Issue 78-August 2018
The Authority has always considered its business partners to be of strategic importance. They understand the need for relevance, change, succession, and stability. They also draw lessons from the past to work jointly with the Authority in helping members manage risk. And noteworthy at this particular time, they underwrite a significant part of the annual forum.
Educational Forum – The Amazing Race to Risk Management Success
The Authority has always considered its business partners to be of strategic importance. They understand the need for relevance, change, succession, and stability. They also draw lessons from the past to work jointly with the Authority in helping members manage risk. And noteworthy at this particular time, they underwrite a significant part of the annual forum.
Once again for this year, these partnerships will allow us to continue to deliver an exceptional educational experience for members from up and down the state.
Coupled with the Executive Committee’s ongoing support of waiving registration fees for members, these sponsorships make a difference for those who would not otherwise be able to attend.
We deeply appreciate the role our strategic partners play in supporting these educational opportunities to members.
Alliant Insurance Services Inc.
AmWINS Insurance Brokerage of California, LLC
Brit Global Specialty USA
Burke, Williams & Sorensen, LLP
Carl Warren & Company
Grossberg & Hoehn
Markel Global Reinsurance
York Risk Services Group, Inc.
JLT Re Inc.
Kessel & Associates
Kutak Rock LLP
Wesierski & Zurek, LLP
El Capitan Level
Berkley Public Entity Managers
Declues, Burkett & Thompson, APC
Disability Access Consultants
Laughlin, Falbo, Levy & Moresi
Law Offices of Scott C. Haith, APLC
Poms & Associated Risk Services
Siegel, Moreno & Stettler, APC
USI Insurance Services
Archer Norris, PLC
Great American Insurance Group – Public Sector
Hayford Felchlin Valencia & McWhorter
Juve Creative, Inc.
McCormick, Mitchell & Rasmussen APC
NPA Return-to-Work Services
PFM Asset Management LLC
Public Sector Excellence
Risk Placement Services, Insurance Brokers
Adamski Moroski Madden Cumberland & Green
Dr. Steve Albrecht, PHR, CPP, BCC
CD Photocopy Service, Inc.
Collins Collins Muir + Stewart, LLP
Daley & Heft Attorneys at Law
Goldman, Magdalin & Krikes LLO
Law Offices of Barber & Bauermeister
Law Offices of S. Henslee Smith
Pollak, Vida & Barer
Procter, Shyer & Winter, LLP
Robert Robin & Associates
Aftermath of the Janus v. AFSCME Decision
By Kelly A. Trainer & Joel Moon, Burke, Williams & Sorensen, LLP
The dust is settling in the wake of Janus v. AFSCME, prompting public sector unions and public agencies to make significant changes to the way they operate moving forward. This article is intended to provide public agencies with a brief summary and reminder of their new legal obligations after Janus and to offer practical insights and recommendations for navigating the post-agency fee world.
Background and Procedural History of Case
Prior to Janus, California law permitted public agencies to enter into “agency shop” arrangements with its employee organizations. These arrangements typically required employees, as a condition of employment, to either (1) join the union and pay dues or (2) refuse to join the union and pay the union a service fee, commonly known as an “agency fee.”
Historically, this “agency fee” was justified as a “fair share” payment to the union for the costs associated with representing all employees, based on the premise that the employees who chose not to join the union nonetheless benefitted from the union’s collective bargaining efforts (i.e., no free riders).
The constitutionality of “agency fee” was challenged by the employee in Janus. The key issue in the Janus was whether the union’s requirement that employees either join the union or pay a “fair share” fee equal to approximately 78% of the normal union dues amount, violated the First Amendment. The primary argument being that “fair share” fees are a form of compelled speech and association that requires employees to support a union which they have not chosen to join.
The U.S. Supreme Court issued its decision in Janus on June 27, 2018. The U.S. Supreme Court ruled 5 to 4 to overturn Abood v. Detroit Bd. Of Ed (1977) 431 U.S. 209, which was the U.S. Supreme Court decision that previously found such agency fees to be constitutional. The Janus case was reversed and remanded to the lower court. The Janus decision’s key holdings are as follows:
- Mandatory agency fees are unconstitutional because they violate the free speech rights of nonmembers by compelling them to subsidize private speech on matters of substantial public concern.
- Payments to unions may not be deducted from a nonmember’s wages, nor may any attempts be made to collect such payments, unless the employee affirmatively consents to pay.
- Employees who affirmatively consent to pay waive their First Amendment rights.
- The waiver must be given freely and shown by clear and convincing evidence.
SB 866: New Legislation in Wake of Janus
SB 866 was a fast-track omnibus bill in response to the Janus decision. The bill was signed by Governor Brown on the same day as the Janus decision, and took effect immediately upon signing. The bill applies to virtually all employers covered by PERB and has enacted the following changes to the law:
- Employers must allow for payroll deductions for union dues.
- Any employee request to begin or cancel dues deductions must be made to union, not the employer.
- Unions are responsible for providing employers with information regarding dues deduction amounts.
- Employers shall rely on the information provided by the unions and the unions must indemnify employers for any claims made by employees for deductions made in reliance on that information.
- Unions may certify to employers that they maintain written authorizations from employees to deduct dues without providing copies of the written authorizations to the employer, unless a dispute arises regarding the existence or terms of the written authorizations.
- Dues deductions may only be revoked pursuant to the terms of the employee’s written authorization.
Additionally, California law now requires the following with respect to communications from employers to employees:
- If employers choose to disseminate mass communications to its employees or applicants concerning their rights to join or support unions, or to refrain from joining or supporting unions, employers must meet and confer with the exclusive representatives regarding the content of the proposed mass communication.
- If the parties cannot reach agreement on the content of the proposed mass communication and the employer still decides to disseminate the mass communication, the employer must also allow the union to disseminate its own communication of reasonable length at the same time.
- Employers are prohibited from disclosing the date, time, and place of a new employee orientation to any individual other than employees, the exclusive representatives, or a vendor contracted for purposes of conducting or facilitating the orientation.
Revisions to Current Prohibitions against Deterring or Discouraging Union Membership
As a reminder, Government Code Section 3550 prohibits employers from deterring or discouraging employees from becoming or remaining members of a union.
Government Code Section 3550 was amended with SB 866 to additionally prohibit employers from deterring or discouraging employees from “authorizing representation by an employee organization, or from authorizing dues or fee deductions to an employee organization.”
Accordingly, regardless of the agency’s intent, any official response or statement that has the effect of convincing employees to withdraw from their unions or withhold dues deductions may violate California law.
Practical Insights and Reminders
1. Your Agency May Rely on the Information Provided by Your Recognized Employee Organizations Regarding Employee Dues Deductions
If your unions have not already provided your agency with information regarding dues deduction authorizations and/or employees who have affirmatively consented to make such payments, you should request this information immediately. This information is essential to identify which employees are affected by the Janus decision.
Under the new laws, unions may certify to your agency that they maintain written authorizations from employees to deduct dues without the need to provide copies of the written authorizations, unless a dispute arises regarding the existence or terms of the written authorizations.
In return, your agency is permitted to rely on the information and representations made by unions that the identified employees have affirmatively consented to deductions when processing or administering your payroll. Furthermore, your agency’s reliance on this information will require unions to indemnify your agency against any claims made by employees for deductions made in reliance of that information.
As a reminder, employee requests to begin or cancel dues deductions must be made to unions directly. The law now prohibits public agencies from discussing these matters directly with employees and from processing any employee request to cease or start deductions in the absence of union participation and/or approval. Your agency should be mindful of engaging in any acts that deter or discourage union membership and your employees should be directed to their unions for questions. It is also recommended that your agency meet and confer with your unions regarding how the parties will deal with future employee requests.
2. Review and Verify Your Payroll Deduction and Authorization Procedures
It is recommended that your agency review applicable payroll practices, policies and procedures to ensure that agency fee deductions have been stopped or can be stopped immediately upon request, as required by the Janus decision. If your agency is aware of any agency fee deductions that have not or cannot be canceled or stopped, you should immediately contact the union of the affected employee to discuss issues related to reimbursement or refunding of any scheduled or completed deductions.
3. Update Applicable Collective Bargaining Agreements or Memoranda of Understandings and Meet and Confer with Unions
If your agency has not already, it is recommended that your agency conduct an audit of the operative collective bargaining agreements or memoranda of understandings in place to determine what amendments or modifications are necessary as a result of the Janus decision. Many of the clauses or provisions in your negotiated agreements may trigger additional actions or obligations. For example, many “indemnification” clauses or provisions typically found in negotiated agreements are tied to “agency shop” or “agency fee” agreements, which are now unconstitutional. Accordingly, the Janus decision will likely require your agency to meet and confer with your unions and your agency should be prepared to field requests for negotiations or meet and confer obligations.
4. Educate Your Supervisors and Establish Agency-Wide Approved Communications
If your agency has not already issued communications in response to Janus, it is recommended that your agency develop and adopt a consistent Agency-wide official response or statement. However, the response or statement should adopt a neutral stance and should be carefully drafted to eliminate any appearance of bias or influence and should avoid any language that may be interpreted as discouraging union membership or activity. As a reminder, your agency will be required to meet and confer with your unions prior to communicating with employees. If the parties cannot reach an agreement on a mutual communication, your agency can decide to send out a communication anyways, but must allow your unions to also provide a communication at the same time.
Alternatively, your agency may choose to communicate only with your unions regarding the Janus decision. At a minimum, we recommend that communications with unions reaffirm your agency’s intent to remain neutral on employee decisions concerning union membership by continuing to direct and refer all employees to the unions for any questions regarding union membership or dues deductions.
In conjunction with developing your agency’s official response or statement, your supervisors, managers, and directors should be educated on the Janus decision and instructed to refrain from discussing the outcome with their employees. This includes refraining from discussing any potential lawsuits or litigation filed against your unions as a result of Janus. Establishing a consistent response or message amongst your agency’s management employees may help protect against potential claims of unfair practices or breach of neutrality.
 SB 866 does not provide significant detail on what the appropriate course of action would be if an employer wished to challenge the information provided by a labor union. We anticipate that new regulations may provide additional guidance on this issue in the future.
 In the wake of Janus, several lawsuits have been filed by employees against unions seeking reimbursement for mandatory service or agency fees.
Understanding Dynamex: The Public Employer Perspective
By Daphne M. Anneet, Esq., Partner, Burke, Williams & Sorensen, LLP
In Dynamex Operations West, Inc. v. Superior Court, the California Supreme Court established a new test for determining whether a worker should be classified as an employee or independent contractor under California’s wage orders. The wage orders regulate issues such as minimum wage, overtime compensation, and meal and rest periods. The Court rejected the flexible, multifactor Borello common law test that has been used to resolve worker classification issues in contexts such as pension, workers compensation, unemployment insurance and other employment rights for decades. Instead, the Court adopted a strict three-prong ABC test that places the burden on the employer to establish a worker is properly classified as an independent contractor and not entitled to the protections of the wage orders. Notably, under the ABC test, a worker who performs services that are part of the employer’s “usual course of business” is protected under the wage orders as an employee.
Dynamex is part of a growing trend of case law and statutory regulations to address perceived worker misclassification abuses. In response, California public employers should review their current contractual relationships under the ABC test and also seize the opportunity to review all contractual relationships to ensure compliance with other key regulations, including CalPERS membership requirements.
II. THE DYNAMEX CASE
Dynamex is a nationwide package and document delivery company. After Dynamex restructured its operations and reclassified all of its drivers as independent contractors to generate cost savings, two of its drivers filed a class action. They alleged that the company misclassified its drivers as independent contractors instead of employees, under the wage order governing the transportation industry and the California Labor Code.
California wage orders protect employees, not independent contractors. To address plaintiffs’ claims, the Court had to determine the applicable standard and test for evaluating their status as employees or independent contractors. Dynamex argued for the application of the Borello common law standard. That test is a flexible, multifactor approach that focuses primarily on whether the hiring entity has a “right to control” the manner and means by which the worker performs the contracted service. The Borello test has been used to make independent contractor determinations in a wide variety of contexts for over thirty years. The plaintiffs argued that in addition to using the Borello test, the Court should apply two additional tests, including the standard known as “to suffer or permit to work.” That standard is much broader and is intended to protect relationships beyond the reach of the common law.
The Dynamex court adopted the “suffer or permit” standard. Under that standard, if an employer requires or allows employees to work, they are employed and the time spent is probably hours worked. The Court adopted this standard to provide workers with the broadest possible protections so that “workers are provided at least the minimal wages and working conditions that are necessary to enable them to obtain a subsistence standard of living and to protect the workers’ health and welfare.” The Court also sought to remove employers’ economic incentives to misclassify workers to avoid costs associated with paying payroll taxes, etc. for employees.
III. THE ABC TEST
After adopting the “suffer or permit to work” standard, the Court next had to establish a workable test to govern the determination. The Court adopted the ABC test as enacted by the state of Massachusetts, after concluding it is the most structured, provides the broadest coverage, and removes the possibility for manipulation to which the more flexible tests such as the Borello common law are susceptible.
Under the ABC test, the hiring entity – not the worker – must establish that a worker is an independent contractor under the wage order. To properly classify the worker as an independent contractor, the hiring entity must prove each of the following three conditions:
- that the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of the work and in fact; and,
- that the worker performs work that is outside the usual course of the hiring entity’s business; and,
- that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
Applying the ABC Test
Part A “free from the control and direction”
Part A requires the hiring entity to establish that the worker is free from the direction and control of the hirer in performance of the work, both under contract and in fact. This requirement appears to closely mirror the Borello test, with the focus on whether the hiring entity retained or exercised the “right to control” the manner and means by which the workers perform the services.
Part B “work that is outside the usual course of…business”
Part B has raised the most concerns for employers. Courts must consider the usual course of business for which the worker has been retained and assess the worker’s role in the overall operation. If the worker performs a function that is directly tied to the heart of the operation, the service will be deemed to constitute a regular and integrated portion of the employer’s business. This factor would thus weigh in favor of a finding of employee status.
To explain this prong of the test under the ABC test, the Court provided examples of fairly straightforward transactions. For example, the Court explained that when a retail store hires a plumber to a repair a leak, the services are not within the retail store’s usual operation. Conversely, when a bakery hires cake decorators to work on custom designed cakes on a regular basis the workers are part of the bakery’s usual operations.
The use of independent contractors to perform any service that is part of the public agency’s usual course of business carries a high degree of risk of misclassification. To pass muster under this general guidance, a public agency must clearly establish the contract for service is one that is unrelated to the agency’s usual course of business. The agency can do so by identifying the specialized nature of the service, its purpose and anticipated duration. If the service is ongoing and relates to a core function, a literal application of the ABC test may result in the classification of the worker as an employee. To avoid a misclassification determination, the agency will need to establish its independent authority to contract for the service and challenge any interpretation of the prong that is inconsistent with such authority. Alternatively, the agency may consider contracting for the service through a third party contract.
Part C “independently established trade, occupation, or business”
This inquiry focuses on the usual or customary trade, occupation, profession, or business of the person retained to perform services for the employer. The employer must show that the worker is engaged in an enterprise that exists and can continue to exist upon termination of the relationship. In other words, the worker must be well-established in a business for his or herself, as evidenced by incorporation, licensure, advertisements, own office, business card, and offers to provide services to many potential customers.
IV. THE POTENTIAL IMPACT OF DYNAMEX ON CALIFORNIA’S PUBLIC AGENCIES
The Dynamex decision leaves many important questions unanswered.
Does the ABC Test Apply to Joint Employment Relationships?
The Dynamex Court did not address whether the ABC test applies in the context of a joint employment relationship. Such relationships are common in the public sector. They arise when an employer uses staffing agencies, management companies and consulting firms to supply workers to perform specific services. The worker is subject to the control of both the outside firm and the public agency: the outside firm is responsible for all of the administrative functions, including payment of salary, benefits and payroll taxes, and both entities are responsible for ensuring the worker receives proper employment protections. In a positive development, in Curry v. Equilon Enterprises, an appellate court recently found that the ABC test does not apply in the joint employment context because “taxes are being paid and the worker has employment protections.”
Following Curry, public agencies may be able to contract out functions that are part of their core business, so long as they do so with a third party entity that serves as the primary employer, rather than contracting directly with the individuals. Such contractual arrangements ensure the worker receives the protections of California’s labor and employment laws and that the appropriate payroll taxes are paid. By clearly articulating the primary employer’s responsibilities towards the workers in the contracts, employers may be able to reduce the risk of misclassification under the “usual course of business” prong of the ABC test.
Does the ABC Test Apply Beyond the Wage Order Context?
Another question is whether the ABC test is limited to the wage order context. The Dynamex court expressly limited its application of the ABC test to the analysis of the “suffer or permit to work test” under the wage orders. The decision does not change the definition of independent contractor under federal law, which governs who is an employee for purposes of Social Security and payroll taxes. Indeed, the Dynamex court specifically recognized that a worker may qualify as an employee under one statute but not another. Thus, Dynamex contemplates that workers who qualify as independent contractors under the Borello common law test under a scheme such as Unemployment Insurance, Workers’ Compensation, or CalPERS regulations, may not be considered independent contractors for the purposes of wage order violations.
While it appears the Dynamex decision does not change the definition of employee outside of the wage and hour context, it is uncertain as to how lower courts and administrative agencies interpret Dynamex and its application in other contexts. Final resolution may need to come from the legislature, not the courts.
Does Dynamex Have Retroactive Application?
The Dynamex court did not address the issue of whether the decision applies retroactively. Employers maintain that the ABC test is a new mandatory test that should not be applied retroactively as it would violate due process. Courts and administrative agencies have followed the Borello multifactor test for more than three decades and businesses and public agencies have relied on the Borello common law standard in structuring their business and service models. On the other hand, employee advocates assert that the decision merely clarified existing law and therefore should apply retroactively.
On June 20, 2018, the California Supreme Court unanimously denied a petition for rehearing solely on the issue of whether the Court’s adoption of the ABC test should apply retroactively. One trial court presented with the issue of retroactivity has already ruled in favor of the employee. Also on June 20, 2018, the California Chamber of Commerce, and multiple business organizations petitioned to have the Administration and Legislature “postpone or suspend the application of the Dynamex decision until all parties impacted by the decision can work together to develop a balanced test for determining independent contractor versus employee status that reflects the needs of California’s economy and the workforce.” It is notable that every other state that has adopted the ABC test has done so through legislative action, not a judicial decision. Given the current California legislature’s pro-employee posture, it is unclear as to whether legislative action would favor employers.
How Do California Wage Orders Apply to California Public Agencies?
While the Dynamex decision has been perceived as a direct blow to the “gig economy” and a direct attack on new business models that are based on independent contractor relationship that have driven the growth of companies such as Uber, Lyft, and Grub-Hub, the direct impact on California public agencies may be more limited. That is because not all of the wage order provisions apply to public agencies. For example, the Wage Order that is most applicable for public sector employees is Wage Order 4. It addresses wages, hours and working conditions in “Professional Technical, Clerical, Mechanical and Similar Occupations.” Wage Order 4 specifies that the following provisions do not apply to public agencies: daily overtime and double pay; meal and rest periods; reporting time pay; and, uniforms and equipment among others. Daily overtime, meal and rest breaks and failure to comply with reporting provisions are among the most common claims in wage and hour litigation.
V. RESPONDING TO DYNAMEX
While some important questions remain unresolved, California employers should anticipate a renewed general focus on worker misclassification issues. To minimize the risk of employee misclassification under the wage orders and other employment laws, employers would be wise to review of all of its contingent worker relationships in order to (1) proactively identify potential compliance issues; (2) modify contracting practices to minimize potential risks; (3) implement effective control and monitoring mechanisms; and, (4) establish a record of good faith compliance efforts.
Unfortunately, the Dynamex decision leaves many unanswered questions. Given the significant impact of the decision on California employers, pressure for legislative action will likely continue to grow. At the same time, lower courts and enforcement agencies will continue to consider the application of the ABC test in a variety of contexts in future misclassification proceedings. Thus, employers must pay close attention to judicial and administrative determinations, as well as legislative developments to keep abreast of this developing area of law.
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Liability Attorney Summit Recap
By Paul Zeglovitch, Liability Program Manager
The California JPIA held its Annual Liability Attorney Summit on July 24, 2018, at the Authority campus in La Palma. Over 52 participants attended the Summit, including representatives from Carl Warren & Company, the Authority’s liability defense panel firms and business partners, and Authority staff.
Paul Zeglovitch, Liability Program Manager, welcomed attendees and presented a report on the State of the Liability Program. Zeglovitch explained that combined indemnity and expense payments made in 2017/18 were $31M, down from $37M the prior year. Overall claim volume in the liability programs also dropped in 2017/2018 to 1,800 with the prior year being 2,100. A lack of storm related claims in 2017/18 are believed to be the bulk of the decrease.
The program did have one case go to trial in 2017/18 that unfortunately resulted in a large verdict of $4.7M for the plaintiff. Subsequent motions have been successful in reducing the verdict by $2.9M and the matter is on appeal.
Attendees then shared success stories with the audience from both California JPIA cases and other clients from the past year, offering their experiences and insights into the law, local jurisdictions, and juror and judge behavior.
Attorney Dan Barer of the law firm of Pollack, Vida & Fisher followed with an appellate case update, covering cases related to design immunity, qualified immunity for police officers, public records act requests, trail immunity and public employment rights.Other sessions included electronic discovery in public entity litigation presented by Alex Marjanovic and Greg Mahoney of Epiq Global, and a journey into mindfulness and mediation for lawyers presented by Robert Zeglovitch, Esq.
The event once again proved to be a great opportunity for our defense counsel to gather, learn, share knowledge and improve their respective abilities to successfully defend the members.
2018 Workers’ Compensation Symposium
The California JPIA hosted its tenth Annual Workers’ Compensation Symposium at the Authority campus on August 16, 2018. Five presentations were delivered by eight presenters for an audience that included California JPIA members, defense attorneys and claims adjusters from York.
The initial session featured three defense attorneys; Giovanni Valencia from Hayford, Felchlin, Valencia & McWhorter, Cliff Weinberg from Ingber & Weinberg and Steve Siegel from Siegel, Moreno & Stettler. The panel shared their experiences and advice related to Resolving Claims with Difficult Employees. They provided tips for keeping claims moving toward resolution and entertained the audience with some of the more interesting claims they have handled.
Jeff Rush, the Authority’s Workers’ Compensation Program Manager, then provided a legislative update. While there are a number of bills in this year’s session focusing on a variety of issues, there is also a great deal of anticipation for this year’s statewide election and the change that is certain to come to the Capitol.
Dr. Mark Hyman followed with a thorough presentation on the causation of injuries. Dr. Hyman practices in internal medicine, serves on the faculty of UCLA Medical School and also serves as an editor and author for multiple publications of the American Medical Association. His presentation focused on the science behind industrial medicine and showcased the thorough approach he takes with each evaluation.
Cole Smith from Norm Peterson & Associates (NPA) educated the group on the components of successful return to work programs. In addition to providing general information for the attendees, he shared evidence of the positive impact NPA’s services have delivered to Authority members.
The final presentation featured Paul Warner and Catalina Jimenez from CalPERS, and focused on the disability retirement process. They shared a great deal of information and also fielded many questions from attendees with regard to the appropriate processing and documentation of applications for both disability retirements and industrial disability retirements.
Topics are already being considered for next year’s Symposium so if you have any ideas you’d like to see addressed, please contact Jeff Rush, Workers’ Compensation Program Manager.
New Contractual Risk Transfer Courses
Reviewing contracts and insurance requirements that effectively transfers risk while reducing your agency’s exposure to loss is technical work that is learned through years of experience and training. It is important that employees involved in the contractual risk transfer process understand principles of insurance, proper allocation of risk in contracts, different types of insurance policies, and the exposures that these policies cover in relation to the contracts entered into by an agency.
The Authority is pleased to announce the development of new instructor-led training courses for contractual risk transfer. The courses will be available for scheduling beginning January 2019 and will replace the existing “Contractual Risk Transfer: Strategically Managing Risk” training. The Contractual Risk Transfer series will provide detailed discussion on the various aspects of the risk transfer process. Additionally, the Authority’s Contractual Risk Transfer Manual will be provided to attendees as part of the the training.
The following courses will be available to members beginning in 2019:
Contractual Risk Transfer 101: Risk and Principles of Insurance – 3 Hours
This entry level course provides attendees with a better understanding of the concept of risk and transfer of risk including awareness of the different types of insurance policies that are commonly requested in contracts. The course also covers insurance terminology and how it relates to contracts.
Contractual Risk Transfer 201: Risk and Contracts – 3 Hours
This intermediate level course will cover indemnity agreements and contractual liability and the importance of insurance requirements in contracts. Attendees will review sample certificates of liability insurance and endorsements. Beyond that, this training provides members with proper insurance requirements in requests for proposal (RFP) or requests for quotation (RFQ). Matching the correct contract for the relationship with the Agency’s business partner is often not fully considered and that is also covered in this course.
Contractual Risk Transfer 301: Reviewing Contracts and Workflow – 2 Hours
Attendees will review more complex contracts and insurance documentation in this advanced course, which they will compare and contrast with the Authority’s Contractual Risk Transfer Manual. In addition, attendees will gain a better understanding of protected contracts and will learn from other’s mistakes via “lessons learned” exercises.
For further information regarding trainings offered by the California JPIA, please contact Training and Loss Control Specialist, Ryan Thomas, by email or (562) 467-8775.
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:
“Have you seen an employee’s workers’ compensation claim get a lot more complex when an attorney is retained? Are you interested in learning why employees retain attorneys and how to reduce the likelihood of litigation? Join us at our 23rd Annual Risk Management Educational Forum for “How to Prevent a Litigation Detour: Why Injured Employees Hire an Attorney” on 9/20. Learn more here: http://www.cvent.com/events”. Like, comment and share on the Authority’s Facebook page.
“At the @MMASC annual Summer Session, Authority staff network with members while receiving valuable information on emergency management, budgeting for local governments, and the California housing crisis. We’re proud to be a Platinum-Level Corporate Partner of the MMASC!” Follow us, comment and share about risk managementon the Authority’s LinkedIn page.
“Prevent avoidable workers’ comp claims w/ our Root Cause Tools resource, which helps identify the root cause of industrial injuries & illnesses in order to protect workers & minimize claims. Find it in our Resources & Documents Library, keyword ‘root.’ tinyurl.com/jxpfhdu” Tweet, retweet and follow the California JPIA on Twitter.
For information on how to join these sites or participate in discussions, please contact Courtney Morrison, Administrative Analyst.
By Abraham Han, Administrative Analyst
In a continued effort to provide members with information and updates on proposed bills that may have an impact on liability or workers’ compensation matters, the Authority provides this legislative update.
AB 553 (Daly). Workers’ compensation: return-to-work program.
Summary: 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 1298 (Santiago). Public safety officers: procedural rights.
Summary: This bill would require, when any public safety officer is under investigation and subject to interrogation by his or her commanding officer, of 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.
AB 1749 (Daly). Workers’ compensation: off-duty peace officer.
Position: Oppose unless amended
Summary: This bill would state that an employer, at its discretion, is not precluded from accepting liability for an injury sustained by a peace officer while performing his or her duties as a peace officer by reason of engaging in the apprehension or attempted apprehension of law violators or suspected law violators, or protection or preservation of life or property, or the preservation of the peace, outside the state of California, but who was not at the time acting under the immediate direction of his or her employer, including any claims for injuries sustained by peace officers during the October 1, 2017, mass shooting in Las Vegas, Nevada. The brave acts displayed during the tragic Las Vegas shooting in October 2017 and the intent to help those who were harmed are fully recognized. However, as currently drafted, this bill represents a major expansion of the workers’ compensation system.
AB 1870 (Reyes). Employment discrimination: unlawful employment practices.
Summary: Current law authorizes a person claiming to be aggrieved by an alleged unlawful practice to file a complaint with the Department of Fair Employment and Housing within one year from the date upon which the unlawful practice occurred, unless otherwise specified. This bill would extend the period to three years for which complaints alleging unlawful employment or housing practices may be filed with the department, as specified. Furthermore, this bill would expose public employers to costly litigation.
AB 1912 (Rodriguez). Public employees’ retirement: joint powers agreements: liability.
Summary: In alignment with the California Association of Joint Powers Authorities (CAJPA), the Authority is now neutral on AB 1912, as amended July 3, 2018. As previously written, this bill would have imposed substantial burdens and costly unworkable requirements on local agencies by applying retroactive, joint and several liability as well as prospective joint and several liability for all retirement-related obligations to any current or former member of a joint powers authority (JPA) throughout its existence. The recent amendments remove the joint and several liability provisions (retroactively or prospectively) in favor of a more equitable apportionment scheme and clarifies that this apportionment applies only when a JPA dissolves, ceases operations, or has its contract with the retirement system terminated. This approach strikes the balance of ensuring JPA retirees have secure retirement while avoiding the blanket liability provisions which have been in previous versions of the bill.
AB 2069 (Bonta). Medicinal cannabis: employment discrimination.
Summary: The bill would declare that the medical use of cannabis by an employee is subject to reasonable accommodation by an employer. The bill encroaches on an employer’s ability to manage and effectively provide a safe workplace, and exposes employers to costly and unnecessary litigation.
AB 2946 (Kalra). Division of Labor Standards Enforcement: complaint.
Summary: This bill would extend current law of six months, to three years for a worker to allege that they have been discharged or otherwise discriminated against and file a complaint with the Division of Labor Standards Enforcement. Furthermore, the bill also requires a one-sided plaintiff attorney’s fee provision that will incentivize further litigation.
AB 3120 (Gonzalez Fletcher). Damages: childhood sexual assault: statute of limitations.
Summary: This bill would expand the definition of childhood sexual abuse, which would instead be referred to as childhood sexual assault. This bill would increase the time limit for commencing an action for recovery of damages suffered as a result of childhood sexual assault 22 years from the date the plaintiff attains the age of majority or within five years of the date the plaintiff discovers or reasonably should have discovered that the psychological injury or illness occurring after the age of majority was caused by sexual assault, whichever is later. This bill would deprive California public entities of the ability to timely investigate and settle claims. This bill would also hamper early compensation to those who have been injured, and would dramatically increase the taxpayers’ cost of such claims.
ACA 31 (Cervantes). Public employee salaries: limit.
Summary: This assembly constitutional amendment would place a hard cap on all public sector entity base compensation and tie the cap to the compensation set for the Office of the Governor which is established by the California Citizens Compensation Commission. Currently, the Governor’s compensation is set at an annual salary of $195,803. This would negatively impact the leadership of many public entities providing much needed services in California.
SB 772 (Leyva). Occupational safety and health: regulations.
Summary: This bill would exempt any occupational safety and health standard and order from the standardized regulatory impact analysis requirement, including a cost/benefit analysis.
SB 899 (Pan). Workers’ compensation.
Summary: This bill would clarify existing law which prohibits discrimination in providing workers’ compensation benefits. This bill would amend the California Labor Code to specifically state consideration of race, gender, and national origin are excluded from determination of apportionment regarding causation of permanent disability.
SB 937 (Wiener). Lactation accommodation.
Summary: This bill would place burdensome mandates regarding lactation accommodations on public employers and would expose employers to costly litigation traps.
SB 1300 (Jackson). Unlawful employment practices: discrimination and harassment.
Summary: This bill would provide that a person alleging that an entity failed to take all reasonable steps necessary to prevent discrimination and harassment from occurring is not required to prove that he or she actually endured sexual harassment or discrimination. The Authority is supportive of the idea of educating employees about harassment and discrimination, including how to report complaints. However, this can likely be accomplished in a less expensive manner than the one proposed by this bill.
The Authority will continue to monitor these bills and others as needed.
If you have any questions, please contact Abraham Han, Administrative Analyst.
Electrical Safety – Assessing Your Agency’s Risk
By Tim Karcz, Senior Risk Manager
Electricity plays an important role in every aspect of an agency’s operation. Whether it is as simple as unplugging a device, or as complicated as conducting an arc flash hazard analysis, it is important for Authority members to understand their electrical exposures so that they can manage them appropriately.
Electrical safety guidelines and requirements are rooted in several sources, including standards enforced by Cal/OSHA and the guidelines found in the National Fire Protection Association’s NFPA 70E, Standard for Electrical Safety in the Workplace. Employers are required to assess their own exposures to electrical hazards and take appropriate action to maintain them in a safe condition.
The requirement for California employers to maintain electrical systems in a safe condition can be found in the California Code of Regulations, Title 8, Section 2340.1. In addition, General maintenance procedures for enclosed electrical systems, such as electrical panelboards or junction boxes, are found in Section 3328 of the same title. Employers are required to maintain and inspect electrical systems to identify potential hazards, including deteriorating or frayed components, foreign debris, or nearby combustible materials, all in accordance with the manufacturer’s recommendations. The regulations also direct employers to the primary source for guidelines on electrical safety, NFPA 70E, Standard for Electrical Safety in the Workplace. These codes, standards, and recommended practices are developed through a consensus standards development process, and include requirements for Safety-Related Work Practices, Safety-Related Maintenance Requirements, and Safety Requirements for Special Equipment.
According to these sources, all hazardous energy, including electricity, must be controlled through proper shut down and lockout tagout procedures, prior to work commencing on those systems. NFPA 70E also provides requirements for work that is to be done when shutting down the system is not feasible or when doing so presents additional hazards. This is called “live work,” and requires special precautions to be taken to ensure worker safety. The primary concern during live work is the chance of an arc flash or arc blast event. An arc flash is the extreme light, heat, and sound produced as a part of an arc fault; a type of electrical explosion or discharge that results from a low-impedance connection through air to ground or another voltage phase in an electrical system. In more extreme cases, an arc blast may occur, which is the supersonic shockwave produced when uncontrolled arc vaporizes the metal conductors. These events are extreme and can cause serious injury or death to those working in and around these systems.
To help protect workers from these events, NFPA 70E calls for proper signage, personal protective equipment, and approach boundaries to be established. Prior to commencing work on electrically energized conductors greater than or equal to 50 volts, NFPA 70E Article 130.3 requires that a flash hazard analysis be performed to identify work tasks that must be performed while electrical equipment remains energized.
Through this analysis, employers are to establish a flash protection boundary–a distance from exposed energized electrical parts at which an employee could sustain a second-degree burn if an electric arc flash were to occur. Employees performing work on energized conductors, and anyone else inside this boundary, must be protected with appropriate personal protective equipment. Instead of performing a detailed analysis, however, Table 130.7 (c)(9)(a) (Hazard Risk Category Classifications) may be utilized to identify various job tasks and the corresponding hazard risk category. Whatever method is used, it’s important for agencies to establish the proper approach boundaries, signage, and personal protective equipment to be worn for work on systems that must remain energized. In most cases, the use of a qualified electrical engineer is needed.
Establishing electrical safety procedures and the need for hazard assessments should be a part of a comprehensive electrical safety program, outlining the systems that require energized work, and the procedures to be taken to ensure worker safety is achieved.
For more information on electrical exposures and how they may pertain to your agency, contact your assigned Risk Manager.
The Court Report
California Supreme Court Upholds Law Enforcement’s Burden of Proof in Pursuit of Immunity
By Erin R. Dunkerly and Vanessa A. Evangelista, Attorneys, Collins, Collins, Muir + Stewart
On August 13, 2018, the California Supreme Court clarified vehicle pursuit immunity, unanimously holding that a law enforcement agency need not prove that every single peace officer received, read, and understood their agency’s pursuit policy and training.
Few actions of law enforcement call for more ongoing, split-second deliberation and discretion than the vehicular pursuit of a fleeing suspect. In order to address the death and serious injuries to innocent third parties, peace officers, and fleeing suspects, as well as property damage, the Legislature enacted Vehicle Code section 17004.7, which created an immunity for law enforcement agencies from civil liability for damages for personal injury or death or damage to property resulting from the collision of a vehicle fleeing law enforcement.
The drawback of this immunity was that a law enforcement entity could be immunized even if it didn’t actually implement its pursuit policy and training. So, in 2005, the Legislature modified the immunity after finding that California led the nation in the prior 20 years in fatalities from crashes involving pursuits and in the number of innocent bystanders killed. In order to qualify for the immunity, the modified Vehicle Code section 17004.7 required an agency prove that it adopted and promulgated a written policy on vehicular pursuits, provided annual training, and required that every officer certify in writing that they received, read, and understood their agency’s pursuit policy. If an agency could prove that it complied with section 17004.7, it received the immunity, which could save the agency thousands, if not millions, of dollars in liability exposure.
However, in 2016, the Court of Appeal in Morgan v. Beaumont Police Department imposed a steep hurdle for law enforcement. Beaumont police chased a driver who crossed a double yellow line and struck and killed another driver. The decedent’s heirs sued Beaumont and its police department, who in turn filed a motion for summary judgment alleging immunity under Vehicle Code Section 17400.7. The police department proved that it disseminated new and revised policies to all employees through a software program and required them to review and acknowledge the receipt online and via email. However, the plaintiffs argued that the Vehicle Code required certification be in writing—not via email. The Beaumont Commander testified that “the vast majority” of peace officers used email to acknowledge receipt of new or revised policies, but he couldn’t prove that all 25 or so of his officers certified in writing that they received, read, and understood the policy. The Court of Appeal denied the pursuit immunity under Vehicle Code Section 17400.7 because of Beaumont’s failure to provide certification in writing by each and every one of its officers. The court held that the promulgation requirement applied to “all peace officers of the public agency” and required them to “certify in writing that they have received, read, and understand” the agency’s pursuit policy before the pursuit in question.
The Morgan case posed a daunting and sometimes impossible challenge for larger law enforcement agencies in California that have hundreds or thousands of officers and deputies. What if a large law enforcement agency indeed maintained a pursuit policy and annual training, but could not prove that each and every single one of its peace officers certified their compliance in writing? Under Morgan, such agencies could never obtain immunity.
In 2017, the Court of Appeal called Morgan into question. In Ramirez v. City of Gardena, police were in pursuit of a pickup truck. The police bumped the rear corner of the truck, causing it to spin and hit a street light pole. Gardena moved for summary judgment based on the pursuit immunity, which was granted. Gardena produced a custodian of records who attested that all city officers completed a written certification that they received, read, and understood the city’s pursuit policy, but he conceded that some certification forms might have been lost over time. Plaintiff appealed, arguing that there was a question of fact as to whether every single officer signed a written certification. The Court of Appeal disagreed with Morgan and affirmed summary judgment. Ramirez sought review by the California Supreme Court.
The Supreme Court in Ramirez reviewed the language of Vehicle Code Section 17400.7 and found that if the Legislature intended to require proof that every single peace officer certified in writing their receipt and comprehension of a pursuit policy, the Legislature would have said so. Rather, the statute only provides that the law enforcement agency have a pursuit policy requiring “that all peace officers of the public agency certify in writing that they have received, read, and understand the policy.” That is, proving actual compliance by each officer isn’t required for the immunity. The “requirement may exist even if not every peace officer complies with it.” The Court reasoned that the purpose of the immunity is to entice law enforcement agencies to develop and promulgate pursuit policies in the interest of reducing the number of pursuits and saving lives. If one-hundred percent compliance were mandatory, many law enforcement agencies—especially large ones—would not be able to meet that heavy burden and a single negligent or recalcitrant officer could spoil immunity for the entire agency.
Ramirez leaves open the issue of when a lack of compliance with the certification requirement or meaningful implementation of the pursuit policy indicates that an agency is not satisfying the statute’s requirements. It is left to the law enforcement agency to do its best to prove that its policy complies with Vehicle Code section 17004.7 and now that pursuit of immunity can’t be thwarted even if some officers fail to certify.