Welcome to the Weintraub Resources section. Here, you can find our Blogs, Videos, and Podcasts, in which Weintraub attorneys regularly provide insights and updates on legal developments. You can also find upcoming Weintraub Events, as well as firm and client News.


Reopening Commercial Buildings: Guidelines and Legal Duties

Landlords and property managers have massive amounts of guidance materials available to them as they prepare to reopen their properties. These materials detail many different things a property owner can do.  In the face of this, the question being asked by many owners is: what are they actually required to do, what is their legal duty?  Unfortunately, the answer is both fact- and circumstance-specific, taking into account the property and its users, as well as federal, state and local requirements. But landlords and property managers should always be cautious about measures they commit to implement because commitments that exceed the minimum required by the circumstances can, if not implemented fully, expose them to liability.

As landlords and property managers prepare to reopen their commercial, retail, and office buildings, they have available to them a wide variety of guides and resources.  There is no shortage of these materials, which are being prepared and provided by commercial real estate trade groups and the large brokerage/property management companies, as well as all manner of law firms and other professional advisors.  As with much of the information that has circulated during the pandemic, available information has been packaged and repackaged, and pushed out in great volume.  Many people have described taking it as “drinking from a firehose.”  This makes sense — advisors want to be helpful to their clients and position themselves as experts to the public and prospective clients.

These materials offer detailed guidance on a wide variety of steps that can be taken to both make buildings safer and to make tenants and other users comfortable in returning to these spaces.  They provide thoughtful advice, recommendations, and practical checklists.  The guides include communications and management advice; social distancing, cleaning and disinfecting protocols; and guidance specific to different areas and elements of each property. Altogether, it is an impressive set of resources.

It is clear from reviewing these materials that there is a lot that landlords and property managers can do.  That there is always one more thing that can be done.    The practical question that these materials beg however is:  what does a landlord and property manager need to do in order to protect themselves from claims and liability?   What is required?  What is my duty as a landlord or property manager, and what is the standard of care? The materials are much more tight-lipped on this issue, in many ways the crucial, practical and bottom-line issue on the minds of landlords and property managers.

At least one of the trade groups has recognized the issue in their materials, declaring that “[t]his Guide or any part thereof does not, and is not intended to, create a standard of care for any real estate professional or property manager” and “is not meant to advocate, promote or suggest any preferred method or methods for dealing with a Pandemic.”  Additional comments beg the question: “Users should seek advice from a qualified professional before applying any information contained in this Guide to their own particular circumstances.  Users should always obtain appropriate professional advice on… legal issues.”  The concern is the liability exposure created if landlords have a duty to do all of these things, and the standard of care is compliance with these exhaustive guidelines.

The answer, unfortunately, is that it depends on the specific circumstances.  Most leases do not have provisions which clearly define or disclaim duties in connection with this pandemic.  This leaves the matter open to argument, and the various guidelines and industry resources can be part of that argument.  Establishing the existence of a legal duty and the applicable standard of care is key to a successful claim. For a tort claim of negligence against a landlord, a plaintiff will need to prove the landlord owed a duty to the plaintiff, the landlord breached the standard of care applicable to that duty, plaintiff suffered an injury, and the landlord’s breach of the standard of care was the proximate cause of that injury.

What is the standard of care?  California Civil Code 1714 (a) states that “everyone is responsible… for an injury occasioned to another by his or her want of ordinary care or skill in the management of his or her property or person…” The courts have held that this duty of care espoused in Section 1714 applies to possessors of land for injuries to people on their premises (see Rowland v. Christian (1968) 69 Cal.2d 108, 119) and that a landlord owes a tenant the same duty of reasonable care in providing and maintaining a leased premises. (Becker v. IRM Corp. (1985) 38 Cal.3d 454, 467.)  Under these cases, any departure from that standard will be analyzed by balancing various factors, including the foreseeability of the harm, the degree of certainty that the plaintiff suffered injury, the closeness of the connection between the defendant’s conduct and the injury suffered, the moral blame attached to the defendant’s conduct, the policy of preventing future harm, the extent of the burden to the defendant and consequences to the community of imposing a duty and liability and the availability of insurance for the risk involved.

The take-away from all of this for landlords and property managers is: be careful in taking on duties. The existence of a duty does not have a single, objective standard, and therefore landlords and property managers should be careful in defining and assuming these duties by, among other things, agreeing to perform certain tasks or assuming responsibility for obligations that they may not otherwise be responsible for.  If a duty is taken on, be sure that it is performed to the standard of care.  In other words, if you’re going to agree to do something, you need to actually do it; failing to complete that which you have agreed to do is prime fodder for a claim of negligence.

Landlords should also be mindful of their resources outside of the lease.  This can include reviewing available insurance coverage and other risk management tools to mitigate liability exposure, as well as revising leases as appropriate to clarify and define landlord’s duties going forward.  The current circumstances were difficult to predict, but a diligent landlord can minimize future issues by targeting the concerns raised and addressing them for future leases.

WEBINAR: Main Street Lending Program

  • When: Jun 30, 2020
  • Where: Webinar

What is the Main Street Lending program, and how is it different than the PPP and other business loans?

On June 30, 2020, Justin Borrowdale and Dan Franklin of River City Bank discussed the Main Street program – what businesses are eligible, unique program features, and documentation needed.

Topics:
• Program Overview
• Borrower Eligibility
• Loan Terms and Documentation
• Borrower certifications, covenants, and restrictions

A recording of this webinar can be viewed on the Weintraub Tobin YouTube page. Please keep in mind that the COVID-19 pandemic is a fluid situation and information is constantly being updated. We recommend that you check with your professional advisors to make sure you have the most current information.

Opportunity Zone Funds and Investors Get Relief in Light of COVID-19

On June 4, 2020, the Internal Revenue Service published Notice 2020-39 (Notice) which provides relief to qualified opportunity funds (QOFs) and their investors in light of the COVID-19 pandemic.  Here is a summary, and more details follow below:

  • Investors who otherwise would be required to reinvest capital gains into a QOF any time this year on or after April 1 now have until December 31, 2020 to reinvest such gains.
  • A QOF’s failure to hold at least 90% of its assets in “QOZ property” on any semi-annual testing date from April 1, 2020 through December 31, 2020 will not cause the entity to fail to qualify as a QOF.
  • Qualified Opportunity Zone Businesses taking advantage of the working capital safe harbor can add an additional 24 months to their working capital safe harbor period.
  • The period between April 1, 2020 and December 31, 2020 is disregarded for purposes of the 30-month “substantial improvement” period.
  • QOFs that received proceeds from the disposition of QOZ property have up to 12 additional months to reinvest those proceeds in QOZ property.
  1. Overview of Opportunity Zones. Congress created opportunity zones in 2017 to encourage investments in economically distressed communities.

The Opportunity Zone program provides taxpayers the opportunity to defer gain on the sale or exchange of an asset if the gain is reinvested in a Qualified Opportunity Zone Fund (a “QOF”) within 180 days. Note that the entire proceeds from an asset sale need not be invested in a QOF; rather, only the portion of the proceeds that represent gain must be invested in a QOF. The gain is deferred until the sooner of (i) the date the taxpayer sells its investment in the QOF or (ii) December 31, 2026. If the taxpayer invests in the QOF in 2020 or 2021, the amount of gain that will ultimately be recognized is reduced by 10%.

Additionally, if the taxpayer holds its QOF interest for 10 years, the taxpayer will recognize no taxable gain when they sell that investment. In order to be a QOF, an entity must be organized for the purpose of investing in QOZ Property and 90% or more of its total assets must be QOZ Property.  QOZ Property includes both new and substantially improved tangible property, including commercial real estate (e.g., offices buildings, apartment complexes, etc.) and equipment located in qualified opportunity zones. These investments can be direct or through subsidiary corporations or partnerships that operate businesses in qualified opportunity zones. Each U.S. state has its own qualified opportunity zones.

  1. Relief regarding 180-day investment requirement for QOF investors.

Background

If a taxpayer has gain from the sale or exchange of property with an unrelated person, the taxpayer can elect to exclude from gross income the amount of such gain that the taxpayer invests in a QOF during the 180-day period following the date of such sale or exchange (“180-day investment requirement”).

Relief

The Notice states that if a taxpayer’s 180th day to invest in a QOF falls on or after April 1, 2020, and before December 31, 2020, the taxpayer now has until December 31, 2020 to invest the gain in a QOF.

III. Relief regarding 90% investment standard for QOFs.

Background

For an investment vehicle to qualify as a QOF, it must be corporation or a partnership organized for the purpose of investing in QOZ property (other than another QOF).  The QOF must satisfy the 90% investment standard, meaning it must hold at least 90% of its assets in QOZ property, determined by the average of the percentage of QOZ property held by the QOF measured semi-annually on (i) on the last day of the first 6-month period of the QOF’s tax year (June 30 for calendar year taxpayers), and (ii) on the last day of the QOF’s tax year.

If the average of the percentages of the QOZ property held by a QOF on the semi-annual testing dates fails to meet the 90% investment standard, the QOF must pay a penalty for each month that the QOF fails to meet the standard. However, no such penalty is imposed “with respect to any failure if it is shown that such failure is due to reasonable cause.”

Relief

The Notice provides relief by stating that, in the case of a QOF whose (i) last day of the first 6-month period of the tax year or (ii) last day of the tax year falls within the period beginning on April 1, 2020, and ending on December 31, 2020, any failure by that QOF to satisfy the 90% investment standard for that tax year is disregarded for purposes of determining whether the QOF meets the 90% investment standard rules. This prevents QOFs from being held liable for the statutory penalty.

  1. Relief regarding working capital safe harbor for QOZ businesses.

Background

An entity must meet certain requirements to be a “QOZ business,” including the requirement that less than 5% of the average of the aggregate unadjusted bases of the entity’s property be attributable to “nonqualified financial property” (as defined in the Internal Revenue Code — essentially cash and cash equivalents). However, if the QOF satisfies the “working capital safe harbor”, the QOF may hold an unlimited percentage of its assets in cash and short-term instruments.

One of the safe harbor requirements is that the business keep a written schedule consistent with the ordinary start-up of a trade or business for the expenditure of the working capital assets within 31 months of the receipt by the business of the assets. A QOZ business can extend the working capital safe harbor period to a maximum of 62 months. If a QOZ business is located in a QOZ within a presidentially declared disaster area, then the QOZ business may receive an additional 24 months to expend its working capital assets.

Relief

The Notice provides relief by stating that, as a result of the emergency declaration by President Trump on March 13, 2020 regarding COVID-19, all QOZ businesses covered by the working capital safe harbor before December 31, 2020 now will receive up to 24 additional months to expend the working capital assets of the QOZ business (i.e., the QOZ business now has up to 86 months to expend working capital).

  1. Relief regarding 30-month substantial improvement period for QOFs.

Background

QOZ Property includes tangible property acquired after 2017 if (i) the entity puts the property to its original use in the QOZ (“original use requirement”), or (ii) the property is substantially improved (“substantial improvement requirement”).

The substantial improvement requirement is met only if, during any 30-month period beginning after the date of acquisition, there are “additions to basis with respect to such property” that, in the aggregate, exceed the adjusted basis of that property as of the beginning of that 30-month period (“30-month substantial improvement period”).

Relief

The Notice provides relief by stating that, for purposes of the substantial improvement requirement, the period beginning on April 1, 2020 and ending on December 31, 2020 is disregarded in determining any 30-month substantial improvement period.

  1. Relief regarding 12-month reinvestment period for QOFs.

Background

If a QOF sells or disposes of some or all of its QOZ property or if a distribution with respect to the QOF’s QOZ stock is treated as a return of capital, and if the QOF reinvests some or all of the proceeds in QOZ property by the last day of the 12-month period beginning on the date of the distribution, sale, or disposition, then the reinvested proceeds are treated as QOZ property for purposes of the 90% investment standard.

To qualify for such treatment, the QOF needs to hold such proceeds continuously in cash, cash equivalents, or debt instruments with a term of 18 months or less. If the QOF’s plan to reinvest some or all of such proceeds in QOZ property is delayed due to a presidentially declared disaster, then the QOF may receive up to an additional 12 months to reinvest the proceeds, provided that the QOF invests the proceeds in the manner originally intended before the disaster.

Relief

The Notice provides relief by stating that if any QOF’s 12-month reinvestment period includes January 20, 2020, then that QOF receives up to an additional 12 months to reinvest the proceeds in QOZ property.

Post Moratorium Evictions

As the first of the rent moratoriums are expiring, landlords throughout California are eager to file unlawful detainer actions to obtain possession of their properties from tenants who have failed to pay rent or comply with repayment obligations. While it is natural for landlords to want to immediately initiate unlawful-detainer proceedings, they should proceed with caution. Landlords who issued 3-day or 30-day notices to their tenants for failure to pay rent during the moratorium period would be wise not to rely on those notices as the basis of an unlawful detainer action.

Many of the moratoriums specifically prohibit the issuance of those notices during their operative period.  For the overly eager landlord filing a prompt unlawful-detainer action, that action may fail because it is based on a defective notice issued at a time when it was specifically prohibited by a moratorium.

While it is understandable that landlords want to recoup their rents and obtain possession, care must be given to ensure that the unlawful detainers are based on enforceable notices, which do not violate the moratoriums. Only valid notices will permit landlords to obtain possession and judgments for past rent as expeditiously as possible. Proceeding on the basis of an invalid notice will be counterproductive and delay matters further.

The lawyers of Weintraub Tobin are able to discuss any notices a landlord may have provided to confirm their appropriateness for an unlawful-detainer proceeding to avoid newly enacted defenses.

Paycheck Protection Program Flexibility Act of 2020

On June 5, 2020, President Trump signed into law H.R. 7010 – the Paycheck Protection Program Flexibility Act of 2020 (“PPPFA”). The PPPFA makes significant borrower favorable amendments to the Paycheck Protection Program (“PPP”).

Background.

As our readers know, the PPP loan program was enacted pursuant to the CARES Act as a tool to help small businesses keep employees on their payroll. The draw of the program is the ability for borrowers to have the loans forgiven. In other words, the loans can be essentially converted into tax-free grants. One caveat is that borrowers are permitted to spend PPP loan proceeds on very limited types of expenditures. PPP loans may only be spent on payroll, rent, utilities and interest on certain pre-existing obligations.

In order to obtain loan forgiveness additional conditions must be satisfied. The CARES Act permitted loan forgiveness only to the extent the loan proceeds were spent during an eight-week period following loan origination (the “Covered Period”). The Small Business Administration (“SBA”) added a requirement that payroll expenses constitute at least 75% of Covered Period expenditures to achieve full loan forgiveness. Moreover, subject to one large exception, a portion of loan forgiveness will be lost for borrowers who reduce the number of full-time equivalents on their payroll OR reduce the average hourly wage or annual salary of an employee by more than 25%. The aforementioned exception to loan forgiveness reduction applies (in its original form) where (i) reductions in full-time equivalents or average hourly wages and salaries took place between February 15 and April 26, 2020 and (ii) the number of full-time equivalents and compensation are restored by June 30, 2020.

PPP Flexibility Act Changes.

Longer Covered Period, Reduced Payroll Costs Requirement. The most significant changes are an increase in the Covered Period to 24 weeks from 8 weeks; and the replacement of the 75% payroll expenditure requirement with a reduced 60% payroll expenditure requirement. In other words, borrowers now have 24 weeks to spend their PPP loan proceeds and can spend up to 40% of the loan amount on rent, utilities and interest on pre-existing debts without forfeiting any loan forgiveness.

Borrowers with existing PPP loans can choose to stick with the original 8-week Covered Period.  Such borrowers will be obligated to maintain payroll levels only through their original 8-week Covered Period in order to qualify for maximum loan forgiveness (or qualify under the Restoration Rule described below). On the other hand, borrowers using the new expanded 24-week covered period will need to maintain payroll levels for the full 24 weeks in order to avoid reductions in their forgivable loan amounts (or qualify under the Restoration Rule).

Restoration Rule.  As noted above, a reduction in payroll levels during the Covered Period would result in a reduction in the amount of the PPP loan forgiven unless the payroll levels were restored by June 30, 2020.  The PPPFA replaces the June 30, 2020 date with December 31, 2020.  Accordingly, if the borrower cuts the number of full-time equivalents or the salary or wages of its employees between February 15, 2020 and April 26, 2020, those reductions will not result in a loss of loan forgiveness if those cuts are restored by December 31, 2020.

Maturity.  After enactment of the PPPFA, PPP loans with any unforgiven loan amounts will have a minimum maturity of 5 years (previously 2 years).  The PPPFA states that lenders and borrowers will not be prohibited from mutually agreeing to modify the maturity of pre-PPPFA PPP loans to conform to the new 5-year minimum maturity date provided by the PPPFA.

Loan Payment Deferral.  The PPPFA extends the loan payment deferral period.  Originally, borrowers were not required to make any loan payments for six months.  Now PPP loan repayment will be deferred until the date on which the SBA remits the loan forgiveness amount to the lender.  PPP loan recipients who do not apply for forgiveness will not be required to make loan payments until 10 months following the close of the Covered Period.

Rehiring, Employee Availability. Additionally, the borrower will not suffer a reduction of its loan forgiveness amount due to reductions in the number of full-time equivalent employees IF the borrower is able to document EITHER:

(A) The borrower was both unable to rehire individuals who were employees on February 15, 2020 AND unable to hire similarly qualified employees on or before December 31, 2020;

OR

(B) The borrower was unable to return to the same level of business activity as of February 15, 2020 due to compliance with requirements or guidance issued by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID–19.

Payroll Tax Deferral. PPP borrowers are now permitted to delay paying the employer’s share of 2020 payroll taxes.  One-half of the employer’s share of payroll taxes are now due December 31, 2021 and remaining half will be due December 31, 2022. PPP borrowers can now enjoy this deferral even if they have their PPP loan forgiven. Previously, PPP borrowers were denied this benefit once their loans were forgiven.

The new PPPFA changes will benefit some PPP borrowers more than others. The SBA and Treasury Department will likely provide additional guidance soon.

Business Owners – Planning Can Help Prevent Employer Liability During Civil Unrest

My colleague Brendan Begley blogged last week about the risks employers face due to the threat of COVID-19 in the workplace.  As he noted, employees have the right to expect employers to follow city, county, and state orders and take reasonable precautions to minimize the risk to a known “direct threat” to health and safety.

Now, in the wake of the horrific death of George Floyd 10 days ago, the citizens of our nation have risen up to demand racial equality and an end to systemic injustice.  Our nation’s pent up frustrations have boiled over, and, unfortunately, some of that frustration is being expressed violently.

In the last few days, I’ve been hearing from business owners who were focused on steps to reopen after COVID-19, but are now worried about preventing potential destruction of property, theft, and violence.  While owners work to protect their businesses, they must also not forget to take reasonable steps to protect their employees from harm.

Southern District of New York Court Orders “All Remote” Bench Trial

In Ferring Pharmaceuticals Inc. et al v. Serenity Pharmaceuticals, LLC et al, 1-17-cv-09922 (SDNY 2020-05-27, Order), Chief Judge C.J. McMahon of the Southern District of New York ordered an upcoming bench trial set to begin on July 6, 2020 in a patent infringement case to be “all remote,” at least in the sense that at a minimum all the witnesses will testify remotely.

Judge McMahon stated that the decision to go “all remote” was “a no-brainer.”  The Judge reasoned that under the protocols the Southern District of New York was adopting, individuals who have traveled abroad in the preceding two weeks would not be permitted to enter the courthouse.  And, it was noted that in this case there would be at least five or six witnesses — about half of the fact witnesses, and all but one non-expert — who would be traveling in from Europe. Putting to one side the issue of whether they could get into the United States at all — which just introduces additional uncertainty in a situation where no more is needed — Judge McMahon noted that they would have to arrive in New York by June 22 just so they could quarantine for two weeks before they would be allowed into the courthouse.

Thus, Judge McMahon determined that “given all the constraints, the witnesses should testify from where they reside. I will have read their directs and the expert reports. I can watch their crosses. Every witness for both sides gets the same benefit and suffers from the same perceived handicaps. It is the fairest way to proceed.”

As for the attorneys, Judge McMahon stated that is was up to them whether they would prefer to cross examine remotely or from the courtroom.  However, Judge McMahon made clear that both sides needed to come to an agreement because the Court “will not have just one side’s lawyers in the courtroom.”  Judge McMahon did state that she also might consider having lead trial counsel come to court after all the witness testimony to have “a real bench trial closing argument,” but strongly discouraged bringing a lot of people to court for such a closing argument.

Judge McMahon then outlined some of the other procedures for trial, such as using a dedicated computer on which she can watch the testimony that will have no connection to the court’s secure intranet, shipping of sealed exhibit binders to witnesses, possibly having an attorney present with witnesses during their testimony, and not breaking exhibit seals or showing exhibits to witnesses prematurely.

In sum, this case is an example of a Court working as hard as it can to continue moving cases and trials forward in these difficult times as best as possible while still striving to ensure fairness in the process.

Inoculating Against the Coming Spread of Employee Lawsuits Related to COVID-19

As workplaces begin reopening in the coming weeks, attorneys are predicting a rash of lawsuits by employees against their employers related to the COVID-19 pandemic.  It seems clear that workers-compensation preemption may immunize employers from most civil actions alleging that employees became infected with the virus on the job.  However, other types of employee lawsuits may reach fever pitch.

There does not appear to be any vaccination to alleviate many of the anticipated claims.  Still, just as good hygiene practices may help flatten the curve of the actual coronavirus, good employment practices can help reduce the incidence of such lawsuits in your workplace.  Here are four types of employment claims that are likely to spread like a contagion as employees are expected to (or actually do) return to their jobs, along with some inoculations that employers should consider:

Disability Claims

According to at least one media outlet, the head of the U.S. Equal Employment Opportunity Commission’s New York office reported this week that charges accusing employers of failing to accommodate workers’ disabilities are outpacing any other allegation tied to COVID-19 in the Empire State.  Employers should anticipate similar developments here in the Golden State.

Indeed, California’s Fair Employment and Housing Act (“FEHA”) and its federal counterpart, the Americans with Disabilities Act (“ADA”), both prohibit disability discrimination and require employers to provide reasonable accommodations to disabled employees.  An ounce of prevention – by engaging in the interactive process (from a safe distance) with infected or otherwise disabled employees to identify reasonable accommodations – often is more economical than the pound of cure that would come from prevailing in a failure-to-accommodate lawsuit.

In this regard, employers should remember that each request for an accommodation must be analyzed independently, and that a leave of absence may constitute a reasonable accommodation.  Thus, if employees request a leave of absence, either to get over their own COVID-19 infection or to reduce the risk of being exposed to the coronavirus due to some preexisting disability that puts them at greater risk, serious thought must be given to fashioning a workable accommodation.

Some employers may find respite in the notion that a coronavirus infection might not constitute an actual disability under the ADA or the FEHA, as the illness typically impairs its victims moderately or for only a short duration of time.  But this brand of comfort is often an ineffective placebo and not a recommended treatment to prevent the spread of disability lawsuits.  That is because the effects of a COVID-19 infection may be more long-lasting or create a more severe impairment for some individuals.  Thus, it would be a mistake for an employer to assume that such an infection can never amount to a protected disability.

At the same time, both the FEHA and the ADA prohibit employers from discriminating on the basis of a perceived disability.  Thus, it is foreseeable that some employers might decide to treat certain workers differently than others because they believe certain workers have some other actual or perceived medical condition (e.g., a persistent cough, or diabetes, or an immunodeficiency, or Chronic Obstructive Pulmonary Disease).  Employers may worry that letting such vulnerable employees return to the job or interact with coworkers might make them more susceptible to getting or spreading COVID-19.  While treating such employees differently in this manner may seem (or even might actually be) an act of caring and concern that would rival Florence Nightingale, such actions can lead to costly challenges in court (especially if they are applied in a clumsy fashion).

Disability harassment is another type of claim that employers may anticipate.  One way this type of claim may arise is when coworkers, managers or supervisors develop a notion that a particular employee was (or is) infected with coronavirus and spread (or is spreading) the sickness to the workplace.  If such coworkers, managers or supervisors are allowed to harass, insult or ostracize an employee on that basis, the employer may find itself in need of some urgent care from lawyers.

Tameny Claims

The so-called Tameny claim is named after the California Supreme Court’s decision 40 years ago in Tameny v. Atlantic Richfield Co. (1980) 27 Cal.3d 167.  Under the high court’s ruling in that case, a worker may pursue a lawsuit when he or she alleges that the employer terminated his or her employment in violation of some public policy.

It is difficult to tally how many Tameny claims are spreading in California, as the administrative agencies that handle claims of disability discrimination (or other types of discrimination, harassment or retaliation) typically are not responsible for investigating a Tameny claim.  So we may not know for many months how many Tameny claims have been filed in court; nonetheless, there is good reason to think the number will be high.

Keep in mind that California has a public policy that requires employers to “furnish employment and a place of employment that is safe and healthful for the employees therein.”  (Cal. Labor Code, § 6400.)  Also bear in mind that California has a public policy that prohibits employers from “preventing an employee from disclosing information to a government or law enforcement agency,” or to a manager or supervisor, “who has authority to investigate, discover, or correct the violation or noncompliance.”  (Cal. Labor Code, § 1102.5.)

With those public policies in mind, there are two general ways to become exposed to a Tameny affliction.  One arises when an employee is fired for refusing to execute some task on the job that actually would be unlawful.  The second arises when the employee is fired for complaining about what he or she reasonably perceives to be unlawful activity in the workplace (even if the activity in question turns out to be legal).

Regarding the first variety, it is easy to foresee the following scenario developing:  An employer directs an employee to return to work and the employee refuses and is fired.  If the employer instructed the employee to return before the government lifted restrictions for that specific workplace, terminating the employee for refusing to return may violate a public policy.  Likewise, if the employer waits until the restrictions lift but then fails to enforce regulations requiring social distancing or sanitary practices or the donning of personal protective equipment (“PPE”), firing an employee for refusing to work under such conditions may also be in violation of public policy.

Turning to the second type of Tameny ailments, it is equally easy to anticipate these scenarios occurring:  An employer directs an employee to return to work either before the restrictions are lifted or after the restrictions are lifted but without implementing or enforcing policies for social distancing, sanitation, or PPE.  The employee complies, returns to the job, and performs his or her work, but not quietly or without protest.  Instead, the employee complains about the workplace conditions, either to a governmental agency or a supervisor, and is subsequently fired.  Terminating an employee for complaining about such workplace conditions may be in violation of public policy.

One aspect of many Tameny claims that make them look less severe than other types of claims is that they often do not result in the employer having to pay the employee’s attorney fees.  However, given the other undesirable symptoms and bad side-effects that such lawsuits can trigger (e.g., lost productivity due to litigation, or the risk of emotional-distress and even punitive damages), that is a bit like telling a sick patient suffering from simultaneous chills and sweats that a fever of 103.8 degrees is not as bad as one that is 104 degrees.

Leave Claims

There are a number of federal and state laws that require various employers to provide a certain amount of protected leave to covered employees; for example, the federal Families First Coronavirus Response Act (“FFCRA”), the federal Family and Medical Leave Act (“FMLA”) and the California Family Rights Act (“CFRA”).

The FFCRA was passed just this year to provide workers with protected leave if they have been impacted in various ways by the coronavirus and related shelter-in-place orders.  It has already resulted in what some might call an epidemic of lawsuits where employees have claimed that their employer interfered with their protected leave, denied them benefits, or fired them in retaliation for requesting leave.

Meanwhile, the FMLA and the CFRA are not geared specifically for coronavirus-related leaves, like the FFCRA is, but those laws may still protect such leaves of absence.  Making things more complicated, there may be overlap between these leave entitlements and some employers may be subject to all of these laws, while others are subject to some or none of them.

It is very probable that employers will be faced with many more leave requests, either to care for someone who has been infected with COVID-19 or to stay at home with a child whose school or daycare facility remains closed while some restrictions are lifted.  Of course, employees also may request leave to deal with other health conditions that deteriorated while they were unable to get routine medical treatment while sheltered in place.  Each leave request should be given serious consideration.

Discrimination Claims

Whereas some employers may be struggling with too many employees in need of leave, others may be grappling with having to lay off employees due to downturns in business as a result of the shelter-in-place restrictions.  In either scenario, care must be given to how such decisions are made and serious thought must be devoted to the potential results.

Such decisions may trigger claims under the FEHA or its federal counterparts, Title VII of the Civil Rights Act or the Age Discrimination in Employment Act.  Those laws bar making employment decisions on the basis of certain protected categories; for instance, age, race, national-origin, gender or religion.

When deciding which employees are going to be given leaves of absence, or laid off, or assigned to certain duties, consistent procedures and rationales must be followed.  Even then, under what is called the disparate-impact type of claim, a neutral policy or practice can lead to discrimination liability if it has a statistically disproportionate impact on a certain class of workers.

Inoculate Against Such Claims

There is no vaccine that will prevent or get rid of all such claims, but the harmful effects of such lawsuits can be ameliorated by following certain precautions.

First, be sensitive to actual or perceived disabilities, do not make medical assumptions, work hard to identify and implement reasonable accommodations for disabled employees, and be vigilant in guarding against harassment of employees on the basis of some perceived or actual medical condition.

Second, take every request for a disability accommodation or leave of absence seriously and analyze each one independently on its own merits.

Third, do not violate or direct your employees to violate governmental shelter-in-place, social-distancing, sanitary or PPE restrictions or regulations.

Fourth, whenever making a termination decision, be sure it is for reasons that have absolutely nothing to do with the employee’s refusal to violate some public policy or the employee’s complaints about reasonably perceived violations of some public policy.

Fifth, make certain that personnel decisions have nothing to with protected classifications (e.g., age, race, gender, religion) and carefully analyze how decisions may impact protected classes of employees.

Just as there presently is no medicine that is sure to eradicate the current pandemic, there is no one-size-fits-all regimen that will completely wipeout such employment claims.  Even these steps cannot completely immunize employers against all these types of lawsuits, yet failing to adopt such protective measures probably will increase the risk of exposure to these afflictions.

Finally, it seems obvious that getting prompt medical attention may stem the more serious effects of a disease; by the same token, obtaining early legal advice may decrease the incidence or cost of these exorbitant types of lawsuits.

The DFEH’s Free On-Line Sexual Harassment Prevention Training For Non-Supervisors is FINALLY Available

On May 20, 2020, the California Department of Fair Employment and Housing (DFEH) announced that it has finally launched free anti-sexual harassment training for non-supervisory employees. The online training, which is available through DFEH’s website – https://www.dfeh.ca.gov/shpt/ – will meet an employer’s obligation to provide training to non-supervisory employees by January 1, 2021.

Section 12950.1 of the California Government Code requires employers with five or more employees to provide at least one-hour of classroom or other effective interactive training and education regarding sexual harassment prevention to all non-supervisory employees in California.

Webinar – Getting Back to Business: Building Your Net to Minimize Your Risk

  • When: Jun 3, 2020
  • Where: Zoom - Online

On June 3, 2020,  Lizbeth (Beth) V. West was a panelist for the webinar Getting Back to Business: Building your Net to Minimize Risk, hosted by the Capital Region Family Business Center.

Summary:
A panel of business leaders shared their insights and experiences in bringing employees, vendors, and the public back to business. They detailed the steps to create a safe work environment, the psychological hurdles, the physical preparations, communication tools, and dealing with employees who don’t want to return.  The panel also shared their first-hand “stories from the front lines” as businesses open up.

A recording of the webinar is available on the Capital Region Family Business Center website.