Ad Astra Law Group, LLP

Update on 2017 Transgender Protection Regulations

With the recent media frenzy surrounding President Trump’s attempt to ban transgender individuals from serving in the military, and Attorney General Jeff Sessions’ formal determination that federal civil rights law does not protect transgender workers from employment discrimination, we thought it a particularly fitting time to highlight some of the new 2017 rights and protections afforded to transgender individuals, here in California.

In May 2017, the California Department of Fair Employment and Housing (DFEH) approved new regulations regarding transgender identity and expression in the workplace. A new definition for “transitioning” was added and the regulations now prohibit discrimination against an individual who is transitioning, has transitioned, or is perceived to be gender transitioning. The regulations became effective July 1, 2017.

Restroom Facilities

Under the new regulations, employers must provide equal access to comparable, safe and adequate facilities without regard to the sex of the employee.

All employees have the right to use a facility that corresponds to the employee’s gender identity or gender expression, regardless of the employee’s assigned sex at birth. An employer may not REQUIRE an employee to use particular facility and they are not allowed to ask for “proof” from an employee to allow them to use a particular facility.

This regulation applies to more than just bathrooms. It also applies to other facilities including locker rooms and showering areas. In order to protect the rights of ALL employees, employers shall provide feasible options to maintain privacy – such options might include locking toilet stalls, staggered shower schedules, and shower curtains.

Dress Standard

The 2017 regulations make it unlawful to impose upon an applicant or employee any physical appearance, grooming or dress standard which is inconsistent with an individual’s gender identity or gender expression – unless the employer can establish a business necessity. Please note, “business necessity” is a difficult hurdle to overcome and “customer preference” is not considered as such. If an employer does have a dress standard, it must be enforced in a non-discriminatory manner.

Preferred Name and Identity

The new regulations require employers to honor an employee’s request to be identified by a preferred 1) gender and 2) name or pronoun – including gender-neutral pronouns. An employer can be held liable for a FEHA violation if the employer fails to abide by an employee’s stated preference. Employers can only insist on using an employee’s legal name or gender if it is otherwise required to meet a legally-mandated obligation.

Documentation

An employer cannot inquire or require documentation on sex, gender, gender identity, or gender expression as a condition of employment.

Employers should ensure their policies comply with these new regulations regarding transgender identity and expression. Employers should also review their employee handbooks to make sure any policies contained therein comply with the new regulations. For specific legal advice regarding transgender regulations or any other employment issue, please contact Ad Astra for guidance.

Unexpected Litigation Costs

Author: Michael S. Dorsi

Many clients actively work with their attorneys to minimize their bills, and understandably so. Some choices are within the client’s control, such as making a motion for summary judgment. Others are not — like when the other side files a motion.

I have always understood the conventional wisdom to be that the moving party ends up with a larger bill for motion work – at least in California where the moving party writes two briefs, while the opposing party writes only one.[1] But a review of past matters suggests this may be incorrect.

Looking at federal court motions in the 2014-2016 timeframe, I found that opposing a motion often consumed more attorney hours — and resulted in higher bills — than making a similar motion. It was a small sample size, but the result is consistent with a different analysis: when you decide the strategy, you have more control over costs. But when the other side picks their spots, maybe lawyers end up spending more time adjusting to the other side’s focus.

Attorneys: does this match your experience?

Academics: there are a lot of attorney bills in the public domain because of fee applications — perhaps this would be a good subject for research . . .

[1] Some courts, such as the U.S. District Court for the District of Massachusetts, have only one brief by each side unless there is a reason to have additional briefing. See D. Mass. Local Rule 7.1(b)(2)–(3).

Hiring Seasonal Employees – Don’t End Up on the “Naughty” List

Author: Trina Clayton

For many retailers, the holiday shopping season is a “make or break” period that can define their bottom lines for the entire year. Other businesses such as restaurants and hotels also see a huge uptick in traffic associated with holiday shopping and travel. Temporary and part-time employment spikes as retailers and other businesses increase staffing to accommodate this seasonal increase in business.

As with hiring any employee, well-planned hiring practices that comply with applicable employment laws can help ensure seasonal employees are well-suited for the job and the company is prepared to defend any possible claims. Below are a few actions employers can take to avoid common legal pitfalls when hiring seasonal workers.

Abide by All Wage and Hour Laws: With few exceptions, California law requires employers to pay any non-exempt employees one-and-one-half times their regular rate of pay for any hours worked in excess of 8 hours in any workday, or 40 hours in a given workweek. An employee is further entitled to double their regular rate of pay for all hours worked in excess of 12 hours in any workday and for all hours worked in excess of 8 on the seventh consecutive day of work in a workweek. These overtime laws apply equally to seasonal workers, as do state and local minimum wage laws.

Properly convey hiring duration: You may presume seasonal employees understand they have been hired on a temporary basis, but it is particularly important for employers to explicitly specify the limited duration of employment both at the onset and in writing. In addition, employers should require any seasonal employees to acknowledge, in writing, that they understand they are being hired for a limited duration and are “at-will” employees – meaning the employer has a legal right to terminate the employee, with or without cause, at any time.

Proper Classification: Employers often misclassify employees as independent contractors – this practice is especially common when hiring seasonal employees. Employers should be sure to avoid designating a seasonal worker as an independent contractor without first determining that the circumstances legally justify such a classification.

Proper Training: Even though seasonal employees may only be with your company for a relatively short time, providing proper training is critical for maintaining a productive, fair, and safe workplace. Employers commonly forget to give seasonal employees handbooks (and have them sign off on them) – if your business has “regular” employees sign arbitration agreements, you should do this for seasonal employees as well. Seasonal employees should generally receive the same training as other new hires, such as training in anti-harassment, nondiscrimination, safety, and other important workplace issues.

LOCAL ORDINANCES

As an important reminder, both San Francisco and San Jose have enacted local ordinances designed to allow “regular” part-time employees the first opportunity to work additional shifts before an employer can hire temporary or seasonal workers.

Under San Jose’s “Opportunity to Work” ordinance passed earlier this year, San Jose businesses with 36 or more employees must offer, in writing, extra work hours to existing qualified part-time employees. If those employees aren’t qualified or decline the extra hours, an employer can then hire additional workers to fill the shifts.

Under San Francisco’s Retail Workers Bill of Rights, “formula retail establishments” with at least 40 retail sales establishments worldwide and 20 or more employees in San Francisco, must, before hiring new employees, offer additional work hours to qualified part-time employees who have performed similar work for the covered retail establishment, and afford those part-time employees 3 days to accept the offered hours.

Employment law, especially in California, is in a state of constant flux. Employers must keep apprised of new legislation, and comply with all federal, state and local employment laws. For specific legal advice regarding any employment issue, please contact Ad Astra for guidance.

The Computer Fraud and Abuse Act and Shutting Down @realDonaldTrump

By: Michael S. Dorsi

The Washington Post published an article suggesting that the Twitter employee who deleted @realDonaldTrump might be criminally liable under the Computer Fraud and Abuse Act (“CFAA”).[fn1] The article, which draws on comments by Lawfare’s Benjamin Wittes and Chris Calabrese of the Center for Democracy and Technology, focuses on the misdemeanor access without authorization provision, 18 U.S.C. § 1030(a)(2)(C).[fn2] This provision attracts a lot of attention because it is very broad.[fn3]

The article focuses on whether the Twitter employee accessed without authorization, but then twists around to whether, while using that access, the employee did something he was not supposed to do. That is an invalid reading of the law, at least in the Ninth Circuit.[fn3] The access without authorization provision only criminalizes access, not what a person does once he or she has access. So the Twitter employee has nothing to fear, right? Wrong.

Just because the most notable part of the law is not implicated does not mean the law does not apply. A different provision, 18 U.S.C. § 1930(a)(5)(A), makes it a crime to “knowingly cause[] the transmission of a . . . command, and as a result of such conduct, intentionally cause[] damage without authorization, to a protected computer.” The story, as reported, indicates that the Twitter employee knowingly caused the transmission of a command that shut down @realDonaldTrump. The question is whether that shut down caused “damage” without authorization.

And a note of caution here: this offense does not require the defendant to access without authorization — it doesn’t require the defendant to access the system at all.[fn5] It just requires the defendant to lack authorization to cause damage.

What does it mean to cause damage? Unlike many words in the CFAA, damage actually has a definition in the law. “[T]he term ‘damage’ means any impairment to the integrity or availability of data, a program, a system, or information.”[fn6] Deleting a Twitter account probably impairs the availability of data, a program, a system, and information.

Does an 11-minute interruption qualify? One federal court in California held that changing someone else’s password and refusing to reveal it for two hours was insufficient under both the CFAA and its state-law analog.[fn7] Another case, in San Francisco, held that the CFAA and its state-law analog applied during “extended unavailability of the data.”[fn8] Maybe 11 minutes is not “extended unavailability,” but if I was the Twitter employee, I’d lawyer up.

And if I was his lawyer, I’d read the cases cited in this blog post. Free research. Because information wants to be free, or something like that.

P.S. The trial would probably have to be in San Francisco. Good luck asking Northern California jury to send someone to jail for shutting down Trump’s twitter.[fn9]

Footnotes

[fn1] 18 U.S.C. § 1030.

[fn2] Subsection (a)(2)(C), confers misdemeanor liability on any person who “intentionally accesses a computer without authorization or exceeds authorized access, and thereby obtains . . . information from any protected computer.”

[fn3] See, e. g., United States v. Nosal, 676 F.3d 854, 862 (9th Cir. 2012) (Nosal I) (en banc), Michael S. Dorsi & Keenan W. Ng, Computer Criminal Intent, 51 U.S.F. L. Rev. 469, 503–506.

[fn4] Nosal I, supra, at 855.

[fn5] Cf. United States v. Nosal, 844 F.3d 1024, 1039 (9th Cir. 2016), cert. denied, No. 16-1344, 2017 WL 1807382 (U.S. Oct. 10, 2017) (Nosal II)

[fn6] 18 U.S.C. § 1030(e)(8)

[fn7] Welenco, Inc. v. Corbell, 126 F. Supp. 3d 1154, 1168 (E.D. Cal. 2015)

[fn8] NovelPoster v. Javitch Canfield Grp., 140 F. Supp. 3d 954, 961 (N.D. Cal. 2014). Your author argued the motion that resulted in this order in NovelPoster.

[fn9] See United States v. Auernheimer, 748 F.3d 525, 533 (3d Cir. 2014) (quoting United States v. Rodriguez–Moreno, 526 U.S. 275, 279 (1999)).

Just Hire an Intern? Understanding the Risks Associated with Unpaid Internships

Aurthor: Annie Smiddy

Hiring an unpaid intern is a risky endeavor. The law presumes anyone who “suffers or permits” someone to work has employed that person. Employees are protected by the wage and hour laws, and failing to abide by these laws can expose a business to substantial liability. California’s Department of Labor Standards and Enforcement (the agency that regulates wage and hour laws) adopted the federal approach to applying an exemption to the wage and hour laws for “interns.” The DLSE uses a six-factor test, and ALL factors must be met for a person to be considered a true intern under California law:

The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment.

Comment: The DLSE commented that this element is satisfied when “an intern’s use of the employer’s computers, network systems, and tools to perform tasks” was “directly related to training and the educational and vocational objectives of the program.” Avoid assigning mundane or routine administrative tasks (such as running errands or making photocopies). Provide resources not necessarily available to the intern. Train, educate, supervise!

The internship experience is for the benefit of the intern.

Comment: The internship should be “directly tied to the core components of the educations objectives” of the intern. Work with a university to provide school credit in exchange for the internship, and adhere to the university’s rules regarding school credit.

The intern does not displace regular employees, but works under close supervision of existing staff.

Comment: Avoid clerical work, or work that is typically assigned to employees. Make sure that the intern is being closely supervised by employees, and not working on independent tasks. However, some incidental work will not defeat the exemption “so long as such work does not unreasonably replace or impede the educational objectives for the intern and effectively displace regular workers.”

The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;

Comment: Benefit to the intern is not sufficient to maintain the intern exemption; there must also be no immediate benefit to the company. Keep track of the time spent supervising and training the intern. Avoid assigning work that is necessary to the business that would typically be rendered by an employee. While “[t]he performance of the described tasks performed by interns at the placement sites has some benefit to the placement business,” the DLSE requires that “any such limited benefit is counter-balanced by impediments to the employer’s operations in both time and economic costs in teaching the intern the activities, reviewing any work performed as well as immediate economic costs to the business in participating in the program.”

The intern is not necessarily entitled to a job at the conclusion of the internship; and

Comment: The internship cannot be an extended job interview. The exemption is not defeated by hiring the individual after the internship, but make sure to clearly state this in a written agreement between the parties prior to beginning the internship.

The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

Comment: Again, written agreements are crucial!

Since the test is a multi-factored, factual analysis, there is inherent uncertainty in the ultimate determination of whether an intern is actually an employee. Under wage and hour laws, if the intern is misclassified, the company could be liable for damages and penalties, including, but not limited to, unpaid wages, liquidated damages for failing to pay minimum wage, unpaid overtime, pay statement penalties, premium pay for missed meal and rest periods, and waiting time penalties. To minimize exposure, consult with an attorney to ensure that your internship program meets the DLSE’s requirements, work with a university to provide school credit, provide a written agreement, and keep records of the project goals, training procedures, time you spend supervising and training, and time the intern spends performing the internship. Offer meal and rest periods, and understand that additional rules apply if hiring a minor.

Use the following link to see the DLSE’s opinion letter regarding the test of whether an intern is actually an employee: https://www.dir.ca.gov/dlse/opinions/2010-04-07.pdf

Cannabis Update – New Legislation Would Let Cannabis Businesses and Attorneys Breathe Easier

Author: Annie Smiddy

A new bill was recently passed into law that will provide more certainty in contracting and consulting with attorneys for the cannabis industry. While medicinal and recreational use of marijuana is still currently illegal under federal law, California authorized medicinal cannabis in 1996, and adult recreational cannabis use in 2016. The conflict in law has provided a number of obstacles for the cannabis industry. Since existing law requires that a contract “be for a lawful object,” the federal conflict in law has created uncertainty regarding the enforceability of contracts in the cannabis industry. The new law provides that commercial activity relating to medicinal cannabis or adult-use cannabis conducted in compliance with state law, and any applicable local standards and regulations, is a lawful object of a contract, is not contrary to an express policy or provision of law or to good morals, and is not against public policy. In addition, the law increases the availability of attorney-client privilege in the cannabis industry by clarifying that attorney-client privilege protections regarding “legal services rendered in compliance with state or local laws on medicinal cannabis or adult-use cannabis and [] confidential communications provided for the purpose of rendering those services” do not fall within the crime/fraud exception to attorney-client privilege. This law is beneficial because it promotes written agreements, and consultation with attorneys who are knowledgeable in cannabis regulatory issues. The law will promote good business practices within the cannabis industry, and will lead to increased compliance with California’s regulations.

See here for the text of AB 1159.

Additional Fees in California Real Estate Transactions to Fund Affordable Housing

Author: Wendy Hillger

To help increase funding for affordable housing, Gov. Jerry Brown recently signed a bill (Senate Bill 2: “Building Homes and Jobs Act”) that places fees on some real estate transactions in the state of California. Effective in January 2018, a fee of $75 per single parcel of property will now apply for documents such as deeds and notices. The fees are capped at $225 per transaction. Recording of these documents for sales of residential and commercial property are specifically excluded [SB 2 bill text, section 2(19)].

The State Senate estimated these fees would bring the state between $200 to $300 million annually. The additional revenue from the fees will be a permanent source of funding to pay for affordable, low-income housing, of which lawmakers estimate 1.8 million units are needed in the state.

The full bill text can be read here:

Why You Want to Know an Attorney Before You Need One

Author: Annie Smiddy

Annie recently presented with a panel of attorneys on “Why You Want to Know an Attorney Before You Need One.”

From large companies to individuals, litigation is a highly emotional experience for anyone involved. Choosing an attorney at that time can be difficult. At Ad Astra, we have experienced attorneys involved in a broad range of litigation, covering multiple practice areas. We also can help with minimizing the risk of litigation with our consultation services.

Annie and other local attorneys spoke to local entrepreneurs at the Hera Hub Business Accelerator Exposition on why it is a good idea to know an attorney before you need one. Topics included referral networks, litigation prevention, timing considerations in litigation, and the “ideal client” to keep costs down. There are many benefits to consulting with an attorney before a lawsuit is filed, so get to know us before you need us!

California Trial Courts Are Still Chronically Underfunded, Which Delays the Public from Getting their Day in Court

Author: Wendy Hillger

Have you wondered why it takes so long to have your matter heard by a judge in California?

Unfortunately, the trial courts are not being properly funded. As a result, there are reduced hours of operation, reduced services, and fewer workers to staff the courts. California Supreme Court’s Justice Tani Cantil-Sakauye noted that chronic under-funding of the courts, “unfairly affects members of the public seeking their day in court.”

In 2008, the San Francisco Court’s budget was $90.5 million. At the time, the Court employed nearly 600 non-judicial staff. However, because of the subsequent Recession, California’s trial courts saw severe budget reductions.

While the economy has improved, the funding has not been substantially restored.

In July, 2017, San Francisco trial courts saw their budget further reduced by 9% for the fiscal year 2017-2018. The court has a budget deficit of over $5.2 million dollars. Today, the Court’s budget amounts to just $51.7 million, with a staff of approximately 430.

To help save money, San Francisco announced that court staff are being furloughed without pay for one day a month. In addition, the clerk’s office will close early on Fridays. Alameda County also has experienced a similar shortfall and has been on reduced staff hours and services for a few years now.

The July 2, 2017 news release of the San Francisco court is linked here. Here is the County of Alameda public notice from November, 2016.

Cannabis Industry Employment Numbers on the Rise: Misclassification Claims to Follow?

Author: Katy M. Young

In a recent article in Marijuana Business Daily , author Eli McVey posited that the cannabis industry now employs 165,000 to 230,000 workers, which is more than the number of employees who are dental hygienists, bakers, or massage therapists. At the NCIA’s Business Expo in Oakland, I was a speaker on a panel discussing how cannabis business owners need to be mindful of employment classification issues.

Here at Ad Astra, we predict (along with many other experienced attorneys) that employment misclassification claims are going to be the next big wave of litigation in the cannabis industry.

As an example, I came upon a cannabis grower who operated as a sole proprietor. When I asked if she had any employees, the owner responded: “No, just my boyfriend who works with me and we split profits 50/50, then a few people [her trimmers] who come and go.” She must have seen the reaction on my face, because she then asked what it was that she said. I explained that in a business context, anyone working with you is either your business partner/co-owner, your employee, or your independent contractor. She said that her boyfriend is NOT her partner, though I was sure she called him her “partner” earlier in the conversation.

Additionally, this owner insisted that her trimmers were independent contractors. She obviously was unaware that there is a multi-factor test for determining whether one is truly an independent contractor. California’s default is that a person is an employee, and so it is far more likely that the trimmers are really misclassified employees. It came as a shock to her that there were no in-betweens, and that at any moment, one of those people she considers friends could go to the EDD and complain that they were misclassified as independent contractors when they are really employees.

If there are 165,000 employees we know of, how many “independent contractors” are there? How many potential claims does that translate to? Many! Please do not fall into this trap.

If you are a business owner in the cannabis space, it is imperative that you understand the difference between employees and independent contractors; and, partners or co-owners. Employees are further subdivided into “exempt” and “non-exempt” (non-exempt are entitled to meal and rest breaks, and paid overtime- this is a whole different topic).

In sum, please contact us for a review of your employment and ownership practices. An ounce of prevention is really worth a pound of cure here!