Newsletter Archives

The Letter of the Law: April 2016

IN THIS ISSUE:

EMPLOYMENT: The Rights and Implications of Alcoholism in the Workplace

FAMILY LAW: Practicing the Four Agreements in a Divorce

PERSONAL INJURY: Effective Defense against Reptilian Theory: A New Trend of the Plaintiff's Bar to Maximize Injury Awards

The Rights and Implications of Accommodating Alcoholism in the Workplace

By: Kyle D. Kring and Faheem A. Tukhi

In light of the recent lawsuit filed by the University of Southern California's former Head Football Coach, Steve Sarkisian, alleging discrimination against USC based on his alcohol addiction, it is imperative to address what an Employee's rights are if they suffer from alcoholism, and what an Employer must do to protect itself from breaking the law while ensuring their employee is treated fairly.

Under the Americans with Disabilities Act (ADA), an alcoholic is considered to be a person with a disability and is therefore protected by the ADA. Thus, an employer may be required to provide an accommodation to a person suffering from alcoholism. On the other hand, an employer may still discipline, discharge, or deny employment if that person's use of alcohol adversely affects job performance or conduct.

California's laws protecting disabilities such as alcoholism are governed by the Fair Employment and Housing Act (FEHA). Specifically, the Act prohibits an employer from discriminating against an employee based on that employee's disability and the FEHA recognizes alcoholism as a disability. That disability must simply be a "limitation" upon a "major life activity" (unlike the ADA's requirement that the disability be a " substantial limitation") and the Act recognizes "working" as a major life activity. (Cal. Gov. Code § 12926.1(c)). In other words, an employer cannot fire an employee simply because they suffer from alcoholism, and the employer must consequently provide reasonable accommodations.

Similar to the ADA, the California Labor Code (§ 1025) requires a private employer that employs 25 or more employees to reasonably accommodate any employee who wishes to voluntarily enter and participate in an alcohol rehabilitation program, provided that the accommodation does not impose an undue hardship on the employer. Therefore, generally, an employee suffering from alcoholism may join a rehabilitation program without the fear of losing their job. If, on the other hand, an employer's daily operations must substantially change to provide the accommodation, then the employer may have a valid argument to refrain from making the accommodation. To illustrate, Coach Sarkisian alleges in his lawsuit that he was fired despite having obtained permission from USC's Athletic Director to get treatment for his alcoholism and made arrangements with the coaching staff to ensure his departure would not disrupt the team's day-to-day operations.

Notably, the accommodation may overlap with federal law under the Family Medical Leave Act (FMLA) or California law under the California Family Rights Act (CFRA) which guarantees that an employee may take, and an employer must provide, up to twelve workweeks of paid or unpaid leave if an employee is unable to work because of a serious health condition. Of course, there are certain requirements that both the employee and employer must meet to qualify for leave under the FMLA and CFRA. Nonetheless, employers and employees should be aware of this alternative when confronted with the issue of an accommodation or leave for alcoholism.

The California Labor Code (§ 1025) goes on to clarify that an employer may still refuse to hire or discharge an employee who, because of the employee's current use of alcohol, is unable to perform his or her duties or cannot perform those duties without endangering their own health and safety or the health and safety of others. This means that if an employee is currently abusing alcohol and it impairs their ability to do their job, or it jeopardizes their safety or the safety of their colleagues, the employer may validly and immediately fire the employee. To again illustrate using the USC example, the University will likely argue that Coach Sarkisian's current and active alcohol abuse impaired his ability to effectively coach the football players and manage the football staff, evidenced by the team's inability to win games that they statistically should have won by a landslide.

Despite the various federal and state laws and acts, employers and employees should be aware of their rights with respect to alcoholism in the workplace. Employees can rest assured that they have legitimate legal avenues to seek rehabilitation coupled with job security, whereas employers can protect their operation while still treating their employees fairly.

Practicing the Four Agreements in a Divorce

By:

If you've read the book The Four Agreements by Don Miguel Ruiz, you'll better understand this article. If you haven't read the book, I highly recommend it. A summary doesn't do the book justice, but is necessary for this article.

To summarize the overall message of the book, the author posits that if you can live your life in accordance with these four main agreements (i.e., values or rules) then you will be happier and more fulfilled with your life. I not only agree with Don Miguel Ruiz, I can show you how these four agreements can be utilized in the divorce process, or even modified to fit any other career or personal situation.

  • Be Impeccable With Your Word : Meaning, speak with integrity, say only what you mean, avoid using the word to speak against yourself or gossip about others, use the power of your word in the direction of truth and love.

A volatile or emotionally-laden situation, such as a divorce, is rife with opportunities to explode either verbally or physically, and to behave in ways you'll later regret. Some people say that hard times reveal a person's true character. I'm not so sure about that. While I've been surprised by a client's occasional degradation of character, I don't know that I believe that is their true character. Rather, I tend more to believe that when a person is exposed to emotional stress for a longer period of time than they are hard-wired to handle, that stress will find a way to release. It's not their true character unless it manifests in a pattern of behavior.

By committing to being impeccable with your word, you can protect your case, your conscious, your reputation and your dignity during a divorce process. It's so tempting to reciprocate in the verbal mud-flinging and airing of dirty laundry. But who will that help? Neither a judge, nor your attorneys, are going to want to hear about Joe's affair with his secretary or Betty's weight gain and snoring. Protect your privacy and dignity by discussing matters solely with your attorney and allow him/her to decide what facts should be shared on public documents.

  • Don't Take Anything Personally: Nothing others do is because of you. What others say and do is a projection of their own reality, their own dream. When you are immune to the opinions and actions of others, you won't be the victim of needless suffering.

Nothing can feel more personal than going through a divorce. Whether you are the one who filed or not, it feels "gasping for air" personal. Realistically, for the family court judges and staff, you are just item #35 on their day's calendar, and the next day, and each day thereafter, they will have another calendar with 35 items to process. For the attorneys involved, it's a bit more personal, because we all think that our client is right and perfect, but we don't have to live with the decisions on a case. It's not our kids that are going to be involved in that custody arrangement. It's not our retirement accounts that are being subdivided. Truth be told, as invested as we are in a client at the time, we attorneys will eventually move on and that client will become an old memory. That's the nature of the beast. So, protect your psyche during the divorce process by imbedding the idea that nothing others are doing is really because of you. That value will alleviate a lot of needless suffering and drama.

  • Don't Make Assumptions: Find the courage to ask questions and to express what you really want. Communicate with other as clearly as you can to avoid misunderstandings, sadness and drama. With just this one agreement, you can completely transform your life.

Any legal procedure is replete with jargon, procedures and rules with which the average person is ignorant. Clients sometimes fail to ask questions or seek clarification for various reasons. Either because they don't want to appear uninformed, or they don't want to run up the attorney fees, or they just assume that their attorney has things handled. Truth be told, the divorce process actually belongs to the client, the parties, and not to the attorneys or the judge. The parties should understand as fully as possible the what's, why's, where's, and so forth. If you are paying an attorney for their time, use some of that time to educate yourself. Knowledge is power. When you understand the lay of the land, you tend to make better decisions. I'm always impressed by a client that demonstrates participation in their process. When a client assumes ownership of the divorce and asks thoughtful questions, articulates points of view, and values and desires, that impresses me.

And finally...

  • Always Do Your Best: Your best is going to change from moment to moment; it will be different when you are healthy as opposed to sick. Under any circumstance, simply do your best, and you will avoid self-judgment, self-abuse, and regret.

You simply cannot do better than your best, whatever that looks like at the time. If you do your best in any given situation, then you never have to doubt yourself or the outcome. Most couples put a lot of effort into their wedding. They often plan for months or years on each detail, from the rings, to the colors, to the dress, flowers, appetizers, seating arrangements and honeymoon. When they reach their wedding day, they've given their best efforts toward that blessed day. Now with divorce, on the other hand, not so much.

Divorce is not a time to scrimp or become lackadaisical. Since the outcome will affect a good portion of your future, if not the rest of your life, it deserves to be taken seriously and be given your best efforts. What does that look like in the context of a divorce setting? It means to be where you are supposed to be, and be early. It means to communicate with your attorney fully, and timely. It means to comb the attic for documents your attorney requests, if that's what is needed. It means to conduct yourself with dignity and truthfulness. It means to put your children's interests ahead of your own and realize that they love mom and dad. It means to mentally walk in the other party's shoes when you want a certain outcome and ponder how you would want to live with that outcome.

Only you will recognize your best. No one else will know for sure what your full potential was in any given moment. But, if you do your best, you will know. And if you didn't do your best, you will know that too.

Effective Defense against Reptilian Theory: A New Trend of the Plaintiff's Bar to Maximize Injury Awards

By: Merielle Enriquez

There has been a recent trend in the Plaintiff's Bar to utilize what is colloquially known as "Reptile Theory" to maximize injury awards. The strategy is based on a book by David Ball and Don Keenan entitled "Reptile: The 2009 Manual of the Plaintiff's Revolution." The thesis of the book is the reptile's primary instinct of self-preservation. The theory is that a juror's impulse of self-preservation will override logic based on the evidence presented. The book advises Plaintiff attorneys to convert every issue into one of self-protection, which helps to compel the jurors to make their rulings due to a misguided sense of fear for themselves, despite what the evidence has presented. This tactic also influences the jurors to award large verdicts.

An example of this can be found in the context of a motor vehicle case, where a Plaintiff attorney will cross-examine the Defendant driver and ask: "Name three things you would have done differently to avoid the accident" (with an anticipated response by the Defendant that they "would have paid more attention," "drive slower," etc.). Another example is in the context of a product liability case, where a Plaintiff attorney will cross-examine a defendant manufacturer and ask: "What is the worst thing that could happen if a manufacturer fails to design safe products?" (with the anticipated response by the manufacturer that "someone would be injured" or "someone could lose a life.")

Issues of liability and damages must be based on the evidence, rather than prejudicial fears of self-preservation. In many instances, reptilian tactics are pretexts for Plaintiff's counsel to impermissibly invoke the Golden Rule and/or make appeals to the community conscience. In order to effectively defend against such tactics at trial, defense counsel must be trained to recognize such tactics and take measures to prevent such tactics by way of a Motion in Limine, or otherwise.

In Nevada, Golden Rule arguments are prohibited pursuant to Lioce v. Cohen, 124 Nev. 1 (2008). In Lioce, the Nevada Supreme Court stated that attorneys cannot make a Golden Rule argument, which is an argument asking the jurors to place themselves in the position of the Plaintiff. Although Plaintiff attorneys may not explicitly ask jurors to put themselves in the shoes of the Plaintiff under the Reptilian Theory, defense counsel must be aware of such disguised Golden Rule arguments and make the appropriate objections in Court.

Defense counsel must also be ready to argue that reptile tactics should be precluded on the basis of relevancy. Arguments related to generalities regarding personal or community safety are irrelevant and should be excluded. Jurors should only consider the evidence and circumstances presented to them, not hypotheticals regarding "the safest possible environment" as advocated by the Reptilian Theory.

Lastly, defense counsel must be prepared to advocate that such Reptilian testimony is more prejudicial than probative pursuant to NRS 48.035(1). Reptilian tactics tend to inflame the jury and the argument should be made that such testimony would be inflammatory and prejudicial.

Students at Olive Crest Academy Plant School Garden

On April 18th, 2016, Olive Crest Academy students planted their individual classroom gardens for the horticulture program that Kring & Chung, LLP, Orange County Women Lawyers Association and other local businesses helped develop.

While working in their therapeutic school garden and learning about the life cycle of plants, students will gain an understanding of nurturing, problem solving, learning from mistakes, personal responsibility, and compassion. Each classroom selected a garden theme, such as salsa, butterfly, berries, and scratch n' sniff. The students were very enthusiastic and involved in the planting process. We look forward to seeing their gardens grow and the beneficial effects this program will undoubtedly have on the children. Click here for further information.

Olive Crest Academy is a nonpublic, non-profit special education school for grades K-12 that specializes in providing individualized academic instruction to students with unique needs, including developmental and learning disabilities, emotional and mood disorders, behavioral challenges, dual diagnosis, and Autism Spectrum Disorder.

If you are interested in contributing to the ongoing maintenance and curriculum implementation of Olive Crest Academy's horticulture program, please contact Courtney Kring at (949) 261-7700 or ckring@kringandchung.com.

The Letter Of The Law March 2016

IN THIS ISSUE:

EMPLOYMENT: The Cost of Doing Business in California for Garment Industry Employers

FAMILY LAW: Transgender Divorce

EMPLOYMENT: SB 588 Creates Personal Liability for Officers, Directors, and Managing Agents of Employers for Wage and Hour Violations

The Cost of Doing Business in California for Garment Industry Employers

By: Kyle D. Kring and Alis M. Moon

The Division of Labor Standards Enforcement ("DLSE") implements certain requirements for garment industry employers before they may begin operating in California. These strict requirements were put into action with the passage of the Garment Manufacturing Act in 1980, which was in response to the California's Legislature's efforts to protect the wages and health and safety standards throughout the garment industry. Recently, on March 11, 2016, the Department of Industrial Relations published a "Summary of Some Basic California and Federal Employment Requirements for Garment Industry Employers," which summarizes what garment industry employers need to do in order to operate in California.

One of the most onerous and often overlooked requirements is the registration requirement, which states that every business engaging in garment manufacturing must register with the DLSE before doing business in California. The DLSE also imposes a duty on all garment industry employers to ensure that those businesses in which it contracts with are also registered with the DLSE. If a garment industry employer contracts with another garment industry employer who is not registered, the employer - even if registered with the DLSE - will be jointly liable for the labor law violations of the unregistered employer for unpaid wages and penalties, which can be substantial.

For a complete list of the requirements, visit http://www.dir.ca.gov/dlse/Garment-Summary_of_Basic_Req.pdf. If you are a garment industry employer that needs assistance complying with these requirements and California law, please contact us immediately.

Transgender Divorce

"May you live interesting times," is a Chinese curse or proverb, depending upon what authority you rely. Although each generation might proclaim their generation to live in the most interesting of times, I dare say that the millennial transition is turning out to be an ardent advocate and witness to respect for personal rights. This may lead some of us in the 21 st century to look back on civil rights and equal rights with a head scratching pondering of what seems so obvious to us now. The year of 2015 brought the landmark United States Supreme Court decision of In Re Obergefell (Obergefell v. Hughes), more commonly known as Marriage Equality, which summarily holds that no two parties of the same sex (or of any gender or gender identity) shall be deprived of the rights to enter into a legal marriage with all of its benefits and responsibilities. In one admittedly landmark decision, my clientele potentially doubled. Now, as far as legally-protected constitutional rights are concerned, same sex marriages are not to be treated differently than traditional marriages. Insofar as it comes to the divorce process (and unless there is a domestic partnership to dissolve), is the divorce process any different when a transgender party is involved? Let's explore that...

With the metamorphosis of Caitlyn Jenner being broadcast on tabloids and media of all manner, many of us have been able to witness her transition from a biological male and gender-identified male, the infamous Bruce Jenner, to a gender-identified female, Caitlyn Jenner, who is in the process of transitioning to a female in as many aspects as biologically and scientifically possible. We are learning the lingo associated with these transgender individuals and are quickly expanding our legal terminology and processes to encompass and protect their legal rights as well.

If you are interested in this topic enough to be reading this article, let me caution you to make sure that any authority you rely upon is dated after the Obergefell decision which was announced on June 26, 2015. Now, post- Obergefell, each and every state in the United States must recognize the validity of a same-sex marriage or a prior marriage that was valid when entered into. This is essentially now a part of the protection provided by the Fourteenth Amendment to the United States Constitution. Since transgenders are of a biological sex transitioning to a gender-identified sex, how can they not fit into the protections afforded under the Fourteenth Amendment? They do. Regardless of what transitioning is taking place, as long as their marriage was valid when they entered into it, it will continue to be recognized under Obergefell. Any marriage that a transgender enters into after Obergefell will be recognized as valid as long as the state's criteria are met.

So, if the marriage of a transgender is viewed as the same as any other marriage, then a divorce involving a transgender or a same-sex couple will be the same. A uniqueness in California is that, because we had a system in place for domestic partnership prior to Obergefell, any couple that was in a registered domestic partnership in the State of California, will have to dissolve their domestic partnership along with their marriage, should they choose to do so. The domestic partnership is a separate legal entity and continues to be treated separately from marriage and it's step-sister, divorce.

So use caution when googling or researching transgender divorce. Legal information is specific to the state that the author is licensed in (assuming the article is authored by an attorney), and if the information was written before Obergefell then it's no longer relevant from a legal perspective.

SB 588 Creates Personal Liability for Officers, Directors, and Managing Agents of Employers for Wage and Hour Violations

By: Kyle D. Kring

Senate Bill (SB) 588 known as the "The Fair Days Pay Act" went into effect on January 1, 2016. The bill's stated purpose was to enhance the Labor Commissioners ability to enforce California Division of Labor Standards Enforcement (DLSE) judgments. Where a worker wins their case before the DLSE, SB 588 gives the California Labor Commission the right to use any of the existing remedies (such as filing a lien or levy) available to a traditional judgement creditor i.e. plaintiff that prevails in a lawsuit, and to act as a levying officer when enforcing a judgement. In addition, it prevents an employer from closing down its business and reopening under a new name in order to avoid their debts to workers.

Unfortunately, tagged on to the end of this lengthy bill, and not discussed in the legislative history, is a standalone provision that creates personal liability for owners, directors, officers and managing agents of employers for wage and hour violations.

Until the passage of SB 588, there was arguably no individual liability under the Labor Code for state wage and hour violations in California, other than under PAGA (Labor Code 2698, et seq). This meant that employees were not permitted to sue individual managers, officers and directors for the company's violations of provisions of the California Labor Code. SB 588 changed this long-standing rule.

In the very last paragraph of SB 588, a new Labor Code §558.1 was added which, for the first time, creates individual liability for owners, directors, officers, or managing agents of an employer for violations of certain sections of the California Labor Code.

California Labor Code 558.1 provides as follows:

(a) Any employer or other person acting on behalf of an employer, who violates, or causes to be violated, any provision regulating minimum wages or hours and days of work in any order of the Industrial Welfare Commission, or violates, or causes to be violated, Sections 203 (payment of wages on termination of employment), 226 (paystub reporting requirements), 226.7 (meal period premium), 1193.6 (recovery of attorney fees for lawsuits to recover unpaid minimum wage and/or overtime), 1194 (failure to pay minimum wage for all hours worked), or 2802 (reimbursement of business expenses), may be held liable as the employer for such violation.

(b) For purposes of this section, the term "other person acting on behalf of an employer" is limited to a natural person who is an owner, director, officer, or managing agent of the employer, and the term "managing agent" has the same meaning as in subdivision (b) of section 3294 of the Civil Code.

It will take some time for the courts to determine exactly how Labor Code section 588.1 will be applied and interpreted. For now, it is strongly advised that all employers evaluate their wage and hour compliance and ensure that there are appropriate employment practices, liability insurance and/or directors and officers insurance coverage or excess coverage. For smaller individually owned businesses, simply shutting down and starting a new company may no longer be an appropriate strategy to avoid liability for wage and hour violations.

Jai H. Kim Joins Kring & Chung

Kring & Chung welcomes new Associate, Jai H. Kim to its Irvine, CA office. Mr. Kim practices in the areas of civil litigation, business transactions, estate planning, tax law and bankruptcy. Mr. Kim routinely provides business and labor advice to officers and shareholders, represents clients on employee and business disputes, and represents debtors in bankruptcy litigation, providing a new start to business owners and individuals. To view Mr. Kim's full profile, click here.

K&C Helps Develop Olive Crest Academy's Horticulture Program

In conjunction with Kring & Chung, LLP, Orange County Women Lawyers Association, and the support of other community partners, Olive Crest Academy is expanding upon their horticulture program at their nonpublic, non-profit special education school for grades K-12. While working in their therapeutic school garden and learning about the life cycle of plants, students will gain an understanding of nurturing, problem solving, learning from mistakes, personal responsibility, and compassion.

Olive Crest Academy specializes in providing individualized academic instruction to students with unique needs, including developmental and learning disabilities, emotional and mood disorders, behavioral challenges, dual diagnosis, and Autism Spectrum Disorder.

We kindly ask that you assist us in fostering this beneficial program for the students of Olive Crest Academy, by making a monetary donation, volunteering your time, or providing items needed to make this a successful project. If you are interested in getting involved, please contact us at (949) 261-7700.

Requested items: Mobile storage shed, tables, hose and water wand, watering cans, shovels, gardening gloves, bags of potting soil and garden mulch, spring vegetables and flowers, seeds, plant labels, bamboo stakes, tomato cages and green tape

The Letter of the Law: February 2016

IN THIS ISSUE:

FAMILY LAW: Husband Awarded 150% of Retirement Benefits

REAL ESTATE: Homeowner Steps to Prevent El Niño Property Damage

Husband Awarded 150% of Retirement Benefits

Once upon a time, John Peterson met Annette. They were both attorneys and John was smitten by Annette's beauty and intelligence, so he decided he wanted to share his life and surname with Annette. John and Annette married in 1994 and they entered into marital and financial bliss as they embarked on their journey in life together.

In his law practice, John chose a life of solitude as he entered into private practice. He steadfastly made regular contributions to social security through payroll deductions. Annette, equally fastidious, began working for the County of Los Angeles as a Deputy District Attorney. She was exempt from social security deductions as her employment required her to participate in the LACERA defined-benefit retirement plan. Both parties could enjoy a certain level of satisfaction that they were being responsible citizens and marital partners in preparing for their old age.

Fast forward fourteen years and their love for one another was now lost. John and Annette are in divorce court fighting over the division of retirement benefits. John effectively says, "I get all of my social security because it's separate property, and I get half of your (Annette's) retirement plan." Annette effectively replies, "No way John! That's not fair! If I have to share my retirement plan, then I should get an off-set for half of the value of your social security." They continue to duke it out through the trial court and up to the California appellate court. Both the trial court and the appellate court agreed with John, and here's why:

The Social Security Act, 42 U.S.C. § 415(a)(7), which is called the Windfall Elimination Provision, prevents certain employees from receiving either some or all of their previous, or their spouses, social security benefits in certain conditions. In this case, the WEP applies to Annette because she was employed by a governmental agency (the LA District Attorney's Office) whose defined-benefit retirement plan (LACERA) barred its members from contributing to Social Security. See, https://www.ssa.gov/pubs/EN-05-10045.pdf.

Under California law, Annette's defined-benefit retirement plan was community property to the extent the participation occurred during marriage. However, under federal law, the social security contributions and entitlements of John are his separate property. 42 U.S.C. § 401, et seq. Because federal law preempts state law, the Appellate court could not even offset John's social security benefits against Annette's pension benefits. Thus, John was awarded all of his social security and one-half of the community portion of Annette's retirement plan through the County of Los Angeles.

Seemingly unfair, the full case analysis goes into far greater depth than I have summarized (and personalized) above. The relevant laws involved in this case could cause another fact pattern to result in a different decision, depending upon employment and exact factual circumstances.

Not surprisingly, there is currently legislation submitted as HR 711 that seeks to repeal the current Windfall Elimination Provision.

Homeowner Steps to Prevent El Niño Property Damage

By: John Schroeder

Landslide Prevention Tips

We are all being told that the El Niño heavy rains are coming soon! In Southern California heavy rains usually mean landslides. In fact, we have already witnessed some landslides in sensitive areas throughout Southern California. Most homeowners insurance does not cover earth movement. Therefore, it is even more important to protect your property from landslides or earth movement. In this article I will set forth what a landslide is, what areas are prone to sliding, what are the warning signs for a landslide on your property, what steps to take to prevent a landslide and what to do if a landslide occurs.

What is a landslide?

In the simplest terms a landslide is movement of rock, debris or earth down a slope. A geotechnical engineer might add that landslides occur when the resisting forces are less than the driving forces at a given location. Driving forces can include heavy rains, heavy loads at the top of a slope, steep slopes and adding water from pipe breaks or irrigation. An earthquake can also serve as a driving force. Resisting forces include retaining walls, vegetation, structures or soils that resist movement.

What areas are prone to landslides?

If there is a history of landslides on or around your property then it is normally more prone to slide. If there are steep slopes on or around your property it is more prone to slide. Other factors such as recent fire activity that removes vegetation, areas with high concentrated surface water flows, poor drainage, areas where construction has removed buttress material and areas with fractured or sheet rock geology can all make your property more prone to landslides.

What are the warning signs of landslides?

  • The breaking of water or gas lines
  • Unusual noises in your home such as cracking or creaking
  • Local evidence of recent landslides or earth movement
  • Soil pulling away from your foundation or other structures
  • Surface cracking in your soil
  • Windows or doors that stick or won't move>
  • Roads with cracks or bulging in your area

What steps should a homeowner take to prevent landslides?

Make sure roof gutters and downspouts are clear of debris and are connected properly. Test your soil drains to make sure they are free and clear. Make sure your property drains away from your house and toward ground drains or drainage structures such as gutters and storm drains. Check the storm drain entrances to make sure they are free of debris or obstructions. Protect sensitive areas against increases in surface water. Review the drainage patterns from the surrounding properties to insure your property is not being surcharged with unnecessary surface water. Finally, if you have a swimming pool make sure it has a working overflow pump or drain and turn off the automatic filling device.

Call your local government official or neighbor to repair any surrounding areas that will increase your risk before the next heavy rain.

If you have questions about sensitive areas or surrounding property call a licensed Engineering Geologist.

What to do if you have a landslide?

If you believe you are in peril, leave your home immediately and get to a safe location. Over 32,000 people have died from landslides between 2004 and 2010. Mudflows and actual slides can move very quickly. In the recent Mt. Soledad landslide one homeowner came within minutes of being caught in her shower as her house slid down the hill. Do not delay in leaving dangerous areas.

If damage occurs, call a licensed Engineering Geologist and your local government. If you believe that your local government or others caused or contributed to your damage contact an attorney. You should also contact your insurance company immediately and report the damage. Finally, you should act quickly to take steps to prevent or minimize any future damage.

Landslides are complex geologic events that often have hidden or less than obvious causes. In many landslides there is more than one triggering event. These triggering events can be man-made, mother nature, or man-made and mother nature acting together. Expert and legal consultations will be required to determine who or what is at fault. Your local government will almost always blame the weather or soil conditions. The truth is that construction, lack of maintenance or leaking underground pipes may be contributing to the landslide. In complex cases boring or underground testing is needed to determine all the causes. This can be very expensive and should be monitored by your attorney.

Additional Information Sources for landslides:

FEMA at 1-800-621-FEMA

United States Geologic Service at www.USGS.gov

The national landslide Information Center at 1-800-654-4666 and http//landslide.usgs.gov

The Association of Engineering and Environmental Geologist at aegsc.org


Kring & Chung Partners Named to 2016 Super Lawyers List

Kring & Chung, LLP is pleased to announce that Kenneth W. Chung and Laura C. Hess have once again been named to the Southern California Super Lawyers list. This is the sixth consecutive year Kenneth W. Chung has received this honor, and the third consecutive year for Laura C. Hess. Super Lawyers is a rating service of outstanding lawyers from various practice areas who have attained a high degree of peer recognition and professional achievement.

A patented multi-phased selection process includes independent research, peer nominations and peer evaluations. Each candidate is evaluated on 12 indicators of peer recognition and professional achievement. Selections are made on an annual, state-by-state basis with no more than 5% of the attorneys in California being selected as Super Lawyers.

The Letter of the Law: January 2016

IN THIS ISSUE:

EMPLOYMENT: New Employment Laws for 2016

FAMILY LAW: Why a Divorce Attorney is a Good Investment

New Employment Laws for 2016

By: Allyson K. Thompson

2015 was another busy year for the California Legislature when it came to adopting new employment related laws that are effective in 2016. While this list is not exhaustive, it provides an overview of the key legislation employers in California should be aware of.

Bills Related to Discrimination, Retaliation & Whistleblowing

AB 987 - Reasonable Accommodation & Retaliation - This law makes it an unlawful employment practice for an employer to retaliate or otherwise discriminate against a person for "requesting" an accommodation for a physical or mental disability or religious belief or observance, regardless of whether the request was granted.

This bill was sponsored by the California Employment Lawyers Association (CELA) and is in direct response to a recent California Court of Appeal decision, Rope v. Auto-Clor System of Washington, Inc., 220 Cal. App. 4th 635 (2013). According to the Committee analysis, CELA states that, as a result of the Rope decision, courts have dismissed cases where an employee was fired or otherwise discriminated against in retaliation for simply making a request for reasonable accommodation for a disability or religion.

AB 1509 - Whistleblower & Retaliation - This law expands on existing laws to prohibit employers from retaliating against an employee when the employee's family member (who also works for the same employer) engages in whistleblowing. Whistleblowing occurs when an employee suffers adverse employment actions for complaining about unsafe conditions, violations of state or federal laws, or wage theft.

SB 358 - Fair Pay Act - This historic law prohibits an employer from paying any of its employees at wage rates less than the rates paid to employees of the opposite sex for substantially similar work and performed under similar working conditions, except where the employer demonstrates that the wage differential is based upon one or more of the following factors:

  1. A seniority system;
  2. A merit system;
  3. A system that measures earnings by quantity or quality of production;
  4. A bona fide factor other than sex, such as education, training, or experience; or
  5. A business necessity. A "business necessity" is defined as an overriding legitimate business purpose such that the factor relied upon effectively fulfills the business purpose it is supposed to serve.

The bill also prohibits an employer from discharging, discriminating or retaliating against, any employee by reason of any action taken by the employee to invoke in any manner the enforcement of the Act. For example, if a female employee asks to see the pay records of her male counterparts in the same position, the employer cannot terminate or retaliated against the female employee for making this request.

While written "gender neutral," this bill was written to address claims that female employees are paid less for the same or similar job performed by males. This bill also makes it unlawful for an employer to prohibit an employee from disclosing the employee's own wages, discussing the wages of others, or inquiring about another employee's wages if the purpose of the disclosure, discussion, or inquiry is to invoke or enforce the rights granted by this bill.

Kring & Chung recently published a more detailed analysis of this bill. Click here to read more.

Wage & Hour Laws

AB 1506 - PAGA Right to Cure - In a bill helpful for employers, AB 1506 amends the Private Attorney General Act ("PAGA") to allow employers an opportunity to cure several types of itemized wage statement violations before an employee can sue. These violations include a failure to provide employees with itemized wage statements that include the pay period dates or a failure to list the legal name and entity of the payor as often times the employee's employer is not paying the wages, rather another legal entity is.

AB 1513 - Piece Rate - This law significantly affects any employer who has compensated their employees on a piece rate basis for any work performed during a pay period for the last four years. The new law has two main purposes: (1) to set forth "new" requirements for compensating piece rate workers for their non-productive time, including rest and recovery periods, travel time, safety meetings, etc.; and (2) to create an affirmative defense for employers who are currently facing or in the future may face lawsuits for failure to pay piece rate workers for rest and recovery breaks and non-productive time.

This bill requires the itemized wage statements provided to employees, who are compensated on a piece-rate basis, to separately state (1) the total hours of rest and recovery periods, the rate of pay (regular rate of pay), and the gross wages paid for those periods during the pay period; and, (2) the total hours of other non-productive time, the rate of pay, and the gross wages paid for that time during the pay period. The bill also requires those employees to be compensated for rest and recovery periods at the "regular rate of pay" and other non-productive time at the contractual hourly rate in excess of the current minimum hourly wage rate, separately from any piece-rate compensation. The bill defined "other non-productive time" to mean time under the employer's control, exclusive of rest and recovery periods, that is not directly related to the activity being compensated on a piece-rate basis.

The bill further provides that, until January 1, 2021, an employer shall have an affirmative defense to any claim or cause of action for recovery of wages, damages, liquidated damages, statutory penalties, or civil penalties based solely on the employer's failure to timely pay the employee the compensation due for rest and recovery periods and other nonproductive time for time periods prior to and including December 31, 2015, if, by no later than December 15, 2016, the employer complies with specified requirements (basically paying all employees unpaid or underpaid back wages).

Note the bill does not address (1) overtime claims, (2) meal period violations, or (3) claims relating to unlawful employment policies such as failure to advise employees to take their breaks or preventing employees from taking rest and recovery breaks.

Kring & Chung has been heavily involved in assisting contractors, who routinely utilize piece rate to pay its employees, in bringing them into compliance with the requirements of AB 1513.

SB 588 - A Fair Day's Pay Act - Another stab at employers that utilize a piece rate system, SB 588, gives the California Labor Commissioner new mechanisms to collect back wages from employers who have exhausted all appeals for their non-payment of wages and have final judgments owed. The bill would authorize the Labor Commissioner to use any of the existing remedies available to a judgment creditor and to act as a levying officer when enforcing a judgment pursuant to a writ of execution. It requires a business that has an outstanding unpaid judgment against them to purchase a wage bond of $150,000. If it fails to do that, the employer can be subject to a stop work order and a lien at the Labor Commissioner's discretion.

SB 588 also gives the Labor Commissioner the authority to hold individual business owners liable for their company's debts to workers. By applying an existing employment law (Labor Code section 558) to wage claims, responsible individuals can held personally liable. This was done to discourage business owners from closing up their operations and starting a new company and avoiding their debts to employees. The new law also improves collection methods by giving the Labor Commissioner greater flexibility and power in choosing how to secure the assets needed to pay judgments a business owes its employees.

Hiring

AB 622 - E-Verify - E -Verify is an internet-based system that compares information from an employee's Form I-9 to data from U.S. Department of Homeland Security and Social Security Administration records to confirm employment eligibility. There are very specific rules regarding when, where and how an employer can utilize E-Verify in its hiring practices, which is what this bill is clarifying. AB 622 prohibits employers from using E-Verify in a manner that is inconsistent with federal law.

As indicated in the Senate analysis of the bill, AB 622 limits the misuse of E-Verify by prohibiting "unscrupulous" employers from engaging in unjust E-Verify practices against workers and creates financial civil penalties for employers who maliciously use E-Verify to discriminate against their workforce. The penalty is $10,000 for each violation.

AB 202 - Cheerleaders - While this bill may not be of interest to most of our readers, what is important to note is the Legislature continues to take steps to ensure that employers do not misclassify their workers as "independent contractors" when they are really employees, to avoid having to pay employment taxes. This bill requires professional sports teams to classify professional cheerleaders as employees, not independent contractors.

Proper classification of a person as either an employee v. independent contractor or exempt v. non-exempt is absolutely essential. Misclassification can costs employers hundreds of thousands of dollars, particularly if a class action is filed. Kring & Chung regularly provides classification advice and analysis to its clients. If you have concerns whether a particular person is properly classified, contact an employment attorney at Kring & Chung.

Leaves of Absence & Benefits

AB 304 - Amendments to the Paid Sick Leave law - Kring & Chung has extensively reported on the requirements of AB 1522, which was adopted in 2014, but became effective on July 1, 2015, regarding providing all employees 3-paid sick days a year. Since this bill became law, amendments have already been made and passed via AB 304 to address some of the ambiguities of AB 1522. The amendments make some of the following clarifications (for a complete listing of all amendments, you can read the bill in its entirety at www.leginfo.ca.gov):

  1. Specifies that an "employee in the construction industry" means an employee performing work - deleting the reference to "onsite work" in the current provisions of the law.
  2. Specifies that the law applies to an employee who works in California "for the same employer" for 30 or more days within a year.
  3. Provides that an employer may use a different accrual method, other than providing one hour per every 30 hours worked, provided that the accrual is on a regular basis so that an employee has no less than 24 hours of accrued sick leave or paid time off by the 120th calendar day of employment or each calendar year, or in each 12-month period.
  4. Provides that an employer may satisfy the accrual requirements of this section by providing not less than 24 hours or three days of paid sick leave that is available to the employee to use by the completion of his or her 120th calendar day of employment.
  5. Provides that an employer is not required to reinstate accrued paid time off to a rehired employee that was paid out at the time of termination, resignation, or separation of employment.
  6. Provides that if an employer provides unlimited paid sick leave or unlimited paid time off, the employer may satisfy a specified written notice requirement of existing law by indicating on the notice or the employee's itemized wage statement that such leave is "unlimited."

SB 579 - Kin Care and School Activities Leave - Changes were made to the Kin Care law to be in accordance with the Paid Sick leave law addressed above. This bill allows employees to use Kin Care for the same reasons that employees can use Paid Sick leave - to care for not only oneself, but a sick "family member," as defined by AB 1522.

The current School Activities leave allows an employee to take time away from work to attend a child's school activities during the work day. This bill now allows a parent employee to take time away from work to find a school or a licensed child care provider for enrollment purposes.

Miscellaneous

AB 560 - Child Labor - This law adds a section to the Code of Civil Procedure that bars the consideration of a child's immigration status in civil actions involving liability or remedy.

This bills stems from a lawsuit by more than 80 elementary school children against the Los Angeles Unified School District (LAUSD) for alleged sexual misconduct by one of the district's former teachers. Many of the victims in the lawsuit were undocumented. During the litigation, attorneys for the children filed motions to preclude inquiry into the immigration status of the children in the case. In response, the attorneys for the LAUSD requested that the court deny the children's motion based on the holding in Hernández v. Paicius, (2003) 109 Cal. App. 4th 425, 460, which held that if a plaintiff is seeking damages for loss of earnings or lost wages, the plaintiff's immigration status is relevant to the determination of the plaintiff's potential for earning money in the future.

Notably, existing law specifies a number of situations where immigration status is not to be considered, however it did not address protections for minor children or personal injury matters. We have seen this problem in California sweat shops were garment manufacturers employ immigrant minor children and yet do not pay them for minimum wages.

Why a Divorce Attorney is a Good Investment

The statistics vary, but it is noted that between 60 and 70% of the litigants in Family Court (the courts that process divorces and other family law matters) are self-represented, meaning they do not have an attorney. Of that 60 to 70%, about half of the individuals can afford an attorney, but are opting not to hire one. The other half are not able to afford an attorney. So why are litigants choosing to represent themselves if they can afford an attorney? Let's explore the benefits of hiring a divorce attorney and why a divorce attorney is a sound investment.

Any litigant, whether they have an attorney or are self-represented, is expected to know and follow the rules of procedure and evidence. An attorney goes to college for 4 years, and then law school for an additional 3 years, for a total of 7 years of education beyond high school. After graduation from law school, it takes at least 5 years of being in a specific practice field to have a good handle on typical matters. This experience enables an attorney to conduct themselves appropriately in hearings and navigate any unexpected situations, questions from the court, and so forth. That is a total of twelve years of education and experience that an attorney has over a self-represented party.

Next, is the issue of asset protection. If there is a pension that needs to be divided, an attorney will know that a separate domestic relations order will need to be prepared to properly divide that account. Otherwise, the non-pensioned spouse will almost certainly have their community property interest in that pension affected. This is just one of the many issues that can fall through the cracks when a litigant fails to have a professional handling their divorce case for them.

Why do litigants think they can trust the spouse they are divorcing when it comes to equally dividing property? The court puts the onus on the parties to disclose the assets and debts, so an asset can easily be left off the "balance sheet", either intentionally or inadvertently, especially when there are no attorneys involved. If an asset is omitted when an attorney is handling the matter, the omission has the potential to be located, found and disclosed or the attorney can seek court orders to rectify the omission. Why not have it done right the first time?

But what about the belief that a divorce attorney will cost too much or that they just want to rip you off? Our Family Law Courts involve a small circle of family law attorneys and judges. Over the years, we get to know one another and reputations are formed and shared. We know that our reputations are everything. Just off the cuff, I'd estimate that at least 90% of the family law attorneys I practice amongst are ethical, straight-shooting people who value their profession and feel honored and privileged to be able to practice it. Those attorneys (myself included) are not going to "run up a bill" unless the work done justifies the outcome being sought. A good attorney will treat your pocket book as they would their own. We will almost always do a cost/benefit analysis when determining whether to take a certain action by discerning the size of the estate we are dividing versus the cost of the action being contemplated. The other 10% of divorce attorneys unaccounted for could consist of misunderstandings between client and attorney, poor decisions or even rogue attorneys who do put their own pocketbook above yours. They are by far the exception.

So what is your call to action after reading this? Take advantage of those attorneys that offer free consultations and meet with several different attorneys. Come prepared to ask each attorney a string of the same questions so you can compare apples to apples. Then ask some other questions as they occur to you to gauge the attorney's knowledge base and personality. Make sure you comply with the time they allot to a free consultation (mine is 30 minutes) because it is, after all, free. Disclose your concerns to the attorney in advance, and throughout the representation as to how important it is to you that your divorce fees not exceed a certain amount. Don't be afraid to have candid conversations with your attorney about fees and whether actions are necessary or recommended.

I have practiced family law for eighteen years and could not imagine representing myself in a divorce if I didn't know what I know now. I urge all self-represented parties to take the suggestions discussed in this article into consideration.

Congratulations to Managing Partner, Kyle D. Kring on being selected for inclusion in the 2016 Best Lawyers list.

Best Lawyers is the oldest and most respected peer-review publication in the legal profession. The methodology is designed to capture the consensus opinion of leading lawyers about the professional abilities of their colleagues within the same geographical and legal practice area. Best Lawyers employs a sophisticated, conscientious, rational, and transparent survey process designed to elicit meaningful and substantive evaluations of the quality of legal services.

Kring & Chung Holds Men's Clothing Drive in Support of Working Wardrobes and their Camp Pendleton Power Up for Success Event

Kring & Chung is thrilled to be hosting a clothing drive to benefit Working Wardrobes. Working Wardrobes empowers men, women, veterans and young adults overcoming difficult challenges to confidently enter the workforce and achieve success. Their clients become workforce ready by participating in career training, job placement assistance and wardrobe services, in an environment of dignity and respect.

The items needed are men's suits, slacks, blazers, ties, dress shirts, belts and new dress socks. We kindly ask that all donated clothing is in good condition, with no tears, holes or broken zippers. Please provide your donations to Courtney Kring at the Irvine, CA office before February 29 th, 2016. Contact Courtney Kring at (949) 261-7700 if you have any questions.

If you would like to learn more about Working Wardrobes, visit their website here.

The Letter of The Law: December 2015

IN THIS ISSUE:

EMPLOYMENT: Two New Laws Significantly Affecting Piece Rate Employers

EMPLOYMENT: How a Detailed Job Description Can Prevent Violation of California's New Fair Pay

FAMILY LAW: When Spouses are Living "Separate and Apart" for Purposes of Determining When the Community Estate Stops Accumulating

Two New Laws Significantly Affecting Piece Rate Employers

By: Kyle D. Kring

The California legislature recently passed two bills that were significantly amended late in the legislative session. Senate Bill 588 was passed on September 10, 2015 and Assembly Bill 1513 was passed late in the day on the last day of the legislative session, September 11, 2015. Both bills are effective January 1, 2016, and will have a significant impact on employers who have paid employers piece rate compensation anytime over the past four years.

Senate Bill 588

In short, SB 588, A Fair Day's Pay Act, authored by Senate President pro Tem Kevin De Leon, gives the California Labor Commissioner new mechanisms to collect back wages from employers who have exhausted all appeals for their non-payment of wages and have final judgments owed. The bill would authorize the Labor Commissioner to use any of the existing remedies available to a judgment creditor and to act as a levying officer when enforcing a judgment pursuant to a writ of execution. It requires a business that has an outstanding unpaid judgment against them to purchase a wage bond of $150,000. If it fails to do that, the employer can be subject to a stop work order and a lien at the Labor Commissioner's discretion.

SB 588 also gives the Labor Commissioner the authority to hold individual business owners liable for their company's debts to workers. By applying an existing employment law (Labor Code section 558) to wage claims, responsible individuals can held personally liable. This was done to discourage business owners from closing up their operations and starting a new company and avoiding their debts to employees. The new law also improves collection methods by giving the Labor Commissioner greater flexibility and power in choosing how to secure the assets needed to pay judgments a business owes its employees.

Assembly Bill 1513

AB 1513 is a bill that significantly affects any employer who has compensated their employees on a piece-rate basis for any work performed during a pay period for the last four years. The new law has two main purposes: (1) to set forth "new" requirements for compensating piece rate workers for their non-productive time (hereinafter "NPT"), including rest and recovery periods ("R&R"), travel time, safety meetings, etc.; and, (2) to create an affirmative defense for employers who are currently facing lawsuits for failure to pay piece rate workers for the NPT.

Existing law prohibits an employer from requiring an employee to work during any meal or rest or recovery period mandated by an applicable statute or specified regulation, standard, or order, establishes penalties for an employer's failure to provide a mandated meal or rest or recovery period, and requires rest or recovery periods to be counted as hours worked. Existing law establishes the Division of Labor Standards Enforcement in the Department of Industrial Relations for the enforcement of labor laws, including laws related to wage claims. Existing law requires every employer, semimonthly or at the time of each payment of wages, to furnish each employee with an accurate itemized statement in writing showing specified information. A knowing and intentional violation of this provision by an employer is a misdemeanor, as specified.

This bill will require the itemized statement provided to employees compensated on a piece-rate basis to separately state the total hours of compensable rest and recovery periods, the rate of compensation, and the gross wages paid for those periods during the pay period, and the total hours of other nonproductive time, as specified, the rate of compensation, and the gross wages paid for that time during the pay period. The bill would require those employees to be compensated for rest and recovery periods and other nonproductive time at or above specified minimum hourly rates, separately from any piece-rate compensation. The bill will define "other nonproductive time" for purposes of these provisions to mean time under the employer's control, exclusive of rest and recovery periods, that is not directly related to the activity being compensated on a piece-rate basis. Because a knowing and intentional violation of these requirements would be a crime, the bill would impose a state-mandated local program.

The bill provides that, until January 1, 2021, an employer shall have an affirmative defense to any claim or cause of action for recovery of wages, damages, liquidated damages, statutory penalties, or civil penalties based solely on the employer's failure to timely pay the employee the compensation due for rest and recovery periods and other nonproductive time for time periods prior to and including December 31, 2015, if, by no later than December 15, 2016, the employer complies with specified requirements (basically paying all employees unpaid or underpaid back wages).

To qualify for the litigation safe harbor defense, (1) the employer must be a defendant to a lawsuit that is filed on or after March 1, 2014, and (2) an employer who is a defendant in such a lawsuit would be required to do the following:

(1) Pay all its piece-rate employees for uncompensated or undercompensated rest and recovery periods and other miscellaneous NPT for the period of July 1, 2012 to December 31, 2015, using one of the following calculation methods:

(a) Actual sums due plus 10% interest; or

(b) 4% of each employee's gross earnings over the same 42 month period minus any amounts already paid for rest and recovery and other NPT (but such credit not to exceed 15 of each employee's gross earnings in that pay period).

(2) Provide notice of such payments to the Department of Industrial Relations on or before July 1, 2016.

(3) Complete all such payments on or before December 15, 2016 (Note, if the employer cannot locate an employee, payment must be made to the Labor Commissioner pursuant to Labor code section 96.7); and

(4) Provide detailed statements regarding the payments to each employee.

Note the bill does not address (1) overtime claims, (2) meal period violations, or (3) claims relating to unlawful employment policies such as failure to advise employees to take their breaks or preventing employees from taking R&R breaks.

Additional Assembly Bill 1513 Comments/Concerns

  1. AB 1513 doesn't affect overtime or minimum wage compensation requirements.
  2. Rest and recovery and other non-productive time must be tracked separately from piece rate compensation.
  3. Itemized statements required by Labor Code section 226 shall state: (1) total hours of R&R time and the agreed to hourly rate, (2) non-productive time and the agreed to hourly rate. Rest breaks are now required to be paid at the regular rate of pay, not at the contractual hourly rate (in excess of minimum wage) as was previously set forth in the Bluford case.
  4. Non-productive time may be compensated at a rate different than the regular rate of pay as long as it is agreed to in advance (on Notice to Employee) and in excess of the applicable minimum wage.
  5. Contractors can expect to see a significant rise in piece rate wage and hour claims given the attention these two bills will provide employees and attorneys. As such, if you continue to pay workers by piece rate, you must make sure your piece rate compensation system is compliant with all aspects of the law.

What You Should Be Doing

  1. An internal audit with legal counsel experienced in piece rate compensation and AB 1513, to determine if your piece rate compensation plan is legally complaint. Are you properly paying overtime at the regular rate of pay? Are you properly paying for rest and recovery breaks? What is nonproductive time and how are you tracking and paying for nonproductive time? Don't wait. Call us for a consultation and/or audit of your existing piece rate compensation plan including a review of the following documents: (1) Notice to Employee, (2) Time card, (3) Piece Rate pay sheet, and (4) itemized wage statement.
  1. Develop and prepare appropriate documents to prevent class action and/or representative actions.
  1. If you get served with a PAGA claim notice, contact us immediately to insure that you analyze whether to take advantage of resolution strategies that expire after 30 days.

Please call us for an initial consultation.

How a Detailed Job Description Can Prevent Violation of California's New Fair Pay

By: Kyle D. Kring and Faheem A. Tukhi

California has historically proven itself a leader in progressing women's rights and was one of the first states to adopt a statewide Equal Pay Act. Despite this, the California Legislature determined that in 2014, women in California who work full-time make only 84 cents for every dollar a male makes during the same amount of time, which amounts to a staggering $33 billion dollar loss for the state and families. To combat this, California's new Fair Pay Act (Senate Bill 358) - which takes effect on January 1, 2016 - intends to close that gap by modifying existing laws and requiring employers to pay men and women equal pay for "substantially similar" work.

Under existing California law, an employer cannot pay an employee a wage less than what an employee of the opposite sex earns in the same establishment for equal work. (Cal. Lab. Code § 1197.5). The Fair Pay Act therefore amends that law by ensuring that men and women who perform substantially similar work, receive the same wages, even if they have different job titles or they work in different locations for the same employer. This can be concerning because it seems as though virtually any employee whose job title or location differs from a higher paid and similarly situated employee of the opposite sex can file a lawsuit against their employer for discrimination and violation of the Fair Pay Act. "Substantially similar work," however, will be considered as a composite of skill, effort, and responsibility when performed under similar working conditions. For example, the Act seeks to equalize wages of a male "janitor" who is performing the same type of work for the same company as a female "maid".

Under the Fair Pay Act, an employer must show that the difference in pay is based on factors that are reasonable and related to the employee's job, and unrelated the employee's gender. Specifically, an employer must demonstrate that (a) the difference in pay is reasonably based on factors such as a seniority or merit system (e.g., the amount of hours an airplane pilot must fly to qualify as a captain); (b) the quantity or quality of their production (e.g., the standard by which a head chef must prepare food compared to a line cook); or (c) on a business necessity such as a difference in education, training, or experience. The Act defines a "business necessity" as an "overriding legitimate business purpose...that...effectively fulfills the business purpose it is supposed to serve." For example, if a lower paid professor at a university challenged the higher salary of another professor of the opposite sex, the university would have to show that the higher paid professor possesses a more advanced degree, has conducted extensive research in that field, or has taught the subject for a longer period of time.

The California Legislature also included additional safeguards for employees who want to discuss or ask about their wages. Under the Fair Pay Act, an employer cannot prohibit an employee from (1) disclosing his or her own wages, (2) discussing the wages of others, (3) inquiring about another employee's wages, or (4) aiding or encouraging another employee to exercise his or her rights under the Act's provisions. The Legislature indicated that pay secrecy contributes to the gender wage gap because employees cannot challenge wage discrimination that they do not know exists. They went on to say that although California employers currently cannot ban discussions about wages and cannot retaliate against employees for doing so, many employees are unaware of these protections and others are afraid to exercise these rights due to potential retaliation. Therefore, employees may freely discuss their own wages and inquire about the wages of other employees without the fear of being fired.

As a preventative measure, employers should prepare detailed job descriptions for each of their employees. A basic job description includes information regarding the general nature of the work to be performed, some indication of the responsibilities and duties, and the employee characteristics required to perform the job. On the other hand, an effective detailed job description should include an unambiguous job title; whether the position is full-time, part-time, or temporary, and exempt or non-exempt; the essential and specific duties, responsibilities, and functions of the job; the type and extent of knowledge and skill, and physical abilities necessary to perform the job; the scope of the employee's decision-making authority and whether they can hire/fire or supervise other employees; the qualifications (e.g. licenses and skill) of the position; and the physical/geographic location of the job.

Using a detailed job description to be specific about an employee's role will help dispel whether two employees perform substantially similar work. Thus, an employee will know precisely what his or her duties are and the justification for their wages, leaving little room for confusion or a perception of unfairness when a person of the opposite sex earns a higher wage. Employers should also proactively audit their existing employee pay rates and reevaluate the current market rates for certain positions.

California's new Fair Pay Act may be the nation's most aggressive attempt yet to close the salary gap between men and women. Although the Act's intentions are obvious and its rules are clear, employers should seek a legal advisor who can effectively guide them through the process of ensuring that their current compensation policies are compliant with the new Fair Pay Act and ensure that they have documents supporting their compensation policies.

When Spouses are Living "Separate and Apart" for Purposes of Determining When the Community Estate Stops Accumulating

By:

The California Supreme Court has defined the rule as to when a couple is considered separated for purposes of cessation of community property. Prior to the California Supreme Court's definitive "line-drawn-in-the-sand" ruling in In re Marriage of Davis(7/20/2015), the concept of when parties are considered separated might be explained as follows:

As long as one party communicates to the other that they believe the marriage to be irreversibly broken and they intend to live a separate life, and their actions match their words, the parties are separated within the meaning of Family Code section 771. When pressed for more detail, some family law attorneys might offer that spouses can dwell in the same house, but as long as their actions support the fact that at least one party believes them to be separated, then they should be fine - with a caution that the client should not be providing or receiving marital benefits or the separation can be set aside by the court or the other party.

Now, in a post- Davis world, this advice and concept of living separate, but not necessarily apart, has been called into question.

We anticipated this reversal in case interpretation, and the California Supreme Court used the Davis case to do this. In their definitive ruling in In re Marriage of Davis , in which they retraced legislative history circa 1870 to the present, they pronounced their emphatic decision, "we conclude that living in separate residences -is an indispensable threshold requirement‖ ( Norviel, supra, 102 Cal.App.4th at p. 1162) for a finding that spouses are -living separate and apart for purposes of section 771(a)."

Family Code section 771(a) is the statute that determines when community property stops accumulating and separate property starts accumulating. This issue touches nearly every divorce case, and in some cases can be a very costly determination. In a case I previously tried, I successfully argued that a date of separation occurred six years later than husband contended...and I won...even though the parties lived apart for those six years and dated other people. My client gained approximately $300,000 more in assets than she would have, had we lost that argument. That case involved a middle class estate. Imagine that in a high net worth estate, a similar ruling could mean millions of dollars being pushed from one ledger to the other.

I cannot stress enough that the issue of when spouses are living "separate and apart" for purposes of determining when the community estate stops accumulating, can be a very important issue. This is particularly true in high asset cases, or when there has been a windfall, such as a lottery winning. It can also impact a stay-at-home parent who continues to focus on the well-being of the children until the divorce is final.

Due to its potentially grievous impact on unknowing individuals, our California Supreme Court determined that parties are better served if they know the facts that are required in order for a date of separation to protect separate property assets. The courts have grown weary with playing Jenga with litigants' lives as they pluck a fact out of a set of facts and move it to the top of the list as dispositive (in their mind) as to why there was or was not a true separation for purposes of determining the accumulation of separate property. In the past, family law attorneys would caution separated clients to not even acknowledge anniversary dates with their separated spouse. "Do not exchange gifts or cards, and for goodness sake - do not celebrate it over dinner! Do not have sex (together), do your own laundry, cook your own meals, separate your bank accounts-act like a single person! Act like a roommate...you wouldn't ask your roommate to (insert action here)...would you?"

Now, thanks to the Davis ruling, we have a clear test of whether one of the spouses has moved out and away from the residence that was once shared. So, what used to be just one fact to be considered amongst many other facts, it is now a starting point - to wit, are the parties living in separate residences and apart from one another? If so, has one person communicated a desire to have a final break in the marriage? Did their actions and words continue uninterrupted from the original date of separation until the finalizing of the divorce? If the answer is yes to all three questions, then you have a date of separation for purposes of Family Code section 771(a).

I can appreciate the need for a definitive rule that is not subject to mental gymnastics. While I sympathize with the pending litigants whose cases may be turned upside down by the Davis ruling, we believe that having a definitive rule will work out best in the long runfor all parties and their attorneys. It should also serve to reduce attorney's fees to the litigants as the factual minutiae will not be as potentially determinative as it was pre-Davis. However, we also believe that the Davis ruling won't be good law for very long. Revised legislation is currently being contemplated to amend Family Code section 771 to effectuate wording clarifying that the living in separate dwellings is only one factor to consider and not a necessity for a finding as to a date of separation.

But, until the new legislation is formally enacted, Davis is the rule of law.

Allyson K. Thompson Sworn in as New OCWLA President

Congratulations to Kring & Chung Partner, Allyson K. Thompson, on being installed as the incoming 2016 President of the Orange County Women Lawyers Association at last night's OCWLA's holiday celebration. OCWLA is the second largest affiliated bar association in Orange County with over 400 members. Ms. Thompson gave a very nice acceptance speech in front of a large audience of lawyers, judges and justices. As part of its charitable efforts, OCWLA made a significant charitable contribution to Human Options.

Twenty-five Olive Crest Academy Families Receive Thanksgiving Meals

We are excited to announce we reached our goal of providing 25 complete Thanksgiving meal baskets for the families of Olive Crest Academy. A huge "thank you" to our clients, business partners, friends and families who helped support our event. The OCA families were extremely grateful and appreciative of what we were able to provide.

The Letter of The Law: November 2015

IN THIS ISSUE:

Personal Injury: Requests for Admission- A Back Door to Recovery of Attorney's Fees in Personal Injury Cases

Personal Injury: When Howell V. Hamilton Meats & Provisions, Inc. ("Howell") Meets the Uninsured Plaintiff

REQUESTS FOR ADMISSION- A BACK DOOR TO RECOVERY OF ATTORNEY'S FEES IN PERSONAL INJURY CASES

By: Paul T. McBride

Under California law, an award of attorney's fees is typically not available to a prevailing party at trial. The most common exceptions to this rule are statutes authorizing recovery of attorney's fees for particular actions and contracts authorizing recovery of attorney's fees in breach of contract actions. However, in personal injury lawsuits, the loser typically does not pay the winner's attorney's fees.

A rather obscure provision in the discovery sections of the Code of Civil Procedure can provide a back door for recovery of attorney's fees, including in personal injury cases. The provision is Civil Code Section 2033.420, dealing with a party's failure to admit the truth of a matter when requested to do so in a pre-trial Request for Admission.

Under CCP 2033.420, if a party fails to admit the truth of a relevant matter, thus forcing the other side to prove the truth of the matter at trial, the party requesting the admission may obtain a court order requiring the non-admitting party to pay the reasonable expenses incurred in making that proof at trial, including reasonable attorney's fees. The court may award such fees unless it finds that the non-admitting party "had reasonable grounds to believe that party would prevail on the matter." Both plaintiff and defense attorneys should be aware of this provision, in particular, those defense counsel who refuse to admit liability even when it is staring them in the face.

A recent Court of Appeals case, Grace v. Mansourian, illustrates this point nicely. Mr. Mansourian, the defendant, drove his car into an intersection and struck a car driven by Mr. Grace, the plaintiff. Mr. Mansourian told the responding police officer the light was yellow when he entered the intersection. An eyewitness, Ms. Napoli, told the police officer the light was red. She made this statement in the presence of Mr. Mansourian, who responded, "I ran a red light?" Ms. Napoli said, "Yes, you did." Mr. Mansourian did not reply. This conversation was included in the responding police officer's report, who found Mr. Mansourian at fault for the accident.

Mr. Grace sued Mr. Mansourian for the personal injuries he sustained in the accident. His attorney served Requests for Admissions upon Mr. Mansourian requesting Mr. Mansourian to admit 1) that he ran the red light, 2) that he was negligent in doing so, and 3) that his negligent conduct caused Mr. Grace's injuries. Mr. Mansourian denied all three Requests for Admission.

At trial, Mr. Mansourian's attorney told the jury the case was one of credibility. If they believed Mr. Mansourian's testimony that the light was yellow when he entered the intersection, they should find him not negligent. However, if they believed Ms. Napoli's testimony that the light was red, they should find him negligent.

The plaintiffs called the plaintiff, the eyewitness, the investigating officer, and an accident reconstruction expert to prove their side of the case, i.e. that Mr. Mansourian ran a red light. The defense did not designate a liability expert. Instead, they merely put Mr. Mansourian on the stand to repeat his claim that the light was yellow when he entered the intersection. The jury did not believe him. They found him liable.

After trial, Mr. Grace's attorneys moved the court for an award of attorney's fees under CCP 2033.420, arguing that Mansourian had no reasonable basis to refuse to admit that the light was red or that he was negligent. They sought over $170,000 for the attorney's fees Mr. Grace subsequently incurred in having to prove these two facts at trial.

The trial court refused to award attorney's fees to the plaintiff. It held that Mr. Mansourian had the right to have a jury decide his claim that the light was yellow.

On appeal, the trial court's ruling was reversed and the case remanded with instructions that Mr. Grace be awarded the amount of attorney's fees and other expenses he incurred because of Mr. Mansourian's wrongful refusal to admit he ran the red light and to admit he was negligent. According to the Court of Appeals, the evidence against Mr. Mansourian was overwhelming. There was not simply Ms. Napoli's eyewitness testimony, but also that of the accident reconstruction expert and the investigating police officer.

The court stated that it is not sufficient grounds to deny a request for admissions to merely have "some evidence" to contest an issue. Rather, the defendant must reasonably believe he will prevail on the issue at trial. Otherwise, he is simply wasting the court resources and the jury's time, which is exactly what Requests for Admission are designed to prevent. A good faith belief means, it said, "more than a hope or a roll of the dice."

The lesson to be learned from this case for a defense practitioner is to be objective in evaluating liability. If your case is a pure loser, refusing to admit liability can cost your client attorney's fees on top of all other recoverable damages, often doubling or even tripling the client's ultimate exposure.

WHEN HOWELL V. HAMILTON MEATS & PROVISIONS, INC. ("HOWELL") MEETS THE UNINSURED PLAINTIFF

By: Grant R. Mullen

In Bermudez v. Ciolek (No. G049510, filed June 22, 2015, Superior Court Case No. 30-2012-00539759), the California Court of Appeal, Fourth Appellate District, Division Three, held that an uninsured plaintiff's (no medical insurance) unpaid medical bills, substantiated by medical expert testimony regarding the reasonableness and necessity of the medical charges, were properly admitted and were sufficient evidence to support an award of damages.

This case arises from a motor vehicle accident when two vehicles collided at a light controlled intersection. Defendant Ciolek was travelling westbound making a left hand turn. Defendant Heacox was travelling eastbound. Ciolek turned and stopped in front of Heacox. Heacox struck Ciolek's vehicle and veered towards the sidewalk where plaintiff Bermudez was astride his bicycle striking the plaintiff. Bermudez suffered very serious injuries as a result of the accident. Bermudez had no medical insurance at the time of the accident. Bermudez sued both defendants for negligence.

At trial, neither defendant filed a motion in limine to exclude the medical bills and charges. None of these charges had been paid at the time of trial. The parties stipulated to the admissibility (not the reasonableness) of plaintiff's summary of past medical bills totaling $445,430.64. The parties also stipulated to the reasonableness (not just the admissibility) of $15,000.00 in recent medical charges not reflected in Ex. 239. Accordingly, plaintiff's claim for past medical expenses exceeded $460,000.00 at trial. Plaintiff's expert medical witnesses testified (without objection) to the fairness and reasonableness of the medical expenses incurred by plaintiff, up to $414,255.59. Plaintiff's experts found $46,175.41 of the medical charges to be too high, hence not reasonable, so plaintiff argued past medical expenses of $414,255.59 to the jury. Defendants argued that the amounts were not reasonable and disputed the services as medically necessary.

The jury returned a special verdict against Ciolek only, in the amount of $3,751,969. This included past medical expenses of $460,431.00, which was $46,175.41 in excess of what plaintiff's experts testified was fair and reasonable. Ciolek appealed, claiming the verdict was based on insufficient evidence to prove the reasonableness and necessity of the charges and that plaintiff's experts lacked the necessary foundation to show the medical treatment charges were within the "market value" for such medical services.

The Court of Appeal rejected Ciolek's bid for a new trial. But, because $46,175.41 of the judgment was not supported by substantial evidence, the damage award was reduced to $3,706,793.60, with the judgment affirmed as modified and the Court held that (1) the jury verdict finding Heacox negligent but not a "substantial factor" in causing the plaintiff's harm was not inconsistent and was based on substantial evidence; that according to Howell v. Hamilton Meats & Provisions, Inc. (2011) 52 Cal.4 th 541 ("Howell") and its progeny; (2) unpaid medical costs and expenses are admissible when offered into evidence by an uninsured plaintiff (insured plaintiffs can only seek to admit medical expenses paid by the plaintiff or his insurance carrier for the medical services received or still owing at the time of trial) ( Howell, supra, 52 Cal.4 th at p. 566); and (3) the summary of the medical bills and the plaintiff's medical expert testimony concerning the bills was sufficient evidence to support the jury's finding that the medical bills were the reasonable value of the medical services provided. The Court rejected Ciolek's argument that a proper foundation had not been set by plaintiff's experts to give the opinions they gave at trial. Further, the Court found that Ciolek was unable to pursue this argument on appeal because appropriate objections were not made at trial. No motion in limine was filed and no objections or motions to strike were made on relevance or lack of foundation.

This case raises several important issues:

  1. The insured plaintiff can only recover the amount actually paid by the plaintiff or plaintiff's insurer as medical expenses per Howell. The uninsured plaintiff is not so fettered. He can receive all past medical expenses incurred if the jury finds they were reasonable and necessary. Howell recognized that, all other factors being held equal, the amount recovered by an uninsured plaintiff may be higher than that recovered by an insured plaintiff: "There is, to be sure, an element of fortuity to the compensatory damages the defendant pays under the rule we articulate here. A tortfeasor who injures a member of a managed care organization may pay less in compensation for medical expenses than one who inflicts the same injury on an uninsured person treated at a hospital (assuming the hospital does not offer the person a discount from its chargemaster prices). But, as defendant notes, 'fortuity is a fact in life and litigation'"(Id. at 566).
  2. Unpaid medical expenses, standing alone, cannot serve as a basis for a jury verdict awarding economic damages for medical expenses. The plaintiff must lay a foundation, by expert medical testimony that the charges are reasonable and fall within the market value of such medical services and that the subject medical services were medically necessary.
  3. Counsel must depose the medical experts thoroughly and question the expert's foundation concerning the medical charges for reasonableness and necessity. If the expert's opinions concerning reasonable value of the services does not reflect the actual market rates for those services, motions in limine should be filed and objections timely made at trial to preserve the record. Further, counsel should request the trial court to allow questioning of the expert under Evidence Code Sections 402 and 803 to test the foundational underpinnings of the expert's opinions before they are presented to the jury. The trial court is the "gatekeeper" and it is counsel's job to help the "gatekeeper" carry out this function properly.

NEWS AND EVENTS:

THANKSGIVING FOOD DRIVE TO BENEFIT OLIVE CREST ACADEMY

Kring & Chung, LLP's annual Thanksgiving Food Drive will benefit the families of Olive Crest Academy this year. We are excited to be helping such a reputable and deserving organization this holiday season. Our goal is to provide 25 complete meal baskets to Olive Crest Academy families. We invite our clients, business partners, friends and families to make a food or monetary contribution to a great cause. Please contact Courtney Kring at ckring@kringandchung.com if you would like to make a donation. For more information about Olive Crest, please visit their websites at www.olivecrest.org and www.olivecrestacademy.org.

MANAGING PARTNERS NAMED 2015 TOP ATTORNEY'S BY COAST MAGAZINE

Congratulations to Managing Partner's, Kenneth W. Chung and Kyle D. Kring on being recognized as 2015 Top Attorney's by Coast Magazine. Coast Magazine and OCMetro used Avvo to compile their list. Avvo is a Seattle-based company that rates and profiles attorneys nationwide. Avvo's algorithm rates all attorneys on a 10-point scale, factoring in peer endorsements, as well as experience, education, training, speaking engagements, published works and awards.

These dynamic ratings are continuously updated based on new information from attorneys as well as from licensing and disciplinary authorities.

Click here for the direct link to the digital magazine.

SCOTT M. BONESTEEL PROMOTED TO PARTNER

Kring & Chung, LLP is pleased to announce the promotion of Scott M. Bonesteel to Partner in our San Diego office.

With 29 years of experience as a trial lawyer, Mr. Bonesteel's commitment to legal excellence and his dedication to defending our clients earned him this well-deserved promotion to Partner. Since joining the firm in 2010, his practice has focused upon complex product liability, intellectual property, personal injury, product-based class actions and construction defect litigation.

Mr. Bonesteel can be reached at our San Diego office located at:

11682 El Camino Real, Suite 100, San Diego, CA 92130

Phone: (858) 436-0268

Email: sbonesteel@kringandchung.com

The Letter of The Law: June 2015

IN THIS ISSUE:

Bankruptcy: Considering Filing A Chapter 7 Bankruptcy?

Construction Law: Entry of Judgment Pursuant to Terms of Stipulation for Settlement - Avoiding Pitfalls in the Use of CCP Sections 664.6 and 664.7

Personal Injury: Who and What Does Uninsured Motorist Provisions Cover

CONSIDERING FILING A CHAPTER 7 BANKRUPTCY?

By: Andrew Yun

A chapter 7 bankruptcy is more commonly referred to as a "liquidation" or "straight" bankruptcy, meaning that an individual debtor's assets will be liquidated by a court appointed trustee, and the proceeds, if any, will be used to pay off - pro rata - the debts owed to creditors. The debtor will then be declared debt-free, and will be able to wipe the financial slate clean. With that being said, let's explore some questions you may have in deciding whether you should file a chapter 7 bankruptcy petition.

What is bankruptcy?

Bankruptcy is a legal proceeding that allows an individual to be free from debt and to have a fresh start. In other words, if the court grants you a discharge in bankruptcy, you will no longer be obligated to pay your debts. The right to file bankruptcy is enacted under the federal law (not state law) and the cases are handled in the U.S. Federal Bankruptcy Court.

Do I have to do anything once I decide to file a bankruptcy petition?

Within 180 days before you file a bankruptcy petition, you must attend a budget and credit counseling session by an approved credit counseling agency, which can be done in-person, over the telephone or the internet. The agency will issue a certification of completion which you will need in order to file your bankruptcy petition. A list of approved credit counseling agencies can be found on the U.S. Federal Bankruptcy Court's website (www.cacb.uscourts.gov).

How do I file a chapter 7 bankruptcy petition? Where do I file?

In order to file a chapter 7 bankruptcy petition, you must submit to the U.S. Federal Bankruptcy Court Clerk's Office the following:

  • Credit Counseling Certificate of Completion
  • Filing Fee of $335
  • Bankruptcy Petition Documents (which is provided on the court website) (at the very minimum, you need to file the Statement of Social Security Number); Voluntary Bankruptcy Petition; Electronic Filing Declaration (if you file online); and Master Mailing List of Creditors (a list of all your creditors' names and addresses)

The U.S. Federal Bankruptcy Court has courts throughout the nation. If you are a resident of Los Angeles or Orange County, the proper court will be the Central District of California - which has five divisional offices located in Santa Barbara, San Fernando Valley, Los Angeles, Santa Ana, and Riverside.

Are there any fees to file a bankruptcy petition?

The fee to file a chapter 7 petition is $335 for one person or a married couple. In certain situations of hardship, the court will allow the filing fee to either be paid installments or possibly waived; however, you must make such request with the court. The court accepts cash, money orders, or cashier's checks but not credit cards.

Can I repay my friends and family once I determine I am going to file a bankruptcy?

There is a presumption that 90 days prior to your bankruptcy petition you are insolvent. Hence, any acts you perform to sell, transfer, repay or give away your assets will result either in the trustee unwinding the transaction and returning the assets to the estate and/or you will be liable for such "preferential" transfers. Therefore, it is strongly advised that you talk to an attorney prior to any such bankruptcy filing.

What are my obligations after the petition is filed? And, how long does it take to get my fresh start (get a discharge)?

After you file a chapter 7 bankruptcy petition, you will need to attend what is called a 341(a) Creditors' Meeting. This is where the appointed trustee and creditors will have an opportunity to interview you regarding your assets and liabilities. Thereafter, if there are no objections from the trustee and/or creditors, the court will grant you a discharge approximately 80 - 100 days after your petition date.

Do I need to hire an attorney?

It is not necessary to hire an attorney to file a bankruptcy petition BUT it is very advisable to do so to protect your rights and interests afforded to you under the law. For example, you will not be allowed to discharge certain debts, e.g., student loans, child support payments, alimony, taxes, etc., and so bankruptcy might not be advantageous to you. Also, certain personal property may be exempted, e.g., jewelry, professional equipment, clothing, equity in your home, etc., meaning that you will be able to keep it even after you file bankruptcy.

I see lots of ads in the newspaper and internet regarding agencies that provide assistance to prepare the bankruptcy petition for a very low cost - what is this?

There are many non-attorney bankruptcy petition preparers out in the market that help you file the documents; however, they are limited to strictly that - preparing the document. The law prohibits them from providing legal advice, and you should not accept such advice. Filing a bankruptcy incorrectly can cause more harm than good.

If you are considering filing a chapter 7 bankruptcy petition in California, or have bankruptcy related questions, please contact Andrew Yun. In addition to preparing the requisite forms, he can advise you on the best financial strategy for your situation.

ENTRY OF JUDGMENT PURSUANT TO TERMS OF STIPULATION FOR SETTLEMENT - AVOIDING PITFALLS IN THE USE OF CCP SECTIONS 664.6 AND 664.7

By: Grant R. Mullen

You have worked very hard to get a case ready for settlement or trial and the parties are now ready to settle the case in its entirety. You, the parties and counsel have spent hours hammering the general terms of the settlement out and you want to put the terms on the record or in writing quickly, so the settlement can be enforced as a judgment, if necessary, pursuant to CCP Sections 664.6 (non-construction defect matters) and 664.7 (residential construction defect matters). There are essential conditions you must follow if you want to use these code sections successfully to enforce the settlement you worked so hard to reach.

Code of Civil Procedure Section 664.6 states:

"If parties to pending litigation stipulate, in writing signed by the parties outside the presence of the court or orally before the court, for settlement of the case, or part thereof, the court, upon motion, may enter judgment pursuant to the terms of the settlement. If requested by the parties , the court may retain jurisdiction over the parties to enforce the settlement until performance in full of the terms of the settlement." (Emphasis added)

Code of Civil Procedure Section 664.7 states, in pertinent part:

"(a) Notwithstanding Section 664.6, if parties to a pending construction defect action stipulate personally or, where a party's contribution is paid on its behalf pursuant to a policy of insurance , the parties stipulate through their respective counsel, in a writing signed by the parties outside the presence of the court or orally before the court, for settlement of the case, or part thereof, the court, upon motion, may enter judgment pursuant to the terms of the settlement. If requested by the parties, the court may retain jurisdiction over the parties to enforce the settlement until performance in full of the terms of the settlement.

* * *

(c) For purposes of this section, "construction defect action" shall mean any civil action that seeks monetary recovery against a developer, builder, design professional, general contractor, material supplier, or subcontractor of any residential dwelling based upon a claim for alleged defects in the design or construction of the residential building unit." (Emphasis added)

Unless your case is a residential construction defect action, you must use Section 664.6 to enforce your settlement as a judgment.

First, there must be pending litigation when the stipulation or settlement agreement, in writing, or orally before the court is made. If the case has been dismissed before the settlement is properly placed on the record or properly placed in writing, then the court lacks jurisdiction to act in any way whatsoever. (See, Hagen Engineering, Inc. v. Daniel Mills, (2003) 115 Cal.App.4 th 1004, 1007-1008)

Second, the request that the court retain jurisdiction over the case in order to enforce the settlement must be made orally by the parties before the court or in a signed writing by the parties, not by their attorneys, spouses or agents. If after a suit has been dismissed, a party brings a Section 664.6 motion for judgment on a settlement agreement but cannot present to the court a request for retention of jurisdiction that meets all of these requirements, then enforcement must be left to a timely filed separate lawsuit. (See, Caesar Wackeen, et al. v. William Malis, et al., (2002) 97 Cal.App.4 th 429,433 ).

Remember, in non-residential construction defect cases, only the parties, not their attorneys, can secure the protections of Section 664.6.

In regard to Section 664.7, it was enacted to allow counsel to bind the parties and allow the court to retain jurisdiction to enforce insurance funded settlements by judgment. This is known as the "parties themselves" exemption found in construction defect cases. Please note, subsection (c) of Section 664.7, only applies to construction defect actions for residential dwellings. If your construction defect action is commercial, industrial or a mix of residential and commercial uses then you would be wise to follow the requirements of Section 664.6, even if the settlement is funded by insurance proceeds.

Keep an eye on these requirements and you should be able to use these CCP Sections 664.6 and 664.7 as the legislature intended them to be used.

WHO AND WHAT DOES UNINSURED MOTORIST PROVISIONS COVER

By: Melissa Bright

In Nevada, in determining as to whether a claim of injury is covered by the uninsured provision of an insurance policy depends on the interpretation of the uninsured provision. The court will look at the insurance contract in determining what individuals are covered in the provision and what injuries the individual may recover. Further, unless an uninsured motorist provision specifies that punitive damages will be included, punitive damages are not covered in an uninsured motorist provision.

In Allstate, the court determined that the underinsured provision was unambiguous in that it only limited recovery to the injured insureds. Allstate Ins. Co. v. Fackett, 125 Nev. 132, 137; 206 P.3d 572, 575 (2009). Barbara Testa was a fault-free passenger in a vehicle and ultimately passed from her injuries. Id. at 135; 574. Respondent, Deborah Fackett, was Ms. Testa's daughter. The insurance policy stated that Allstate would pay the damages an insured is entitled to recover from the owner or operator of an uninsured auto because of bodily injury sustained. Id. Ms. Fackett argued that she was entitled to a wrongful death action against the driver of the other vehicle; therefore, as the insured, she was entitled to the underinsured benefits for the death of her mother, Ms. Testa. Fackett agreed that she was not injured in the accident.

The court ruled in favor of Allstate. The court determined that the uninsured provision of the policy was unambiguous and comports with the plain language of Nevada's uninsured statutory scheme, therefore it is enforceable. The insurance policy was unambiguous in that it provided coverage to the insured only for bodily injuries sustained as a result of an accident. Fackett was not entitled to damages for the death of her mother, because, the death of her mother was not "bodily injury" of the insured, Fackett.

Further, punitive damages are only included if set forth within the uninsured provision and in no way are punitive damages within the definition of bodily injury. In Siggelkow, the uninsured provision provided that the company "will pay all sums which the insured or his legal representative shall be legally entitled to recover as damages from the owner or operator of an uninsured highway vehicle because of bodily injury sustained by the insured." Siggelkow v. Phoenix Ins. Co., 109 Nev. 42, 44, 846 P.2d 303, 304 (1993). Siggelkow argued that the provision sets forth that the company "will pay all sums" legally entitled to from the uninsured individual. Id. The court ruled that punitive damages are not covered in the uninsured motorist provision because: (a) requiring an innocent party (insurance company) to pay punitive damages circumvents the purpose of punitive damages; and (b) allowing punitive damages to be covered in an uninsured provision would "distort the plain meaning of the uninsured motorist provision limiting coverage to 'bodily injury only'" because "under no construction can the language 'for bodily injury' be read to include punitive damages." Id. (citing State Farm Mut. Ins. Co. v. Belvins, 49 Ohio St.3d 165, 551 N.E.2d 955, 959 (1990). As such, the only way an insured can obtain punitive damages through its carrier from an uninsured provision is if the uninsured provision sets forth that punitive damages are included.

NEWS AND EVENTS:

2015 RISING STAR

Kring & Chung, LLP is proud to announce that Allyson K. Thompson has been recognized by Super Lawyers as a 2015 Rising Star for the third consecutive year. Super Lawyers is a rating service of up-and-coming outstanding lawyers from more than 70 practice areas who have reached a high degree of peer recognition and professional achievement. Each year, no more than 2.5 percent of the lawyers in the state are selected to receive this honor.

Mrs. Thompson's practice consists of employment issues, including sexual harassment, discrimination, wage and hour litigation, and advises employers on how to avoid employment related litigation. She represents individuals and small and large businesses in all aspects of civil litigation. This includes representing employees and defending employers, in lawsuits, class actions, mediations, arbitrations and Labor Commissioner hearings. She also provides counseling to businesses to avoid litigation, including drafting policies, employee handbooks, and providing sexual harassment training.

Mrs. Thompson is a frequent presenter on a wide variety of employment topics and is currently serving as President-Elect of the Orange County Women Lawyers Association and formerly served as the Vice President, Secretary and Board Member.

PAID SICK LEAVE AND PIECE RATE PAY UPDATES

Kyle Kring and Allyson Thompson of our Irvine office recently presented webinars focusing on paid sick leave and piece rate pay to members of CALPASC.

The paid sick leave webinar covered important items relating to the implementation of California's paid sick leave law (AB 1522). Participants received vital information pertaining to options to provide the benefit and associated timelines, best practices, and pitfalls to avoid.

The piece rate pay webinar provided best practices and discussed ways to avoid potentially costly pitfalls relating to piece rate pay.

Employers are strongly encouraged to contact Kyle Kring or Allyson Thompson to ensure they are complying with the piece rate pay system as well as the new paid sick leave law.

CALIFORNIA HR CONFERENCE - JOB DESCRIPTIONS

Kyle Kring and Laura Hess will present, "Job Descriptions - They Are More Important Than You Might Think," at the 2015 California HR Conference taking place at the Anaheim Convention Center on Monday, August 31, 2015 from 10:45 a.m. to 12:00 p.m.

During the session, you will learn the importance of job descriptions as it relates to ADA claims, wage and hour claims (exempt/non-exempt), harassment and discrimination claims, and worker's compensation claims. Attendees will learn about important information that should be included in job descriptions and the reasons for it. The presenters will also discuss practical advice for formulating job descriptions and updating them on a regular basis along with their use as a teaching and evaluation tool for annual or regular performance reviews.

Our attorneys have represented employers in all aspects of employment law. They defend employers against claims for sexual harassment, wrongful termination, retaliation, disability and age discrimination, failure to accommodate whistleblower, gender discrimination, misclassification and unpaid wages.

The Letter of the Law: March 2015

Real Estate Law: How to Clear Title to Real Property - The Basics

Construction Law: Reforms to Construction Defect Litigation Signed Into Law in Nevada

Employment Law: A Parent Corporation May Be Liable for the Nonpayment of Wages By its Subsidiary

How to Clear Title to Real Property - The Basics

By: Lance Adair

California law provides a statutory method of resolving conflicting interests in real property, known as an action to "quiet title." A quiet title action may be brought to establish-or to clear title against-any kind of claimed title or interest in real property. The action is available to anyone who holds an interest or a claimed interest in the property.

Quiet title actions are typically brought to establish or defeat easement claims or to resolve competing claims of legal or equitable ownership. But the remedy is not limited to these more or less straightforward situations. The author of this newsletter recently handled a quiet title case involving disputed rights and obligations arising from the foreclosure of a developer's ownership interest, water rights and development rights in approximately 1,100 acres of land covered by a complex, multi-party development agreement.

There is no specific statute of limitations for an action to quiet title; the applicable limitation period generally is based on the underlying legal theory of relief. However, an action to quiet title against a known adverse claim must be brought within five years of the first assertion of the adverse claim. Any question regarding a possible statute of limitations issue should be brought to the attention of an attorney at the earliest possible time.

A quiet title judgment generally will be binding as against all persons, known or unknown, provided that the procedural requirements of the quiet title statute have been met. If the action is handled properly, the quiet title judgment should result in a clear and marketable title that can be insured by any title insurance company.

A quiet title action must be distinguished from an action to remove a "cloud" on title created by the existence and/or recordation of a particular legal instrument. The proper form of action in that type of case typically will be an action for cancellation or "reformation" of the instrument.

Reforms to Construction Defect Litigation Signed Into Law in Nevada

By: Robert L. Thompson

On February 25, 2015, Governor Sandoval signed into law Assembly Bill 125 which significantly reforms Nevada's construction defect law statute, also known as "Chapter 40." The reforms to the statute have been an ongoing issue in previous legislative sessions over the past 10 years and will have a significant effect on subsequent construction defect litigation in Nevada.

Originally, the purpose of Chapter 40 was to prevent large scale construction defect litigation and frivolous lawsuits during the construction boom in Southern Nevada during the late 1990's and early 2000's. The law placed a requirement that before a homeowner could pursue litigation against a general contractor or subcontractor, they had to serve the contractor with a notice of alleged defects and allow the general contractor up to 90 days to come out and inspect and repair the defect. The original intent was obvious in that it gave the contractor a chance to fix the alleged defect rather than face a lawsuit and allow a quick remedy for the homeowner.

The problem with the statute became clear early on. First, just because a contractor agreed to repair alleged defects, did not mean the homeowner had to agree to accept the repair. In fact, the homeowner could declare that the repair was incomplete and then pursue litigation against the contractor for the original defect allegation and the defective repair. As such, attorneys for general contractors and subcontractors would often have to caution their clients on performing such repairs as to risk additional exposure in future litigation.

The second problem with Chapter 40 was its provision awarding homeowner attorney fees and expert costs. While this seemed like a generous provision at first, it quickly became abused by homeowner attorneys. Even if a contractor came out and performed repairs, they were still given a bill for the homeowner's attorney fees and any costs associated with hiring an expert to identify potential defects. Additionally, this practice was also abused frequently by attorneys who would sign on clients under the impression that they would pursue action for the original defect they complained about only to find out that the experts hired by the attorneys would make numerous (and often unsupported) allegations of defects on the property. For instance, a homeowner who complained about a roof leak and hired an attorney would learn that the attorney hired an architect, a civil engineer, and electrical contractor, and a geological engineer who would come up with over fifty new defect allegations that the homeowner never complained about in the past. These experts were often the same ones retained by the handful of law firms that based their business practice off of these lawsuits. The expert reports were generally the same for each house with the exception of changing the name and address on the report. This resulted is the homeowner being dragged into lengthy litigation which could take up to five years to resolve over issues they had not intended to pursue in the lawsuit.

Assembly Bill 125 provided major reforms to these practices. First, it revised the statute to require homeowners to first resolve any potential remedies with the contractors through any warranty provisions that were provided. In the past, homeowner attorneys would bypass this measure and just serve a Chapter 40 notice and then proceed to litigation (often within 2 years of the home being built). This will be beneficial to the homeowner because contractors generally have an entire department in their company to handle warranty claims and they can be resolved quickly. Second, the bill abolished the attorney fees and costs provision. Now, the homeowner will have to hire their own attorneys and experts, which will reduce the numerous amount of frivolous allegations that were often added to the original homeowner complaint. Finally, the statute reduced the time to bring a construction defect lawsuit from ten years to six years which is much more in line with Nevada's statute of limitations for other tort and contract actions.

With the elimination of the attorney fees and costs provision, the attorneys for the homeowners will be more inclined to only pursue litigation in clear cut cases where there are actual defect allegations. This is also in line with several other tort statutes in the country which require each side to bear their own attorney fees and costs. Furthermore, with the risk of litigation being reduced, attorneys for the contractors will be more inclined to advise them to go forward with making the repairs to any alleged defects. This end result will be the homeowner having the original defect repaired and the contractor avoiding years of large scale litigation. Essentially, Chapter 40 will be more in line with its original intent which was to ensure a quick and effective remedy for homeowners who have defect claims and reduce the amount of frivolous litigation.

A Parent Corporation May Be Liable for the Nonpayment of Wages By its Subsidiary

By: Alis Moon

In Castaneda v. Ensign Group, Inc., (2014) 229 Cal.App.4th 1015, plaintiff, a former employee of Cabrillo Rehabilitation and Care Center ("Cabrillo"), filed a class action against Cabrillo's parent company, The Ensign Group, Inc. ("Ensign") for nonpayment of minimum wages and overtime wages.

The employee alleged that the parent corporation was his employer because: (1) it owned and controlled Cabrillo; and (2) it controlled the training, supervision, work requirements, work condition and employee benefits for the employees who worked at Cabrillo.

In deciding whether Ensign could be liable as a joint employer, the Court of Appeal pointed out that an entity that controls a business enterprise may be an "employer" even if it did not "directly hire, fire or supervise" the employees. Multiple entities may be considered employers where they "control different aspects of the employment relation." For example, when an entity such as a temporary employment agency hire and pays an employee, while an entirely different entity supervises the employee's work, both entities can be considered that employee's "employer."

Ensign argued that it was not plaintiff's employer as it is purely a holding company that has no employees and is not engaged in the direction, management or control of Cabrillo or its employees. Ensign even introduced a written agreement entered into with Cabrillo, stating that Cabrillo's employees were its "own" employees.

Plaintiff, on the other hand, argued that Ensign did in fact exercise control over Cabrillo's operations and employees. It was undisputed that Ensign owned all of Cabrillo's stock. Plaintiff introduced evidence showing that Ensign exercised control over Cabrillo's workplace policies, and provided equipment and computer systems, including employee timekeeping systems for Cabrillo. All of Cabrillo's new hires were shown Ensign "policy and training videos," Ensign had the ability to discipline Cabrillo's employees, and Ensign handled the traditional employee benefits including medical, dental, vision, and 401(k) savings plans for all of Cabrillo's employees.

After weighing the evidence, the Court of Appeal concluded that a trier of fact could reasonably infer that Ensign was plaintiff's employer. Thus, even though Ensign was merely a corporate parent with no employees, it could nevertheless be liable for its subsidiary's failure to pay overtime and minimum wages under the joint employer theory.

This case emphasizes the need for companies to be cautious in maintaining separate, distinct and independent corporate structures in order to avoid joint employer liability.

NEWS AND EVENTS:

Jon J. Carlston Joins the Las Vegas, Nevada Office

Kring & Chung would like to welcome Jon Carlston to the Las Vegas, Nevada office. His litigation-based practice focuses in the areas of commercial, property, landlord/tenant, personal injury, and family law disputes. Mr. Carlston began his law career as a judicial law clerk for a number of Clark County, Nevada, judges before moving on to private practice. Mr. Carlston handles all facets of case management and litigation, including mediation, arbitration, trial, and appeal. He is accomplished at litigating a wide variety of cases for both businesses and individuals.

2015 Global Awards Recipient

Corporate LiveWire has selected Kring & Chung, LLP as a 2015 Global Awards recipient in the area of Labor and Employment. The Global Award recognizes businesses that display excellent standards and incredible performance across the globe. Corporate LiveWire's team of journalists work to provide business professionals and individuals in the corporate and business community with information on the latest news and developments around the world.

SCORE Workshop - Avoiding Employment Related Litigation

Partner, Allyson Thompson of our Irvine, CA office will be presenting a workshop on how to avoid employment related litigation from 5:00 p.m. to 8:00 p.m. on March 24, 2015 at Lake Forest City Hall located at 25550 Commercentre Drive, Lake Forest, CA 92630. This workshop covers the potential pitfalls of employment issues and how these mistakes can lead to costly litigation. Topics include the hiring process and avoiding discrimination; employee handbooks; wage and hour issues; overtime and meal/rest breaks; handling internal complaints; discipline and performance reviews; independent contractor vs. employee; and wrongful termination. A question-and-answer session will follow her presentation. There is no cost to attend the workshop.

Score Seminar - Common Legal Questions for Start-up Businesses

Matthew A. Reynolds of our Irvine, CA office will be conducting a workshop on April 16, 2015 from 6:00 PM to 9:00 PM regarding common legal questions for start-up businesses. New business owners often have questions regarding the formalities required to get their business off the ground. This seminar assists the small business owner in determining the best legal structure for their business. In addition, the seminar addresses the common types of contracts small business owners encounter and provides attendees with tips for entering contracts. Finally, the seminar will also touch on protecting the intellectual property of a small business. The workshop will take place at Fullerton Public Library, 353 W. Commonwealth Ave., Fullerton, 92832. There is no cost to attend the workshop.

The Letter of the Law: February 2015

IN THIS ISSUE:

REAL ESTATE LAW: How to Partition Real Property - The Basics

REAL ESTATE LAW: Are Co-Tenancy Agreements Enforceable

NEVADA LAW: Nevada's Newly Established Intermediate Appellate Court

How to Partition Real Property - The Basics

By: Lance Adair

It is common for two or more individuals or business entities to hold title to real estate as co-owners, also known as "tenants in common." In this type of ownership, each party owns an undivided interest in the whole. This may work well as long as the parties agree on what to do with the property. But what happens when the relationship sours or the parties otherwise reach an impasse?

California law expressly provides that a co-owner of real property is entitled to separate the common interests. The means by which this is done is an action to "partition" the property. Except in the relatively uncommon case of a waiver or some other equitable defense, the right of partition is an absolute right.

A partition action may be used by parties who hold successive estates-such as a life estate and a remainder. Partnership property may also be partitioned.
Some of the basics of a partition action are:

  • Each co-owner has the right to seek a court judgment partitioning the property - no special reason and no special proof is required.
  • There are different methods of partitioning property, each one suited to particular circumstances. Unless the property is reasonably capable of being physically divided in some fair and equitable fashion, the method most likely to be used is a partition by sale. In a partition by sale, the property is sold at the best possible price and the proceeds of sale divided among the parties according to their respective ownership interests. Another method of partition is for one or more of the co-tenants to acquire the property of another co-tenant at its appraised value.
  • Partition actions can be-and typically are-resolved by agreement of the parties. While there are few guarantees in life or in the law, the co-owner who is unreasonable may become more reasonable when he or she realizes that a partition by sale (or by some other method) is inevitable. With a reasonable degree of cooperation, the parties can set the terms and other parameters of the sale in advance. If the parties are unable to agree, the court can appoint a "referee" to sell the property.

Again, these are some of the more basic concepts of a partition action; there is much more complexity in the law. The key is to find a legal advisor who can efficiently guide you through the process.

Are Co-tenancy Agreements Enforceable?

By: Roland Amundsen

A recent decision by the California Court of Appeal answers this question to a large extent, and the answer is... it depends!

In Grand Prospect Partners LP v. Ross Dress for Less, Inc. (2015) 182 Cal. Rptr. 3d 235, the Court looked at a co-tenancy clause agreed upon by two sophisticated parties to a commercial retail lease, and addressed the issues of whether the clause was unconscionable and/or an unenforceable penalty. It found that despite the relatively equal sophistication of the two parties, under some circumstances, the co-tenancy agreement can constitute an unenforceable penalty and be unenforceable, although it may not be unconscionable.

Ross Dress for Less (Ross) signed a commercial lease with a sophisticated landlord called Grand Prospect Partners LP (landlord) wherein Ross agreed to lease space at a commercial retail shopping center, contingent on the "anchor" tenant, Mervyn's, being a co-tenant. Not long after the lease was signed, Mervyn's filed for bankruptcy and later closed their store at that retail shopping center location. Ross exercised its rights under the lease and did not move into the retail space and did not pay rent. The landlord sued, alleging that Ross was obligated to pay rent for the full 10 year term of the lease because the lease terms authorizing rent abatement and termination were unconscionable or, in the alternative, an unreasonable penalty and thus unenforceable.

The landlord won at the trial level with a jury verdict of roughly $3.8 million, comprised of $672,100 for unpaid rent and approximately $3.1 million in other damages. Both parties appealed and the Court of Appeal affirmed in part and reversed in part, reducing the damages to $672,100. This represented the unpaid rent only.

The Court of Appeal noted that there was no unconscionability because such a finding requires both procedural and substantive unconscionability. Because both parties were sophisticated and experienced in the negotiation of commercial leases, and the terms were reached by way of a free and unpressured choice, there was no procedural unconscionability in the transaction. The agreement was not unenforceable on unconscionability grounds.

The Court also noted that as a general rule, a contractual provision is an unenforceable penalty if the value of the property forfeited under the provision bears no reasonable relationship to the range of harm anticipated to be caused if the provision is not satisfied. In this case, the Court held that there was no reasonable relationship between $0 of anticipated harm due to Mervyn's not being open and the forfeiture of $39,500 per month rent. Ross failed to show what harm would arise in the event that Mervyn's was not a co-tenant. Because Ross did not show what damages they anticipated, the Court concluded that the rent abatement provision was an unenforceable penalty. On that basis, the Court awarded the landlord the amount of the unpaid rent.

The lesson to be learned from this particular case is that if you are the landlord, you should consider whether to allow such a co-tenancy agreement at all. If you are a tenant and want to enter into a lease conditioned on a co-tenancy, make sure that you can prove a reasonable relationship between the value of the property being forfeited and the range of harm to be caused if the provision is not satisfied.

Nevada's Newly Established Intermediate Appellate Court

By: Jon J. Carlston

In November 2014, voters in Nevada voted to amend the Nevada constitution to create an intermediate appellate court. Until the passage of this amendment, Nevada was one of ten states that did not have an intermediate appellate court. The Nevada Supreme Court was the only appellate court in Nevada hearing and deciding appeals from final judgments entered by Nevada's 82 district court judges. As a result, Nevada's Supreme Court was one of the busiest in the nation. Each of its seven justices was averaging approximately 333 cases per year - more than three times the American Bar Association's ("ABA") recommended 100 cases per year.

Historically, the Nevada Supreme Court has had the highest number of filings of all states without an appellate court. This backlog forced the Nevada Supreme Court to resolve most appeals through unpublished written orders that only bound the parties to the appeal. The lack of published opinions has arguably led to the same issues being litigated repeatedly. The new intermediate Court of Appeals is designed to decide the more routine cases, thus allowing the Supreme Court to issue more published opinions affecting or modifying Nevada's existing laws. In the past, the Nevada Supreme Court typically issued precedent-setting published opinions in 3 to 4 percent of all appeals. This Court of Appeals should also provide for speedier resolution of appeals. Currently, it takes approximately 18 months for an appeal filed in Nevada to be decided.

The new Court of Appeals will use the "push-down" model. Appeals filed in Nevada will continue to be filed with the Office of the Nevada Supreme Court Clerk, and will remain assigned to the Supreme Court until they are ready to be decided. The Supreme Court will then decide which matters should be assigned to the Court of Appeals. Approximately 700 cases each year will be assigned to the three judges on the Court of Appeals. The Supreme Court will establish the types of matters to be reviewed by the lower court. It will also be possible to seek review of a decision made by the Court of Appeals to the Nevada Supreme Court. However, the Nevada Supreme Court retains the sole discretion to accept petitions for review, and such review will only be granted in extraordinary cases. This deflective model will allow the Supreme Court to speed up the appeals process by assigning cases to the lower court, while retaining those cases that raise questions of first impression or issues of important public policy. This will result in more published opinions that establish guidance on Nevada law, improved decisions in the district courts, and improved access to the appellate process.

This Court of Appeals will consist of three judges, but the Nevada Legislature law increase the number of judges. The initial three judges were appointed by a selection process and will serve terms of two years. After this initial two year term has concluded, the judges of this court will be elected in the general election to serve a term of 6 years, similar to all judges in Nevada.

The newly established intermediate court began its work in January 2015. Its initial members are the Honorable Justices Abbi Silver, Jerome "Jerry" Tao, and Michael Patrick Gibbons. The Court is based in Las Vegas, Nevada, and is housed inside the Regional Justice Center in downtown Las Vegas.

NEWS AND EVENTS:

Announcing a New Office Location in Temecula, CA

We are pleased to announce the opening of our new Temecula office, located on Old Town Front Street, close to the new Temecula Civic Center. Lance Adair, a seasoned litigator and business advisor, will be heading up the Temecula office. Lance is rated "AV-Preeminent"© by Martindale-Hubbell (their highest peer-review rating). His practice will continue to emphasize real estate, land use and construction, including both transactions and litigation.

Kring & Chung Lawyers Named to 2015 Southern California Super Lawyers List

Kring & Chung, LLP is please to announcement that Kenneth W. Chung and Laura C. Hess have once again been named to the Southern California Super Lawyers list. This is the fifth consecutive year Kenneth Chung has received this honor, and the second consecutive year for Laura Hess. Super Lawyers is a rating service of outstanding lawyers from various practice areas who have attained a high-degree of peer recognition and professional achievement.

A patented multiphased selection process includes independent research, peer nominations and peer evaluations. Each candidate is evaluated on 12 indicators of peer recognition and professional achievement. Selections are made on an annual, state-by-state basis with no more than 5% of the attorneys in California being selected as Super Lawyers.

SCORE Workshop - Avoiding Employment Related Litigation

Partner, Allyson Thompson of our Irvine, CA office will be presenting a workshop on how to avoid employment related litigation from 5:00 p.m. to 8:00 p.m. on March 24, 2015 at Lake Forest City Hall located at 25550 Commercentre Drive, Lake Forest, CA 92630. This workshop covers the potential pitfalls of employment issues and how these mistakes can lead to costly litigation. Topics include the hiring process and avoiding discrimination; employee handbooks; wage and hour issues; overtime and meal/rest breaks; handling internal complaints; discipline and performance reviews; independent contractor vs. employee; and wrongful termination. A question-and-answer session will follow her presentation. There is no cost to attend the workshop.

The Letter of the Law: January 2015

IN THIS ISSUE:

EMPLOYMENT LAW: Year in Review - 2014 Key Employment Legislative Laws

EMPLOYMENT LAW: Blurred Lines: Maintaining Separateness Between Companies

INSURANCE LAW: Excluded Drivers in Nevada

Year in Review - 2014 Key Employment Legislative Laws

By: Allyson K. Thompson

Employment related legislation was big in 2014. The Legislature once again passed a number of pro-employee bills that are worth reading about. While this list is not exhaustive, it provides an overview of the key legislation employers should be aware of. In case you are tempted to skip this article, remember that the State of California expects employers to know and understand all laws that are passed that may affect your employees. So keep reading!

Bills Related to Discrimination

AB 1660 - Drivers' Licenses & Non-Discrimination - The DMV is now required, per AB 60, to issue a driver's license to individuals that are unable to submit satisfactory proof of the individual's right to be present in the United States, assuming of course that the individual meets other qualifications for licensure and provides proof of his or her identity and California residency. Licenses issued under AB 60 will say on the license, "Federal Limits Apply."

AB 1660, makes it a violation of the Fair Employment & Housing Act ("FEHA") for an employer to discriminate against an individual because he or she presents a driver's license that indicates "Federal Limits Apply." Discrimination on the basis of national origin now includes, but is not limited to, discrimination on the basis of processing a driver's license granted under these provisions. Employers must continue to comply with the federal Immigration & Nationality Act by only accepting documents that meet with the requirements set forth on Form I-9.

AB 1443 - No Discrimination of Unpaid Interns - Per the FEHA, individuals seeking and obtaining employment should be free from discrimination or harassment based on age, race, religious creed, color, ancestry, national origin, disabilities, medical and genetic conditions, marital status, sex, gender, including gender identity and expression, sexual orientations and military status.

This law expands the applicability of the FEHA to unpaid internships. Unpaid interns will now be subject to the protections against discrimination or harassment, including during the hiring process, termination and course of employment.

AB 2053 - Education & Training Regarding Abuse Conduct - Hopefully employers with more than 50 employees are well aware of the law requiring them to conduct sexual harassment training for its supervisors. Effective January 1, 2015, employers will have to include anti-bullying training within the 2-hour training curriculum. The new law defines "abusive conduct" as:

. . . conduct of an employer or employee in the workplace, with malice, that a reasonable person would find hostile, offensive, and unrelated to an employer's legitimate business interests. [It] may include repeated infliction of verbal abuse, such as the use of derogatory remarks, insults, and epithets, verbal or physical conduct that a reasonable person would find threatening, intimidating, or humiliating, or the gratuitous sabotage or undermining of a person's work performance.

Kring & Chung can provide this mandatory training to your supervisors. Please contact Allyson K. Thompson for more information about the specialized training session.

AB 2288 - Child Labor Protections Against Discrimination - AB 2288 strengthens current law to protect children from child labor abuses by providing additional remedies. Specifically, the statute of limitations for a child labor violation will be tolled until the child reaches the age of 18. AB 2288 specifies that this provision is declarative of existing law, meaning it applies retroactively. Also, AB 2288 allows treble damages, the recovery of three times the amount of actual financial losses suffered. Finally, this new bill will strengthen civil penalties in class "A" violations, the most serious violations and will increase the civil penalty from $5,000 - $10,000 to $25,000 - $50,000 for each labor practice violation involving minors less than 12 years of age.

AB 2617 - Waiver of Civil Rights - Under existing law, individuals are protected from any violence or threat of violence committed against them due to their political affiliation, position in a labor dispute, or any other protected category.

AB 2617 prohibits a person from requiring a waiver of these protection as a condition to enter into a contract for goods and services, including the right to file and pursue a civil action or complaint with any public prosecutor, the Department of Fair Employment & Housing (DFEH) or any other governmental agency. Any waiver of these protections must be made knowingly and voluntarily in writing, and expressly not made as a condition of entering into the contract or as a condition of providing or receiving goods or services.

This bill only applies to contracts entered into, altered, modified, renewed, or extended after January 1, 2015. This legislation does not apply to general discrimination claims under FEHA, but only to waivers under specified civil rights statutes, such as the Ralph Civil Rights Act or the Bane Civil Rights Act.

Leaves of Absence

Perhaps the hottest and most publicized employment related bill is AB 1522, commonly referred to as the Healthy Workplaces, Healthy Families Act of 2014. This act now requires employers to provide three paid sick leave days a year. California and Connecticut are the only two states in the nation that now make it a law to provide paid sick days. Kring & Chung advises that employers look at their current sick leave or PTO policies to make sure that they are in compliance with the new law.

AB 1522 - Paid Sick Days - Effective July 1, 2015, employers are now required to provide three (3) paid sick days (up to 24 hours) to all employees working in California. While the Act establishes minimum requirements, employers have the option to provide more time off than the minimum required three days. This Act applies to all employers, regardless of size. It also applies to all employees, regardless of whether they work part-time or full-time, exempt or non-exempt. Specifically it applies to employees that have worked in California for 30 or more days within a year from the commencement of employment. That means that temporary or seasonal employees may be covered if they spend enough time working in California. Under the Act, an employee can use paid sick leave for the diagnosis, care, or treatment of an existing health condition, or preventive care, for themselves or a defined family member. Remember, that if an employee asks to use sick leave, employers cannot ask the specific reason why. To do so may lead to exposure for discrimination.

Employers can choose three options in calculating and satisfying the requirement to provide employees with paid sick leave: 1) Statutory Mandated Accrual Method; 2) Lump-Sum Approach; or 3) the Employer Policy Meeting the Minimum Requirements. The latter two methods are the easiest to incorporate. The following is a very brief summary of the three methods. Please seek legal counsel for more detailed information about the three methods.

1) Statutory Mandated Accrual Method: Under this method, an employee earns one hour of sick pay for every thirty (30) hours worked. Eligible employees will begin to accrue on July 1, 2015. Both regular and overtime hours are counted toward accrual. Policies that don't permit accrual of paid sick leave during the introductory period are not allowed. Any accrued but unused time must carry over to the following year of employment. However, an employer can cap the employee's total accrued amount at 48 hours or six days. Important to note, an employer does not need to pay out accrued but unused sick leave when an employee leaves employment, unless the employer wraps the paid sick leave days into a paid-time off (PTO) program.

2) Lump Sum Method: With this method, the employer grants the full amount of leave, three days or 24 hours at the beginning of each year. This method takes out the painstaking time and attention that the accrual method requires. If using a lump-sum method, carry over is not allowed. There is no requirement to pay out any unused leave at the end of the employment.

3) Employer Paid Leave and PTO Plans Meeting Minimum Requirements: This method applies to employers that already have a paid sick leave, PTO or other leave policy, that covers the requirement of at least three paid leave days. If an employer already provides for at least three paid leave days, employers do not have to provide for any additional time in order to comply with the new law.

Wage & Hour Laws

AB 1723 - Waiting Time Penalties Available to Citation by Labor Commissioner - Currently, the Labor Commissioner lacks the statutory authority to recover "waiting time" penalties as part of a citation for a minimum wage violation. Waiting time penalties occur when an employer willfully fails to pay any wages of an employee who is discharged or who quits. The wages of the employee continue as a penalty for up to 30 days.

AB 1723 provides that, in a citation by the Labor Commissioner for failure to pay minimum wage, an employer who fails to pay the minimum wage shall be subject to any applicable "waiting time" penalties under existing law in addition to existing civil penalties, restitution of wages, and liquidated damages.

AB 2074 - Three-Year Statute of Limitations on Liquidated Damages Claim - Existing law authorizes employees to bring a civil lawsuit seeking liquidated damages for failing to pay minimum wage. Liquidated damages are "an amount equal to the wages unlawfully unpaid and interest." However, an issue arose in deciding how back the employees' claims stretch. A claim for unpaid wages has a three-year statute of limitations while a claim for penalties is subject to a one-year statute of limitations.

AB 2074 provides that a claim for liquidated damages arising out of an employer's failure to pay minimum wages is subject to a three-year statute of limitations.

SB 266- Prevailing Wage Determination - Existing law seeks to streamline the determination process for public works projects to ensure that workers receive the legally mandated prevailing wage.

SB 266 clarifies the procedure by outlining the steps for furnishing the proper documentation to the Labor Commissioner (LC). Current law states that a notice of completion must be provided to the LC in a manner determined by the LC. SB 266 clarifies the notice of completion process, including a ten-day deadline for furnishing the documents requested by the LC.

SB 1360 - Rest or Recovery Periods Are Compensable Time - Existing law prohibits an employer from requiring employees to work during a meal, rest or recovery period. Failure to provide an employee with a meal, rest or recovery period entitles the employee to one additional hour of pay at his/her regular rate of compensation for each workday that the meal, rest or recovery period is not provided. There was some ambiguity as to whether or not these periods are counted as hours worked, and thus required to be compensated.

SB 1360 clarifies that a legally mandated rest or recovery period is counted as hours worked and thus employees shall be required to be compensated. This bill requires employers to pay for rest or recovery periods. It defines a recovery period as a cool down period afforded to an employee by law to prevent heat illness. SB 1360 states that it is "declaratory of existing law" which means it is effective immediately and applies retroactively. For those employers that pay their employees on a piece-rate basis only, employers must be careful to ensure that they are paying employees for rest breaks. Some employers only pay employees for productive time and not for non-productive time. If an employee takes a rest break during unpaid non-productive time, that practice would be against the law. It is advisable to speak with an attorney about piece rate and rest breaks if you have any questions about the new laws.

Blurred Lines: Maintaining Separateness Between Companies

By: Laura C. Hess

An issue that sometimes arises in the employment cases we handle concerns whether an employer/employee relationship really exists between the parties. The reason this comes up is because the employee sues not only the employer, but also all of the companies who are affiliated with the employer, such as parent companies, franchisors, or other businesses owned by the same family. The employer wants to carve these affiliated entities out of the case and shield them from the lawsuit.

Unless the companies are the alter egos of one another, the employee can only sue the affiliated entity if he or she can establish an employer/employee relationship with it. The question of whether an employer/employee relationship exists comes down to how much control that company exerts over the employee.

A recent case highlights the importance of this determination. In Patterson v. Domino's Pizza, LLC (2014) 60 Cal.4th 474, a Domino's Pizza employee sued for sexual harassment. She sued both the franchisee and the franchisor, under the theory that the harassing supervisor acted as the agent of the franchisor.

The case made its way all the up to the California Supreme Court. The issue was whether the franchisor can be held liable as a matter of law for the actions of its franchisee's supervisor. The Supreme Court focused its inquiry on the amount of control that the franchisor exerts over the day-to-day aspects of the employment and workplace behavior of the franchisee's employees. In determining the franchisor was not liable, the Court noted the franchisor did not hire, supervise, or set the sexual harassment policies for the franchisee's employees. If the franchisor did so, or retained the ability to do so, then the result would likely have been different.

The employer/employee lines blur in situations where a parent company is set up as a separate entity on paper, but it still exerts some control over a subsidiary's policies and procedures (for instance, where the parent company provides the subsidiaries with a common employee handbook.) Another scenario we see is where a family owns multiple businesses, but the employees of one sometimes perform duties for the other. Examples of this are a centralized human resources department or a shared in-house attorney.

We can provide you with advice and counsel if you have concerns about whether you are truly maintaining separateness between companies. Please contact us if you have any questions.

Excluded Drivers in Nevada

By: Melissa Bright

In Nevada, although an individual is expressly excluded as a driver in an insurance policy, if the excluded individual drives the car with the owner's permission, the insurance company must cover at least the statutorily required minimum coverage.

Pursuant to Nevada Revised Statute 485.3091, an insurance policy for motor vehicles must provide the statutory minimum coverage for both owner and any person who uses the vehicle. In Federated American Ins. Co. v. Granillo (1992) 108 Nev.560, the insured's son was expressly excluded in the insurance policy. The owner chose to exclude his son so that he could obtain a cheaper premium. If his son was included, the premium would be double.

The Court determined that the insurance company was required to reimburse for the injuries caused by the insured's son. Specifically, the Court cited to Nevada Revised Statute 485.3091(1) which states liability insurance must insure the named person and any individual using the vehicle with the "express or implied permission of the named insured." The coverage must insure "against loss from the liability imposed by law for damages arising out of the ownership, maintenance or use of such motor vehicle." The Court so reasoned due to Nevada having a "strong public policy interest in assuring that individuals who are injured in motor vehicle accidents have a source of indemnification." Further, Nevada's "financial responsibility law reflects Nevada's interest in providing at least minimum levels of financial protection to accident victims." The Court concluded that in Nevada, an insurance company is required to cover "all persons who drive an insured's car with the insured's permission regardless of whether the permissive driver has been explicitly excluded from coverage."

However, a policy containing exclusions is valid if the policy covered an out of state resident, provided that the exclusion was valid in the applicable state where the policy was written. In Progressive Gulf Ins. Co. v. Faehnrich, (2014) 327 P.3d 1061 a mother and her minor children, new residents of Nevada, were in an accident injuring the minor children. The vehicle still carried Mississippi registration, license plates and the mother had a Mississippi driver's license.

The insurance policy excluded coverage of bodily injury to any "person residing in the same household as [insured], and related through blood, marriage or adoption." The Court reasoned that if the policy was delivered "in Nevada, to a Nevada resident owning a car principally garaged in Nevada, then-existing case law would have invalidated the household exclusion to the extent it eliminated the statutorily mandated . . . minimum coverage." Here, the exclusion was valid because Mississippi law had the strongest ties to the transaction and the policy was applied for, delivered and renewed in Mississippi by Mississippi residents. The Court concluded that Nevada's public policy does not preclude giving effect to a choice-of-law provision in an insurance contract that was negotiated, executed, and delivered while the parties resided outside of Nevada.

NEWS AND EVENTS:

Kring & Chung, LLP Announces New Partner

We are pleased to announce that Allyson K. Thompson has been elevated to Partner in our Irvine, CA office effective January 1, 2015.

Since joining the firm in January 2005, Ms. Thompson's practice focuses on labor and employment law as well as business litigation matters. She also provides training seminars on numerous employment matters including hiring practices, how to avoid wrongful termination, wage and hour issues, sexual harassment and discrimination. "Ms. Thompson fits our firm image perfectly," said Kyle D. Kring. As the current President-Elect for the Orange County Women Lawyers Association, she is dedicated to promoting equality and social justice for all people.

Ms. Thompson received her bachelor's from the University of Hawaii and her Juris Doctor from Lincoln Law School.

Kring & Chung, LLP is Proud to Announce Michael S. Schulze as New Associate Attorney

Michael S. Schulze joined the firm as a law clerk in January of 2014, and became an Associate in December, 2014. His practice areas include business litigation and construction. Mr. Schulze attended the California State University, Fullerton where he graduated in 2011 with a Bachelor of Arts in Business Administration. In 2014, he obtained his Juris Doctorate from Whittier Law School.

Michelle Philo Elected as OCBA Young Lawyer's Division Chair-Elect

Michelle Philo has been elected as the Orange County Bar Association Young Lawyer's Division Chair-Elect. The Young Lawyer's Division represents over 800 of Orange County's young lawyers with up to 5 years' experience in the profession. When Philo rises to the position of Chair in 2016, she will serve as the voice of the Young Lawyer's Division to the Orange County Bar Association's Board of Directors.

Ms. Philo is an attorney in our Irvine, CA office. Her practice includes general civil litigation; business transactions, including formations, maintenance, mergers, dissolutions; estate planning and probate. Philo's litigation cases have included partnership disputes, contract disputes, employment disputes, and personal injury cases.

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