Ad Astra Law Group, LLP

A Fact Investigation Conducted by Outside Counsel in response to an Employee’s claim of Harassment and Discrimination is Privileged

The California Court of Appeal recently held that outside counsel’s fact investigation of an employee’s harassment and discrimination claims conducted prior to litigation was protected by the attorney-client privilege and work product doctrine.

It has long been California law that when there is a claim of discrimination, harassment or retaliation, the employer must investigate. This investigation must be thorough, objective and complete. To help assist with these requirements, some companies have hired outside legal counsel. This ruling resolves the issue about whether outside legal counsel’s work and communications were privileged. Companies now should not hesitate to investigate an employee claim with outside counsel.

The Court also ruled that assertion of the “avoidable consequences” defense (the employer took reasonable steps to prevent and correct harassment, but the employee failed to use those measures) in the subsequent lawsuit did not waive the privilege as to a post-employment investigation.

[City of Petaluma v. Superior Court (Andrea Waters), Case No. A145437]

Court Declines to Enforce Uber’s Terms of Service

Scripta Ad Astra is extremely pleased to present a guest post by Nicole Syzdek. Ms. Syzdek is an Associate with our friends at Brand & Branch LLP, who focus on branding (trademark protection, registration and enforcement), and provides advice on privacy and data security practices.

Author: Nicole Syzdek

On July 29, 2016, the Southern District of New York in Meyer v. Kalanick declined to enforce the arbitration provision of Uber’s Terms of Service on the grounds that the plaintiff did not have adequate notice of, and consequently did not consent to, Uber’s Terms. Since each online user interface differs, there is no bright-line rule to ensure the enforceability of your terms of service. Nevertheless, decisions like Meyer are instructive in helping business owners understand how to ensure that their own terms of service are enforceable if violated.

The central issue in Meyer v. Kalanick was whether the plaintiff actually agreed to Uber’s Terms of Service when he signed up to use Uber through his mobile phone. Below is an image of what the plaintiff saw prior to registration:

The court categorized this as a “sign-in wrap” since the user was notified of the existence and applicability of the Terms while registering as a user but was not required to view them. The court took issue with the appearance and placement of the terms of service language, which was located below the options to use PayPal or Google Wallet and stated:

By creating an Uber account, you agree to the
TERMS OF SERVICE & PRIVACY POLICY

The court found that this language was in a font barely legible on a smartphone and not prominently displayed in relation to the color and size of the overall design of the registration screen. This layout, the court said, did not adequately draw users’ attention to the Terms of Service—let alone to the fact that by registering to use Uber, a user was agreeing to Uber’s Terms.

Why Should You Care?
As a business owner, it’s your responsibility to limit risk and keep your business running smoothly. One way to limit liability with respect to your websites and mobile applications is to have strong, enforceable terms of service. Your terms of service are your contract with your website visitors; they protect you by telling your customers what they are and are not allowed to do on your website or mobile app, and what they can and cannot expect from your website or service. Your terms should also enable you to ban users who violate these terms from your website, or terminate their accounts from your service.

Your terms of use are an incredibly important and powerful tool in managing your potential liability—but only if they’re actually enforceable.

The Uber decision makes clear that “click-wrap” agreements—which require a user to click through your terms of service—are the safest bet and most likely to be enforceable. By contrast, “browsewrap” agreements—burying your terms in a link at the bottom of the page or smartphone screen—are usually only enforced against other businesses that should be knowledgeable about the terms. “Sign-in wrap” agreements like Uber’s may be enforceable, but the notice of acceptance and link to the terms of service must be prominently positioned prior to the user completing the registration process.

Nicole Syzdek is an Associate at Brand & Branch LLP, focusing on intellectual property and technology matters, including trademark and copyright prosecution and enforcement, Trademark Trial and Appeal Board proceedings, licensing agreements, Internet policies, and privacy. She may be reached at nicole@brandandbranch.com.

To read additional posts visit www.brandandbranch.com.

Be advised of new federal Overtime Pay rules which start December 1st

Author: Wendy Hillger

The U.S. Department of Labor has revised its rules under the Fair Labor Standards Act concerning overtime pay. As of December 1, 2016, the salary and compensation levels needed for white collar workers (executive, administrative, and professional categories) to be exempt from overtime compensation under federal law will more than double.

California employers need to be cautious, however, because California has a different salary threshold pegged to the state minimum wage that will increase over time. Likewise, California maintains a different test for determining whether an employee is engaged in duties that are exempt from the overtime rules. Hence, an employee may be exempt under federal law but not under California law. If you have questions, please call us at Ad Astra Law Group.

The “Day of Rest” Requirement is Now Clear for California Employers

Author: Wendy L. Hillger

Last month, the California Supreme Court issued an important ruling for employers concerning the state’s “day of rest” statute for employees. California Labor Code sections 551[1] and 552[2] entitle employees to one day’s rest in seven and to not be caused to work more than six days in seven. The question before the Court in Mendoza v. Nordstrom, Inc. was whether this protection applies on a week-by-week basis or on a rolling basis. The Court explained the difference:

Under the weekly interpretation, the calendar is divided into seven-day blocks, and these provisions ensure at least one day of rest in each block, but an early day of rest in one week and a late day of rest in the next may lead to an employee working seven, eight, or more days in a row—though no more than six days out of seven, on average. Under the rolling interpretation, the provisions apply on an ongoing day-by-day basis, so that any employee who has worked the preceding six days in a row is presumptively entitled to rest on the next day.

One of the employees who sued Nordstrom had worked each day from Friday, January 14, 2011, to Friday, January 21, 2011. Nordstrom’s workweek was Sunday to Saturday. The Court ruled this was not a Labor Code violation, after a lengthy review of the statute’s text, the legislative history, the Industrial Welfare Commission Wage Orders and the general statutory scheme. The unanimous Supreme Court noted, “We conclude sections 551 and 552, fairly read in light of all the available evidence, are most naturally read to ensure employees at least one day of rest during each [work]week, rather than one day in every seven on a rolling basis.”

There are some exceptions:

1) This protection is not applicable for workers who do not work more than six hours in any day of the workweek;

2) Employees can work more than seven days in a row if they are given time off equivalent to one day’s rest in seven days.

[1] “Every person employed in any occupation of labor is entitled to one day’s rest therefrom in seven.”

[2] “No employer of labor shall cause his employees to work more than six days in seven.”

San Francisco Protects Caregiver Employees

Author: Annie Smiddy

The City of San Francisco has recognized the need for protections for caregiver employees, and in particular working parents, by enacting two ordinances providing employees the right to request flexible working schedules and paid family leave for bonding time with a new child. The changes to demographics of the modern workplace have resulted in: (1) more flexible work arrangements regarding the time or place where work is conducted, and (2) more mothers and fathers wanting time to bond with their new children. However, many employees are concerned about requesting flexible work arrangements, or taking time off after the birth of a new child, due to the stigma associated with these additional family responsibilities. These protections extend to employees who have caregiving responsibilities, such as pregnant women, mothers and fathers of young children, and employees with aging parents.

Family Friendly Workplace Ordinance
In 2013 (operative January 1, 2014), the Family Friendly Workplace Ordinance (“FFWO”) was enacted to provide employees the protected right to request a flexible work schedule. The FFWO states that caregiver status is a protected class, and places notice and record keeping requirements on covered employers. The FFWO prohibits employers from retaliating against an employee who attempts to exercise of rights under the ordinance, or makes a claim or complaint pursuant to the ordinance. The Office of Labor Standards and Enforcement (“OLSE”) is authorized to investigate possible violations of the FFWO, and the agency will impose an administrative penalty up to $50.00 requiring the employer to pay to each employee or person whose rights under the ordinance were violated for each day or portion thereof that the violation occurred or continued. In addition, the City may bring a civil action for reinstatement; back pay; the payment of benefits or pay unlawfully withheld; the payment of an additional sum as liquidated damages in the amount of $50.00 to each employee or person whose rights were violated for each day such violation continued or was permitted to continue; appropriate injunctive relief; and reasonable attorneys’ fees and costs.

Paid Parental Leave for Bonding with New Child Ordinance
In 2016, the City further expanded protections for parents by enacting the Paid Parental Leave for Bonding with New Child Ordinance (“PPLO”), which requires employers who have employees working in San Francisco to provide Supplemental Compensation to employees who are receiving California Paid Family Leave benefits to bond with a new child, so that the employees receive up to 100% of their normal weekly wages during 6 weeks of parental leave. The PPLO takes effect on January 1, 2017 for San Francisco employers with 50 or more employees; on July 1, 2017 for employers with 35 or more employees; and on January 1, 2018 for employers with 20 or more employees. The ordinance places notice, posting and record keeping requirements on employers. The ordinance prohibits against retaliation for an employee’s exercise of rights provided by the ordinance. The OLSE may investigate any possible violations of the ordinance by an employer and bring an administrative enforcement or a civil action against an employer. In addition, the City may bring a civil action in court against an employer for violations of the ordinance. A person or entity may also bring a civil action against an employer after he/she/it provides the OLSE and the City Attorney with written notice and more than 90 days have passed without the City Attorney filing suit or the OLSE providing notice of its intent to bring an administrative enforcement action or a determination that no violation has occurred. The employee may be entitled to reinstatement; backpay; payment of any Supplemental Compensation unlawfully withheld or the amount of Supplemental Compensation unlawfully withheld from the employee multiplied by three, or $250.00, whichever is greater; $50.00 for each employee or person whose rights were violated for each day that violation occurred; injunctive relief; attorneys’ fees and costs.

In sum, San Francisco has expanded protections for employees with greater caregiving responsibilities. If you would like to hear more about these ordinances, Ad Astra Law Group LLP is available to help.
For a link to the text of the ordinances, as well as FAQs, please visit the following websites:

FFWO – http://sfgov.org/olse/family-friendly-workplace-ordinance-ffwo
PPLO – http://sfgov.org/olse/paid-parental-leave-ordinance

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!

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.

Lenovo and Superfish Sued Under The Computer Fraud and Abuse Act.

Written by Keenan W. Ng

It was recently discovered that Lenovo has been selling laptops with preinstalled adware that creates a catastrophic security hole in the web browser leaving users vulnerable to hacks. Superfish, a small company in Palo Alto, develops the adware. Plenty has been written about the technical aspects of the security flaw and more will be written going forward. As the ramifications of the Superfish vulnerability play out in the community, at least two lawsuits* have been filed. More lawsuits certainly will come. One of these cases, Sterling International Consulting Group (“SICG”) v. Lenovo, Inc. and Superfish, Inc.(collectively, “Lenovo”), alleges violations of the Computer Fraud and Abuse Act. SICG seeks class action certification and was filed in the Northern District of California. The problem with Sterling is that the plaintiffs may have a hard time establishing the authorization element of the CFAA.

Allegations

NSF Funds New UCLA Cybersecurity Research Center and Other News

Author: Scripta Ad Astra Staff

NSF Funds New UCLA Cybersecurity Research Center
In news not necessarily related to the law, UCLA just announced that it is starting a cybersecurity research center, thanks to a grant by the National Science Foundation. The Center for Encrypted Functionalities opened on Thursday, July 31, 2014, and is funded by a five-year, $5 million grant from theNSF’s Secure and Trustworthy Cyberspace program. The center is a collaboration among researchers at UCLA, Stanford University, Columbia University, the University of Texas at Austin and Johns Hopkins University. As a proud alumnus, I am happy to hear that UCLA is taking a leading role in developing cybersecurity solutions.

S.D.N.Y. Affirms Order To Microsoft To Hand Over Data Stored Overseas Pursuant To A Stored Communications Act Warrant

Author: Scripta Ad Astra Staff

On Thursday, July 31, 2014, Microsoft lost a challenge to an April 25, 2014 order denying its motion to quash a subpoena issued by the federal government pursuant to the Stored Communications Act (“SCA”) for email communications located on Microsoft servers in the Ireland. Issuing her ruling from the bench, U.S. District Judge Loretta Preska stated that “Congress intended in this statute for ISPs to produce information under their control, albeit stored abroad, to law enforcement in the United States … As [Magistrate Judge James Francis IV] found, it is a question of control, not a question of the location of that information.”

Luckily for Microsoft, Judge Preska stayed the implementation of her ruling so that Microsoft could appeal to the Second Circuit. While we wait for that to occur, it might be worthwhile to go back and examine what Judge Francis’ April 25, 2014 Order said.