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Restaurant SIG Endorses WCIRB Sept 1 Rating Changes

The California Restaurant Mutual Benefit Corporation (CRMBC) is endorsing the upcoming changes in workers’ compensation classifications for California’s restaurant and hospitality sectors, as announced by the Workers’ Compensation Insurance Rating Bureau of California (WCIRB).

CRMBC is a California Self-Insured Group (SIG) formed BY restaurant owners FOR restaurant owners. Choosing to opt out of commercial insurance that uses premiums to boost their substantial profits and overhead, CRMBC is a group of business-savvy restaurant owners who joined forces to self-insure their work comp for sustainable cost savings.

This significant update to the classification system will take effect on September 1, 2024. This update, a result of a comprehensive study, introduces six new classifications within the restaurant and hospitality sectors to better reflect the diverse operations and risk profiles across the industry.

The six new classifications, effective September 1, 2024, are:

– – 9058, Hotels, Motels or Short-Term Residential Housing – food or beverage employees
– – 9080, Restaurants – full service
– – 9081(1), Restaurants – N.O.C.
– – 9082, Caterers – not restaurants
– – 9083, Restaurants – fast food or fast casual
– – 9084, Bars or Taverns – not restaurants

The following classifications will also be included in the Food and Beverage Service Industry Group:

– – 8078(1), Sandwich Shops
– – 8078(2), Beverage Preparation Shops
– – 8078(3), Ice Cream or Frozen Yogurt Shops
– – 9081(2), Concessionaires ​​​​​
– – – – Classification Code changing from 9079(2) effective September 1, 2024

Previously consolidated under broad categories, these new classifications aim to provide a more accurate representation of risk, thereby enabling fairer premium assessments. The changes are designed to capture the evolving dynamics of the restaurant industry, addressing the need for granularity in risk assessment and insurance rate determination. This strategic adjustment is part of WCIRB’s ongoing efforts to enhance the standard classification system, ensuring it remains relevant and responsive to industry trends.

Kaya Stanley, CEO and Board Chair of CRMBC urges workers’ compensation brokers and restaurant owners to engage actively with the forthcoming changes. “Understanding the implications of the new classifications on policies and rates is crucial,” Stanely said. “While the immediate impact on rates is expected to be neutral, the long-term benefits of more accurately identifying risks and performance cannot be understated. This reclassification will enable more strategic decisions regarding loss prevention, safety programs, and overall risk management – ultimately benefiting the entire industry.”

According to the WCIRB, the changes to workers’ compensation classifications are more than administrative adjustments; they are a forward-looking approach to better serve the needs of California’s diverse restaurant industry. By breaking down the broad Classification 9079(1) category into six detailed classes, insurance will better align with businesses’ actual risks and operations.

Bill Mudge, WCIRB President and CEO, commented, “We appreciate the opportunity to educate all workers’ compensation system colleagues, including CRMBC members and restaurant owners across California, on the upcoming changes to Classification 9079, Restaurants or Taverns, as approved by the Insurance Commissioner and effective September 1, 2024. Stakeholders can find our latest interactive and educational resources on our website.”

WCAB Issues en bank Notice of Intent to Sanction Applicant Firm

The WCAB just published en banc orders that involve a course of conduct that appears to have occurred across eight (8) cases, involving attorney Susan Garrett and hearing representative Lance Garrett’s representation of seven applicants and one lien claimant.

It appears that in each of these cases Garrett Law Group through Susan Garrett or its hearing representative Lance Garrett, while supervised by attorney Susan Garrett, requested a series of continuances of multiple trial dates. However, the requests for continuance due to calendar conflict were not filed when the notice of hearing was issued. Instead, they waited until days before trial to request a continuance.”

“When the WCJ denied the request for continuance, they waited until the day of trial to file petitions for reconsideration in lieu of appearing for trial and to prevent the matters from proceeding, even though they were given notice by the Appeals Board in a prior decision that reconsideration is not proper from an order setting the matter for trial.”

“That is, based upon the timing of their filings, it appears that they filed the petitions for reconsideration solely to delay the trial proceedings in each case, as evidenced by their action of not appearing at trial in each case and not ensuring that their client appeared.”

“We emphasize that filing a petition for reconsideration does not by itself excuse any party from appearing at a properly noticed hearing because only the Workers’ Compensation Appeals Board can excuse an appearance. Moreover, their delay in seeking a continuance and filing for removal on or near the day of trial would not have provided sufficient time for the Appeals Board to act.”

Consequently, on April 10, 2024, the Appeals Board issued an en banc order consolidating eight cases and issued a notice of intention to impose costs and sanctions collectively up to $20,000.00 against attorney Susan Garrett (CA BAR #195580) in eight (8) instances where it appeared that she filed petitions for reconsideration with willful intent to disrupt or delay the proceedings of the Workers’ Compensation Appeals Board or with an improper motive, or where it appeared that such actions were indisputably without merit.

The Appeals Board issued a second notice of intention to impose costs and sanctions collectively up to $20,000.00 against hearing representative Lance Garrett in eight (8) instances where it appeared that he filed petitions for reconsideration with willful intent to disrupt or delay the proceedings of the Workers’ Compensation Appeals Board or with an improper motive, or where it appeared that such actions were indisputably without merit.

In the en banc notice of intent, the Appeals Board makes clear that a request for a continuance is not a final order as it does not resolve any threshold issue. Where a party files a petition for reconsideration without good cause, a notice of intent to impose sanctions may issue.

“In each of these cases, eight (8) instances total, attorney Susan Garrett and hearing representative Lance Garrett each appear to have engaged in the similar tactic of requesting trial continuances, then filing a petition for reconsideration of the order denying the trial continuance on or near the day of trial and then failing to appear at trial”.

Filing petitions for reconsideration designed to delay a trial can be described as frivolous and/or bad-faith conduct, which is sanctionable. (See United States Fire Ins. Co. v. Workers’ Comp. Appeals Bd. (Palafox) (2013), 78 Cal.Comp.Cases 1021 [2013 Cal. Wrk. Comp. LEXIS 137].) “Based upon our review of the record, it appears that the following same or similar sanctionable conduct has occurred in each of these cases.”

Both Susan and Lance Garrett have 20 plus 5 days to file a response to the notice.

En banc decisions of the Appeals Board are binding precedent on all Appeals Board panels and workers’ compensation administrative law judges. (Cal. Code Regs., tit. 8, § 10325; City of Long Beach v. Workers’ Comp. Appeals Bd. (Garcia) (2005) 126 Cal.App.4th 298, 316, fn. 5 [70 Cal.Comp.Cases 109]; Gee v. Workers’ Comp. Appeals Bd. (2002) 96 Cal.App.4th 1418, 1424, fn. 6 [67 Cal.Comp.Cases 236].) This en banc decision is also adopted as a precedent decision pursuant to Government Code section 11425.60(b).

It is interesting that the WCAB has elevated these cases to an en banc effort. One possible reason is that the WCAB intends to deal with frivilous petitions for reconsideration/removal more aggressively.

Insurance Industry Becoming Major User of Commercial Drones

Insurance is among the industries already deploying and expanding the potential of commercial drones,eyeing two strategic objectives: better risk management through improved data collection, analysis, and actionable insights; and reduced operational costs through improved efficiency and effectiveness in claims adjudication, claims processing, and customer experience.

Several leading insurance companies were first in the air, securing FAA permission as early as 2015 to use drones for aerial data collection, catastrophe response, research and development, underwriting, and claims resolution support. Since then, more insurance companies, both national and regional, have begun using drones.

Sensing disruptive potential, numerous insurance technology (insurtech) firms have entered the drone domain to offer both comprehensive and specialized services to the insurance industry.

For example,Betterview, an insurtech devoted to using drones for property inspections, has executed more than 6,000 rooftop inspections in the last two years. the company signed a partnership agreement with Loss Control 360, which makes software for insurance companies and inspectors. According to it’s website “Betterview is the Property Intelligence & Risk Management Solution the insurance industry depends on to identify and mitigate property risk, improve underwriting and inspection efficiency, and build a more transparent customer experience.​” Nearmap, one of the world’s largest location intelligence and aerial imagery solutions providers, has signed an agreement to acquire Betterview.

According to a report by Deliotte drone deployment is rapidly expanding and evolving, with current and potential applications spanning the insurance value chain. For example:

Pre-loss

– – Risk engineering and pricing – Aerial site assessments can identify property features that allow the owner either to seek a reduced risk profile or to take appropriate actions to lower overall risk and justify premium discounts.
– – Natural disaster monitoring – Drones can be quickly and safely deployed to monitor areas threatened by natural disasters. Governments working with insurance companies can monitor a situation and alert local residents to potential danger.

Post-loss

– – Inspection – Drones can provide a safer, faster, and more cost-effective way to conduct a site inspection, particularly in challenging working conditions.
– – Risk assessment – Drones may allow insurers to engage a generalist, rather than a specialist, to perform field assessments and obtain high-quality visuals.
– – Claims adjudication – The precise photos that drones take can potentially improve the quality of the claims adjudication process.
– – Fraud prevention – The moment a property claim is reported (First Notice of Loss), a drone could be deployed to inspect the claims site, increasing information capture accuracy and timeliness.

But Deloitte cautions that “Courts have upheld trespass claims involving aircraft operated below navigable airspace that interfered with a property owner’s use of their land.In addition, drone operators may be liable for trespassing for physically entering on land to retrieve a drone. In addition, where risk assessment is conducted by drone, regulators may expect insurers to seek prior approval from insureds. Because drones are capable of flying at lower altitudes than manned aircraft, common-law nuisance claims against drone operators might be successful.”

However, according to a recent report from The Wall Street Journal aerial home inspections are something insurance companies claim their customers give consent to when they purchase a policy, and that it allows them to “respond more quickly to disasters and charge rates that better reflect a property’s risk.” The companies also claim that aerial home inspections are “less intrusive” than visiting customers’ homes to do inspections.

Major insurance companies such as American International Group, State Farm and Allstate have gained approval from the Federal Aviation Administration to use drones for insurance adjustment claims over the past few years.

COVID-19 Fraud Enforcement Task Force Publishes 2024 Report

In May 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Justice Department in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The task force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts.

The Justice Department’s COVID-19 Fraud Enforcement Task Force (CFETF) just released its 2024 report detailing the efforts of the task force and its member agencies in response to widespread fraud involving many COVID-19 relief programs targeted by fraudsters and other criminals who sought to exploit the government’s relief efforts for their personal gain.

To date, the efforts of the task force’s member agencies has led to criminal charges against more than 3,500 defendants for losses of over $2 billion, civil enforcement actions resulting in more than 400 civil settlements and judgments of over $100 million, and over $1.4 billion seized or forfeited.

In addition to the efforts noted above, the CFETF has established five strike forces to focus on the most complex and harmful pandemic fraud – often committed by overseas, organized, or violent actors. Those strike forces, located in the U.S. Attorneys’ Offices across the country including the Districts of Maryland, New Jersey, Colorado, the Southern District of Florida, and a joint task force co-located in the Eastern and Central Districts of California, are responsible for indicting 250 defendants to date, including gang members, inveterate fraudsters, and overseas rings committing a myriad of cyber-enabled fraud against our citizens and government programs.

The Eastern and Central Districts of California joint COVID Fraud Strike Force was formed in August 2022. As strike force district, the Eastern and Central Districts of California oversee agents, analysts, and AUSAs to bring the most impactful criminal pandemic fraud cases, often involving multiple CARES Act programs, foreign actors, violent perpetrators, or large loss amounts.

Since the inception of the Strike Force, the Eastern District of California has criminally charged 17 cases with associated actual losses of over $20 million.

The Central District of California has joined with FBI, IRS CI, SBA-OIG, HHSOIG, DOL-OIG, TIGTA, USSS, and several local law enforcement agencies to initiate 37 criminal cases involving 72 individuals suspected of committing PPP, EIDL, UI, and ERC fraud, with losses identified of more than approximately $126 million. Approximately 15 of the 35 cases involve fraudulent UI claims with collective losses of more than $53 million. CDCA’s cases have covered a broad spectrum of criminal activity in its diverse population with a view

CFETF members also established the National Unemployment Insurance Fraud Task Force, a first-of-its-kind task force that developed a data sharing and lead development process within OCDETF’s International Organized Crime Intelligence Operation Center (IOC-2), using data from pandemic relief programs. The NUIFTF has used that process to disseminate over 100 leads and intelligence associated with over $3 billion in suspected pandemic fraud.

While this report highlights these accomplishments, much work remains in the fight against COVID-19 fraud. CFETF members have seen their budgets cut, straining resources to develop investigations and prosecute offenders. The first years of the pandemic fraud response were dedicated to coordination, data collection, and the establishment of interagency data sharing to generate actionable leads.

New California Audited Financials Show EDD Financial Disaster

Currently, California has the highest unemployment rate in the nation. The Bureau of Labor Statistics reports the California unemployment rate at 5.3% as of February 2024. The unemployment rates shown are a percentage of the labor force.

Meanwhile its unemployment insurance trust fund is empty, relying on nearly $20 billion in loans from the federal government. By contrast, 26 states opted out of pandemic unemployment programs before the 2021 deadline and many of them are solvent and have a surplus, such as Alabama and Utah.

By contrast, 26 states opted out of pandemic unemployment programs before the 2021 deadline and many of them are solvent and have a surplus, such as Alabama and Utah.

The Golden State is facing an impending fiscal earthquake. Since families and businesses are already fleeing the state in record numbers, straining businesses with higher taxes to refill the unemployment insurance trust fund will only make people run away faster. Therefore, California cannot tax its way out of this problem.

The State of California finally published its fiscal year 2022 audited financial statements on March 15, 2024, 350 days later than the March 31, 2023 deadline required by the municipal bond market and the federal government. Even worse, the tardy audit revealed that California had overstated its “Net Position” by about $29 billion.

The FY 2022 filing delay of 350 days represents a slight improvement from FY 2021, reversing a trend toward worsening delays. Further, California State Controller Malia Cohen set out a goal of getting back to timely financial reporting by FY 2025. As she stated in her submittal letter attached to the newly released FY 2022 ACFR:

“The SCO [State Controller’s Office] will continue to work earnestly toward the goal of publishing the 2024–25 ACFR in March 2026. The SCO’s statewide ACFR process improvement initiative will increase efficiencies and data quality to advance the fiscal integrity of the state into a position to support our continued economic growth. These efforts include establishing an ACFR compilation governance structure, streamlining manual processes, and optimizing technology. The SCO will build upon our work with partner agencies to provide departments the technical assistance and resources needed to accurately and timely submit financial reports.”

Information technology problems also plague the state’s Economic Development Department (EDD), which is still struggling to address pandemic-​era unemployment insurance fraud. The state auditor had to give California a qualified audit opinion because:

“The Employment Development Department had inadequate internal control over its financial reporting for federally funded unemployment insurance (UI) benefits, including not properly estimating the total population of ineligible payments. As a result, the department was unable to provide complete and accurate information for certain accounts within the federally funded portion of the UI program. We were therefore unable to obtain sufficient and appropriate audit evidence to conclude that the department’s balances regarding 100 percent of Other Liabilities, 11 percent of Intergovernmental Revenues, and 12 percent of Health and Human Services Expenditures within the Federal Fund are free from material misstatement.”

The California State government was obliged to add $29 billion of net liabilities to its balance sheet to recognize the amount of improper UI payments that may have to be remitted back to the federal government.

Bureau of Labor Statistics found that California was one of the easiest states to access unemployment insurance during the pandemic, with 83% of all applicants (about a tenth of California adults) successfully receiving benefits. Research shows that recipients are likely to wait to get back to work until just before these benefits run out.

Employee Stock Options are Not Wages Under the Labor Code

Skillz Inc., is a mobile gaming company founded in 2012 by Andrew Paradise and Casey Chafkin. The company provides an online platform where users can play video games and compete with others on their mobile devices. Paradise is Skillz’s Chief Executive Officer and Chafkin is its Chief Revenue Officer. The company is headquartered in Las Vegas and has offices in San Mateo, Seattle, Vancouver and Los Angeles.

Gautam Shah joined Skillz as an employee in 2015 as Director of Skillz Live, a new program Skillz was launching at the time. Shah’s title later changed to Director of Finance and Strategy in mid-2017. Like many people in Silicon Valley who join startups, Shah accepted less cash compensation in exchange for options to buy Skillz stock at a predetermined exercise price.

For startup employees like Shah, the hope is that the company will undergo an initial public offering (IPO) – which would allow those employees to sell their stock on the open market at a significant profit. Indeed, the primary value of stock options like the ones granted to Shah lies with the ability to cash out those options if the company is successful and goes public.

On January 18, 2018 Shah met with Chafkin and told him he wanted a promotion and more compensation. Chafkin responded that a promotion was not appropriate given Shah’s current performance. Shah commented that it did not make sense for him to remain at the company if Skillz did not plan to promote him or increase his compensation.

On January 22, 2018, Shah forwarded an email from his work account to his personal email account. That email contained a confidential business report prepared by Mike Termezy. Termezy was a consultant hired by Skillz to analyze its “most confidential business data to determine where [it] had opportunities to grow [its] business in . . . a very competitive market space.” After a forensic investigation confirmed that he had taken a personal copy of this report he was terminated for cause.

Skillz had an IPO in December 2020. But Shah was not able to realize the Silicon Valley dream because he lost all of his stock options when Skillz terminated him for cause in 2018. As a result, Shah could not exercise his options and sell the Skillz stock he would have acquired upon doing so at a huge profit after the IPO like other former and current Skillz employees.

Shah sued Skillz for breach of contract, alleging that Skillz did not have cause to terminate him and wrongfully prevented him from exercising the stock options he had earned as a Skillz employee. A jury found that Skillz breached its contracts with Shah and awarded Shah over $11.5 million in damages for the lost options. The trial court, however, conditioned the denial of Skillz’s new trial motion on Shah’s acceptance of a remittitur in the amount of $4,358,358. After Shah accepted the remittitur, the court entered judgment for Shah in that amount.

Both parties appealed. Skillz contends that the judgment must be reversed due to defects in the jury instructions and special verdict forms. Skillz further contends that the damages awarded to Shah are “contrary to law” because they were not measured as of the date of breach, requiring either a far lower award or a new trial on damages. Meanwhile, Shah contends that the jury verdict in excess of $11.5 million should be reinstated because of errors in the trial court’s new trial orders and remittitur. Shah also contends that the court erred in dismissing his tort claims before trial because his stock options are “wages” under the Labor Code.

The Court of Appeal affirmed in part, and reversed in part in the partially published case of Sah v Skillz Inc., -A165372 (April 2024). In the published component of the decision, it was concluded that “stock options are not wages under the Labor Code.” The reasoning of this conclusion is very relevant to the employment law community.

“In the last argument of his cross-appeal, Shah contends we should reverse the trial court’s directed verdict dismissing his tort claims for retaliation and wrongful termination. According to Shah, the court erred when it concluded that stock options are not “wages” under the Labor Code. Shah therefore requests that we remand these claims for a new trial so he may pursue “tort damages, including punitive damages and attorneys’ fees.’ We review de novo a directed verdict and find no error here.”

The Court of Appeal agreed with Skillz that stock options are not wages because they “are not ‘amounts.’ They are not money at all. They are contractual rights to buy shares of stock.” (International Business Machines Corp. v. Bajorek (9th Cir. 1999) 191 F.3d 1033, 1039 (IBM); see Falkowki v. Imation Corp. (9th Cir. 2002) 309 F.3d 1123 [stock ” ‘options are not “wages” ‘under [the Labor Code’s] definition of the term ‘wages’ “].) This conclusion comports with the purpose behind Labor Code section 221. As the Ninth Circuit explained in IBM, “[t]he amount of money for which the shares can be sold on the market varies unpredictably from time to time, so it is not ‘fixed or ascertainable’ by any method of calculation when the agreements are made or exercised.” (Ibid.) Thus, the purposes behind Labor Code section 221 of “avoiding secret kickbacks enabling an employer to avoid minimum wage laws” and “protecting employees’ reliance interests in their expected wages, do not apply to stock options.” (IBM, at p. 1039.)”

Is Chief AI Officer (CAIO) the Hottest Job in Healthcare?

According to a recent article in Forbes, in “healthcare, the presence of AI is clearly evident. From optimizing data processing, enhancing patient experience and aiding in medical evaluation and diagnosing, the uses of AI are continuously being tested and expanded.”

At the forefront of AI’s revolution in healthcare is a new executive in the C-suite: the chief AI officer. As this role takes shape, healthcare leaders should be looking closely at the ways AI can be harnessed to responsibly drive patient satisfaction and business objectives.

From saving time to minimizing errors and staying on top of patient communication – a key element of patient satisfaction – chief AI officers should be guiding the ways technology can streamline and automate routine tasks. Through harnessing robotic process automation (RPA), organizations can see significant cost-savings, increases in claims processing, decreases in process times and more. Opportunities to incorporate AI into daily administrative tasks include:

– – Processing insurance claims.
– – Assigning medical and billing codes.
– – Scheduling appointments and coordinating patient reminders/follow-ups.
– – Streamlining employee scheduling.
– – Managing compliance regulation.

Healthcare systems are vast labyrinths that house the clues to how healthcare will continue to evolve. Similar to AI models used in diagnosing that comb through thousands of data sets to quickly identify abnormalities, this technology can also be used to pinpoint trends in how healthy patients are, the services they are utilizing, the ailments they suffer from and how they are interacting with medical professionals. With this data, healthcare executives can engage in forecasting and decision-making for the longevity of their operations and to proactively and holistically approach the healthcare system.

And an article in Modern Healthcare also claimed “As more healthcare organizations adopt artificial intelligence, there’s a newcomer in some C-suites: the chief AI officer.

According to Becker’s Hospital Review, Cleveland Clinic is hiring for a chief artificial intelligence officer, hoping to harness the power of the growing technology for healthcare. The new chief AI officer will guide the integration of the technology across Cleveland Clinic, “ensuring AI innovations align with our vision and objectives,” according to a March job posting.

“Our ambition is to embrace and leverage AI to transform not just the Cleveland Clinic but the industry at large,” the health system wrote.

A handful of other health systems have named AI chiefs in recent months, including Mayo Clinic Arizona, UC San Diego Health and Atlanta-based Emory Healthcare.

At Cleveland Clinic, the chief AI officer will work closely with other C-suite executives, as well as IT, data science and clinical leaders and build a team of AI specialists, data scientists and analysts. The health system is looking for someone with a master’s or PhD in computer science, AI, data science or a related field. The hourly pay ranges from $125.61 to $257.52, or about $261,000 to $537,000 annually.

Despite fears that artificial intelligence would kill jobs, the technology has helped create the “hottest new role in corporate America”: the chief AI officer, The New York Times reported Jan. 29.

“It helps to have a coordinating function with the depth of expertise,” Richard Gray, MD, CEO of Mayo Clinic in Arizona, told the newspaper. “We’re really trying to foster some of these data and AI capabilities throughout every department, every division, every work group.”

In 2023, 122 chiefs or vice presidents of AI joined a forum on company review site Glassdoor, compared to 19 the year prior, The Times reported. However, a 2023 Harvard Business Review article contended that chief AI officers are “set up for failure” because of the risks of the new technology, while LinkedIn’s chief economist told the newspaper that AI-specific job titles will eventually go away because the technology will become so ubiquitous.

WCAB Reverses WCJ’s Rejection of Parties Stipulation to Electronic Testimony

The case of Thomas Perez was initially set for a priority conference on June 7, 2022. At that time, the case was set for trial commencing on November 15, 2022, on the issue of employment  On June 24, 2022, defendant SCIF filed a Petition to permit remote witness trial testimony of defense witnesses Jeff Hinkley and John Eastman.

On June 29, 2022, the WCJ issued an Order denying defendant’s petition on the basis that no good cause had been shown for allowance of such remote testimony. No evidence was identified, nor was any record made or testimony taken prior to denial by the WCJ of the Petition.

Then, on July 7, 2022, defendant filed a Petition for Removal of the June 29, 2022 Order. On November 30, 2022, the WCAB issued an “Opinion and Order Granting Petition for Removal and Decision After Removal,” remanding the matter back to the trial judge to make a record, in order to enable us to understand the basis for the WCJ’s decision per Hamilton v. Lockheed Corporation (2001) 66 Cal.Comp.Cases 473 (Appeals Board en banc).

A trial hearing took place on April 25, 2023, at which time the sole issue to be decided was whether Mr. Hinkley should be granted a remote appearance for purposes of testimony in any future trial related to the case. The stipulations of the parties included the statement that there were no objections to the remote testimony of Mr. Hinkley.

On June 12, 2023, the WCJ issued the F&O denying SCIF’s petition on the basis that defendant failed to demonstrate good cause. So, once again filed a Petition for Removal, which was granted, and the WCJ’s decision was rescinded in the panel decision of Perez v Cleanco Construction et.al, -ADJ2030301 (April 2024).

Any decision of the WCJ granting or denying a petition to allow an electronic appearance or electronic testimony must be reduced to writing and be based upon an adequate record, after providing the parties an opportunity to be heard, in the same manner as any other order touching on the parties’ due process rights. (Lab. Code § 5313; Cal. Code Regs., tit. 8, § 10833; Hamilton v. Lockheed Corporation (Hamilton) (2001) 66 Cal.Comp.Cases 473, citing Evans v. Workmen’s Comp. Appeals Bd. (1968) 68 Cal.2d 753, 755 [33 Cal.Comp.Cases 350, 351].)

A party intending to appear electronically may seek permission to appear electronically at a hearing pursuant to WCAB Rule 10816, by filing a petition pursuant to WCAB Rule 10510. A witness seeking permission to testify electronically may likewise file a petition pursuant to WCAB Rule 10817. The person seeking to appear electronically or testify electronically must demonstrate good cause.

A stipulation between the parties constitutes such good cause, and obviates the need to provide an opportunity to be heard or to create a record. (Cal. Code Regs., tit. 8, § 10835.) Here, the parties stipulated that Mr. Hinckley could testify electronically. By doing so, the parties demonstrated good cause. Thus, as explained below, in order to disregard the stipulation, the WCJ was required to demonstrate good cause to set it aside.

Stipulations are binding on the parties unless, on a showing of good cause, the parties are given permission to withdraw from their agreements. (County of Sacramento v. Workers’ Comp. Appeals Bd. (Weatherall) (2000) 77 Cal.App.4th 1114, 1121 [65 Cal.Comp.Cases 1] (Weatherall).) As defined in Weatherall, “A stipulation is ‘An agreement between opposing counsel . . . ordinarily entered into for the purpose of avoiding delay, trouble, or expense in the conduct of the action,”(Ballentine, Law Dict. (1930) p. 1235, col. 2) and serves ‘to obviate need for proof or to narrow range of litigable issues (Black’s Law Dict. (6th ed. 1990) p. 1415, col. 1) in a legal proceeding. – (Weatherall, supra, at p. 1119.).

It is true the Appeals Board has the discretion under section 5702 to reject factual stipulations. (See Frankfort General Ins. Co. v. Pillsbury (1916) 173 Cal. 56, 58-59 [159 P. 150]. However, the Appeals Board should not reject a stipulation clarifying the issues in controversy absent good cause. (See Robinson v. Workers’ Comp. Appeals Bd. (1987) 194 Cal.App.3d 784, 790-791 [52 Cal.Comp.Cases 419]; Weatherall, supra, p. 1119; See Bailey v. Taaffe (1866) 29 Cal. 422, 424 [exercise of discretion should not be capricious].)

We see no basis on the existing record for the WCJ to have rejected the stipulation. The WCJ’s rejection of the agreement at trial to allow the witness’ remote testimony was stated as ‘[i]n order to properly assess the credibility of a witness, a trier of fact (as well as the other parties in a case) is best served by being able to observe the witness in ‘real life’ rather through a monitor or on a phone.’ (Report, p. 7.) Based on our review, we do not believe that this is a sufficient reason to reject the stipulation.”

Thus, the Order denying defendant’s petition to permit remote testimony of Jeff Hinkley in light of the stipulation of the parties at trial resulted in substantial prejudice and irreparable harm to defendant, as well as unnecessary delay.

Mandating Vehicle Dashcam Be On At All Times Does Not Violate NLRA

Stern Produce Co., an Arizona-based company, operates a wholesale produce distribution center in Phoenix. Since at least 2015, United Food and Commercial Workers, Local 99, has been trying to unionize Stern Produce’s warehouse employees and truck drivers.

In 2015 and 2016, this union filed unfair labor practice charges against Stern Produce, alleging that the company interfered with a scheduled representation election. In 2020, the union again lodged charges against the company. Stern Produce had laid off all its hourly workers at the start of the COVID-19 pandemic and then brought back some drivers when business resumed. The union claimed that Stern Produce had selectively failed to recall pro-union employees and had done so in order to dilute union support in its workforce. These charges were resolved by litigation and/or settlement.

In this current case one of the charges against Stern Produce involves a text message a supervisor sent to delivery truck driver Jose Ruiz. The other charge relates to a written warning a supervisor issued to another driver, Uvaldo Ponce. The evidence with respect to each charge was as follows.

While driving a truck for the company in July 2021, Ruiz parked to take a lunch break and covered the truck’s inward- facing camera. Ruiz’s truck, like virtually all Stern Produce trucks, was equipped with a system transmitting real-time data to the company about the vehicle’s location and operation. The truck was also fitted with one camera with a street view and another with a view of the driver and the truck’s cab. At some point later, Ruiz’s supervisor, transportation manager Nick Barr, sent Ruiz a text message: “Got the uniform guy for sizing bud, and you cant cover the camera it’s against company rules.” When Ruiz saw the message several hours later he replied: “OK Bud muy [sic] lunchtime.” The evidence showed that manager Barr did not know that Ruiz was on a lunch break. There was no set time for drivers to stop for lunch. Ruiz testified that after this solitary incident, manager Barr “never once touched the subject ever again.”

In August 2021, Ponce was at the Stern Produce facility when he heard two fellow drivers, Joe Metzgar and Mohamed Chayko, jokingly call each other “baby.” Ponce told Chayko, “you know they kill people like that in your country.” When Chayko asked Ponce to clarify, Ponce replied, “gays.” Chayko then asked Ponce where he thought Chayko was from. Ponce guessed Afghanistan and then Iraq; Chayko told Ponce he was wrong and left the room.

After concluding their investigation, owner Stern and manager Barr consulted with human resources and concluded that because Ponce had insulted Chayko based on his perceived race, ethnicity, and sexual orientation, Ponce’s conduct warranted a written warning. The written warning stated that Ponce’s comments violated “company policy around the use of disparaging or abusive words, phrases, slurs, and negative stereotyping.”

The union filed unfair-labor-practice charges based on these two incidents. The Board’s General Counsel issued a complaint, alleging that Stern Produce had created an impression of surveillance of organizing activities by making Ruiz aware that he was being watched, and that Ponce’s union support motivated Stern Produce’s decision to give him a written warning for a first-time offense.

The Administrative Law Judge sided with Stern Produce. The ALJ found that the message to Ruiz did not create an impression of surveillance, since manager Barr had engaged in “mere observation” in line with “longstanding company policies” about truck cameras. As for the warning to Ponce, the ALJ determined that it had not been motivated by Ponce’s prounion activities. The ALJ found that Stern Produce had issued the warning without knowing if Ponce was still involved with the union, and that the company had acted based on Ponce’s offensive and discriminatory comments, rather than any antiunion animus.

The National Labor Relations Board reversed the ALJ on both issues. Stern Produce Co., 372. N.L.R.B. No. 74, 2023 WL 2913118 (Apr. 11, 2023). Stern Produce’s petition for judicial review by the Court of Appeals for the D.C. Circuit presents the question whether the Board’s conclusions are “supported by substantial evidence on the record as a whole.”

The D.C. Circuit reversed the NLRB and found that the “Board lacked substantial evidence to find that Stern Produce violated the National Labor Relations Act. Stern Produce’s petition for judicial review is therefore granted, and the Board’s decision and order are vacated. The Board’s cross-application for enforcement was therefore denied in the case of Stern Produce Compay Inc., v NLRB – No. 23-1100 (March 2024).

The Board’s misguided attempt to find a labor-law violation in one text message is ‘the product of a familiar phenomenon’: years ago the Board took an expansive view of the scope of the Act and then, over time, it ‘presse[d] the rationale of that expansion to the limits of its logic.” NLRB v. Int’l Bhd. of Elec. Workers, Loc. 340, 481 U.S. 573, 597 (1987) (Scalia, J., concurring in judgment). The Board then focused its analysis here not on the statutory text – the ‘authoritative source of the law’ – but on its own constructions of (its own constructions of) the Act. Id. at 597-98. The Board extended the Act’s prohibition on ‘coerc[ing]’ employees to first reach acts that ‘reasonably tend’ to coerce, e.g., Blue Flash Express, Inc., 109 N.L.R.B. 591, 593 (1954); then acts that create an impression of surveillance, e.g., Harrington & Richardson, Inc., 136 N.L.R.B. 1095, 1098 (1962); and then ‘out of the ordinary’ actual or perceived surveillance of pro-union activity, e.g., Metal Indus., Inc., 251 N.L.R.B. 1523, 1523 (1980).”

“Relying on that logical progression, the Board here went one step further, asserting that a single communication to a prounion employee referencing a generally applicable policy of employee monitoring fell within Section 8(a)(1)’s ambit as ‘out of the ordinary’ surveillance. That argument, as explained, stretches Board precedent so far that not even ‘fidelity to [the] logic’ of those prior decisions can sustain the Board’s finding.”

The Court of Appeals concluded by commenting “that the Board’s majority and its General Counsel, at least at the time of these proceedings, should have brushed up on the ancient and wise legal doctrine de minimis non curat lex – that is, the law does not concern itself with trifles. Or should not.”

Emergency Ambulance Employees May Remain On-Call During Rest Breaks

Medic Ambulance Service provides advanced life support ambulance services in the North San Francisco Bay area. They are the exclusive 911 ambulance provider for all of Solano County with the exception of Vacaville.

Meghan Silva, an Emergency Medical Technician, filed a class action against Medic Ambulance Service, Inc. alleging it had violated labor laws by requiring that employees remain on call during their rest breaks.

California voters subsequently approved a proposition enacting the Emergency Ambulance Employee Safety and Preparedness Act (EAESPA) (Lab. Code, § 880 et seq.). The EAESPA provides that emergency ambulance employees “shall remain reachable” throughout their work shift and is explicit that this provision is retroactive.

In Calleros v. Rural Metro of San Diego, Inc. (2020) 58 Cal.App.5th 660 (Calleros), the Fourth District rejected an argument that retroactive application of the EAESPA was unconstitutional.

When confronted with the EAESPA and Calleros, Silva’s counsel indicated they would proceed and appeal to the First District for a decision that disagreed with Calleros. Medic filed a motion for judgment on the pleadings (MJOP) and a motion for sanctions. The trial court granted the MJOP, and imposed a $2,000 sanction against Silva’s counsel. Silva and her counsel appealed, renewing their argument that Calleros was wrongly decided and contending that the trial court abused its discretion in imposing sanctions.

The Court of Appeal for the First Appellate District affirmed the trial court, and Calleros in the partially published case of Silva et al. v. Medic Ambulance Service, Inc -A167098 (April 2024).

In December 2016, the California Supreme Court issued its decision in Augustus v. ABM Security Services, Inc. (2016) 2 Cal.5th 257 (Augustus). The class action plaintiffs in that case worked as security guards for ABM Security Services and were required to remain on call during rest periods. Interpreting Wage Order 4 in Augustus, the California Supreme Court determined that the term “rest period” should be given its “most common understanding” as a period of rest during which employees are relieved from their work duties. Requiring employees to remain on call could not be reconciled with this reading.

In February 2017, two months after the Augustus decision was issued, Silva filed a class action against Medic on behalf of herself and other emergency medical technicians, as well as paramedics, dispatchers, and supply service technicians employed by Medic.

In December 2017, the Ninth Circuit certified questions to the California Supreme Court regarding the applicability of meal and rest period regulations to the employers of ambulance attendants working 24-hour shifts. (Stewart v. San Luis Ambulance, Inc. (9th Cir. 2017) 878 F.3d 883, 884 (Stewart I).) The Ninth Circuit explained that, while the California Supreme Court had interpreted Wage Order 4 to require off-duty rest periods, “Augustus does not control the interpretation of Wage Order 9.”

The Ninth Circuit noted that “for the past twenty- seven years, California courts have permitted employers of ambulance attendants to exclude sleep periods from compensable time without a written agreement, despite the fact that the employer retains control throughout the twenty-four hours to wake the employees from their sleep every time an emergency arises.” (Stewart I, at pp. 886-887.) “This precedent, unique to the ambulance industry, makes the applicability of Augustus to Wage Order 9 a difficult open question.” (Stewart I, at p. 887.)

In November 2018 (with these questions still pending before the Court), California voters approved Proposition 11, which enacted the EAESPA. Section 887, subdivision (a) of the EAESPA provides: “In order to maximize protection of public health and safety, emergency ambulance employees shall remain reachable by a portable communications device throughout the entirety of each work shift.”

The California Supreme Court subsequently dismissed consideration of the questions posed by the Ninth Circuit in Stewart I. (Stewart v. San Luis Ambulance, Inc., S246255, Supreme Ct. Mins., Sept. 18, 2019.) It explained: “In light of the passage of Proposition 11, the Emergency Ambulance Employee Safety and Preparedness Act (Gen. Elec. (Nov. 6, 2018)[)], resolution of the questions posed by the Ninth Circuit Court of Appeals is no longer necessary . . . to settle an important question of law. ” (Ibid.)

In November 2020, the Fourth District issued its decision in Calleros. Calleros concluded that the EAESPA’s retroactive application satisfies constitutional requirements.

After the Calleros decision was issued and requests for its depublication were denied, Silva’s counsel represented to the trial court that Silva “does not intend to dismiss the case and believes the opinion from the 4th District was erroneously decided and will go before the Court of Appeal to have the decision reversed.”

After reviewing the arguments of the parties, the Court of Appeal in Slliva affirmed the reasoning in Calleros and the trial court. “..we conclude that the EAESPA clarified existing law and therefore retroactivity analysis is unnecessary. The EAESPA applies to Silva’s claim and Medic was entitled to judgment on the pleadings.” It also concluded that the trial court did not abuse its discretion in imposing sanctions against Silva’s counsel.