The Letter of the Law: July 2012

IN THIS ISSUE:

BUSINESS: Excess Disabled (ADA) Litigation

EMPLOYMENT: Wage & Hour Update: The Department of Labor is Cracking Down!

CONSTRUCTION: Mandatory Arbitration Agreements

Excess Disabled (ADA) Litigation
By: Shane Singh

California businesses have long struggled with "drive-by" Americans with Disabilities Act (ADA) lawsuits brought by "professional plaintiffs" represented by unscrupulous attorneys. Both the Federal and State Legislatures have struggled with finding a balance between providing access to the disabled, as well as protecting business from burdensome lawsuits.

In January 2009, ADA trial attorneys, business groups and advocates for the disabled came up with a compromise, creating the state's Certified Access Specialist (CASp) program. This created certain procedures for businesses to be deemed "compliant." Unfortunately, there are still ADA plaintiff attorneys that send out demand letters in efforts to obtain quick settlements with businesses based on the threat of protracted litigation. Some go so far as to make threats of $4,000 per violation claims, even before filing a lawsuit.

The goal of ADA litigation has to be to gain compliance rather than make "easy money" for certain professional plaintiffs and their attorneys. The State Legislature is now attempting to respond to complaints from businesses.

In a bipartisan effort, Democratic State Senate President Pro-Tem Darrell Steinberg of Sacramento and former State Senate Republican leader Bob Dutton of Rancho Cucamonga have authored Senate Bill (SB) 1186. This bill would ban demand for money letters and would require ADA plaintiff attorneys to give notice of any construction related access "barrier" at least thirty days before the filing of a lawsuit.

This "notice" would allow businesses a chance to fix the alleged barriers before a professional ADA plaintiff can increase his or her damages and attorney fees. Additionally, SB 1186 would protect "mom and pop" shops by requiring landlords to disclose in their leases whether their commercial property is certified in compliance with access regulations. Such small businesses would then know the status of compliance at the property before they enter into a lease agreement.

Lastly, the proposed legislation would resolve disparities between Federal and State access codes. These differences often lead to scenarios where a business complies with State regulations, only to be sued for non-compliance with Federal regulations. This provision will allow local building department officials to make certain that at least newly constructed buildings comply with current Federal regulations in addition to State requirements. Businesses will be able avoid future ADA lawsuits in this scenario.

California has to act now to protect its businesses from out of control ADA lawsuits. SB 1186 offers a reasonable approach to both protect disabled rights, as well as commerce.

Wage & Hour Update: The Department of Labor is Cracking Down!
By: Allyson K. Thompson

Employers, particularly restaurateurs in the Los Angeles area, need to be aware that the Department of Labor ("DOL") is increasing its surprise worksite visits and conducting immediate and unannounced wage and hour investigations. This news comes directly from Alfred Robinson, the acting Administrator of the DOL's Wage & Hour Division.

On April 18, 2012, the Wage & Hour Division issued a press release stating that it is "launching an enforcement and education initiative focused on the restaurant industry in the Los Angeles area to ensure compliance with the Fair Labor Standards Act's minimum wage, overtime, record-keeping and child labor provisions. Under this initiative, the division will be conducting unannounced investigations at restaurants in the San Fernando Valley, Hollywood, West Hollywood, West Los Angeles and other areas of Los Angeles County."

In the past six years, the Division's Los Angeles office found that "72% of all restaurants investigated in its jurisdiction were in violation of the FLSA. Those violations resulted in $2.2 million in minimum and overtime back wages owed to more than 1,400 workers."

Should your company be subjected to an impromptu investigation, be prepared to provide time cards for all of your employees going back a minimum of four years. They may also be requesting to inspect personnel records. The DOL is going to be looking for common violations including not paying for all hours worked, having employees perform work duties "off the clock," and incorrectly designating employees as exempt from overtime. Other violations include paying nonexempt employees a flat salary regardless of any overtime hours worked, as well as paying cash wages completely "off the books," which can lead not only to employees being cheated out of proper minimum wage and overtime compensation, but also to tax liabilities.

Best practices: The take away from this news is that all employers, regardless of whether they are in the restaurant business or not, must ensure that they are properly keeping track of employees' time, including requiring that employees clock out and then back in for their meal breaks. All too often we find that employers are not keeping a record of when employees are taking their lunches. Regardless of whether your company is subject to an investigation by the DOL, if an employee sues you for failure to provide meal and rest breaks, you will lose if you are unable to document that your employees did take a meal break. The obligation is on the employer to demonstrate that they are providing hourly employees with an opportunity to take a duty-free meal break for shifts longer than five hours.

Another best practice is to take a look at salaried employees and ensure that they are properly classified as an exempt employee, (meaning, not entitled to overtime). We caution that this is a fact-based inquiry that requires that you look at all of their job duties and the amount of time that they are performing those job duties. Just because you call someone a "manager" or "supervisor", or just because you pay them a "salary", does not alone mean that the employee is exempt. In the restaurant context, only a designated restaurant manager who manages at least 51% of the time would be considered exempt. Everyone else, from servers, bartenders, hostesses or cooks, regardless of whether you call them a manager or have them conduct training, will likely be considered a non-exempt employee. Non-exempt employees must fit into one of the major recognized exemptions including: administrative, professional, executive, computer professional, or an outside salesperson.

If you have any questions about whether an employee is properly classified, we advise that you seek qualified legal counsel. For more information about the classifications, click here.

Mandatory Arbitration Agreements

By: Brendan J. Coughlin

For anyone considering the purchase of a condominium in California, time can be tantalizing. The time between when a case is argued before the California Supreme Court and when a ruling is issued can also seem like forever for the litigants and other interested parties. And that is just where Pinnacle Museum Tower Association v. Pinnacle Market Development, S186149, hovers right now: waiting for a decision from the Court on whether developers can enforce mandatory arbitration agreements contained in covenants, conditions and restrictions ("CC&Rs") against condominium associations which bring lawsuits for construction defects.

Generally, when parties enter into a contract that includes an enforceable mandatory arbitration provision, they agree to waive their right to a jury trial. Any dispute between the parties will be resolved before an arbitrator.

Pinnacle v. Pinnacle was argued in San Francisco in late May this year, with Chief Justice Tani Gorre Cantil-Sakauye presiding. The case is the culmination of a number of conflicting holdings on the issues at play. Homeowners associations and consumer attorneys argue that at purchase, when buyers agree to CC&Rs, the HOA does not even exist, and therefore cannot be a party to any contract or binding arbitration agreement. Developers and building industry associations counter that our courts are already facing mandatory reductions due to shrinking budgets, making dispute resolution by arbitration a necessary and desired process.

Registration Opens for Newport Beach Triathlon

Registration is now open for the Kring & Chung Newport Beach Triathlon, which is scheduled to take place on October 21, 2012 in Back Bay in Newport Beach, California. The course includes a 1/2 mile swim, 15 mile cycle, and a three mile run.

This year marks the 35th year of the event. Visit www.newportbeachtriathlon.com for more information and to register.

Laura C. Hess Selected for 2012 Rising Stars List

Congratulations to Kring & Chung Partner, Laura C. Hess, for being selected for the 2012 Southern California Rising Stars list. Super Lawyers launched Rising Stars in 1998 to recognize the top up-and-coming attorneys in the state - those who are 40 years old or younger, or who have been practicing for 10 years or less. Today, Rising Stars honors attorneys in California and thirty-five other states across the country.

There are three components to the Rising Stars selection process: the general survey, the research process and the final selection process. Lawyers are instructed to nominate fellow lawyers they have personally observed in action. The attorney-led research team then reviews the credentials of the potential candidates. The lawyers are ranked by point totals and those with the highest point totals are named to the Rising Stars list. No more than 2.5 percent of the lawyers in each state are named to the list.

Anna Greenstin Kudla Presents at NAHREP Seminar

This month, Kring & Chung presented Current Legal Topics to real estate agents and brokers who are members of the National Association of Hispanic Real Estate Professionals (NAHREP). This was a three day conference in Victorville, Rancho Cucamonga, and Palm Dessert.

The conferences were sponsored by Wells Fargo, Chase, and other local lenders. Anna Greenstin Kudla, real estate attorney at Kring & Chung, spoke on real estate disclosures, litigation pitfalls, foreclosures, short sales, and agent duties.

Kring & Chung looks forward to continuing its relationship with NAHREP, and hosting other speaking events. If your agency or association is interested in having an attorney present legal topics to your agents and members, please contact our offices.

John Schroeder Joins Kring & Chung's Irvine, CA Office

Kring & Chung is proud to announce the addition of John Schroeder to our Irvine, CA office. Mr. Schroeder has over thirty years of major trial experience with many trials lasting over twenty days. He is the former General Counsel to the Insurance Contractors of America and the immediate past President and Chairman of the Board of the CHP 11-99 Foundation. Mr. Schroeder has extensive experience in handling both public and private construction matters. He also has extensive experience in inverse condemnation, landslide, Credit Union and financial institutions defense, personal injury and business litigation. Mr. Schroeder is currently on the Orange County Bar Association Fee Arbitration Panel and has served as a Superior Court Settlement Officer in both Orange and Los Angeles for many years.

Kring & Chung Welcomes Christina L. Rogers to its Irvine, CA Office

Christina L. Rogers has joined Kring & Chung's Irvine, CA office as an Associate attorney. Ms. Rogers practice will focus on Estate Planning and Business Transactions. As an experienced estate planner in multiple states, Ms. Rogers has assisted hundreds of families with the successful transition of wealth to the next generation. Ms. Rogers previously served clients in estate planning and business succession planning at both a large international law firm and a large national accounting firm. Her representative estate planning clients include retired individuals, small business owners, successful entrepreneurs, public figures and celebrities.

A ruling in this case is expected in August 2012. At this point, it is anyone's best educated guess on how the California Supreme Court will resolve the conflicting lower appellate court decisions regarding enforceability of arbitration clauses in construction defect actions brought by condominium homeowners associations. There may be a distinction made between original and subsequent purchasers. Or the Court may go further, expanding its decision to directly or indirectly affect the enforceability of other types of arbitration agreements. Does the Federal Arbitration Act control?

These are all considerations for the California Supreme Court in the next few weeks. If you are considering the purchase of a condominium in California, or need an informed update on the enforceability of arbitration clauses in business, employment and insurance contracts, the experienced attorneys at Kring & Chung are available to answer your questions.