As we’ve discussed before, California’s new “paid sick leave” law takes effect July 1st. The new law contains several traps for unwary employers. In addition to providing paid time off benefits, there are other important requirements:

  1.  Workplace Posters. Employers are required to display a poster in a conspicuous location at each workplace containing the following information: (1) an employee is entitled to accrue, request, and use paid sick days; (2) the amount of sick days provided for by the Healthy Family Healthy Workplace Act; (3) the terms of use of paid sick days; and (4) the non-discrimination and anti-retaliation prohibitions of the Act. You can download the poster from the DLSE at
  2. Notice to New Employees. The Act further requires employers give new employees, at the time of hiring, a written notice advising the employee that he or she may accrue and use sick leave; has a right to request and use accrued paid sick leave; may not be terminated or retaliated against for using or requesting the use of accrued paid sick leave; and has the right to file a complaint against an employer who retaliates. The DLSE provides a form notice ( but most employers are making their own form instead.
  3. Notice to Existing Employees. Employers must individually notify all employees hired prior to January 1, 2015 of changes to employment terms relating to paid sick leave. These notices must be given no later than July 8, 2015. While the DLSE has published a template notice (, most our clients are preparing their own form.

Finally, paid sick leave benefits apply to both exempt and non-exempt employees. Thus, employees who are exempt from overtime (managers, executives, professionals, etc.) get this benefit unless they fall under a collective bargaining agreement, a more generous existing PTO program, or a special Labor Code exemption. If we can help you avoid troubles with these issues, we are happy to assist.

New California Sick Leave Law Requires Employers’ Immediate Attention

Effective July 1, 2015, under the Healthy Workplaces, Healthy Families Act of 2014; all California employers must provide their California employees with at least three days or 24 hours of paid sick leave per year.

Covered Employers and Employees 

The new law applies to all employers that have at least one employee in the State of California. All employees who work more than 30 days in a year in California are covered (including part-time and temporary employees), except for employees covered by certain collective bargaining agreements, certain providers of in-home support services, and certain airline industry employees.


Once an employee works 30 days, an employer is required to provide that employee with at least one hour of sick leave for every 30 hours worked. Employees are able to use paid sick time for preventive care for themselves or a family member.

In general, an employer must allow accrued paid sick leave to roll over to the next year. However, an employer may limit the use of paid sick leave in a year to 24 hours, or three days, in each year of employment. No accrual or carry-over is required if an employer provides the full amount of sick leave at the beginning of each year, allowing the employee to take sick leave before he or she would have otherwise accrued it.


Employers are not required to increase the number of paid leave days provided for in existing policies if the paid leave policy (or paid time off policy) provides the same benefits as the new law. Yet, even these general PTO policies need to be examined to make sure that employees are advised that they need to use PTO time for sick leave.

Many employers who provide more than the minimum three paid sick days mistakenly assume their current policies are adequate. However, the new law has several other requirements that are often overlooked, such as record keeping, notice, and posting rules. All employers should carefully review their policies and procedures, as most will require updating to comply with the new law’s mandates.

Contact George & Shields to discuss your current sick leave policy and ensure your compliance with the new law.

Are Employers Liable for Unknown Overtime? It Depends.

California’s overtime rules are very specific that employers shall be responsible for overtime compensation and define “hours worked” as “the time during which an employee is subject to the control of an employer, and includes all the time the employee is suffered or permitted to work, whether or not required to do so.”

A question arises, however, when an employee works overtime without notifying the employer. Specifically, what does the statutory language, “suffered or permitted to work” mean? In Forrester v. Roth’s I.G.A. Foodliner, Inc. (9th Cir. 1981) 646 F.2d 413, the court clarified this, explaining that “where an employer has no knowledge that an employee is engaging in overtime work and that employee fails to notify the employer or deliberately prevents the employer from acquiring knowledge of the overtime work, the employer’s failure to pay for the overtime hours is not a violation of §207”.

This would imply that if the employer does not know of the overtime, it is not responsible. This, however, is only the case where the employee fails to notify the employer and the employer does not have knowledge through some other means. It almost requires a situation where the employee attempts to trap the employer into paying overtime by secretly working overtime. 

An employer cannot avoid responsibility for overtime by turning its back on overtime work or failing to keep appropriate records. In those situations, a court will find the employer responsible. 

Most recently, in May 2014, the California Court of Appeal in Jong v. Kaiser Foundation Health Plan, Inc. (2014) 171 Cal.Rptr.3d 874 was faced with this question where the employer had an employee sign documents acknowldging the employer's policy confirming overtime, which included provisions that an employee should always obtain pre-approval before working any overtime. The employer also had an established time-keeping system and a similar policy that employees were not allowed to work off-the-clock. In the Jong case, the employee testified that he did not know whether anyone in management knew he was working off-the-clock. The Jong court found that the written policies combined with the lack of knowledge was enough to absolve the employer. Interestingly, there were two other employees in the Jong case that testified their management did know about their off-the-clock work and the court found those claims could proceed to trial.

The ruling in Jong puts an exclamation point on the importance of having written policies prohibiting off-the-clock work and requiring employees to record all hours worked. This case also further explains how any knowledge on behalf of the employer of overtime work, regardless of whether or not approved or in violation of written policy, can make an employer liable for overtime pay.

If you need assistance with your overtime policies, contact us.

Important Update for California Employers

An August 12, 2014 decision by the California Court of Appeals requires all California employers to reimburse their California employees a reasonable percentage of the employees’ personal cell phone bills if the employees’ job duties require them to use their cell phones for work purposes.  While this ruling deals with cell phone calls, it will likely be extended to work related texts and emails also.  The ruling applies even if an employee has a cell phone plan providing unlimited minutes or data; i.e. even when the employee does not incur any extra charges to use his or her cell phone at work.

This decision puts thousands of California employers at risk of statutory penalties and fines if they do not promptly comply.  The penalties for not timely reimbursing employees for employment related expenses is substantial and we expect to see claims against large and small employers forthcoming.

While each employer’s response to this new rule will differ depending on the nature of the business and the number of employees involved, every employer should immediately develop a plan to avoid violating this rule.  We have developed several compliance strategies for our clients already, and are encouraging our friends and clients to take steps to mitigate their risks as quickly as possible. The decision is Cochran v. Schwan’s Home Service, Inc.

Arbitration Clauses in California Employment Contracts

Arbitration clauses in employment contracts have been something of a moving target over the past few years. However, the Court of Appeals recently in Sanchez v CarMaz Auto SuperStores California, LLC (2014 DJDAR 2654) gave further guidance, allowing an employment dispute to proceed to arbitration where the court found that the specific arbitration clause in question was neither unilateral nor oppressive. Moreover, the court found that the mere fact that the arbitration clause was a condition of employment did not make it unconscionable. At George & Shields, we routinely advise clients from both the employer and employee side on employment contracts. If you have questions about your employment contract, contact us.

Notice Requirements Before Repairing Defective Construction

The recent case of KB Homes Greater Los Angeles Inc. v. Superior Court decided February 21, 2014, serves as a reminder that California’s Right to Repair Act (Civil Code section 895 et seq.) requires notice be given to a builder before repairs are made to a home. In KB Homes, the court made clear the purpose of the Act is to give a builder notice and the opportunity to resolve a homeowner’s construct defects before facing a lawsuit. Since failure to give the builder timely notice could excuse them from liability for damages, contact us immediately if you have concerns about construction defects in your home.

Contractual Limitations on the Business Judgment Rule

A recent case, Scheenstra v. Califontia Dairies, Inc. (2013) 213 Cal.App.4th 370 found a board of directors exceeded their discretion when they adopted a quota program in breach of their contractual obligations to one of its members. The members appealed claiming that the business judgment rule insulated them from liability for the good faith decisions of its directors in the exercise of business judgment. The Court of Appeals affirmed the judgment, explaining that the business judgment rule does not give the board discretion to rewrite its contracts. Because the Board's action breached its contract with its member, the business judgment rule did not apply. If you anticipate any corporate action that may potentially conflict with contractual obligations, let us know so we can help you through these dangerous waters.

Pool Owners Beware

If you own rental property with a swimming pool, the February 25 decision in Johnson v. Prasad, suggests caution.  In that case, the pool was constructed well before California’s Swimming Pool Safety Act took effect.  When the landlord purchased the property, the pool was already installed and he never remodeled or improved it.  When the tenant’s four year old guest drowned, the court ruled the landlord could be responsible.  The court reasoned that failure to install updated self-closing gates or related safety mechanisms (as the Act later required) created a danger the landlord had a duty to avoid.

New Requirements for Employee Commission Agreements

If an employer enters into a contract for employment with an employee for services to be rendered in California that involved payment by commission, the contract must be in writing and must set forth the method by which the commissions will be computed and paid. Labor Code § 2751(a), which went into effect on January 1, 2013, requires all commission-based employment contracts must be in writing and set forth the method for commission payment.

Specifically, it provides all commission contracts “be in writing and … set forth the method by which the commissions shall be computed and paid.” Cal. Lab. Code § 2751(a) (2012). Under the statute, employers must also “give a signed copy of the contract to every employee who is a party [to the contract] and … obtain a signed receipt for the contract from each employee.” The stated purpose for amending Section 2751 was to “protect employees from fraud and abuse, as well as protect employers from unnecessary litigation resulting from vague oral contracts.” Hearing on AB 1396 Before the S. Comm. on Labor and Industrial Relations.

If you have any employees that are paid on a commission basis, it is time to audit your commission agreements to ensure they comply with this new law. For further help with this, contact us.

Foreclosure Tenants Get New Protections

For those clients purchasing additional rental properties through foreclosure, a January 23, 2014 ruling by the California Courts of Appeal, interprets the federal Protecting Tenants Against Foreclosure Act.  In a complex decision, the Court held that a tenant with a bona fide lease may remain in possession of the property until the end of the lease term, and not just the 90 days from a notice to vacate.  This area of the law is riddled with exceptions and special provisions, and special care is required when evicting the occupants after a foreclosure sale.

Significant New Laws for California Businesses in 2014

Quite often new laws go into effect on January 1. This year was no different with several new laws on the books that may concern your business. Here is our list of some of the most important new California laws for 2014.

New Laws for Limited Liability Companies

There were significant revisions to California’s rules concerning the formation and management of limited liabilities companies. The new law greatly expands the consent rights of members. Depending on the language in the operating agreement, the new law may effectively limit the authority of a manager to take actions that the manager could have taken prior to 2014. For example, a new default rule is that if an LLC is managed by managers, the manager may not take any action “outside the ordinary course of business” without obtaining the consent of all the members. If you are operating an LLC, check in with us to see if your company will be affected.

Corporations May Take Actions When Quorum Is Impracticable Due To Disaster

Corporations Code sections 207, 212, 5140, 5151, 7140,7151, and 9140 were revised to give directors and officers of for profit and nonprofit corporations various powers and immunities in order to carry out their operations during an emergency that preclude a quorum of the corporation’s board of directors from being readily convened. The new rules allow for modified notice to directors, appointing officers as directors to reach a quorum, modifying corporate lines of succession, making donations, and entering into contracts, security agreements, and partnerships, among other things. “Emergencies” include natural catastrophes, attacks by enemies of the United States, and acts of terrorism or other extraordinary manmade disasters.

Do Not Track Software - Website Disclosures Required

Business & Professions Code section 22575, the statute governing commercial websites and services that collect personally identifiable information, was amended. These websites are now required to disclose how they respond to “do not track” signals sent by web browsers. Such websites must also disclose whether third parties may collect personally identifiable information when a consumer uses the site. If your website is collecting personal information, make sure to confirm your compliance.

Sellers Must Disclose Construction Defect Claims

Civil Code section 1102.6 makes explicit the requirement that sellers disclose any construction defect or breach of warranty claims brought by them in connection with the sale of residential property.

The Minimum Wage Is Going Up

Assembly Bill 10, passed and approved in 2013, raises the California minimum wage to $9.00 starting July 1, 2014. The law provides for a second increase to $10.00 on January 1, 2016.

Worker Protections Against Immigration Reporting

Assembly Bill 263 adds Labor Code section 1019 and establishes certain “unfair immigration-related practices.” Prohibited practices include requesting additional or different documents than what is required under federal I–9 rules, refusing to honor documents that appear genuine on their face, using federal E-verify to check status in a manner not required or authorized under the program, and threatening to file or filing a false police report. This new law expands protected conduct to include a written or oral complaint by an employee that he or she is owed unpaid wages and prohibits employers from preventing an employee from providing information to or testifying before any public body conducting an investigation, hearing, or inquiry, and prohibits retaliation based on such conduct. Now is a good time to audit your procedures with respect to verification of citizenship and completion of I–9 forms.

Employee Time Off to Testify About Serious Crimes

Under the new Labor Code section 230.5, it is unlawful for an employer to discharge or otherwise retaliate against an employee who is a victim of certain serious crimes for taking time off to testify in proceedings related to the crime. Requests for time off for this purpose must be honored by the employer upon reasonable advance notice.

Retaliation For Complaints Of Unpaid Wages Prohibited

Labor Code section 98.6 now specifies that an employee’s complaint that he or she is owed unpaid wages is an activity protected against employer discrimination or retaliation, and adds that an employer who engages in prohibited discrimination or retaliation is liable for a civil penalty of up to $10,000 in addition to other existing remedies. The amendment also expands the scope of conduct prohibited by section 98.6 to include retaliation in addition to discrimination, which was already prohibited.

Sexual Harassment Need Not Be Motivated By Sexual Desire

Government Code section 12940, The Fair Employment and Housing Act, has been amended to specifically state that prohibited sexual harassment need not be motivated by sexual desire. California law continues to strictly prohibit sexual harassment and employers should take all necessary steps to eliminate it from the workplace.

Reporting Violations of Local Law, Internal Complaints Protected From Retaliation

Various procedural amendments have been made to clarify the procedures applicable to whistleblower claims. Most notably, the State Personnel Board must render a decision on consolidated complaints no later than six months after the order of consolidation, and such claims are now explicitly made exempt from ordinary government claims procedures. In addition, Labor Code section 1102.5, relating to retaliation against whistleblowers, has been strengthened to: (a) protect complaints about alleged violations of local law, as well as internal complaints, and (b) prohibit persons acting on behalf of an employer (in addition to the employers themselves, who were already included) from committing prohibited retaliation.

Prevailing Employers Must Show Bad Faith To Recover Fees In Actions For Non-Payment Of Wages And Benefits

Labor Code section 218.5 provides for an award of attorney’s fees to the prevailing party in actions for the nonpayment of wages, fringe benefits, or health and welfare or pension fund contributions. This amendment to section 218.5 provides that an award of fees to a prevailing employer shall be conditioned on a finding that the employee brought the action in “bad faith”. This significantly reduces the likelihood that employers will recover attorney fees on wage claims.

Criminal History on Job Applications

Assembly Bill 218 prohibits requesting criminal background information on the initial employment application for local and state government employees, with the goal of reducing unnecessary barriers to employment for the one in four adult Californians who have an arrest or conviction record. California joins nine states and over 50 cities and counties across the United States that have adopted similar legislation. AB 218 does not, however, apply to law enforcement positions or positions where the applicant will work with children, the elderly, the disabled or other sensitive positions.

Prelawsuit Warning and Opportunity to Correct Before Proposition 65 Claims

Assembly Bill 227 is intended to decrease frivolous lawsuits under The Safe Drinking Water and Toxic Enforcement Act of 1986, popularly known as Proposition 65 or “Prop 65.” Prop 65 currently allows for penalties of up to $2,500 per day that an individual is exposed to a listed chemical without being provided a clear and reasonable warning about the presence of the chemical. One of Prop 65’s most unusual features is that it provides private citizens with the power to enforce the law once the California Attorney General, California district attorneys, and certain California city attorneys are notified of the alleged violation. With this amendment, alleged violators are provided notice and an opportunity to cure before a party may make a claim.

David Sparks Speaks to the American Bar Association

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David Sparks spoke at the American Bar Association's TechShow in Chicago. David is a nationally recognized speaker and author on the subjection of technology and productivity in law and is a frequent faculty member for the ABA TechShow.

This year David spoke on paperless technologies and using the Mac, iPhone, and iPad in the practice of law.