Dealers Should Know California’s Song-Beverly Consumer Warranty Act

For California businesses, particularly those who sell automobiles and small trucks, the legal landscape can be a proverbial mine field, with multiple consumer law provisions – some of which sometimes appear to conflict with each other. Step on one incorrectly, and it explodes.

Retail businesses must be particularly familiar with the Song-Beverly Consumer Warranty Act (“Warranty Act”). While the Warranty Act isn’t just limited to the sale of motor vehicles – it applies to all consumer goods sold at retail in the state of California that are covered by express or implied warranties – it seems to impact auto dealerships more than other types of businesses.

Warranty Act’s General Provisions

The Warranty Act does not apply to all auto sales. There are some specific requirements:

•  Generally, there must be a written warranty. The automobile manufacturer may provide the warranty. It can also be provided by the dealer itself, particularly with regard to used cars.

•  The vehicle must generally have been purchased for “personal, family, or household purposes.” The dealer should recognize, however, that many small vehicles that are used in businesses still fall within the terms of the Warranty Act. A dealer ordinarily cannot defend a Warranty Act claim on the grounds that the vehicle has been used for some business purposes.

•  The consumer must have given the manufacturer, or the manufacturer’s representative, a “reasonable number” of opportunities to fix the problem(s) with the vehicle. The “reasonable” number depends upon the circumstances. Generally, where the alleged defect involves safety equipment, such as the brakes, fewer attempts to resolve the issue are allowed. Some experts say that the dealer gets two chances to fix a safety issue; there is no such legal rule, however. Where the problem is less serious, “reasonable” could mean multiple attempts to fix the issue.

•  The number of days that the vehicle has been out of service is also important. If the vehicle was out of service by reason of warranty repairs for a total of 30 days within the first 18 months or 18,000 miles, whichever comes first, then there is a presumption that that the vehicle is defective under the terms of the Warranty Act.

•  The warranty issue must substantially impair the vehicle’s use, and value of safety.

The Dealer May Have to Repurchase Vehicle

If the purchaser establishes that the vehicle does not meet the standards of the Warranty Act, the manufacturer, or its representative, may be required to replace the vehicle or return the purchase price to the buyer (or lessee). “Purchase price” must include the price paid for manufacturer-installed items. It need not include the price paid for non-manufacturer items installed by the dealer.

The Buyer May Be Charged For Use of Vehicle

Under the Warranty Act, the buyer (or lessee) may be charged for the use of the vehicle, regardless of whether the vehicle is replaced or the purchase price is refunded. Generally, that charge is based upon the percentage of miles that the vehicle has traveled before it was first brought in for correction of the problem. Vehicles are assumed to have a life of 120,000 miles. Thus, if the car had been driven 10,000 miles before it was first brought in for correction of the problem, the buyer could be charged 1/12th (10,000/120,000 = 8.333 percent) of the purchase price for usage.

Warranty Act Has Other Important Provisions – Legal Counsel is Key

The Warranty Act has a number of other important provisions that should be considered by any automobile dealership. For example, it allows an award of attorney’s fees to the consumer, in some instances. While California law is generally “consumer friendly,” particularly when an aggressive consumer’s attorney represents the consumer, your business is not without power of its own. CKB VENNA LLP has a long history of representing clients in all phases of business litigation, including vigorous representation of dealers and other automotive businesses regarding alleged violations of the Song-Beverly Consumer Warranty Act and California’s Consumer Legal Remedies Act. Our team understands the complexity of the issues, and stands ready to assist your business. We have offices in Rancho Cucamonga, San Bernardino, and Los Angeles. Contact us today by telephone at 909-980-1040, or complete our online form.

Four Misconceptions About Succession Planning in Business

According to information released by the Small Business Administration, more than half of all small business owners are 50-years-old, or older. Financial planning experts say that more than three-quarters of all small business owners intend to sell their operations, in order to fund retirement; yet, less than a third have an actual written succession plan. As Ben Franklin once said, “Failing to plan is planning to fail.”

One reason why so many business owners fail to plan is that they share common misconceptions about succession planning. While the list is endless, here are four of the most common.

No. 1: The “Scarlett O’Hara Thought Process”

At one of the primary junctures of “Gone With the Wind,” Scarlett says to herself, “I can’t think about that right now. If I do, I’ll go crazy. I’ll think about that tomorrow.” All too many business leaders are like “Miss Scarlett.” Business owners avoid succession planning, like other clients avoid estate planning. Both remind one of one’s mortality. Both sometimes involve having to make tough decisions. In a business, succession issues never resolve themselves. They never go away. Don’t procrastinate. Plan now.

No. 2: My Successor Will Be Ready to Take the Reins When I’m Ready to Give Them Up

Many business owners are so used to making decisions, so accustomed to determining when and where and how a business issue is to be determined, that they forget one important factor in succession planning: Timing. If you are going to turn the reins over to someone, he or she has to be available and competent to accept that responsibility. Particularly if taking on new responsibility means longer hours or a geographic move, the new leader needs some flexibility. Does the “target” have small children whose needs must be considered? Are there other concerns that need to be addressed? Just because the business owner is finally ready, it doesn’t always follow that everyone else is, too.

No. 3: The Family Will Always Buy Into My Plan

As noted above, many business owners are insular in their methods. They “think” that they have involved others in the overall operations of the business. They may have withheld all important decisions for themselves, however. These sorts of “leaders” are often surprised when the rest of the family doesn’t see eye-to-eye with the succession plan. If one child has been involved in the operation of the business and another has remained on the outside, a plan that calls for equal ownership of stock between the two may fall flat with the insider. Succession planning needs to be discussed among all those who will be affected. The owner may have been used to having his or her way. In succession planning, that needs to change.

No. 4: Financing the Buy-Out Will Be Manageable

It is one thing to decide to turn over the reins. It is often another to have in place a mechanism that balances the needs of the owner to “cash out,” and the needs of the new business successors to stay invested in the day-to-day operation that has made for success. The value of the business wasn’t built overnight. Pulling retirement funds out may be easier said than done. Here, it ordinarily pays to retain experts: Insurance people, business operations specialists, CPAs and, most particularly, skilled attorneys. While the business owner may have “gone it alone” in building the business, now is not the time for a solo. Build a solid transition team.

CKB Vienna LLP Has the Expertise to Assist in Succession Planning

CKB VENNA LLP has the experience necessary to help any California business with its succession planning issues. We can combine your need to address business concerns with your family’s needs for long-term estate planning. We have represented small to mid-size businesses and their owners in many situations. We work well with other experts, and can help you guard the important assets that have been accumulated through a life of hard work. Our team understands that complex legal issues often go hand in hand with personal, family concerns, and we strive to give you the sort of representation that you deserve. We have offices in Rancho Cucamonga, San Bernardino, and Los Angeles. Contact us by telephone at 909-980-1040, or complete our online form.

Bill in Congress Would Limit Arbitration Rights for Many California Businesses

Companion bills have now been introduced in both the U.S. House and Senate that would exempt most individuals and small businesses from the Federal Arbitration Act (FAA), a piece of 1925 legislation that currently allows contracting parties to avoid the courts and have their disputes informally resolved. The legislation, known as “Restoring Statutory Rights Act,” was introduced in the Senate by Senator Patrick Leahy (VT) and in the House by Representatives John Conyers, Jr. (D-Mich.) and Henry C. “Hank” Johnson, Jr. (D-GA).

FAA Currently Has a Broad Application, Even to Consumer Agreements

Under the FAA, commercial enterprises, such as auto manufacturers and dealerships, may include clauses in their consumer sales agreements that require arbitration of any disputes. The sales agreements may also contain provisions in which the consumer waives his or her right to participate in a class action lawsuit against the businesses. Consumer organizations have argued that the FAA was never intended to cover most consumer agreements, but the federal courts, in virtual unanimity, have said that such limitations are valid.

One recent decision by the United States Supreme Court, DIRECTTV, Inc. v. Imburgia, 136 S.Ct. 463, 193 L.Ed.2d 365 (2015), arose in California, where state courts have not been friendly to those who draft consumer rights waivers. The U.S. Supreme Court, however, again reiterated that the FAA is the law of the land; it preempts inconsistent California law.

Leahy’s Bill Responds to New York Times Series of Articles

According to a press release from Senator Leahy’s office, the bill was in reaction to several articles critical of the federal arbitration process in The New York Times. According to those pieces, the FAA has been used by many large corporations to bar consumers from initiating or participating in class actions. Consumer activists claim that class actions are an important consumer tool, since one consumer with a defective fuel pump is hardly in a position to go to war with General Motors.

In particular, the bill would amend the FAA, so as to make it inapplicable to forced arbitration of claims brought by individuals or small businesses, “arising from the alleged violation of a Federal or State statute, the Constitution of the United States, or a constitution of a State.” The bill would also require court determination as to whether the FAA applied in a given setting.

With Passage Uncertain, Consumer and Commercial Disputes Continue

While the passage of the bill is uncertain, Leahy and others argue that there needs to be a restoration of consumer and small business rights in the country. According to some consumer advocates, the threat of litigation and the power of public opinion are both important mechanisms to safeguard consumers’ health and property interests. The advocates add that the same can be said about small businesses. Business interests counter that the freedom to contract is at stake, and that the arbitration and class action waiver clauses should not be viewed in a vacuum. They argue that consumers enjoy broad protections within American society.

Warranty Act Has Other Important Provisions – Legal Counsel is Key

Arbitration clauses and class action waivers are among many types of clauses that should be considered by any business that sells consumer goods, particularly those that sell new or used automobiles. California law is generally “consumer friendly.” Your operation needs a team of attorneys who are “business friendly.” CKB VENNA LLP has a long history of representing clients in all phases of business operation and litigation. We offer vigorous representation of dealers and other automotive businesses in all aspects of their operation. Our team understands the complexity of the issues, and stands ready to assist your business. We have offices in Rancho Cucamonga, San Bernardino, and Los Angeles. Contact us by telephone at 909-980-1040, or complete our online form to speak with us today.

Arbitration Clauses: An Appropriate Tool for Many California Auto Dealers

It is sometimes said that, “Americans are a litigious sort.” We do seem to take all sorts of disputes, large or small, to court. In fact, some of the most popular reality television shows in syndication – “The People’s Court,” “Judge Judy,” and others – are courtroom based. The mantra seems to be, “We’ve been wronged, and we want a judge.” A look behind the TV shows discloses, of course, that the Judge Judy’s courtroom isn’t real, nor is she currently a sitting judge. She is instead an arbitrator and the parties have agreed to let her determine their dispute.

Arbitration: It Makes Sense for Many Business and Consumer Disputes

More and more, businesses are turning to arbitration to resolve disputes. Arbitration offers a number of advantages of battling the issues out in court:

•  Often, arbitration is less expensive than traditional litigation. While the costs of arbitration have grown in recent years – a qualified arbitrator can charge several thousand dollars per day for his or her services – arbitration is usually cheaper than airing the issues in court. The arbitration procedure can be streamlined, saving valuable time, which means saving money.
 

•  Arbitration usually results in a quicker resolution of the issues. It seems that delay is built into the traditional litigation system. Recent studies show that the average time from filing to decision in arbitration is one-third that of traditional court battles.
 

•  Scheduling arbitration is much more flexible. There are no competing cases; there is no crowded docket. Where it is convenient for the parties, arbitration can even occur on weekends or in the evening. Try talking the judge into Saturday morning court!
 

•  Arbitration can be more private. Courtrooms, of course, are public forums. Arbitration need not be open to the public at all.
 

•  Arbitration can be final. In traditional litigation, with multiple appeals, sometimes it seems that the dispute can never actually be resolved. It is possible to structure a contract such that disputes are subject to binding arbitration. A dispassionate arbitrator hears the dispute, reviews the evidence, and makes a decision. Putting the matter behind a party can have positive results, no matter what the actual outcome.

Arbitration Clauses Should Be Considered For Automobile Sales Contracts

Has your automobile dealership reviewed its sales contracts lately? Does it utilize arbitration to resolve consumer disputes? If not, should arbitration be incorporated into your standard sales agreements? Do your sales agreements incorporate class action waivers? While California law embodies a host of provisions designed to assist and protect the consumer, particularly when that consumer is in the hands of an aggressive consumer’s attorney, your business is not without power of its own.

CKB VENNA LLP has a long history of representing clients in all phases of business litigation, including vigorous representation of dealers and other automotive businesses regarding alleged violations of the Song-Beverly Consumer Warranty Act and California’s Consumer Legal Remedies Act. Our team understands the complexity of the issues, and stands ready to assist your business. We have offices in Rancho Cucamonga, San Bernardino, and Los Angeles. Contact us by telephone at 909-980-1040, or complete our online form.

Auto Dealers Must Understand Consumer Legal Remedies Act

Since 1970, California’s Consumer Legal Remedies Act (“CLRA”) has protected consumers, particularly those who lack commercial sophistication, from unethical businesses practices. Often referred to as the state’s “Lemon Law,” the CLRA has most often been used against used car dealers.

Typical CLRA Allegations

Typical allegations have included claims that the dealer sold:

• Accident-damaged vehicles without appropriate notice to the purchaser
• Vehicles at prices greater than advertised
• Rental cars without disclosing the vehicles’ rental histories
• Sold what were classified as “certified” pre-owned vehicles, which did meet qualifications for the “certified” designation

Written Notice of “Violation” Required

In order to take advantage of the CLRA, the consumer must give the dealer written notice of the particular violation or violations. If the consumer prevails in his or her claim, the court is required to award attorney’s fees and costs to the consumer.

30-Day “Safe Harbor”

It is important to note that the CLRA provides the dealer with a 30-day “safe harbor” period to correct the alleged violation. Under the Act, if the seller provides “an appropriate correction, repair, replacement, or other remedy” within 30 days of receiving the written notice, the consumer cannot recover monetary damages.

Corrective Offer Can Deflate CLRA Civil Action

The power of an appropriately framed “corrective offer” became clear in a Court of Appeals decision late last summer. In the Benson case, the customer contended, among other things, that he had been sold a vehicle with undisclosed frame damage, and that the vehicle’s price exceeded the advertised price. The customer sent the required written notice, and also filed a lawsuit against the dealer. Before the expiration of the 30-day safe harbor time period, the dealer offered to “unwind” the transaction completely and to pay $2,500 in attorney fees. The customer refused and continued with the lawsuit. Later, the case was actually settled, but the issue of attorney fees still hung like a cloud. The trial court denied the request for attorney’s fees and the Court of Appeals affirmed.

CLRA Has Two Purposes, Not Just One

The Court said that the CLRA had two purposes. Its first purpose, of course, was to protect consumers. Second, the CLRA provided efficient and economical procedures to secure that sort of protection. To allow the consumer to engage in protracted litigation, and to run up attorney fees when an appropriate correction had been offered at the outset, was against the very purposes of the CLRA.

Bottom line: As was the case in Benson, where the defense to the CLRA allegations may not be strong, unwinding the transaction may be the least expensive way out for the dealer.

Facing CLRA Allegations?

Does your automobile dealership face CLRA allegations? Recognize that, while the CLRA is a powerful weapon in the hands of an aggressive consumer or consumer’s attorney, your business is not without power of its own. Under all circumstances, your business needs to conduct an early and aggressive investigation of the facts. Just as important, you need skilled, experienced legal counsel who are familiar with the CLRA, its defenses, and who are also skilled in negotiations.

CKB VIENNA LLP has a long history of representing clients in all phases of business litigation, including vigorous representation of dealers and other automotive businesses regarding alleged CLRA violations. Our team understands the complexity of the issues, and stands ready to assist your business. We have offices in Rancho Cucamonga, San Bernardino, and Los Angeles. Contact us by telephone at 909-980-1040, or complete our online form.

California Businesses Should Be Careful in Classifying Workers as Independent Contractors

Historically speaking, when a business owner only desired a particular result – e.g., sheetrock erected in a residence according to established building codes – and did not need control over the details of how the work might actually be carried out, the owner could contract with an independent contractor and avoid the taxes and financial responsibilities of the employer-employee relationship.

California Generally Disfavors Independent Contractor Distinction

In recent years, however, some states – particularly California – have instituted policies that disapprove of the independent contractor relationship. Recent news reports note that firms, such as FedEx, Uber, or Lyft, have paid millions of dollars to settle allegations that they misclassified employees as independent contractors. Under a new law passed last year [AB 202], cheerleaders for professional athletic teams must be treated as employees.

Independent Contractor or Employee: What Factors Control?

What factors control whether the California worker can be properly classified as an independent contractor, rather than an employee? While the following list is not exhaustive, here are five factors to consider:

Work Performed is Integral Part of “Contractor’s” Business

In most instances, when a business “sub-divides” its core business operation, the persons who do that work are considered employees, whether or not they are so designated. This was the rationale for California’s position that FedEx Ground drivers are employees and not independent contractors. As one expert noted, when the company can tell you what color socks that you can wear to work, it’s your employer.

Who Supplies Equipment or Tools?

Generally speaking, where the worker supplies his or her own equipment or “tools of the trade,” that is an indication that the worker is an independent contractor. Where those items are supplied by the business, there is a strong notion of a true employer-employee relationship.

Is the Work Performed Skilled or Unskilled?

True contractors ordinarily possess specialized skills (e.g., plumbers, electricians, interior designers, and the like) that they utilize with little or no supervision. Where the work is of an unskilled nature, chances are high that the workers will be categorized as employees.

How Are Workers Paid by the “Contractor?”

Payment on an hourly basis almost always results in an employee designation. Where payment is on a project basis, and where there is an end to the service being provided, this may show independent contractor status.

Have You Entered into a Formal, Written Agreement?

If the parties have entered into a formal, written agreement that characterizes the worker as an independent contractor, that is a factor that can be considered. Note, however, that too many firms rely upon this factor. A court has no trouble looking past “the form,” if the practice contradicts it. If control over the worker exists to a significant degree, the designation of contractor status will not control.

Does Your Business Utilize Independent Contracts?

If your business routinely utilizes workers whom you classify as independent contractors, be aware that if (i) your intentions do not always control, (ii) you exert control over the activities of the worker, or (iii) the type of work being performed is covered by a special law, then you may be subject to fines and other damages for inappropriately classifying the workers as contractors. The guidance of an experienced legal team is a key to avoiding unpleasant and expensive surprises. CKB VIENNA LLP has a long history of representing clients in all phases of business operations. We can advise you if the designation of your workers is appropriate or risky. Our team understands the complexity of the issues, and stands ready to assist with your long-term needs and goals. We have offices in Rancho Cucamonga, San Bernardino, and Los Angeles. Contact us by telephone at 909-980-1040, or or complete our online form.

Sophisticated Charitable Giving Can Be an Important Estate Planning Tool

Sometimes Success is Penalized!

All too often these days, it seems that success is penalized. The entrepreneur comes up with the idea, takes significant risks in launching a business enterprise, fields off competitors, and then works countless hours for several years building the model, the cash flow, and the brand. He or she is finally at the magic point at which a sale of the business will produce a significant return. Only, because the entrepreneur started with almost nothing, his or her tax basis in the company is virtually nothing. A big tax bite on the capital gain seems inevitable.

Sophisticated Help for Those Who Are Philanthropically Inclined

There may be some alternatives to the big tax bite. One that may work well, particularly for entrepreneurs that are philanthropically inclined, is the charitable lead annuity trust (“CLT”). It sounds sophisticated; it is. But CLTs can also produce some very sophisticated results.

Charitable Lead Annuity Trust: What Is It?

Generally speaking, a CLT is a type of irrevocable trust that makes payments to charity for a specified time period (crafting that time frame involves the weighing of a number of factors), after which the balance in the trust either reverts to the trustor/settlor or passes to (or in trust for) other individual beneficiaries, such as children and grandchildren. Attorneys sometimes refer to CLTs as “wait a while” trusts, since the final beneficiaries wait a while before receiving the full benefit of the principal.

Benefits of a Charitable Lead Annuity Trust

For an entrepreneur who is naturally unwilling to part forever with assets that have been so carefully created, a transfer to a CLT, if properly drafted, can:

• Allow the entrepreneur, via a “grantor CLT,” to offset capital gains with a nice tax deduction in the year of the sale, and pay the bulk of the capital gain taxes owed over several years. This amounts to income averaging. Because of special provisions found in IRC § 7520, a grantor CLT can be much more effective than some other forms of remainder trusts. Yet, like the remainder trust, the CLT allows the entrepreneur to reclaim most of the property when the trust terminates.

• Allow the entrepreneur, via a “non-grantor CLT,” to pass assets down a generation to children – or even skip a generation to grandchildren – at little or no gift tax cost.

• Maneuver around existing percentage limitations on income tax charitable deductions where the entrepreneur is already giving substantial amounts to charity and, therefore, cannot fully deduct additional gifts.

Does Your Estate Plan Have Room for a Charitable Lead Trust?

While great care must be taken in structuring a charitable lead trust, such a vehicle can accomplish a number of important objectives for the individual or entrepreneur who is facing what investment counselors refer to as “a liquidity event.” Experienced legal counsel is a key to a successful plan. CKB VIENNA LLP has a long history of representing clients in all phases of wealth management and estate planning. We would be honored to assist you, and can help you to achieve your long-term goals. Our team takes the time to understand your goals and your long-term needs. We have offices in Rancho Cucamonga, San Bernardino, and Los Angeles. Contact us by telephone at 909-980-1040, or complete our online form.

Sale-Leaseback Arrangements Can Be Powerful Tools For Many Businesses

In California and other states, specialty manufacturing businesses and high tech firms sometimes face a difficult dilemma. In the early days of crafting their business model, they may have acquired one or more tracts of improved real estate that they utilize to produce their products or services. At the time of the acquisition, this seemed to make sense; the firms needed control over their location and processes. They likely financed the real estate purchase with an infusion of cash – obtained either through the sale of common stock, or through mezzanine financing – and a traditional mortgage.

Owning Real Estate Can Actually Be Expensive

In hindsight, they may now realize that they have too much valuable capital invested in their real estate. They find themselves in the business of owning real estate, when the original plan was to produce the high tech item or service that the public needs or wants. For such businesses, a sale-leaseback arrangement might be the answer.

Sale-Leaseback: What Is It?

Generally, a real estate sale-leaseback is a carefully crafted two-step transaction. In step 1, the owner-occupant sells the land and improvements used in its business operations to an investor. In step 2, the former owner-occupant leases the land and improvements back from the investor, under terms that are favorable to both parties.

Advantages of a Typical Sale-Leaseback

Carefully crafted sale-leaseback transactions can offer a number of important advantages:

•  Costs of “financing,” i.e., the lease payments, are often considerably cheaper than mezzanine financing.
•  The purchaser/lessor is usually interested in an income flow, not in being a landlord. The lease agreement is generally a net-net-net lease, with the “old owner” maintaining virtual control over the land and improvements.
•  Depending on the situation, there can be considerable tax savings for the “old owner.” The full lease payment is deductible, whereas before, the interest expense and depreciation were the only available deductions. This can be particularly important when the original down payment for the real estate was provided by proceeds from common stock.
•  Generally speaking, a sale-leaseback arrangement amounts to 100 percent “financing,” whereas the original transaction required that valuable capital be tied up to meet the lender’s requirements.
•  Ordinarily, since the sale-leaseback transaction is not a loan, there is little need for the type of covenants that a bank or other lender would require.
•  Sale-leasebacks typically free up capital for growth.
•  Sale-leasebacks can be particularly helpful if the principal shareholders/owners of the former owner-occupant – now the lessee – is trying to “package” the business for sale to private equity groups. Whether they admit it or not, most private equity groups base their willing purchase price on some multiple of the business’ earnings before interest, tax, depreciation, and amortization (“EBITDA”) Generally speaking, removing the real estate from the equation – i.e., through a sale-leaseback arrangement prior to the packaging of the underlying business for sale – will improve the business’ EBITDA.

Have You Considered the Benefits of a Sale-Leaseback?

CKB VIENNA LLP has a long history of representing clients in all phases of real estate ownership, including contract negotiations and drafting original acquisition transaction, in the arranging of mezzanine financing, and in the crafting of sale-leaseback arrangements that can provide value and flexibility to any business. We would be honored to assist you. Our team makes it a point to understand your business structure, your needs, and your long-term goals. We have offices in Rancho Cucamonga, San Bernardino, and Los Angeles. Contact us by telephone at 909-980-1040, or complete our online form.

California's New Paid Sick Leave law (AB 1522)

Effective July 1, 2015, nearly all California employers will be required to provide at least three days of paid sick leave per year to their employees. The new law, AB 1522, also known as the “Healthy Workplaces, Healthy Families Act of 2014,” was approved by the California Legislature on August 30, 2014 and signed into law by Governor Jerry Brown. 

The majority of employers will be required to provide paid sick leave under AB 1522 to all employee,  including part-time, per diem, and temporary employees. However, the new law provides exceptions for: 

1. Providers of In-Home Supportive Services (IHSS);

2. Flight deck or cabin crew members of air carriers subject to the Railway Labor Act; and

3. Employees working under collective bargaining agreements, provided certain minimum requirements are met.

An employee qualifies for paid sick leave by working for an employer for at least 30 days within a year in California and by satisfying a 90 day employment period. The 90 day period works like a probationary period.  Although you begin to accrue paid sick leave on July 1, 2015, or your first day of employment if you are hired after July 1, 2015, if you work less than 90 days for your employer, you are not entitled to take paid sick leave.

Employees will earn at least one hour of paid leave for every 30 hours worked. That works out to a little more than eight days a year for someone who works full time. But employers can limit the amount of paid sick leave you can take in one year to 24 hours.

The new law establishes a minimum requirement, but an employer can provide sick leave through its own plan or establish different plans for different categories of workers.  However, each plan must satisfy the accrual, carryover, and use requirements of the law or put the full amount of leave into your leave bank at the beginning of each year in accordance with the Paid Time Off policy.  If an employer provides a policy which exceeds the minimum requirements, including providing a specific cap, the policy must be clear as to the additional terms that apply to their employees.

DOES YOUR BUSINESS HAVE A SICK LEAVE POLICY?

Does your business have policies regarding sick leave? Are you concerned that your policies may be impacted by the new  rule? Have you recently reviewed your sick leave policies?  Prior to establishing or modifying your policies, it would probably be advantageous to consult with an experienced attorney.

Don’t wade through these choppy waters alone. For many years now, the attorneys at CKB VENNA LLP have provided employment/labor counseling and litigation services to nearly every type of business. Our team understands the complexity of the issues and stands ready to represent you aggressively. We have offices in Rancho Cucamonga, San Bernardino, and Los Angeles. Contact us by telephone – 909-980-1040 – or complete our online form.

Davis v. Nordstorm, Inc.

Docket: 12-17403
Opinion Date: June 23, 2014
Judge: Smith
Areas of Law: Arbitration & Mediation, Class Action, Contracts, Labor & Employment Law

Plaintiff filed a class action suit alleging that Nordstrom violated various state and federal employment laws by precluding employees from bringing most class action lawsuits in light of AT&T Mobility LLC v. Concepcion. Nordstrom, relying on the revised arbitration policy in its employee handbook, sought to compel plaintiff to submit to individual arbitration of her claims. The district court denied Nordstrom's motion to compel. The court concluded that Nordstrom satisfied the minimal requirements under California law for providing employees with reasonable notice of a change to its employee handbook, and Nordstrom was not bound to inform plaintiff that her continued employment after receiving the letter constituted acceptance of new terms of employment. Accordingly, the court concluded that Nordstrom and plaintiff entered into a valid agreement to arbitrate disputes on an individual basis. The court reversed and remanded for the district court to address the issue of unconscionably.

Download Opinion Here

Johnmohammadi v. Bloomingdale's, Inc.

Docket: 12-55578
Opinion Date: June 23, 2014
Judge: Watford
Areas of Law: Arbitration & Mediation, Class Action, Contracts, Labor & Employment Law

Plaintiff filed a class action suit to recover unpaid overtime wages from her former employer, Bloomingdale's. The district court granted Bloomingdale's motion to compel arbitration, determining that shortly after being hired by Bloomingdale's, plaintiff entered into a valid, written arbitration agreement and that all of her claims fell within the scope of that agreement. The court concluded that plaintiff had the right to opt out of the arbitration agreement, and had she done so she would be free to pursue this class action in court. Having freely elected to arbitrate employment-related disputes on an individual basis, without interference from Bloomingdale's, she could not claim that enforcement of the agreement violated either the Norris-LaGuardia Act, 29 U.S.C. 101 et seq., or the National Labor Relations Act, 29 U.S.C. 151 et seq. The court concluded that the district court correctly held that the arbitration agreement was valid and, under the Federal Arbitration Act, 9 U.S.C. 1 et seq., it must be enforced according to its terms. The court affirmed the judgment of the district court.

Download Opinion Here

Ramona Equip. Rental v. Carolina Casualty Ins. Co.

Docket: 12-55156
Opinion Date: June 20, 2014
Judge: Paez
Areas of Law: Construction Law

Candelaria, CCIC, and Otay (collectively, defendants) appealed the district court's judgment in favor of Ramona, the supplier of rental equipment, in Ramona's action under the Miller Act, 40 U.S.C. 3131-3134. The court held that Ramona's notice of demand was timely as to rental equipment furnished more than ninety days before the notice. The court joined its sister circuits and held that if all the goods in a series of deliveries by a supplier on an open book account are used on the same government project, the ninety-day notice is timely as to all the deliveries if it is given within ninety days from the last delivery. Concluding that there was no risk of double liability to Candelaria, the court affirmed the district court's award in damages, holding that all amounts due for all the rental equipment furnished to Otay for construction of the project were properly in the ninety-day notice. The court affirmed the district court's ruling not to award damages for invoices submitted on or after June 10, 2008, where Ramona had commercially reasonable justifications for choosing not to mitigate its damages prior to that date. Defendant's claim that Ramona waived its right to collect service charges was waived. Accordingly, the court affirmed the judgment of the district court.

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