Tag: 2023 News

The U.S. Occupational Safety and Health Administration (OSHA) announced another annual inflation based increase in the civil monetary penalties for violations of federal Occupational Safety and Health standards and regulations. The new penalties will be nearly 10% higher than the previous penalty amounts.

On November 2, 2015, the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 was enacted, which further amended the Federal Civil Penalties Inflation Adjustment Act of 1990 as previously amended by the 1996 Debt Collection Improvement Act to improve the effectiveness of civil monetary penalties and maintain their deterrent effect.

The OSHA cost-of-living adjustment multiplier for 2023, based on the Consumer Price Index for All Urban Consumers for October 2022 (not seasonally adjusted), is 1.07745. To compute the 2023 annual adjustment, the Department multiplied the most recent penalty amount for each applicable penalty by the multiplier, 1.07745, and rounded to the nearest dollar. The adjustment factor of 1.07745 is consistent across the minimum and maximum penalties set forth in the Occupational Safety and Health Act and the FOM.

The Inflation Adjustment Act required agencies to: (1) adjust the level of civil monetary penalties with an initial “catch-up” adjustment through an interim final rule and (2) make subsequent annual adjustments for inflation, no later than January 15 of each year.

Using this formula, some examples of the new current maximum penalties for this year are as follows:

– – Serious and Other-Than-Serious Posting Requirements maximum penalty is $15,625 per violation
– – Failure to Abate violation maximum is $15,625 per day beyond the abatement date
– – Willful or Repeated violation is $156,259 per violation

States that operate their own Occupational Safety and Health Plans are required to adopt maximum penalty levels that are at least as effective as Federal OSHA’s. State Plans are not required to impose monetary penalties on state and local government employers. Cal/OSHA penalties are specified in section 336 of its regulations.

And their are some costly new changes to the penalty provisions of Cal/OSHA authority.

On Sept. 28, 2021, California Gov. Gavin Newsom signed into law Senate Bill 606 (SB 606), which, among other things, created two new categories of Cal/OSHA violations: “egregious” and “enterprise-wide.

The new categories of violations carry significant monetary penalties against employers. Under this new law, Section 6317.8 of the California Labor Code provides that Cal/OSHA “shall issue a citation to that employer for each egregious violation, and each instance of an employee exposed to that violation shall be considered a separate violation for purposes of the issuance of fines and penalties.”

Employers face up to $134,334 per egregious and enterprise-wide violation. So if this maximum penalty (increased by the COLA) is issued for “each instance of an employee exposed” the total penalty could theoretically result in hundreds of millions of dollars.

In the definition of “egregious” violation in Labor Code 6317.8 lists 7 criteria for this determination, and any “one or more” of them can be grounds for a finding of an egregious violation. One example is “persistently high rates of worker injuries or illnesses.” Theoretically, industries that are dangerous by the every nature of the work will have “persistently high rates of worker injuries or illnesses.”

And a COLA is now required annually to penalties under this new Cal/OSHA law. Labor Code 6429 (a)(2) provides that “Commencing on January 1, 2018, and each January 1 thereafter, the penalty amounts specified in this section shall be increased based on the percentage increase in the Consumer Price Index for All Urban Consumers (CPI-U), not seasonally adjusted, for the month of October immediately preceding the date of the adjustment, as compared to the prior year’s October CPI-U.”

Thus, as employers enter 2023, OSHA penalties and Cal/OSHA penalties increase based upon CPI formulas. And then since each egregious and enterprise-wide violation in California applies the maximum penalty to “each instance of an employee exposed,” 2023 brings in higher OSHA and much higher Cal/OSHA penalties.

The San Francisco Mayor  approved a new city ordinance to require private employers to pay employees who are military reservists and are called for military duty the difference between their military salary and their salary as employees, for up to 30 days in a calendar year, and to create procedures for implementation and enforcement of this requirement. The San Francisco Board of Supervisors passed the ordinance in December 2022, and it will go into on February 19, 2023.

Under this Act an “Employee” means any employee of any Employer who works within the geographic boundaries of San Francisco, including but not limited to part-time and temporary employees, and who is a member of the reserve corps of the United States Armed Forces, National Guard, or other uniformed service organization of the United States.

And “Employer” means any person, as defined in Section 18 of the California Labor Code, including corporate officers or executives, who directly or indirectly or through an agent or any other person, including through the services of a temporary services or staffing agency or similar entity, employs or exercises control over the wages, hours, or working conditions of an employee and who regularly employs 100 or more employees, regardless of location. “Employer” shall not include the City or any other governmental entity.

And “Military Duty” means active military service in response to the September 11, 2001 terrorist attacks, international terrorism, the conflict in Iraq, or related extraordinary circumstances, or military service to provide medical or logistical support to federal, state, or local government responses to the COVID-19 pandemic, natural disasters, or engagement in military duty ordered for the purposes of military training, drills, encampment, naval cruises, special exercises, Emergency State Active Duty, or like activity.

However the law shall not apply to Employees covered by a bona fide collective bargaining agreement to the extent that such requirements are expressly waived in the collective bargaining agreement in clear and unambiguous terms.

If the Employee, having received Supplemental Compensation under this law and being fit for employment in their previous position upon release from Military Duty, does not return to their position with the Employer within 60 days of release from Military Duty, the compensation may, at the Employer’s option, be treated as a loan payable with interest in the manner specified in the Act.

If after an administrative hearing it is found that any Supplemental Compensation was unlawfully withheld, the dollar amount of Supplemental Compensation withheld from the Employee multiplied by three, or $250, whichever amount is greater, shall be included in the administrative penalty paid to the Employee.

And quite similar to the California Public Attorney General Act (PAGA) the City, or any person or entity acting on behalf of the public as provided for under applicable State law, may bring a civil action in a court of competent jurisdiction against the Employer or other person violating this new law. And any person or entity enforcing this Act on behalf of the public as provided for under applicable State law shall, upon prevailing, be entitled only to equitable, injunctive or restitutionary relief, and reasonable attorneys’ fees and costs.

The Background and Findings used to justify passage of the Act claims that as of 2022, there were over 600,000 United States military reserve and National Guard personnel serving. Military reserve and National Guard personnel face many challenges when they serve dually as civilian workers and in the uniformed services, including employment discrimination, income insecurity, financial stress, service-related injuries, mental stress, and suicide.

The United States has made efforts to protect the income and employment security of such personnel. Under the Uniformed Services Employment and Reemployment Rights Act of 1994, 38 U.S.C. Ch. 43, military reserve and National Guard personnel are protected from employment discrimination on the basis of their service and are guaranteed civilian reemployment rights following military service.

State and local laws also protect the income and employment security of military reserve and National Guard personnel. Under California Government Code Sections 19775 and 19775.1, state employees granted military leave are eligible for paid leave for the first 30 calendar days of active duty served during the absence. California Military and Veterans Code Sections 395.01, 395.02, and 395.03 grant other public employees up to 30 calendar days of pay while on military leave.

Encino Hospital engaged SRCC Associates to manage and operate Serenity Recovery Center (Serenity) at the hospital, under the hospital’s direction and control, to provide acute (i.e., short-term) drug and alcohol detoxification services.

In 2016 Mary Lynn Rapier filed this qui tam action on behalf of the People of the State of California, alleging violations of the Insurance Fraud Prevention Act (IFPA) against Encino Hospital and other defendants. California Department of Insurance (CDI) elected to intervene and take over prosecution of the action.

CDI filed the operative second amended complaint, which was eventually pared down to allege a cause of action for “illegal patient steering,” in violation of subdivision (a) of Insurance Code section 1871.7, and a cause of action for “submission of false claims” in violation of subdivision (b) of that section. CDI alleged the causes of action against six defendants: Encino Hospital, Prime Healthcare Services, Inc., and Prime Healthcare Foundation, Inc. and SRCC Associates, its principal, Jonathan Lasko, and JNL Management, LLC (collectively.

The CDI alleged that although Encino Hospital was properly licensed as a general acute care hospital, it could not legally operate a medical detoxification facility because it had no separate license as a chemical dependency recovery hospital. The CDI alleged that in billing for detox services for which they had no proper license, defendants knowingly submitted at least 1,858 fraudulent insurance claims, requiring an award of damages of at least $57,678,436 before trebling. And that that Serenity employed a referring party to funnel patients to its program in exchange for Serenity discharging acute-care patients to chronic-care facilities affiliated with the referring party.

After a bench trial, the trial court found that CDI’s fraud theory was unsupported by any evidence of a false statement or omission, specific intent to defraud, materiality, or reliance. On the contrary, the undisputed evidence was that all defendants intended to follow the law, consulted attorneys when unsure about what to do, and relied on a lack of information from any agency, including CDI, that their practices were improper, even after the allegations in this case were made public.

The court found that CDI’s claims, “including the CDI itself, constituted a vast overreach as to parties, theories, and scope. Thus the trial court found in favor of the defendants, and the Court of Appeal Affirmed in the published case of State of Cal. v. Encino Hospital Medical Center – B303196 (January 2023)

On appeal, CDI contend the trial court erred by interpreting the IFPA as applying only to fraudulent claims as opposed to simply false claims, and by interpreting subdivision (a) of section 1871.1 as requiring a cash exchange as opposed to an exchange of any item or service of value. CDI further contends the trial court erred in denying it a jury trial.

The IFPA, originally enacted in 1993, consists of eight articles concerning insurance fraud. The Court of Appeal reviewed amendments to the Act since then, and the legislative intent. Although the former law allowed actions arising from any workers’ compensation claim even if the claim was not fraudulent, according to the Senate Committee on Criminal Procedure, section 1871.7 as amended in 1995 required proof that a claim was illegal and fraudulent. Section 1871.7 was amended again in 1999, by adding the last sentence to subdivision (b), which provided for the first time that penalties are to be assessed for each fraudulent claim presented to an insurer, instead of for each violation of subdivision (a).

Here, CDI alleged that Encino Hospital misrepresented to insurers that it was properly licensed to provide detox services when it was not. The trial court found no evidence suggesting that defendants presented a false claim to any insurer. The Court of Appeal agreed and said “no authority of which we are aware or to which we have been directed obligates Encino Hospital to hold any license other than its license as a general acute care hospital.“

Because Encino Hospital needed no separate license or approval, and no evidence showed it concealed any provider, the CDI’s cause of action for false claims fails for lack of a predicate. The Court concluded by saying “We therefore need not decide whether the IFPA requires a showing of scienter or materiality.”

CDI demanded a jury trial but failed to deposit jury fees. The trial court therefore granted Prime’s motion to strike the demand for a jury trial, finding that jury fees were not timely paid, and in any event CDI’s causes of action were not subject to jury trial.

On this issue the Court of Appeal concluded that on the merits, CDI was not entitled to a jury trial on its claims. “The IFPA affords no explicit right to a jury trial on causes of action it creates.”

Sedgwick and the Disability Management Employer Coalition (DMEC), announced the release of “Long COVID: Assessing and Managing Workforce Impact.” This first-of-its-kind white paper is the product of months of information gathering and analysis by leading disability, clinical, research, insurance, government, and other workplace experts. It also includes the results of a 2022 DMEC Pulse Survey on current employer practices to accommodate and assist employees with long COVID.

DMEC, the Disability Management Employer Coalition is a non-profit organization that provides educational resources to employers in the areas of disability, absence, health, and productivity. The primary goal of DMEC is to assist employers in developing cost-saving programs, encouraging responsive market products, and returning employees to productive employment.

The two organizations convened a group of the nation’s employers, researchers, clinicians, and others to develop a pathway forward. The mission of the long COVID think tank was to share answers to difficult questions and recommend effective solutions and strategies to help employees with long COVID remain on the job, return to work in an effective and productive capacity, or access leave if they are unable to work.The think tank’s work encompassed:

– – Exploring the current and future problems long COVID presents to employers and employees
– – Developing a consensus definition for long COVID to guide employers’ actions
– – Identifying long COVID’s symptoms and phases (to support benefit design strategies)
– – Summarizing the most credible research on the prevalence and impact of long COVID
– – Assessing stay-at-work (SAW) and return-to-work (RTW) challenges
– – Highlighting emerging best practices and steps for employers and absence management professionals to consider

“This is the first comprehensive examination of how organizations are accommodating employees with long COVID,” said Bryon Bass, senior vice president, workforce absence and disability practice leader at Sedgwick. “The white paper outlines what employers can do to improve results for employees and their organizations and how to better prepare for viruses, mental and behavioral health challenges, and other developments that require effective employee accommodations.”

COVID-19 has claimed the lives of millions of people, disrupted economic activity, and imposed large financial costs on governments, employers, and other organizations. While the COVID-19 pandemic may be over, the endemic phase has just begun. This includes the millions of employees who have or will have long COVID, the difficult-to-diagnose and often debilitating illness that induces long-term symptoms and impedes work and productivity.

Long COVID – the term used to describe the disease when symptoms last beyond five weeks – has affected millions of U.S. workers. Many have experienced significant, long-term health-related changes that affect their jobs, families, and futures. And that, in turn, impacts a wide range of U.S. employers and industries.

“Long COVID has been described as ‘our next national health disaster’ and the ‘pandemic after the pandemic,” reports the Kaiser Family Foundation. While estimates vary on how many people in the U.S. suffer from long COVID, the General Accounting Office (GAO) puts the number at 23 million.

The conclusions of experts form Walmart, Johns Hopkins University, The Hartford, and other leading organizations convened by DMEC and Sedgwick are sobering. Long COVID is costly to employers and employees.

For example, Nomi Health who recently analyzed 20 million claims filed for COVID-19, long COVID, and diabetes found a 421% increase in in-patient hospital spending within the first six months following an initial COVID-19 diagnosis. There is also no question that long COVID cuts deeply into employee productivity. The Centers for Disease Control and Prevention (CDC) found that one in four adults with long COVID reported significant limitations on day-to-day activities.

Employers’ efforts to accommodate employees with long COVID have revealed significant shortcomings in programs and processes used to accommodate all manner of disability and impaired work situations, including those caused by influenza and other viruses and mental and behavioral health challenges. According to the latest DMEC Pulse Survey, only 10% of respondents have an existing program to assist employees with long COVID. Most employers lack formal, best practice stay-at-work and return-to-work programs.

Long COVID: Assessing and Managing Workforce Impact includes lists of accommodations employers should consider as they help those with long COVID return to work and stay at work. The white paper recommends flexibility, creativity, and the need to educate managers about long COVID symptoms and accommodations.

Jesus Gomez was employed by Adanna Car Wash Corporation located on Crenshaw Blvd, in Gardena California. He filed a wage claim against his employer with the California Labor Commissioner.

After a hearing, the Labor Commissioner awarded Gomez $23,915.59 for overtime earnings, meal period premium pay, rest period premium pay, liquidated damages, interest, and waiting time penalties.

Under Labor Code section 98.2, subdivision (a), a party to a Labor Commissioner proceeding may seek review “of an order, decision, or award by filing an appeal to the superior court, where the appeal shall be heard de novo.” Under subdivision (b) of the statute, if the employer is the appealing party, the employer must post a bond.

Adanna filed with the Los Angeles County superior court a document entitled “Department of Industrial Relations Notice of Appeal De Novo” and a “Notice of Posting Bond Re Department of Industrial Relations Notice of Appeal De Novo.” However Adanna had attached a copy of its Labor Code section 2055 car wash bond rather than a specific bond required section 98.2.

Gomez moved to dismiss the appeal because Adanna “failed to deposit/post an undertaking, which is a jurisdictional prerequisite for [its] appeal under Labor Code section 98.2(b).” In opposition, Adanna argued that the section 2055 bond satisfied the section 98.2 undertaking because the former was intended to benefit car wash employees and Gomez was a car wash employee.

The superior court granted Gomez’s motion and dismissed the appeal. The Court of Appeal affirmed in the published case of Adanna Car Wash Corp. v. Gomez – B313649 (January 2023).

This appeal addresses the relationship between two statutory surety bonds required under different sections of the Labor Code. There are two types of bonds in play here – a section 98.2 appeal bond and a section 2055 car wash bond.

“The appeal bond is forfeited to the employee where the employer’s appeal fails or is withdrawn, and the employer does not timely pay the award. (§ 98.2, subd. (b).)”

“In contrast, a $150,000 car wash bond is a prerequisite to operating a car wash in California. (§ 2055.) On its face, section 2055 makes clear a car wash bond has nothing to do with litigation or appellate proceedings. It is condition that must be satisfied before the car wash employer may obtain a license or permit:”

The Court went on to say “Adanna’s sleight-of-hand attempt to substitute a car wash bond for an appeal bond runs afoul of a rule that applies to bonds in general. Code of Civil Procedure section 995.140, subdivision (b) expressly distinguishes between a licensing bond and one furnished in connection with litigation.”

The Legislative history supports the analysis that the posting of a section 98.2 bond is essential to protect employees in Labor Commissioner appeals filed by employers.

Prior to 2000, section 98.2 did not require employers seeking appellate review of Labor Commissioner awards to post a bond. In that year, the Legislature amended section 98.2 to include the appeal bond requirement to ensure that workers are paid if they prevail at the de novo appeal in cases where employers “disappear or declare bankruptcy” during the appeal.

According to the legislative analysis when the appeal bond was being considered, there was evidence that “unscrupulous employers, particularly those in the underground economy, were filing ‘frivolous’ appeals of [Labor Commissioner] decisions with the superior court in an effort to drag out litigation and hide assets so that workers would not be able to collect on judgments, even if ultimately successful on appeal.”

Thus the Court concluded that “a section 2055 car wash bond is not an appeal bond under section 98.2 subdivision (b).”