime rates for purposes of the calculation of overtime. If the plan is a bona fide plan, only those "incidental" cash payments must be included.
  • Analyze the impact of Flores and take action to minimize liability, including making decisions regarding continuation of cash-in-lieu of benefits plan.
    • When analyzing the potential liability, make sure to apply offsets for any items included in the overtime rate that are not required by the FLSA. Also, exclude any employees who may be exempt.
    • Put in place a mechanism to calculate both a MOU overtime rate and a FLSA overtime rate and ensure that the minimum rate used is the FLSA rate.
    • Consider methods of controlling the amount of overtime to avoid the increase in overtime costs brought about by Flores.
    • Determine costs and benefits of the cash-in-lieu of benefits payments.
    • Consider eliminating the plan allowing for the cash-in-lieu of benefits payment.
  • Take action to ensure that your policies and procedures are in compliance with the FLSA so that if you are faced with litigation, you can assert that any violation of the FLSA was not willful and avoid an additional year of liability. This could include a review of your policies and procedures, an FLSA audit and advice from counsel.
  • Take action to ensure that your policies and procedures are in compliance with the FLSA so that if you are faced with litigation, you can avoid the imposition of liquidated damages by demonstrating that you acted in good faith. This could include a review of your policies and procedures, an FLSA audit and advice from counsel.


The Court Report 

Immunity Protects Deputy From Suit Over Shooting—Court

(Reprinted from the Metropolitan News Enterprise, May 15, 2017)

A San Diego County sheriff’s deputy who shot and wounded an intoxicated, knife-wielding man in his own home is entitled to qualified immunity from a federal civil rights claim by the man’s family, the Ninth U.S. Circuit Court of Appeals ruled Friday.

The family of David Lee Brown laid out a factual scenario that might support a claim of excessive force, Judge John Owens wrote for the panel. But the state of the law in August 2013, when the shooting occurred, would not have placed a reasonable officer on notice that he was violating Brown’s civil rights, even when the facts are viewed in the light most favorable to the plaintiffs, Owens said.

The court reversed a district judge’s ruling denying the defendants’ summary judgment motion. But the family can still pursue its wrongful death case under California law, the judge noted.

Evidence presented in connection with the summary judgment motion showed that deputies received a radio call on a Saturday afternoon regarding an “emotionally disturbed person” who had consumed a large quantity of medication and alcohol. The man was later identified as Brown, and family members—who had left the house and gone to a nearby fire station—said he was bipolar, schizophrenic, and diabetic.

Deputies Adrian Moses and Luke Vories, along with a third deputy, went to the scene. Moses announced “Sheriff’s Department,” and called out Brown’s name.

After another deputy yelled “knife” in response to seeing Brown with kitchen knives sticking out of his pockets, Moses pointed his gun and ordered Brown to raise his hands. Moses, according to his partner’s testimony, told Brown he would be shot if he went for the knife.

Deputy’s Testimony

Moses testified in his deposition that Brown pointed a knife with a six-to-eight inch blade at Vories. Sensing his partner to be in imminent danger, Moses said he waited less than a second before shooting three to four times.

About five minutes elapsed between the first sighting of Brown’s knife and the shooting, he testified.

Vories said he drew his Taser, and that Brown told him: ”I’ve been Tased before. Just tase me.” He then began screaming and reached for a knife as Moses yelled: “Don’t do it. Don’t do it.”

As Brown raised the knife, Vories said, he heard three to six shots, but could not see Moses across a small wall separating the kitchen and living room. Vories said he did not believe Moses could see him, although Moses testified that he did.

The third deputy, Deputy Billieux, said she had joined Vories in the kitchen in order to help him handcuff the suspect, but that Brown grabbed the knife extremely quickly and that she heard three to six shots. She said that Brown was trying to stab Vories and was close enough to do so, and that either she or Vories would have been stabbed if Moses had not fired.

The San Diego County District Attorney’s Office and the Sheriff’s Department both ruled the shooting justifiable. Brown’s family sued Moses and the county in the U.S. District Court for the Southern District of California, asserting a civil rights claim under 42 U.S.C. §1983 and a wrongful death claim under state law.

In denying the defense motion for summary judgment, District Judge John Houston concluded that there were three disputed issues that might affect the determinations as to whether the shooting was reasonable, and, if not, whether it violated clearly established law—whether Brown was on his knees or attempting to stand when he grabbed the knife, whether Moses could see the other officers clearly when he fired, and how far Brown was from Vories at the time.

The defendants took an interlocutory appeal as a matter of right from the denial of qualified immunity.

Testimonial Discrepancies

Owens agreed with the district judge that a reasonable juror could find a Fourth Amendment violation based on the discrepancies in the deputies’ testimony and other evidence favorable to the plaintiffs. Drawing all reasonable inferences in the plaintiffs’ favor at the summary judgment stage, the trier of fact might conclude that Moses shot Brown as soon as he touched a knife, even though Brown was complying with the officers’ orders to kneel, that Brown had no warning he was about to be shot, and that the shooting could have been avoided had Vories used his Taser, Owens said.

But to reach that conclusion, Owens went on to say, the court must rely on more recent case law, which it cannot do as part of the second prong of the qualified immunity analysis. There was, he said, no Ninth Circuit or U.S. Supreme Court precedent at the time of the shooting “that put Moses on clear notice that using deadly force in these particular circumstances would be excessive.”

He rejected the argument that Glenn v. Washington County (9th Cir.) 2011 was such a case. Although Glenn also involved a mentally ill person shot by police while holding a knife after his family had requested assistance, Owens noted, the suspect there was holding the knife towards himself, not brandishing it at officers. 

In a footnote, Owens said the district judge’s denial of summary judgment on the wrongful death claim was not before the court on interlocutory appeal, but that the panel’s finding that the plaintiffs presented sufficient evidence of excessive use of force was consistent with Houston’s ruling on that claim.

The case is S.B. v. County of San Diego, 15-56848.


Risk Solutions

Preparing Facilities for Summer

(Posted by BRIT, Global Specialty, USA)

As summer approaches, it is important to inspect and prepare buildings for the upcoming warm weather months. The harsh weather conditions of winter and spring can leave behind deterioration and problems with the building’s gutters, downspouts, and air conditioning systems.

Gutters and Downspouts

Malfunctioning gutters and downspouts can lead to roof damage or erosion problems in the areas that surround the building. Pools of water from leaking or ineffective gutters and downspouts can cause flooding problems on the ground and in basements and other low levels. To avoid these problems, gutters and downspouts should be inspected and repaired on an annual basis. Below are some of the problems to look for along with tips for repairing these issues.

Dirt, Debris and Settling

Nearby trees, pebbles from asphalt shingles and dirt can cause gutters to clog. In addition to the hazard of clogging, the dirt and debris weighs down the gutters, causing them to settle. When the gutters settle, the added weight of snow melt and rain prevents them from draining properly, causing them to pull away from the roof. When this happens, there is a chance that the wood on the roof may begin to rot.

To determine if the gutters have settled, take a look at the corners during the next rain or spray a water hose onto the roof. Watch to see if the corners begin to leak.  If they leak, the gutters are not draining correctly and need to be repaired.

In addition, have gutters cleaned on an annual basis to prevent clogging and settling.

Loose Downspouts

Another common maintenance issue is downspouts that break loose or become disconnected from the gutter itself. Check the building for loose downspouts. To fix loose downspouts, push the downspout back together and drill a couple small holesinto the two pieces.  Fasten the pieces together with sheet metal screws.

Overflowing Rain Gutters

This is often the result of a clogged gutter or downspout. To fix the problem, clean out the area of the gutter where the clogging is occurring. In some situations, the cause is due to having too small of gutters to handle the rain water. If this is the case, larger rain gutters should be installed.

Pooling Water Near Downspouts

To prevent water from pooling around the downspout and building, make sure it runs off well into the yard or another area away from the building.  Use a downspout extension or other flexible tubing to re-route the runoff away from the building.

Air Conditioning Maintenance

An appliance you won’t want to be without when the first warm days of spring arrive is the air conditioning unit. The information below is excerpted from the U.S. Department of Energy and outlines the steps you can take to maintain your building’s air conditioning system for peak performance during the spring and summer months.

An air conditioner’s filters, coils, and fins require regular maintenance for the unit to function effectively and efficiently throughout its years of service.  Neglecting necessary maintenance ensures a steady decline in air conditioning performance while energy use steadily increases.

Air Conditioner Filters

The most important maintenance task that will ensure the efficiency of your air conditioner is to routinely replace or clean its filters. Clogged, dirty filters block normal air flow and reduce a system’s efficiency significantly. With normal air flow obstructed, air that bypasses the filter may carry dirt directly into the evaporator coil and impair the coil’s heat-absorbing capacity. Keeping the filter clean can lower your air conditioner’s energy consumption by 5 to 15 percent.

For central air conditioners, filters are generally located somewhere along the return duct’s length.  Common filter locations are in walls, ceilings, furnaces, or in the air conditioner itself.  Room air conditioners have a filter mounted in the grill that faces into the room.

Some types of filters are reusable; others must be replaced. They are available in a variety of types and efficiencies. Clean or replace your air conditioning system’s filter or filters every month or two during the cooling season. Filters may need more frequent attention if the air conditioner is in constant use, is subjected to dusty conditions, or you have fur-bearing pets in the house.

Air Conditioner Coils

The air conditioner’s evaporator coil and condenser coil collect dirt over their months and years of service.  A clean filter prevents the evaporator coil from soiling quickly.

In time, however, the evaporator coil will still collect dirt. This dirt reduces air flow and insulates the coil, reducing its ability to absorb heat. To avoid this problem, check your evaporator coil every year and clean it as necessary.

Outdoor condenser coils can also become very dirty if the outdoor environment is dusty or if there is foliage nearby. You can easily see the condenser coil and notice if dirt is collecting on its fins.

Be sure to minimize dirt and debris near the condenser unit. Dryer vents, falling leaves, and lawn mowers are all potential sources of dirt and debris. Cleaning the area around the coil, removing any debris, and trimming foliage back at least 2 feet (0.6 meters) allows for adequate air flow around the condenser.

Coil Fins

The aluminum fins on evaporator and condenser coils are easily bent and can block air flow through the coil. Air conditioning wholesalers sell a tool called a “fin comb” that will comb these fins back into nearly original condition.

Condensate Drains

Occasionally pass a stiff wire through the unit’s drain channels. Clogged drain channels prevent a unit from reducing humidity, and the resulting excess moisture may discolor walls or carpeting.

Window Seals for Room Air Conditioners

At the start of each cooling season, inspect the seal between the air conditioner and the window frame to ensure it makes contact with the unit’s metal case.  Moisture can damage the seal, allowing cool air to escape from the building.

Trees and Shrubs

Winter storms that bring wind, snow, ice and heavy rain can cause a lot of damage to trees and shrubs. Take time to visually inspect trees and shrubs for damage and to ensure they are a safe distance from power lines or similar hazards.  Remove broken or dead limbs and branches from trees and shrubs. Consult with a contractor for the removal of trees and for trees that may be dangerously close to power lines and power sources.

Trim healthy trees and bushes on a regular basis throughout the spring, summer and early fall months and make sure limbs and branches are kept away from buildings.

Unkempt branches can cut into the paint or siding of a building causing damage. Regular trimming and maintenance of landscaping also reduces the hazard of potential perpetrators/vandals hiding in areas covered by overgrown foliage.

Lightning

Lightning strikes are a primary cause of fires and damage to electrical equipment and buildings in the United States.  Lightning rod systems are a key to preventing fires caused by lightning strikes. This system provides an attractive target for lightning along with a path of least resistance for the current to take as it seeks its ultimate decision—the earth.

For buildings with lighting rod systems, make sure that the electrical ground is maintained over the years and inspected by a qualified contractor. Over time, the cable or grounding rods may deteriorate to the point where the path to the ground is affected. Under these conditions, the system ceases to work at all or best, attracts the lightning bolt but fails to complete its mission. The resulting fires can be as serious as those occurring in unprotected buildings.

To protect damage to electronic equipment such as phone systems, computers, television and security systems in a lightning storm, make sure that electrical surge protection is used.  However, keep in mind that the best protection against lightning damage is unplugging electrical equipment when not in use if possible.  Surge protectors are not able to prevent damage to electrical equipment when a direct lightning strike occurs to a power source or telephone equipment.

For more information on lighting protection systems and electrical surges, visit the Lightning Protection Institute’s website at: www.lightning.org.

Sidewalks and Walkways

Sidewalk liability is a growing issue as court cases have determined that the responsibility for safe walkways is the responsibility of the property owner.  Many accidents occur on sidewalks due to structural problems such as uneven, cracked or broken surfaces. When addressing sidewalk issues, consider the following:

Inspect Sidewalks Regularly

This is one of the most important actions you can take to protect your organization against sidewalk incidents and liability.  Evaluations can be made in-house by maintenance staff or by a qualified contractor.

Determine the Root Cause of Sidewalk Problems

Examine each problem on an individual basis and address each repair with the appropriate strategy.

Select the Right Repair for the Job

There are three primary repair methods. These include concrete replacement, concrete raising, and concrete grinding.

Implement a Repair Plan That Fits Your Budget

Begin a documented repair plan and schedule sidewalk repair in phases to accommodate your budget.  Scheduling repairs for a future date will meet the property owner’s “duty of care” requirement.

Select the Right Vendors

Utilize the correct specialist for the repair. Be careful of hiring “jack-of-all-trades” contractors. They will typically recommend a more expensive repair alternative since it is more profitable for them.  Utilize a grinding specialist for grinding repairs, a raising specialist for raising repairs and a concrete contractor for replacement.

Re-Inspect Sidewalks Regularly

Sidewalks continually shift and move due to ground settlement, tree roots and weather conditions.  Conduct on-going inspections and document repair plans to provide protection in the event of a lawsuit.

Avoiding Weather-Related Slips and Falls

To avoid slips and falls related to weather conditions, use mats or rugs near doors to dry shoes.