Bills Signed by Governor 9/12/16

AB 1066 by Assemblymember Lorena Gonzalez (D-San Diego) – Agricultural workers: wages, hours, and working conditions

Existing law sets wage, hour, meal break requirements, and other working conditions for employees and requires an employer to pay overtime wages as specified to an employee who works in excess of a workday or workweek, as defined, and imposes criminal penalties for the violation of these requirements. Existing law exempts agricultural employees from these requirements. Under existing law, the function of the Department of Industrial Relations is to, among other things, foster, promote, and develop the welfare of the wage earners of California, to improve their working conditions, and to advance their opportunities for profitable employment.

This bill would remove the exemption for agricultural employees regarding hours, meal breaks, and other working conditions, including specified wage requirements, and would create a schedule that would phase in overtime requirements for agricultural workers, as defined, over the course of 4 years, from 2019 to 2022, inclusive. Beginning January 1, 2022, the bill would require any work performed by a person, employed in an agricultural occupation, in excess of 12 hours in one day to be compensated at the rate of no less than twice the employee’s regular rate of pay. The bill would provide employers who employ 25 or fewer employees an additional 3 years to comply with the phasing in of these overtime requirements. The bill would authorize the Governor to delay the implementation of these overtime pay provisions if the Governor also suspends the implementation of a scheduled state minimum wage increase, as specified. The bill would require the Department of Industrial Relations to update a specified wage order for consistency with these provisions, as specified.

The bill would create a state-mandated local program by including agricultural employees as a class of employees protected by criminal penalties under existing law.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

AB 2230 by Assemblymember Kansen Chu (D-San Jose) – Overtime compensation: private elementary or secondary academic institutions: teachers

Existing law provides that 8 hours of labor constitutes a day’s work. Under existing law, any work in excess of 8 hours in one workday and any work in excess of 40 hours in any one workweek, and the first 8 hours worked on the 7th day of work in any one workweek, is required to be compensated at the rate of no less than 11/2 times the regular rate of pay for an employee. Existing law also provides that hours worked in excess of 12 hours in one dayas well as hours worked in excess of 8 hours on any 7th day of work are to be compensated at the rate of no less than twice the regular rate of pay of an employee. Existing law exempts from these provisions an individual employed as a teacher at a private elementary or secondary academic institution if specified requirements are met, including, among others, that the employee earns a monthly salary equivalent to no less than 2 times the state minimum wage for full-time employment.

This bill would suspend that earnings standard until July 1, 2017. On and after that date, the bill would prescribe a revised earnings standard for exemption from the overtime provisions described above that would require the employee to earn no less than the lowest salary offered by any school district or the equivalent of no less than 70% of the lowest schedule salary offered by the school district or county in which the private elementary or secondary institution is located, as specified.

SB 1015 by Senator Connie M. Leyva (D-Chino) – Domestic work employees: labor standards

Existing law regulates the wages, hours, and working conditions of any man, woman, or minor employed in any occupation, trade, or industry, whether the amount of compensation is measured by time, piece, or otherwise, except as specified. An existing order of the Industrial Welfare Commission regulates wages, hours, and working conditions for household occupations. Existing law makes violations of certain of these provisions and this order a misdemeanor.

Existing law, the Domestic Worker Bill of Rights, regulates the hours of work of domestic work employees who are personal attendants and provides an overtime compensation rate for those employees. The Domestic Worker Bill of Rights defines terms for its purposes and requires the Governor to convene a committee to study and report to the Governor on the effects of its provisions on personal attendants and their employers. Existing law repeals the Domestic Worker Bill of Rights as of January 1, 2017.

This bill would delete the repeal date. By extending the effect of the Domestic Worker Bill of Rights, the violation of which is a misdemeanor, this bill would expand the definition of a crime, which would impose a state-mandated local program.

This bill would provide that no reimbursement is required by this act for a specified reason.

Penilla v. Westmont Corp. (CA2/4 B262097 9/9/16) Arbitration Unconscionability/FEHA Fair Housing

Appellant Westmont Corporation doing business as Wildwood Mobile Home Country Club (“Westmont”) owns land located in Hacienda Heights, Los Angeles County. David Penilla and 60 other named plaintiffs are primarily low-income mobilehome owners who rent the land. After plaintiffs filed a first amended complaint (“FAC”) against Westmont and its employees or agents (collectively “appellants”) alleging contract, tort and statutory causes of action, appellants filed a motion to compel respondents Penilla and 45 other named plaintiffs to arbitrate those claims. The trial court denied the motion to compel, finding the arbitration provision contained in the rental agreements unconscionable and thus unenforceable. We conclude the arbitration provision was procedurally unconscionable, as it failed to disclose prohibitively expensive arbitration fees and was neither provided in a Spanish-language copy nor explained to respondents who did not understand written English. We further conclude the arbitration provision was substantively unconscionable as it imposed arbitral fees that were unaffordable or would have substantially deterred respondents from asserting their claims. The provision’s unreasonably shortened limitations periods for many of the asserted causes of action and its limitation on the remedies available in arbitration for statutory claims further support a finding of substantive unconscionability. Accordingly, we affirm.

http://www.courts.ca.gov/opinions/documents/B262097.PDF

Pauluk v. Savage (9th Cir. 14-15027 9/8/16) Workplace Safety/State-Created Danger Doctrine

The panel reversed the district court’s order, on summary judgment, denying qualified immunity to two employees of the Clark County Health District in an action brought pursuant to 42 U.S.C. § 1983 by the widow and daughters of Daniel Pauluk, an employee of the Health District, who died allegedly from toxic mold in his workplace.

The panel first held that in this interlocutory appeal it had jurisdiction to decide whether the evidence demonstrated a violation by the defendant employees, and whether such violation was in contravention of federal law that was clearly established at the time.

The panel held that viewing the facts in the light most favorable to plaintiffs, they had shown a violation of the constitutional right, grounded in the Fourteenth Amendment’s Due Process Clause, to be free of state-created danger. The panel held that the Supreme Court’s decision in Collins v. City of Harker Heights, 503 U.S. 115 (1992), declining to find a general due process right to a safe workplace, did not bar plaintiffs’ due process claim brought under the state- created danger doctrine. The panel nonetheless reversed the district court’s order denying qualified immunity because the panel determined that it was not clearly established, at the time of the unconstitutional actions, that the state-created danger doctrine applied to claims based on physical conditions in the workplace.

Concurring in part and dissenting in part, Judge Murguia agreed with the opinion’s analysis as to the scope of the court’s jurisdiction to review the district court’s denial of summary judgment on qualified immunity grounds, and with its conclusion that the district court erred in denying qualified immunity to the defendant employees. She respectfully disagreed with the opinion’s conclusion that plaintiffs presented a cognizable claim that defendants affirmatively acted with deliberate indifference to Pauluk’s substantive due process rights under the state-created danger doctrine.

Dissenting, Judge Noonan stated that the law governing the state-created danger doctrine was clearly established at the time and that any reasonable official in defendants’ shoes would have understood that they were violating it.

http://cdn.ca9.uscourts.gov/datastore/opinions/2016/09/08/14-15027.pdf

Mohamed v. Uber Technologies (9th Cir. 15-16178 9/7/16) Arbitration/PAGA

The panel affirmed in part and reversed in part the district court’s orders denying Uber Technologies, Inc.’s motion to compel arbitration in actions brought by two former Uber drivers, Abdul Mohamed and Ronald Gillette, on behalf of themselves and a proposed class of drivers, and remanded for further proceedings.

The district court denied Uber’s motion to compel arbitration of the plaintiffs’ claims.

The panel held that the district court erred in assuming the authority to decide whether the parties’ arbitration agreements were enforceable. The panel further held that thequestion of arbitrability as to all but Gillette’s California Private Attorney General Act (“PAGA”) claim was delegated to the arbitrator. The panel also held that under the terms of the agreement Gillette signed, the PAGA waiver should be severed from the arbitration agreement and Gillette’s PAGA claim may proceed in court on a representative basis. The panel also held that all of plaintiffs’ remaining arguments, including both Mohamad’s challenge to the PAGA waiver in the agreement he signed and the challenge by both plaintiffs to the validity of the arbitration agreement itself, were subject to resolution via arbitration.

The panel affirmed the district court’s order denying the motion to compel arbitration filed by Hirease, LLC, an independent background-check company that Mohamed named in his complaint alongside Uber. The panel held that Hirease was not entitled to compel arbitration as Uber’s agent.

http://cdn.ca9.uscourts.gov/datastore/opinions/2016/09/07/15-16178.pdf

Oregon Rest. & Lodging Ass’n v. Perez (9th Cir. 13-35765 den. rehrg en banc 9/6/16) DOL Rulemaking on Tip Pooling

The panel denied a petition for panel for rehearing, and denied on behalf of the court a petition for rehearing en banc. In its opinion, filed February 23, 2016, the panel majority reversed the district courts’ decisions in favor of employers, and held that Cumbie v. Woody Woo, Inc., 596 F.3d 577 (9th Cir. 2010), did not foreclose the Department of Labor’s ability to promulgate subsequently a formal rule that

extended the tip pooling restrictions of Section 203(m) of the Fair Labor Standards Act of 1938; and remanded for further proceedings.

Judge O’Scannlain, joined by Judges Kozinski, Gould,Tallman, Bybee, Callahan, Bea, M. Smith, Ikuta and N.R. Smith, dissented from the denial of rehearing en banc because the panel’s opinion rejected court precedents, and opened two circuit splits.

http://cdn.ca9.uscourts.gov/datastore/opinions/2016/09/06/13-35765.pdf

Kerr v. Jewell (9th Cir. 14-36000 9/6/16) Jurisdiction/Whistleblower Protection Act

The panel affirmed the district court’s dismissal for lack of jurisdiction of plaintiff’s claim under the Whistleblower Protection Act (“WPA”) brought against her former employer, the United States Fish and Wildlife Service, based on plaintiff’s failure to present the WPA claim to the Merit Systems Protection Board.

The panel held that the statutory scheme governing the Civil Service Reform Act and the WPA did not authorize plaintiff to file her WPA claim in district court without first presenting it to the Merit Systems Protection Board. The panel further held that the district court lacked jurisdiction over plaintiff’s WPA claim because the Merit Systems Protection Board provides the exclusive avenue for obtaining judicial review of a WPA claim. Finally, the panel held that the district court did not abuse its discretion by declining to remand her WPA claim to the Merit Systems Protection Board.

http://cdn.ca9.uscourts.gov/datastore/opinions/2016/09/06/14-36000.pdf

Hott v. College of the Sequoias Community College Dist. (CA5 F070802 9/6/16) PERB Exclusive Jurisdiction/CBO

Plaintiff Lisa Hott (Hott) is a former College of the Sequoias Community College District (COS) administrator whose position was eliminated due to budget cuts. Pursuant to Education Code section 87458, COS offered Hott, who did not have any prior faculty experience, a position as a first-year probationary faculty member, which she accepted. COS determined Hott’s faculty salary under the terms of the collective bargaining agreement between COS and its faculty members, and gave her credit for five years’ occupational experience, which was the maximum credit she could receive. Hott subsequently filed a complaint for declaratory relief against COS, alleging that COS placed her in the wrong “step” on the faculty academic salary schedule because it should have given her full credit for her 15 years of administrative experience. The trial court agreed with Hott, finding that pursuant to a handbook for administrative employees, she was entitled to year-for-year credit for her total years of employment at COS.

On appeal from the resulting judgment, COS contends the trial court erred: (1) in hearing and determining Hott’s claim because it falls within the exclusive jurisdiction of the Public Employment Relations Board (PERB); and (2) the trial court erred in finding that Hott was entitled to a salary greater than that provided for in the collective bargaining agreement. We agree with COS’s second contention and reverse the judgment.

http://www.courts.ca.gov/opinions/documents/F070802.PDF

C.R. v. Eugene Sch. Dist. 4J (9th Cir. 13-35856 9/1/16) School district can discipline student-on-student off-campus sexual harassment

The panel affirmed the district court’s summary judgment in favor of the Eugene School District 4J in an action brought by a middle school student suspended for harassment, who challenged his suspension under the First Amendment, arguing that because the harassment occurred off-campus, in a public park, the school lacked the authority to discipline him.

The panel held that under the unique facts presented by this case, the School District had the authority to discipline plaintiff for his off-campus, sexually harassing speech. The panel noted that the speech at issue occurred exclusively between students, in close temporal and physical proximity to the school, on property that was not obviously demarcated from the campus itself, and that a school may act to ensure

students are able to leave the school safely without implicating the rights of students to speak freely in the broader community. The panel further held that the School District’s decision to suspend plaintiff for two days for sexual harassment was permissible under Tinker v. Des Moines Indep. Cmty. Sch. Dist., 393 U.S. 503, 506 (1969)). The panel concluded that plaintiff’s suspension was permissible under the First Amendment.

Rejecting plaintiff’s due process claims, the panel held that taken in the light most favorable to plaintiff, the uncontroverted facts showed that he was provided the informal procedures that the Constitution requires for a two-day, out-of-school suspension. The panel further held that plaintiff failed to show that he has a substantive due process interest in maintaining a clean, non-stigmatizing school disciplinary record.

http://cdn.ca9.uscourts.gov/datastore/opinions/2016/09/01/13-35856.pdf

In Re: TFT-LCD (Flat Panel) Antitrust Litig. (9th Cir. 14-15916 9/1/16) Federal law on mediation privilege applies where challenge to settlement concerned both federal and state law claims

The panel reversed the district court’s order denying plaintiff’s motion for summary judgment in plaintiff’s action to enforce a settlement agreement, and remanded.

The parties engaged a mediator to resolve a price-fixing dispute, and the mediator proposed settlement in an email exchange. Both parties accepted by email, but defendant refused to comply and plaintiff sued to enforce the settlement agreement. The district court denied plaintiff’s motion for summary judgment, holding that the California Evidence Code’s mediation privilege barred introduction of settlement emails. The parties stipulated to a final judgment.

The panel held that because, at the time the parties engaged in mediation, their negotiations concerned (and the mediated agreement settled) both federal and state law claims, the federal law of privilege applied. The panel therefore concluded that the district court erred in applying California privilege law to resolve the dispute.

Dissenting, Chief District Judge Lynn would hold that the district court correctly determined that state privilege law governed and that California Evidence Code § 1123(b) precluded admission of the email exchange and the resulting settlement contract.

http://cdn.ca9.uscourts.gov/datastore/opinions/2016/09/01/14-15916.pdf

Ruiz Torres v. Mercer Canyons (9th Cir. 15-35615 8/31/16) H-2A Visas/Agricultural Workers’ Protection Act/Class Certification

The panel affirmed the district court’s order certifying a plaintiff class of domestic farm workers who alleged violations of the Agricultural Workers’ Protection Act and Washington law.

The plaintiffs alleged that the defendant farm employer failed to inform them of the availability of agricultural work that was performed by temporary foreign workers under the federal H-2A visa program, and failed to pay domestic workers the same wage as the foreign workers.

The panel affirmed the district court’s certification of an Inaccurate Information class and an Equal Pay subclass. The panel held that as to the Inaccurate Information class, the district court did not abuse its discretion in finding common questions under Fed. R. Civ. P. 23(a)(2) regarding a duty to disclose information pertaining to H-2A jobs, nor in finding that common issues predominated under Rule 23(b)(3). The panel also affirmed the district court’s findings of commonality and typicality with regard to the Equal Pay subclass, as well as the district court’s finding of typicality under Rule 23(a)(4).

http://cdn.ca9.uscourts.gov/datastore/opinions/2016/08/31/15-35615.pdf

Bill Signed by Governor 8/30/16

AB 2068 by Assemblymember Chris Holden (D-Pasadena) – Talent services

Existing law regulates the licensing and operation of talent services within the entertainment industry. Existing law prohibits specific activities or omissions by a talent service or its owners, directors, officers, agents, and employees, including the failure to remove information about, or photographs of, an artist displayed on the talent service’s Internet Web site or an Internet Web site that the service has the authority to design or alter, within 10 days of delivery of a request made by telephone, mail, facsimile transmission, or email from the artist or from a parent or guardian of the artist if the artist is a minor. If the talent service offers to display information about, or a photograph of, an artist on the service’s Internet Web site, existing law requires a contract between an artist and a talent service to contain a notice that the talent service will remove the content within 10 days of a request by the artist or the artist’s parent or guardian, if a minor. A willful violation of those prohibitions is a crime.

This bill would prohibit these specific activities or omissions of a talent service, its owners, directors, officers, agents, and employees through any means of communication. The bill would extend the prohibition of the failure to remove an artist’s information or photographs to those displayed on an online service, online application, or mobile application of the talent service or one that the talent service has the authority to design or alter and would require the talent service to also act on requests to remove information or photographs made by text message or other electronic communication. The bill would expand the above-described notice requirement to contracts in which the talent service offers to display information about, or a photograph of, an artist on the service’s online service, online application, or mobile application. Because a violation of these provisions would be a crime under certain circumstances, the bill would impose a state-mandated local program.

This bill would provide that no reimbursement is required by this act for a specified reason.

Castro-Ramirez v. Dependable Highway Express (CA2/8 B261165A opn. on rehrg. 8/29/16) FEHA Associational Disability Discrimination

Plaintiff Luis Castro-Ramirez sued his former employer, Dependable Highway Express, Inc. (DHE), alleging causes of action for disability discrimination, failure to prevent discrimination, and retaliation under the Fair Employment and Housing Act (FEHA or the Act) (Gov. Code, § 12900 et seq.), as well as wrongful termination in violation of public policy. (He alleged other claims not pursued on appeal.) Plaintiff’s son requires daily dialysis, and according to the evidence, plaintiff must be the one to administer the dialysis. For several years, plaintiff’s supervisors scheduled him so that he could be home at night for his son’s dialysis. That schedule changed when a new supervisor took over and ultimately terminated plaintiff for refusing to work a shift that did not permit him to be home in time for his son’s dialysis. The trial court granted defendant’s motion for summary judgment and denied plaintiff’s motion to tax costs.

We reverse the judgment and the order denying the motion to tax costs. Plaintiff has demonstrated triable issues of material fact on his causes of action for associational disability discrimination, failure to prevent discrimination, retaliation, and wrongful termination in violation of public policy.

http://www.courts.ca.gov/opinions/documents/B261165A.PDF

Mulligan v. Nichols (9th Cir. 14-55278 8/29/16) First Amendment Retaliation

The panel affirmed the district court’s summary judgment and judgment entered following a jury trial in an action brought pursuant to 42 U.S.C. § 1983 and state law by Brian Mulligan who alleged, among other things, that Los Angeles police officers together with City of Los Angeles officials and the police officers’ union retaliated against him for exercising his First Amendment rights.

Mulligan was injured in an altercation with two police officers and subsequently filed an administrative claim against the City of Los Angeles, alleging that the officers had acted unlawfully. The police officers’ union, allegedly with assistance from City officials, responded by accusing Mulligan of being a drug abuser and of having acted aggressively toward the officers. The episode attracted publicity, and Mulligan lost his job with Deutsche Bank.

The panel held that the statements allegedly made by defendants against Mulligan were not sufficiently adverse to support a claim of First Amendment retaliation. The defendants did not make any decision or take any state action affecting Mulligan’s rights, benefits, relationship or status with the state. Nor could Mulligan show the loss of a valuable governmental benefit or privilege. The panel concluded that although Mulligan’s reputation was undoubtedly damaged by the increased media attention, which eventually resulted in the loss of his job, such reputational harm is not actionable under § 1983 unless it is accompanied by some more tangible interests.

The panel held that the district court did not err by granting summary judgment to defendants on Mulligan’s state law negligence claim. The panel held that the causal relationship between the allegedly negligent pre-force conduct of police officers and the later use of force was too attenuated. The panel affirmed the district court’s evidentiary rulings excluding evidence: (1) that Mulligan was not ultimately charged with any crime for his conduct on the night on the incident; and (2) that one of the officers involved in the incident had previously been accused of on-duty sexual assault. Finally, the panel held that once the jury had found that the officers did not act unlawfully, there was no basis for the negligent-supervision claim against the City.

http://cdn.ca9.uscourts.gov/datastore/opinions/2016/08/29/14-55278.pdf

Bill Signed by Governor 8/29/16

SB 954 by Senator Robert M. Hertzberg (D-Van Nuys) – Public works: prevailing wage: per diem wages

Existing law requires, except for public works projects of $1,000 or less, that workers employed on public works be paid not less than the general prevailing rate of per diem wages for work of a similar character in the locality that the public work is performed, and not less than the general prevailing rate of per diem wages for holiday and overtime work fixed, as prescribed. Existing law requires the Director of Industrial Relations to determine the general prevailing rate of per diem wages for work of a similar character in the locality in which the public work is to be performed, and the general prevailing rate of per diem wages for holiday and overtime work.

Existing law includes, as per diem wages, employer payment for industry advancement and collective bargaining agreements administrative fees, provided that these payments are required under a collective bargaining agreement pertaining to the particular craft, classification, or type of work within the locality or the nearest labor market area at issue. Per diem wages also include employer payments for other purposes similar to those specified, including, but not limited to, certain apprenticeship or other training programs, to the extent that the cost of training is reasonably related to the amount of the contributions, and worker protection and assistance programs or committees established under the federal Labor Management Cooperation Act of 1978, to the extent that the activities of the programs or committees are directed to the monitoring and enforcement of laws related to public works.

This bill would instead require per diem wages to include industry advancement and collective bargaining agreements administrative fees if the payments are made pursuant to a collective bargaining agreement to which the employer is obligated. The bill would also exclude from per diem wages, if the payments are not made pursuant to a collective bargaining agreement to which the employer is obligated, employer payments for other purposes similar to certain apprenticeship or other training programs, worker protection and assistance programs or committees established under the federal Labor Management Cooperation Act of 1978, and industry advancement and collective bargaining agreements administrative fees, as specified.

Existing law provides that employer payments are credits against the obligation to pay the general prevailing rate of per diem wages. Credit is prohibited for benefits required to be provided by other state or federal law or for payments made to monitor and enforce laws related to public works if those payments are not made to a program or committee established under the federal Labor Management Cooperation Act of 1978.

This bill would also prohibit credit for payments for industry advancement and collective bargaining agreement administrative fees if those payments are not made pursuant to a collective bargaining agreement to which the employer is obligated.

Teutscher v. Woodson (9th Cir. 13-56411 8/26/16) Retaliatory Discharge Remedies/State Law & ERISA

The panel reversed the district court’s award of front pay and reinstatement as equitable remedies under the Employee Retirement Income Security Act for a retaliatory discharge after the plaintiff had already sought and been awarded by a jury front pay damages to compensate for the same harm.

The plaintiff went to trial against his former employer on retaliatory discharge claims under both state law and ERISA. The jury awarded him lump-sum damages on his state law claims, and the district court then entered judgment on his ERISA claim. Even though the jury had been instructed to include front pay in its damages award, the district court granted the plaintiff additional equitable remedies consisting of reinstatement as well as front pay until reinstatement occurred.

The panel held that the equitable front pay award conflicted with the jury’s front pay award in violation of the Seventh Amendment right to a jury trial. In addition, although the reinstatement remedy did not necessarily conflict with the fact findings implicit in the jury’s verdict, it nevertheless was improper because the plaintiff waived that relief when he elected to seek the duplicative front pay remedy from the jury.

Judge M. Smith concurred in the judgment. However, he disagreed with the majority’s Seventh Amendment analysis. Judge M. Smith would hold instead that the district court’s equitable remedy was an abuse of discretion because the district court did not give reasons why additional equitable relief was appropriate after the jury had already compensated the plaintiff for the monetary harm he suffered.

http://cdn.ca9.uscourts.gov/datastore/opinions/2016/08/26/13-56411.pdf

Demer v. IBM Corp. LTD Plan (9th Cir. 13-17196 8/26/16) ERISA/Long-Term Disability

The panel reversed the district court’s summary judgment in favor of the defendants in an action under the Employee Retirement Income Security Act, challenging the denial of a claim for long-term disability benefits.

The panel held that Metropolitan Life Insurance Company (“MetLife”), the ERISA plan’s claims administrator and insurer, had a conflict of interest such that the court’s abuse-of-discretion review should be tempered by some skepticism because of the financial conflict of the independent physician consultants (“IPCs”) upon whom MetLife relied.

The panel held that MetLife abused its discretion because it did not find that the plaintiff’s mental capacity was affected in any way by the medications he was taking for his physical pain, and improperly rejected the credibility of his complaints of fatigue and difficulty concentrating based on the opinions of two IPCs who did not examine him and did not explain why they rejected his credibility. The panel held that in light

of the totality of the circumstances, including the financial conflict of interest of the IPCs and substantial evidence of the plaintiff’s physical limitations, MetLife abused its discretion in denying the plaintiff’s claim for benefits.

The panel remanded the case to the district court, with instructions to remand to MetLife to re-evaluate the merits of the plaintiff’s long-term disability claim.

Judge Bybee dissented from Part II.B of the majority opinion, addressing the financial conflict of the IPCs. Because that section was not otherwise necessary to the majority’s opinion, he concurred in the judgment. Judge Bybee wrote that MetLife should not be penalized for following the court’s prior case law instructing ERISA plan administrators to mitigate structural conflicts of interest by walling off their claims administrators from their financial offices and seeking medical evaluations from outside, independent physicians.

http://cdn.ca9.uscourts.gov/datastore/opinions/2016/08/26/13-17196.pdf

Fenske v. Service Employees Int’l (9th Cir. 14-71512 8/26/16) Longshore and Harbor Workers’ Compensation Act

The panel denied a petition for review of a decision of the Benefits Review Board holding that the petitioner, a United States government contractor in Iraq who suffered severe injuries caused by a suicide bomber, could not receive concurrent payments for total disability and permanent partial disability under the Longshore and Harbor Workers’ Compensation Act. Petitioner sought concurrent compensation for a “scheduled” injury (hearing loss) under 33 U.S.C § 908(c)(13) and total disability caused by his back injury.

Petitioner alleged that he was exposed to excessive noise throughout his employment in Iraq. The panel held that the holding in Stevedoring Servs. Of Am. v. Price, 382 F.3d 878 (9th Cir. 2004) (as amended) (awarding concurrent payments because the later total disability award was based on a wage that had already been decreased by the earlier partial disability) did not apply because a prerequisite for applying the Price theory is that the partial disability preceded the total disability, and petitioner’s hearing loss did not precede his back injury.

The panel also held that in a case where the only evidence of hearing loss was a post-retirement audiogram, the rule in Bath Iron Works Corp. v. Director, Office of Workers’ Compensation Programs, 506 U.S. 153, 165 (1993) (discussing when a hearing loss occurs and when it is complete for calculating benefits), applied when determining the timing of disability under Price, but Price did not apply in this case because petitioner’s last day of exposure to excessive noise was the same day as his back injury. Finally, the panel declined to provide a decreased concurrent award capped at two-thirds of petitioner’s wage under ITO Corp. of Baltimore v. Green, 185 F.3d 239 (4th Cir. 1999).

http://cdn.ca9.uscourts.gov/datastore/opinions/2016/08/26/14-71512.pdf

Bills Signed by Governor (8/26/16)

AB 2404 by Assemblymember Ken Cooley (D-Rancho Cordova) - Public Employees' Retirement System: optional settlements

Existing law creates the Public Employees’ Retirement System (PERS), the Judges’ Retirement System, and the Judges’ Retirement System II, all of which are administrated by the Board of Administration of the Public Employees’ Retirement System. Existing law permits a member of the Public Employees’ Retirement System to elect from among several optional settlements for the purpose of structuring his or her retirement allowance, which may result in a reduction of the allowance paid to the member in relation to the payments to his or her beneficiary after the member’s death. Existing law includes among these options the following: optional settlement 1, which provides for payment of a retirement allowance until death and the payment of any remaining contributions at death to his or her beneficiary or estate; optional settlement 2, which provides an allowance for life to the member and thereafter to his or her beneficiary; optional settlement 3, which provides an allowance for life to the member and thereafter 1/2 of his or her allowance to his or her beneficiary; optional settlement 4, which provides for such other benefits that are the actuarial equivalent of a member’s retirement allowance, subject to approval of the board and that the benefits payable not exceed actuarial equivalent of benefits under optional settlement 2, as specified; and optional settlement 5, which provides for a partial present distribution of the actuarial present value of a portion of a member’s unmodified monthly allowance, as specified. Existing law entitles a member to elect certain variations within these settlements and, in certain instances, to a recalculated, increased allowance if the beneficiary predeceases the member, subject to a specified, sinking percentage. Existing law similarly permits a member of the Judges’ Retirement System or the Judges’ Retirement System II to select from various optional settlements for the purpose of structuring his or her retirement benefits.

This bill would limit the application of the optional settlements and variations described above to PERS members who retire on or before December 31, 2017. For members who retire on or after January 1, 2018, the bill would revise and recast the optional retirement settlements, which would be termed the Return of Remaining Contributions Option 1, the 100 Percent Beneficiary Option 2, the 100 Percent Beneficiary Option 2 with Benefit Allowance Increase, the 50 Percent Beneficiary Option 3, the 50 Percent Beneficiary Option 3 with Benefit Allowance Increase, and the Flexible Beneficiary Option 4. The bill would revise and bring forward various administrative provisions in connection with these settlements, including those relating to adjustments of actuarial equivalents by the board, the effective dates for elections and revocations and dates of payments, the effect of dissolution of marriage, and of a beneficiary predeceasing a member, among others. The bill would similarly limit application of current optional settlements and variations described above to members of the Judges’ Retirement System or the Judges’ Retirement System II who retire on or before December 31, 2017, and would provide to members of those systems who retire on and after January 1, 2018, optional retirement settlements analogous to those provided to PERS members, as described above. The bill would make conforming and technical changes.

AB 2883 by the Committee on Insurance - Workers' compensation: employees

Existing law establishes a workers’ compensation system, administered by the Administrative Director of the Division of Workers’ Compensation, within the Department of Industrial Relations, to compensate an employee for injuries sustained in the course of his or her employment.

Existing law defines an employee, for purposes of the laws governing workers’ compensation, to include, among other persons, officers and members of boards of directors of quasi-public or private corporations while rendering actual service for the corporations for pay. Existing law excludes from that definition, among other persons, officers and directors of a private corporation who are the sole shareholders of the corporation and working members of a partnership or limited liability company, as specified, unless they elect to come under the compensation provisions of the laws governing workers’ compensation.

This bill would revise those exceptions from the definition of an employee to apply to an officer or member of the board of directors, as specified, if he or she owns at least 15% of the issued and outstanding stock of the corporation, or an individual who is a general partner of a partnership or a managing member of a limited liability company, and that person elects to be excluded by executing a written waiver of his or her rights under the laws governing workers’ compensation, stating under penalty of perjury that he or she is a qualifying officer or director, or a qualifying general partner or managing member, as applicable. The bill would specify the effective date of the waivers.

The bill would also make technical and clarifying changes to the provision excluding specified persons from the definition of employee.

The bill would also delete obsolete provisions.

Existing law proscribes the crime of perjury.

By expanding the scope of the crime of perjury, the bill would impose a state-mandated local program.

This bill would provide that no reimbursement is required by this act for a specified reason.

AB 2887 by the Committee on Insurance - State Compensation Insurance Fund: out-of-state risks

Existing law creates the State Compensation Insurance Fund administered by a board of directors for the purpose of transacting workers’ compensation insurance, insurance against the expense of defending any suit for serious and willful misconduct against an employer or his or her agent, and insurance for employees and other persons for the compensation fixed by the workers’ compensation laws for employees and their dependents.

Existing law authorizes the fund to insure a California employer against the employer’s liability for workers’ compensation benefits, under the law of any other state, for California employees temporarily working outside of California on a specific assignment if the fund insures the employer’s other employees who work within California. Existing law also provides, among other things, that, until December 31, 2016, the fund is only authorized, pursuant to the above provisions, to insure a qualified employer whose principal place of business is in California, provided the majority of the employer’s operations and employees are located within California, against the employer’s liability for workers’ compensation benefits, under the law of any other state, if the fund insures the employees who work within California. The fund is prohibited, until December 31, 2016, from initiating paid advertising or soliciting sponsorship of advertising campaigns to market or promote to prospective insureds the ability to insure qualified employers under the law of any other state.

This bill would delete the requirement that the above provisions be inoperative as of December 31, 2016.

The bill would also delete obsolete provisions.

SB 1175 by Senator Tony Mendoza (D-Artesia) - Workers' compensation: requests for payment.

Existing law establishes a workers’ compensation system, administered by the Administrative Director of the Division of Workers’ Compensation, to compensate an employee for injuries sustained in the course of his or her employment. Existing law requires the employer to provide medical, surgical, chiropractic, acupuncture, and hospital treatment, as specified, that is reasonably required to cure or relieve the injured worker from the effects of his or her injury. Existing law requires a provider of those services to submit, among other documents, its request for payment with an itemization of services provided and the charge for each service. Existing law also requires the employer to reimburse the employee for his or her medical-legal expenses, as specified.

This bill would require, effective for services on or after January 1, 2017, that requests for payment with an itemization of services provided and the charge for each service be submitted to the employer within 12 months of the date of service or within 12 months of the date of discharge for inpatient facility services. The bill would also require, effective for services provided on or after January 1, 2017, that all bills for medical-legal evaluation or medical-legal expense be submitted to the employer within 12 months of the date of service in the manner prescribed by the administrative director. The bill would provide that requests for payment and bills for medical-legal charges are barred unless timely submitted. The bill would require the administrative director to adopt rules to implement the 12-month limitation period, as specified.

SB 1352 the Committee on Public Employment and Retirement - State teachers' retirement.

Existing law, the Teachers’ Retirement Law, establishes the State Teachers’ Retirement System (STRS) and creates the Defined Benefit Program of the State Teachers’ Retirement Plan, which provides a defined benefit to members of the program, based on final compensation, credited service, and age at retirement, subject to certain variations. STRS is administrated by the Teachers’ Retirement Board. The Defined Benefit Program is funded by employer and employee contributions, as well as investment returns and state appropriations, which are deposited or credited to the Teachers’ Retirement Fund.

(1) Existing law authorizes a disabled member to apply for a disability allowance or a disability retirement if he or she has 5 or more years of service and specified requirements are met. STRS provides retired and disabled members certain supplemental benefits, including those that maintain purchasing power up to a specified percent. Existing law prescribes base dates for purposes of applying postretirement benefit increases based on whether final compensation is used to calculate a service retirement upon termination of a disability allowance or if the disability allowance is continued, as specified. Existing law defines base allowance for these purposes.

This bill would provide that definition of base allowance does not apply to provisions relating to base dates, as described above. The bill would, instead, revise the base date provisions to prescribe a method for their determination when applied to supplemental benefits and a disability allowance effective date is used.

(2) Existing law defines a break in service for the purpose of defining a member’s final compensation and defines final compensation with respect to a member whose salary while an active member was reduced because of a reduction in school funds, as specified. Existing law provides that, for these purposes, periods in which a member’s salary was reduced may be aggregated, as specified.

This bill would repeal these provisions and revise definitions of final compensation to address breaks in service, including with reference to periods during which a member’s salary was reduced because of a reduction in school funds. The bill would define school term for these purposes. The bill would define final compensation for purposes of calculating a benefit that does not include service credit, which would include disability and family allowances. The bill, among other things, would also revise and clarify provisions relating to determining final compensation in connection with concurrent retirement when a member has concurrent membership in another retirement system. The bill would make various conforming changes in connection with these changes.

(3) Existing law authorizes members who become employed in specified capacities in positions that are covered by other retirement systems, or who perform service that may be excluded from coverage in certain respects, to elect coverage under the Defined Benefit Program. These provisions prescribe requirements for making this election effective, generally providing that they be made on a form prescribed by the system within 60 days of hire.

This bill would revise these requirements to require that the election forms be received by STRS, as specified, within 30 days of signature.

(4) Federal law, the Uniformed Services Employment and Reemployment Rights Act of 1994, requires pension plans to treat members who return from military service as if they did not have a break in service for purposes of certain provisions, which requirements are reflected in various provisions of the Teachers’ Retirement Law. Existing law establishes the Defined Benefit Supplement Program for the purpose of providing supplemental benefits to members whose earnings are in excess of specified amounts. Existing law establishes the Cash Balance Benefit Program, administered by the Teachers’ Retirement Board, as a separate benefit program within the State Teachers’ Retirement Plan in order to provide a retirement plan for persons employed to perform creditable service for less than 50% of full-time service.

This bill would make clarifying, conforming, and technical changes to reflect the requirements of federal law and specifically to account for its application to the Defined Benefit Supplement Program.

(5) Existing law requires that specified member contributions and employer contributions be credited to a member’s individual account in the Defined Benefit Program or the Defined Benefit Supplement Program pursuant to the applicable provisions in the Teachers’ Retirement Law. Existing law requires the system to make a determination regarding the timing of the crediting of contributions relating to compensation for creditable service in excess of one year. Existing law prescribes how these provisions become operative based on a computation to be made by the Superintendent of Public Instruction for the 2001–02 fiscal year.

This bill would repeal and reenact these provisions, as of July 1, 2018, eliminating obsolete language regarding their operation and establishing when contributions are credited without regard to a determination by the system.

(6) Existing law requires that disability allowances and disability retirement allowances become effective on a date designated by the member, subject to certain requirements, including that the date is later than the last day of creditable service for which compensation is payable.

This bill would revise the reference to creditable service to instead refer to the last day the member earned creditable compensation, as defined.

(7) Existing law prescribes different methods of calculating a STRS service retirement, which depend on whether a member had previously received a disability allowance, disability retirement, or service retirement subsequent to which he or she reinstated in the system. Existing law identifies different methods of calculating service credit in this context, which may be applied to certain benefit enhancements such as that related to longevity. Existing law generally permits unused sick leave to be used for the purpose of calculating service credit, subject to a specified calculation.

This bill would provide, for purposes of the service retirements described above, that a certain amount of credited service that results from application of unused sick leave is to be applied to specified benefit enhancements. The bill would prohibit a member who elects a lump-sum retirement benefit from being eligible for specified disability benefits. The bill would prescribe a method for calculating service credit from unused sick leave for specified members.

(8) Existing law requires amounts of benefits that cannot be paid because a member or beneficiary cannot be located be returned to the retirement fund. Existing law prohibits interest from accruing on returned warrants in payment of benefits and contributions that are drawn and canceled by the Controller.

This bill would prohibit the accruing of interest on payments rejected pursuant to electronic fund transfers.

(9) Existing law permits a participant in the Cash Balance Benefit Program, who is employed while receiving an annuity under the program, to terminate the annuity and again make contributions to the program, subject to certain conditions, including that the participant has reached normal retirement age and has been receiving an annuity for at least a year.

This bill would revise the conditions pursuant to which an annuity may be terminated to eliminate the requirements that the participant has reached normal retirement age and has been receiving an annuity for at least a year, and prescribe administrative provisions.

(10) Existing law requires that employee contributions and employer contributions for the Cash Balance Benefit Program be credited to their respective accounts as of the first working day following the date all contributions to fully satisfy the contribution report, as specified, are received by the system.

This bill, on and after July 1, 2018, would require that employee contributions and employer contributions be credited to their respective accounts as of the day contributions are required to be transmitted to the plan. The bill would also make a conforming change.

(11) This bill would also make other technical, clarifying, and conforming changes.

PHYLLIS W. CHENG, ESQ .

CALIFORNIA CASE LAW ALERT

PHYLLIS W. CHENG, ESQ .

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CALIFORNIA CASE LAW ALERT