Menu Close

Tag: 2024 News

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, -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.

Bakersfield Sting Operation Cites 12 Unlicensed Contractors

The Contractors State License Board (CSLB), along with the Kern County District Attorney’s Office and California Department of Insurance, recently conducted a successful undercover operation targeting unlicensed contractors.

This sting operation took place in Bakersfield on March 20 and 21 where CSLB cited 12 individuals for allegedly conducting contracting activities without the required license. These offenders were issued Notices to Appear in criminal court and could face legal consequences, including fines up to $15,000 and/or jail time. Engaging in contracting work without a contractor’s licnse is a misdemeanor offense in California.

The individuals targeted during this operation submitted bids ranging from $600 to $6,500 for home improvement projects including fencing, landscaping, plumbing, painting, and concrete work. A California contractor’s license is required to bid or contract for construction work exceeding $500 in value, including materials and labor.

In addition, nine stop orders were issued during the operation, halting work at job sites where contractors failed to provide workers’ compensation insurance for their employees.

Unlicensed contractors apprehended in this operation may also face additional charges for advertising their construction services without the necessary license. It is illegal in California to advertise construction or home improvement work without a valid license in the advertised classification. If unlicensed individuals advertise contracting services, they must explicitly disclose their lack of licensure and cannot bid or contract for work valued at more than $500.

“CSLB is unwavering in our dedication to protect homeowners from the risks posed by unlicensed contractors,” said CSLB Registrar David Fogt. “Our commitment includes providing continuous consumer education on the critical significance of hiring licensed contractors. We urge homeowners to verify a contractor’s license on CSLB’s website before embarking on any construction project in California.”

Unlicensed contractors often use workers from the underground economy, who are paid in cash, and not protected by worker’s compensation policies of insurance. Licensed contractors are required to provide worker’s compensation coverage information to the Contractors State License Board as part of the regulatory process.

Arbitration Agreement Does Not Extend to Re-Employment Case

Jasmin Vazquez started working for SaniSure through a staffing agency in July 2019. She was hired directly by the company as an at-will employee that November. Her employment was “for no definite period,” and either she or SaniSure could terminate the employment relationship at any time.

As part of her hiring, SaniSure provided Vazquez with onboarding documents, including agreements to “utilize binding arbitration as the sole and exclusive means to resolve all disputes that may arise out of or be related in any way to [her] employment.” Subject to limited exceptions, she agreed that any claim she had against the company would “be submitted to and determined exclusively by binding arbitration.” She also agreed to bring any claim individually, waiving her right to pursue a class or collective action. Changes to these agreements, if any, could be made only in writing.

Vazquez terminated her employment with SaniSure when she resigned in May 2021. Four months later, she negotiated a new employment offer and returned to work for the company. During negotiations the parties did not discuss whether Vazquez would be required to sign arbitration agreements again or whether claims related to her employment would be subject to arbitration. Vazquez’s second stint of employment with SaniSure ended in July 2022.

In October, Vazquez filed a class action complaint alleging that SaniSure failed to provide accurate wage statements during her second stint of employment. She also alerted both SaniSure and the Labor and Workforce Development Agency (LWDA) of her intent to add a derivative action under the Labor Code Private Attorney Generals Act (PAGA) (Lab. Code, § 2698 et seq.).

SaniSure moved to compel arbitration. The trial court denied the motion. All the claims in Vazquez’s complaint arose out of her second stint of employment with SaniSure. But SaniSure failed to show that Vazquez agreed to arbitrate claims arising from that stint of employment.

The court of appeal affirmed in the published case of Vazquez v SaniSure, Inc., -B329219 (April 2024.)

SaniSure contends the trial court should have granted its motion to compel arbitration because it showed the existence of an arbitration agreement covering Vazquez’s second stint of employment. The court of appeal disagreed.

“Here, we cannot say that SaniSure’s evidence was so uncontradicted, so unimpeached, and of such a character that it left no room for a judicial determination that it was insufficient to support the existence of an arbitration agreement governing Vazquez’s second stint of employment. “An arbitration agreement is tied to the underlying contract containing it.” (Moritz v. Universal City Studios LLC (2020) 54 Cal.App.5th 238, 246 (Moritz).) Such an agreement can be revoked “upon such grounds as exist for the revocation of any contract.” (Code Civ. Proc., § 1281.) At-will employment contracts can be revoked upon reasonable notice. (Consolidated Theatres, Inc. v. Theatrical Stage Employees Union (1968) 69 Cal.2d 713, 727, fn. 12.)”

Vazquez signed arbitration agreements during her first stint of at-will employment with SaniSure. But she revoked these agreements by terminating her employment in May 2021. The causes of action in Vazquez’s lawsuit are based on events that allegedly occurred only during her second stint of employment with SaniSure.

Thus, for her claims to be subject to arbitration, SaniSure must show that the parties agreed that the agreements Vazquez signed during her first stint of employment would apply to her second. (See Code Civ. Proc., § 1280, subd. (i) [arbitration agreement can be extended by implied agreement]; see also Litton Financial Printing Div. v. NLRB (1991) 501 U.S. 190, 205- 206 (Litton) [cause of action that arises after contract terminates may be subject to arbitration if arbitration agreement survives termination of the remainder of the contract].)”

SaniSure has not done so. Vazquez testified that she never agreed that the agreements she signed during her first stint of employment would govern her second. She also said that SaniSure never told her that getting rehired was contingent on agreeing to arbitration. And the documents she signed upon rehiring do not mention arbitration. SaniSure points to no evidence to the contrary. It has thus failed to carry its – ‘almost impossible’ – burden of showing that the trial court erred as a matter of law when it denied the motion to compel arbitration. (Gamboa, supra, 72 Cal.App.5th at p. 166.)”

NSC Releases New Report on Safety Hazards in Crane Industry

While cranes play a vital role in the transportation, construction and agriculture industries, among others, operating this type of equipment can be especially dangerous if proper protocol is not followed. In fact, the Census of Fatal Occupational Injuries, or CFOI, reported a staggering 297 crane-related deaths between 2011 and 2017. As part of a collaboration with the NCCCO Foundation, and continuing its mission to advance safety in the workplace, the National Safety Council released a new report through its Work to Zero initiative, Understanding the Current State of Safety Hazards in the Crane Industry, highlighting lift-specific risks and best practices employers can adopt to keep workers safe.

Research from the CFOI also shows more than half of workplace deaths that occur in the crane industry involve workers being struck by objects or equipment, and an additional 27% of fatalities occur as a result of falls and transportation incidents.

For the report, the National Safety Council partnered with the NCCCO Foundation to survey certified crane operators and inspectors to identify the most common hazards in the industry, top risk factors and learn about technology solutions to eliminate or minimize injuries. Nearly 2,200 voluntary and anonymous responses from the NCCCO Foundation between July and August 2023 were used to develop this report. Notable findings include:

– – Top hazardous situations: Working at height, vehicle-pedestrian interactions, and loading and unloading materials are the top hazardous situations on the job. Between 55% and 89% of participants said they were likely or very likely to be exposed to these circumstances. In 2020, NSC found these three hazardous situations resulted in 30% of non-roadway occupational fatalities.
– – Most common risks: The two most common systemic risks contributing to workplace injuries in the crane industry are heat stress and fatigue. The report also found that survey participants reported heat and stress were some of the most likely exposures on the job.
– – Most common causes of injuries: Situational risks remain prevalent in the crane industry, with falls from height and being struck by a falling object being the two most common causes of injuries.
– – Safety training and compliance: Eight out of 10 survey respondents believe they have access to appropriate safety training before starting a task, but lack of proper training still accounted for 7% of personal injuries and 8% of on-site injuries.
– – Technology implementation: The use of safety technology – including drones, proximity sensors and vital sign wearables – is fairly low. Depending on the specific type, only one to 13% of participants reported using technology at job sites. However, many of those surveyed indicated a willingness to try new safety technology solutions, while the primary barrier to adoption was concern over data privacy.

The report also notes some recommended actions and potential technology solutions that employers can implement to help reduce the top safety risks in the crane industry, including:

– – Heat stress: Working in high-heat environments can lead to both serious injuries and illnesses, including heat stroke, slips, trips, falls and dropping objects. It’s important employers develop heat stress prevention programs that include safety training on how to recognize the signs and symptoms. Potential technology solutions that may help mitigate these risks include wearables that monitor people’s vital signs.
– – Fatigue: Fatigue can cause workers to have trouble focusing and remembering, which can lead to distractions and less muscle coordination, ultimately resulting in more injuries. Similar to heat stress, safety training should focus on how to recognize the signs and symptoms, and wearable technology can play an important role in monitoring this issue.
– – Struck by falling objects and falls from height: Working at height risks, like being struck by an object or falling, can be reduced with fall protection training and instruction on how to properly use personal fall arrest systems. Potential technology solutions include utilizing drones for inspection and visualization purposes, which eliminate the need for a worker to be off the ground.

This report builds on the Work to Zero Safety Innovation Journey to help organizations assess risks, identify technology solutions and ready workplaces for implementation. As the crane industry continues to navigate major safety challenges, NSC and the NCCCO Foundation plan to continue this work and provide additional resources to educate crane operators, inspectors and employers about potential workplace hazards and technology solutions that can help minimize risks.

Failure to Comply With WCAB Rules Precludes Newly Discovered Evidence

Kristina Gallo was employed as an Office Manager/Stock Clerk by Rooster T. Feathers Comedy Club on on 9/5/2014 when she suffered an injury to her back, trunk and lower extremities. A QME, Dr. Renee Ownbe, diagnosed her with right ankle fracture, right hip trochanteric bursitis that resulted in a 16% WPI to the ankle and 3% WPI for pain add on. The case was resolved by Compromise and Release agreement on 11/20/2107 for $60,000.

She then filed an application for Subsequent Injuries Benefits Trust Fund (SIBTF) benefits on 08/03/2018 alleging injury to the back, right side, right lower extremity with pre-existing disability to internal organs, bilateral upper and lower extremities, spine and psyche.

Dr. Christopher Chen, Dr. Joshua Kirz and Dr. Massoud Mahmoudi served as applicant’s SIBTF QMEs. SIBTF did not seek its own med-legal report.

Applicant testified during trial she had varicose vein starting in her early 30s, that she had symptoms prior to her 9/5/2014 subsequent injuries and had to change her work activities as a result. She also testified that during marathon training in 2005, she fell on her left side, injuring her left hip, left knee, and lower back and may have been seen by Dr. Rodney Wong. Applicant testified that she started limping on the left side shortly after the 2005 injury and continued every day but episodic.

However, the WCJ noted that “applicant’s testimony was not supported by any evidence whatsoever. Based on Dr. Kirz, he reviewed in excess of 1000 pages of records dating back to the 1990s. Yet, based on Dr. Chen, Dr. Kirz and Dr. Mahmood’s reports, there were no documents nor history of any lower extremities complaints, treatment, nor any documented history of limping.

Applicant relied on Dr. Chen’s opinion to support her SIBTF claim which stated that in part that “medical records” showed applicant had back problems going back to 2001 and that applicant “likely” had left L4 radiculopathy since 2005, which affected the opposite and corresponding lower extremity under LC §4751.

The WCJ however could not find any “records” that Dr. Chen stated to support this opinion. The WCJ went on to write “While there is no doubt that applicant had prior low back complaints as well as other symptoms, evidence failed to show prior or pre-existing labor disabaling condition to the opposite and corresponding left lower extremity. Dr. Chen miserably failed to point to a single evidence supporting “chronic left L4 radiculopathy” despite having reviewed extensive medical records. He did not support his reason for his opinion that applicant “likely” had left L4 radiculopathy since 2005 when the records he reviewed only related to low back pain.”

Applicant alleges that per Dr. Chen, varicose vein has latency period and genetic factors. Dr. Chen did not provided any opinion regarding latency of varicose vein. He did not specify the latency period nor any medical literature or evidence to support that applicant’s varicose vein was present and developed over many years. As for the genetic factor, again, Dr. Chen failed to provide any evidence. While medical record did confirm family history of heart disease in maternal grandparents and hyperlipidemia in applicant’s mother, where applicant’s mild hypertriglyceridemia was most likely genetic, records were silent as to any family history of varicose vein. The undersigned can only logically conclude Dr. Chen’s opinion is speculative or relying on facts not supported by any evidence.

On July 16, 2021 the WCJ issued a Findings and Order which found that “applicant has not established through substantial medical evidence that she had permanent partial disability to her left lower extremity, specifically varicose vein, as of the date of her subsequent industrial injury to the opposite and corresponding member on [September 5, 2014].”

The Findings and Order was affirmed by the WCAB in the case of Gallo v Subsequent Injuries Benefits Trust Fund -ADJ10049929 (March 2024).

“We agree with the WCJ that the opinion of Christopher Chen, M.D., is not substantial medical evidence. To be considered substantial evidence, a medical opinion ‘must be predicated on reasonable medical probability.’ (E.L. Yeager Construction v. Workers’ Comp. Appeals Bd. (Gatten) (2006) 145 Cal.App.4th 922, 928 [71 Cal.Comp.Cases 1687];McAllister v. Workmen’s Comp. Appeals Bd. (1968) 69 Cal.2d 408, 413, 416–17, 419 [33 Cal.Comp.Cases 660].) A physician’s report must also be framed in terms of reasonable medical probability, it must not be speculative, it must be based on pertinent facts and on an adequate examination and history, and it must set forth reasoning in support of its conclusions. (Yeager Construction v. Workers’ Comp. Appeals Bd. (Gatten) (2006) 145 Cal.App.4th 922, 928 [71 Cal.Comp.Cases 1687]; Escobedo v. Marshalls (2005) 70 Cal.Comp.Cases 604, 612 (Appeals Board en banc), 70 Cal.Comp.Cases 1506 (writ den.).)”

On reconsideration, applicant argued that she had “newly discovered evidence” to support her claim. However, the WCAB panel noted that “we note that applicant has failed to comply with the requirements of WCAB Rule 10974” which requires that the petition must contain an offer of proof which includes “a full and accurate statement of the reasons why the testimony or exhibits could not reasonably have been discovered or produced before submission of the case.”

A petition for reconsideration sought upon these grounds may be denied if it fails to meet the requirements of this rule, or if it is based upon cumulative evidence.”