California Invasion of Privacy Act Lawsuits Challenge Website Live Chats

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Does your business use live chats to offer customer service support to your customers?  Throughout the past year, hundreds of nearly identical suits have been filed alleging that the live chat features on businesses’ websites may violate the California Invasion of Privacy Act (CIPA).  Most of the lawsuits have been filed by attorneys at the Newport Beach, California, firm called Pacific Trial Attorneys, but other firms have brought very similar lawsuits.

CIPA is a set of California penal statutes that are directed against unconsented wiretapping or recording of telephone communications. The CIPA complaints allege that some software vendors that facilitate customer service live chats are acting as third-party eavesdroppers or wiretappers who share sensitive customer information with entities such as Meta for purposes of targeted advertising. In order to fit their allegations of internet-based communications into the CIPA wiretapping and eavesdropping prohibitions protecting telephone communications, the lawsuits often allege that the plaintiffs accessed the defendant’s live chat through their smart phone’s web browser.

The Conkle firm attorneys believe the plaintiff law firms’ approach is a flawed legal theory that is an unwarranted attempt to extend the scope of the CIPA statute.  At present, no reported decisions have determined the merits of these types of claims, and it appears that most of the lawsuits are intended primarily to draw settlements from defendants wishing to avoid the expense and risk of defending themselves.

If your business has a web presence that involves a “chat” function, it may be prudent to take proactive measures to reduce the risk of having to defend a CIPA lawsuit.  Such measures include plain disclosures to live chat users about the involvement of a third-party software vendor, a method of documenting consent of the live chat user, and links to an appropriately-phrased privacy policy. Such prophylactic measures will not only help deter plaintiffs’ lawyers from targeting your business for CIPA violations but can also contribute to a transparent and trustworthy customer experience.

It is also important that you respond quickly and appropriately if you receive a warning letter or demand from a law firm claiming that your business is violating CIPA. A swift and appropriate response is an important part of your defense to such claims and may ward off a lawsuit that is otherwise almost sure to follow. Should you receive a demand letter alleging a CIPA violation based on the above-conduct, it is best to promptly contact experienced counsel for guidance and assistance. Conkle, Kremer & Engel attorneys are very familiar with this area of the law and can guide your business to improve website chat features to forestall such claims, respond to demand letters or, if necessary, defend CIPA litigation.

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California Employers: Do You Know When Your Furlough is a Discharge?

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To employers, it may seem like California regulates nearly everything about employment relations. Yet, surprisingly, statutes and courts in California never answered the question of when a temporary layoff becomes a “discharge” of furloughed employees. That is, until the Ninth Circuit Court of Appeals did so recently in Hartstein v. Hyatt Corporation, 82 F.4th 825. The implications of this new ruling for California employers and employees are considerable.

Under the new ruling, any temporary layoff or furlough of employees without a specific return-to-work date within the employees’ regular pay period is considered a “discharge” under California Labor Code Section 201. That in turn triggers an immediate obligation for employers to pay all laid off employees all of the wages they have earned, including any pay owed for accrued vacation or Paid Time Off (“PTO”). Failure to pay in full all accrued wages, vacation and PTO when due runs the risk of substantial “waiting time penalties” under Labor Code Section 203. That can be a huge burden and risk for employers, as the Hartstein case demonstrated.

Hartstein arose during the beginning of the COVID-19 pandemic, when many businesses were forced to greatly reduce or cease business operations without knowing when they would be able to reopen. In March 2020 Hyatt, like many employers, furloughed thousands of employees and was unable to provide any specific return-to-work date. Hyatt advised employees that vacation and PTO would not accrue during the temporary layoff, and Hyatt offered to pay any accrued vacation to employees upon request. A month later, in June 2020, Hyatt sent a letter advising employees that the temporary layoff had become permanent and employees would be paid their accrued vacation and PTO as required by Labor Code Section § 201 when a “discharge” occurs.

Hyatt employee Karen Hartstein filed a class-action and Private Attorneys General Act (PAGA) lawsuit, arguing that a “discharge” had occurred with the indefinite temporary layoff in March 2020, and not when employees were permanently laid off in June 2020. The key question was whether a temporary layoff, lacking a specified return date, constituted a “discharge” under Labor Code Section 201, which had no definition of “discharge.” No previous published case had addressed the issue.

The Ninth Circuit turned to the California Division of Labor Standards Enforcement (DLSE) for guidance in its previously-issued Opinion and its Policies and Interpretations Manual. DLSE had indicated that, when an employee is laid off without a specified return date within the regular pay period, the employer must immediately give the employee a final paycheck that includes vested vacation pay. DLSE reasoned that this interpretation best aligned with the statute’s purpose of protecting workers and ensuring prompt payment of earned wages.

The Ninth Circuit characterized Hyatt’s actions as “understandable given the uncertainty during the early period of the pandemic,” but remanded the case to the trial court to determine whether Hyatt’s failure to issue full final paychecks in March 2020 constituted a “willful” violation, which would expose Hyatt to waiting time penalties. That question remains open and will be watched closely by employment lawyers.

Hartstein v. Hyatt provides new guidance to California employers who may need to implement open-ended furloughs or temporary shutdowns. This decision has made clear that California employers who furlough or temporarily lay off employees without specifying a return-to-work date within the same pay period should immediately issue final paychecks that include each employee’s vested and unused vacation or PTO.

Hartstein v. Hyatt demonstrates again that employment law in California is constantly evolving, and outcomes may not be as predictable as employers would hope. California employers facing such issues are well-advised to consult with qualified employment counsel to stay up-to-date on these and other important employment issues. Conkle, Kremer & Engel’s attorneys can help advise employers in navigating these complex and evolving issues.

 

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Are You Ready for the New California Employment Privacy Regulations?

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You may recall that the California Privacy Rights Act (CPRA) amendments (Cal. Civ. Code § 1798.100 et seq.) went into effect January 1, 2023, but enforcement was delayed until March 29, 2024. Employers with the requisite contacts with California consumers (which is defined in an extremely broad manner) will be required to provide employees with extensive privacy notices, respond to requests to exercise new data rights, limit uses and disclosures of HR data, and obtain contractual commitments from third-party recipients of personal information.

The CPRA amendments apply to any business with worldwide gross annual revenue of $25 million or more that collects personal information from any California consumer, which includes a service provider, an employee, a job applicant or an investor, for example.  All entities that share common branding will be subject to the CPRA requirements if even one of those entities meet the requisite standards.

Generally, when the employer is subject to CPRA, its employees (and service providers, job applicants, investors, etc.) have six data rights:
1. The Right to Delete
2. The Right to Correct
3. The Right to Know
4. The Right to Restrict the Use of Sensitive Personal Information
5. The Right to Opt-Out of the Sale or Sharing of their Personal Information
6. The Right to Not Be Retaliated for Exercising these Rights

Each of these general rights are subject to detailed requirements and exceptions that must be carefully considered and addressed by employers, who must give appropriate notification to employees.  Employers’ data subject to the CPRA includes only information collected on or after January 1, 2022.  Given the suspended enforcement, it is presently uncertain whether employers will be expected to be in compliance through a “look back” period that could apply as early as the enactment date of January 1, 2023, or whether employers will be given a pass on compliance until the enforcement stay expires on March 29, 2024. In any event, employers who may be subject to the amended CPRA would be well advised to start their compliance efforts as soon as possible, and should contact qualified counsel to guide their efforts.

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Start at the End: Planning for Termination of Sales Representative Relationships

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Conkle, Kremer & Engel attorney Evan Pitchford recently published Start at the End: Planning for Termination of the Principal-Representative Relationship in the April 2023 edition of Agency Sales, the nationwide publication of the Manufacturers & Agents National Association (MANA).  Although no one likes to think about the potential end of a business relationship just when they finally succeeded in getting it off the ground, it is wise for sales representatives and principals alike to do just that.

Thoughtful preparation for the eventual termination of the sales representatives’ relationship will greatly improve the relationship throughout its existence, by making clear the terms that will apply as it comes to an end.  To understand their ongoing duties to each other, both parties should clearly understand the consequences of a termination under the various circumstances that may apply, such as a change by the principal to direct sales, contractual breaches, or just dissatisfaction of either side.  Specialized state statutes directed to sales representative contracts sometimes limit some of the termination provisions, but such statutes typically allow the parties to establish most or all of the terms for themselves.  It is definitely not wise for either side to just assume an applicable state statute will define what happens upon termination.

There are a great many options for termination provisions, including absolute cutoffs upon termination (which may be subject to “procuring cause” post-termination sales commission claims in some states), to timed durations of sales commission tails based on when the commission is considered earned, to phased termination extending commission tale periods based on longevity or achievement.  The only limits to the terms that can be agreed upon are the requirements of each state’s specialized sales commission statutes and the imagination and negotiating leverage of the parties.  Parties considering sales commission agreements are well-advised to seek the counsel of attorneys who are very familiar with sales representatives laws and practices, such as  attorneys at the Conkle firm.

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Changing Messages from Courts on AB 51: Now Employers Cannot Require Arbitration Agreements

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Note:  For updated developments on the long-running saga of AB 51, see our February 2023 blog post: “AB51, California’s Law Against Mandatory Employee Arbitration Agreements, is Invalidated”

For those employers who have been following the evolving history of Assembly Bill 51 (“AB 51”), which regulates California employers’ ability to have agreements to arbitrate any disputes with their prospective or hired employees, there is a new twist:  In a September 15, 2021 decision, Chamber of Commerce of the U.S., et al. v. Bonta, et al., Case No. 20-15291, the Ninth Circuit Court of Appeal reversed a District Court decision to conclude that the Federal Arbitration Act (“FAA”) did not preempt California AB 51’s ban on employment conditioned upon mandatory arbitration agreements. As explained below, this Ninth Circuit ruling may soon have a substantial impact on employers’ arbitration policies going forward.

In 2019, California passed AB 51, which added section 432.6 to the California Labor Code and section 12953 to the California Government Code to generally prohibit employers from requiring applicants or employees to agree to arbitrate as a condition of employment. AB 51 made it illegal for an employer to require applicants or employees, as a condition of employment, continued employment, or the receipt of any employment-related benefit, to waive any rights, forum, or procedure established by the California Fair Employment and Housing Act (“FEHA”) and the California Labor Code. The Conkle firm has written previously about the potential effects of AB 51.

AB 51 had been set to take effect on January 1, 2020, but on December 30, 2019, U.S. District Court Judge Kimberly Mueller issued a preliminary injunction, preventing AB51 from taking effect. Judge Mueller concluded that “AB 51 placed agreements to arbitrate on unequal footing with other contracts and also that it stood as an obstacle to the purposes and objectives of the FAA.” Bonta, No. 20-15291 at 12. In other words, Judge Mueller decided that AB 51 discriminated against arbitration agreements in a manner that is prohibited by the superseding federal law of arbitrations, the FAA.

California appealed Judge Mueller’s ruling.  On September 15, 2021, the U.S. Court of Appeals for the Ninth Circuit issued a split (2-1) decision partially reversing the District Court’s order. The Ninth Circuit held that the FAA did not preempt AB 51 with respect to its prevention of conditioning employment on the signing of an arbitration agreement. On this basis, the Ninth Circuit vacated the preliminary injunction that had stopped AB 51’s enforcement, so at present there is nothing stopping AB 51 from taking effect very soon.

For employers, this means that, unless there are further decisions by the Ninth Circuit or the United States Supreme Court, AB 51’s mandate that employers cannot condition employment or continued employment on the signing of an arbitration agreement will shortly go into effect. However, employers should be aware that AB 51 does not apply retroactively, which means that arbitration agreements previously signed by employers before AB 51 can still be enforced.  ([Proposed] Labor Code §432(f).)

A common question Conkle, Kremer & Engel attorneys are receiving is whether, even under AB 51, an employer is allowed to request that employees or prospective employees sign an arbitration agreement. The answer is yes. However, because the Ninth Circuit’s decision is somewhat muddled on this point, there is no clear answer to the natural follow up question, “What can I do if the employee refuses?”

The Ninth Circuit reasoned that the enforcement provisions of AB 51 are preempted “to the extent that they apply to executed arbitration agreements covered by the FAA.” Bonta, No. 20-15291 at 29. The dissent in Bonta attacks the majority’s reasoning as illogical:

In case the effect of this novel holding is not clear, it means that if the employer offers an arbitration agreement to the prospective employee as a condition of employment, and the prospective employee executes the agreement, the employer may not be held civilly or criminally liable. But if the prospective employee refuses to sign, then the FAA does not preempt civil and criminal liability for the employer under AB 51’s provisions.

Bonta, No. 20-15291 at 47. As the dissent argues, the majority’s reasoning could result in liability to the employer where the employer fails while attempting to engage in the prohibited conduct of forcing an employee or prospective employee to sign an arbitration agreement, but the employer would not have liability when the employer succeeds in engaging in that same prohibited conduct.

What does this ultimately mean for employers? We expect the Ninth Circuit’s ruling to be challenged by a request for an en banc review by a larger panel of the Ninth Circuit’s justices, or by a writ to the U.S. Supreme Court (which has recently been quite hostile to Ninth Circuit rulings that it has chosen to review).  Such a challenge could result in yet another “stay” that would effectively restore the injunction issued by Judge Mueller and preclude AB 51 from taking effect. However, unless a stay is issued, AB 51 is set to go into effect in the near future.

While much uncertainty remains as a result of the Ninth Circuit’s ruling, AB 51 will increase potential liability for employers that condition employment on arbitration agreements, as well as provide more power to employees who do not wish to arbitrate. Employers that currently have policies conditioning employment or continued employment on the signing of an arbitration agreement should continue to monitor the status of AB 51, should prepare for the possibility that it will not be able to require arbitration agreements going forward and should reevaluate the benefits and risks related to conditioning employment on the signing of an arbitration agreement.

CK&E attorneys keep updated on developments in the law that affect employers in California, including their rights to arbitrate disputes with applicants and employees.  Stay tuned for additional developments in this saga of AB 51.

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CCPA Metrics Disclosure Requirement Takes Effect July 1, 2021

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Effective July 1, 2021, annual public disclosure requirements will start to apply to every business that is required to comply with the California Consumer Privacy Act (“CCPA”), and which knows or should know that (alone or in combination) it  buys, receives for the business’s commercial purposes, sells, or shares for commercial purposes the personal information of 10 million or more California residents in a calendar year. This requires these businesses to compile the following metrics for the previous calendar year (January 1, 2020 through December 31, 2020):

  1. The number of requests to know that the business received, complied with in whole or in part, and denied;
  2. The number of requests to delete that the business received, complied with in whole or in part, and denied;
  3. The number of requests to opt-out that the business received, complied with in whole or in part, and denied; and
  4. The median or mean number of days within which the business substantively responded to requests to know, requests to delete, and requests to opt-out.

This information must be disclosed in the business’s privacy policy or posted on its website and accessible from a link included in the privacy policy.  The metrics must be updated annually by July 1. In the disclosure, a business may choose to disclose the number of requests that were denied in whole or in part because the request was not verifiable, was not made by a consumer, called for information exempt from disclosure, or was denied on other grounds.

To review, the CCPA, which became effective on January 1, 2020, grants California consumers the right to control the personal information that businesses collect about them. Through the CCPA, California residents have the right to know what personal information is being collected, whether their personal information was sold or disclosed (and to whom), and may request that businesses delete their personal information.  Currently, only for-profit businesses that collect consumers’ personal information and meet one or more of these criteria must comply: (1) the business has an annual gross revenue in excess of $25 million; (2) the business collects, buys, receives, sells, or shares the personal information of 50,000 or more California-resident consumers, household, or devices; or (3) the business derives 50% or more of its annual revenue from selling consumers’ personal information. For more information about the rights afforded to California residents, and businesses’ obligations under the CCPA, see below for some of our previous CCPA blog posts.

Among other requirements, all businesses that are required to comply with the CCPA must maintain records of CCPA consumer requests and how the business responded to the requests for at least 24 months. These businesses are required to implement and maintain reasonable security procedures and practices in maintaining these records. Such records may be maintained in a ticket or log format, provided that the ticket or log includes the date of request, nature of request, manner in which the request was made, the date of the business’s response, the nature of the response, and the basis for the denial of the request if the request is denied in whole or in part.

In addition, the businesses must establish, document, and comply with a training policy to ensure that all individuals responsible for handling consumer requests made under the CCPA or the business’s compliance with the CCPA are informed of all the requirements in these regulations and the CCPA.

Attorneys at Conkle, Kremer & Engel are staying current with the CCPA and to guide their clients through compliance with this sweeping data privacy law.

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Can Employers Require Employees to be Vaccinated Against COVID-19?

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As we have discussed in previous Coronavirus-related blog posts, employers have a general duty to provide a safe and healthy workplace that is free from serious recognized hazards where possible (meaning that such hazards are either nonexistent, eliminated, or reduced to a safe or acceptable level).  While most regions have tiered or priority programs in which newly-released COVID-19 vaccines will only be made available to certain age groups or industry sectors after higher-risk individuals are vaccinated, as the vaccines are made more widely available, “essential” employers and employers who may be planning to resume or increase the scope of their on-premises operations may see vaccination as an important tool to ensure the maximum level of safety within their workplaces.

These employers likely have many questions about COVID-19 vaccines, such as whether they may be able to require employees to be vaccinated against COVID-19 as a condition to being permitted at the workplace, how a vaccination program implicates disability and other related privacy issues and laws, and whether not requiring such vaccinations (or leaving it up to employees) could open them up to potential liability.

Addressing some of these concerns, the federal Equal Employment Opportunity Commission (EEOC) recently released guidance for employers regarding workplace vaccine mandates (see Section K). While the EEOC guidance does not make any blanket rule regarding the permissibility of mandatory vaccinations, it does give recommendations on how an employer should navigate the various concerns that arise in administering a vaccination program.  (But be aware that state health departments may release guidance or rules different from the EEOC and that union workers in particular may have collective bargaining agreements containing particular rules that must be taken into account.)

Vaccines are not Medical Examinations Under the ADA, but Employers Should be Careful with Inquiries Surrounding a Vaccine

The EEOC guidance initially provides that the administration of Coronavirus vaccines is not considered a “medical examination” under the Americans with Disabilities Act (ADA), but that employers should be careful when posing any pre-screening vaccination questions to their employees that might implicate the ADA’s rules regarding inquiries which are likely to elicit information about an employee disability.  Any pre-screening questions (i.e. to determine whether there is a medical reason that would prevent the employee from receiving the vaccine) must be job-related and consistent with business necessity – an employer must have a reasonable belief, based on objective evidence, that an employee that does not answer pre-screening questions and does not receive the vaccine will pose a direct threat to the health or safety of herself or others.  Though the EEOC has previously stated that “based on the guidance of the CDC and public health authorities […] the COVID-19 pandemic meets the direct threat standard,” this assessment may change moving forward, and an employer’s response to the “direct threat” concern will likely differ depending on industry and other workplace contexts.  In workplaces with significant worker density or customer contact, the threat is generally considered greater than in workplaces with limited interpersonal contact or the ability to work from home.  Under the guidance, these concerns apply equally to requests for an employee to show proof of a COVID-19 vaccine – the request by itself is not a disability-related inquiry, but any questions asking for reasons for not obtaining a vaccine may be.

The guidance identifies two circumstances in which disability-related screening questions can be asked of employees without needing to satisfy the “job-related and consistent with business necessity” requirement.  First, if the vaccination program is voluntary rather than mandatory, an employee’s decision to answer screening questions is also voluntary.  In such case, if an employee declines to answer screening questions an employer can decline to administer the vaccine, but the employer cannot retaliate against that employee in any manner for her decision.  The second circumstance is when employees receive an employer-required vaccination from a third party not under contract with the employer, such as a pharmacy.  However, the guidance cautions that any employee medical information obtained in the course of a vaccination program must be kept confidential by the employer, and that employers should advise employees not to provide medical information to the employer when providing proof of vaccination.

If an Employee Cannot Receive the Vaccine due to Disability or Religious Belief, Employers Must Try to Make Accomodations Where Feasible

Per the guidance, if an employee indicates that she is unable to receive a COVID-19 vaccination because of a disability, employers must conduct an individualized assessment of four factors in determining whether there is a direct threat to the health or safety of others in the workplace – the duration of the risk, the nature and severity of the potential harm, the likelihood that the potential harm will occur, and the imminence of the potential harm.  An employer cannot exclude an unvaccinated employee from the workplace unless there is no way to provide a reasonable accommodation to that employee that will eliminate or satisfactorily reduce the threat without undue hardship to the employer.  If such a threat cannot be reduced to an acceptable level, the employer can forbid the employee’s physical presence at the workplace.  However, this does not mean the employer may automatically terminate the employee – in some cases, the employee may be able to work remotely or may be eligible to take leave under various Coronavirus-related legislation, state law, or the employer’s own policies.  Employers should be sensitive to accommodation requests by employees and should engage in an interactive process that takes into account the nature of the industry, the employee’s role, CDC or other health official guidance regarding the current prevalence and severity of Coronavirus outbreaks, and whether an accommodation poses significant expense or difficulty to the employer.

The same standards and practices apply if an employee’s sincerely held religious belief prevents the employee from receiving the vaccine – while an employer should assume that a professed belief is sincerely held, if there is an objective basis for questioning the claimed belief, the employer may be justified in requesting additional information.

Further, the guidance refers to FDA literature providing that particularly because the COVID-19 vaccine is available under an Emergency Use Authorization (EUA) instead of traditional FDA approval, any person may opt out of receiving the vaccine.  As such, even if it is unclear whether disability or religious concerns motivate an employee’s decision to decline a vaccine, an employer should still likely make whatever reasonable accommodations are possible based on individualized assessments of the four factors described above.

The Genetic Information Nondiscrimination Act (GINA) is not Implicated by Employer Administration of a Coronavirus Vaccine

The guidance provides that because the COVID-19 vaccines, even though they use mRNA technology, do not involve the use of genetic information to make employment decisions or require the employer’s acquisition or the employee’s disclosure of employees’ genetic information.  However, as with disability concerns, employers should be careful to avoid pre-screening questions that specifically seek to obtain “genetic information” about their employees, which can include information about family medical history.

Practical Impacts for Employers Based on the Guidance

Based on the foregoing, employers, depending on the industry and the threat that unvaccinated workers may pose in a particular workplace, may find it easier to encourage but not necessarily require Coronavirus vaccinations, and, if vaccinations are required, employers may find it easier to have employees obtain the vaccines from third parties rather than the employer administering the vaccines.  Employers who do decide to create a vaccination program should create a thoughtful, formal process that both demonstrates reasonable efforts to maintain a workplace free of “direct threats” given the context of the business and takes the various health and privacy-related laws into account.  Protocols should be well-documented, including pre-screening questions and opt-out situations but, again, documentation must be held confidentially and employee inquiries should be narrow.  In some industries (for example, the California health care industry), employers are required to offer certain vaccines to their employees free of charge (and to provide technical information to employees regarding the vaccine itself), though it is unclear whether that requirement would be expanded to all California employers with respect to the COVID-19 vaccine.

An employer with employees who decline to take the vaccine may wish to have those employees sign a statement acknowledging the risks to that employee in making that decision, similar to the declination statement required in health care workplaces in California, and/or a liability waiver.  The employer may also want to post prominent signage or bulletins in its workplace regarding its Coronavirus protocols (which is already required in many instances) that includes some manner of information about the business’ vaccination policy in order to allow customers and others who enter the premises to be informed.  While such documentation may not eliminate liability, it may help to reduce it.

As always, the law surrounding Coronavirus issues in the workplace is constantly evolving.  The foregoing is not intended to be an exhaustive representation of federal, state, and local laws and directives regarding COVID-19, but is rather general information about some of the EEOC’s latest positions and how employers might be able to utilize those positions in the context of the particulars of their own workplaces.  Employers should always consult with the experienced attorneys before taking steps to implement a vaccination policy.  Conkle, Kremer & Engel attorneys stay up to date and are ready to help employers understand and implement practices regarding the Coronavirus vaccine in their  particular workplace circumstances.

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ADA Lawsuits Attacking Website Accessibility Mount

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Over the past few months, we have seen an increase in pre-litigation letters and lawsuits charging Americans with Disabilities Act (“ADA”) violations against commercial websites. These notice and demand letters and lawsuits allege that businesses’ websites violate the federal ADA and similar state laws because they do not give full and equal access to individuals who have disabilities (including blindness, visual impairment and hearing impairment). ADA lawsuits have been filed in federal and state courts throughout the country. No state is immune from such suits, and no business is too small to receive such ADA demands and claims.

One of the factors undoubtedly is the rise of law firms, and consortiums of firms, that specialize in filing such suits. The law firms often work with repeat-plaintiffs with disabilities, much like law firms that specialize in Proposition 65 private enforcement claims in California who work with repeat plaintiffs who purchase products that are then made the subject of notices of violations and lawsuits. The subjects of ADA and Prop 65 laws differ greatly, but the common element is that liability can be fairly easy to establish under both ADA and Prop 65, and both statutes allow awards of attorneys’ fees to the law firms that can far exceed the damages awarded. Some of the law firms that commonly send ADA letters making demands and file lawsuits about website accessibility problems include Pacific Trial Attorneys (Newport Beach, CA), Nye, Stirling, Hale & Miller (Santa Barbara, CA), The Sweet Law Firm (Pittsburgh, PA), Block & Leviton, LLP (Boston, MA), and Carlson Lynch (Chicago, IL).

While there is no universally mandated standard, many large businesses and state and federal agencies follow WCAG 2.1, Level AA standards, which were created by the Web Accessibility Initiative, an internationally recognized organization. Generally, WCAG 2.1 Level AA compliance requires that websites have text components for all images and videos such that assisted technology software may read this content to users. Among other requirements, the standards also require that websites have proper contrast between background images and overlapping font so that visually impaired individuals can use assisting software to be able to read and navigate the website.

To minimize the risk of receiving an ADA violation letter or being sued, we recommend you take at least the following steps:

  1. Request that your digital team ensure and confirm that your website conforms with WCAG standards and, if so, what version/level as there were several earlier WCAG standards prior to the current WCAG version 2.1. To reduce the chances of such claims being made against your company, request your digital team to make your website WCAG 2.1 Level AA compliant and keep it that way until a more updated standard comes into general use.
  2. Add a footer entitled “Accessibility” or “Accessibility Statement” to your website. The footer should preferably appear on the homepage and each webpage, preferably near your “Privacy Policy” and “Terms of Service” footers.
  3. Add a webpage that is linked to the Accessibility Statement footer (e.g. https://www.conklelaw.com/accessibility-statement). This webpage should include an Accessibility Statement discussing your commitment to ensuring accessibility to all and providing contact information to report accessibility barriers and assistance with purchasing products or navigating the website. If you want help formulating your Accessibility Statement, seek qualified counsel to assist you.
  4. Instruct your digital team to periodically review the website as it is updated to ensure there are no access barriers, that all newly uploaded content (including temporary pop-up offers, sale announcements, discount codes, rebates, etc.) complies with WCAG standards, and that all customer service representatives are trained to handle website accessibility inquiries. This training should include advising a responsible person in your digital team of any reported accessibility barriers, and being specifically trained to help disabled customers place orders.

Even if you have not taken these steps before receiving a demand letter or lawsuit from one of the ADA plaintiffs’ lawyers, it’s possible to reduce liability by taking prompt steps. If you received such a website accessibility notice of violation or legal complaint, contact qualified counsel promptly to assist in minimizing the impact and avoid similar future claims. All of the ADA violation matters that Conkle, Kremer & Engel attorneys have defended have been resolved fairly quickly with modest settlements. Others accused of website ADA violations have not been so fortunate, with some reporting having paid tens of thousands of dollars. CK&E attorneys are well qualified to help with all types of ADA and accessibility compliance concerns, whether for websites or physical facilities.

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2019 Was Another Lucrative Year For Prop 65 Bountyhunters

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As recently featured in the Los Angeles Times, Proposition 65 continues to be big business for a handful of plaintiffs’ lawyers and their select group of clients, but it’s highly questionable how much benefit California residents and consumers receive.

According to settlement data released by the California Office of the Attorney General, in 2019, 909 businesses paid close to $30 million to settle Proposition 65 claims asserted against them. The average settlement payment was nearly $33,000. Of this staggering sum, almost $24 million, or 80%, went directly into the pockets of plaintiffs’ lawyers. In sharp contrast, the California Office of Environmental Health Hazard Assessment (OEHHA), which implements Proposition 65, received only about 11% of the settlement payments, or $3.3 million. The plaintiffs – so-called “private enforcers” – took a share of more than $2.7 million.

Proposition 65, otherwise known as California’s Safe Drinking Water and Toxic Enforcement Act of 1986, is a “right to know” law. Prop 65 requires businesses to provide “clear and reasonable” warnings for exposures to any one of the more than 900 chemicals on the Proposition 65 list that are known to cause cancer, reproductive harm or birth defects, before they can be sold in California. The obligation to warn can fall on all parties in the supply chain – manufacturers, producers, packagers, importers, suppliers, distributors and retailers. Businesses that fail to provide such warnings risk receiving a written “Notice of Violation”, a precursor to a Proposition 65 enforcement lawsuit.

Violations of Proposition 65 can cost businesses tens of thousands of dollars in civil penalties, the noticing party’s attorneys’ fees, and defense costs. The deck is stacked against the business alleged to be in violation: In general, all the noticing party has to show is an exposure to a listed chemical. The burden of proof then shifts to the business to show that no actionable exposure has occurred, which is a difficult burden to meet under the law and can require costly expert witnesses. Accordingly, most Proposition 65 cases settle either out-of-court in a private settlement agreement, or in court through a court-approved consent judgment.

One chemical, di(2-ethylhexyl phthalate) or DEHP, accounted for more than half of the 2019 settlements. DEHP, a phthalate, is on the Proposition 65 list as a chemical known to cause cancer and reproductive harm. DEHP is commonly used in plastics to make them flexible. According to OEHHA, DEHP can be found in various types of plastic consumer products, including some shower curtains, furniture and automobile upholstery, garden hoses, floor tiles, coverings on wires and cables, rainwear shoes, lunchboxes, binders, backpacks, plastic food packaging materials, and medical devices and equipment. In 2019, businesses settled claims over DEHP exposure from such products as cosmetic cases, goggles, gloves, erasers, hangers and bedding storage cases. The phthalate diisonoyl phthalate (DINP) and lead are two other chemicals that were the frequent subjects of 2019 settlements.

Proposition 65 claims in 2019 were again dominated by a small group of plaintiffs’ lawyers whose practices consist of sending out Notices of Violation and extracting settlements from businesses.

The private enforcers that have sent Notices of Violation this year include:

• APS&EE (represented by Law Offices of Lucas T. Novak)
• Anthony Ferreiro (represented by Brodsky & Smith, LLC)
• As You Sow (represented by Danielle Fugere and Chelsea Linsley of As You Sow)
• Audrey Donaldson (represented by Voorhees & Bailey, LLP)
• Berj Parseghian (represented by KJT Law Group PLC)
• Brad Van Patten (represented by Law Offices of George Rikos)
• CA Citizen Protection Group, LLC (represented by Khansari Law Corporation and Blackstone Law)
• Center for Environmental Health (represented by Lexington Law Group)
• Clean Label Project (represented by Davitt, Lalley, Dey & McHale, PC)
• Consumer Advocacy Group, Inc. (represented by Yeroulshalmi & Yeroulshalmi)
• Consumer Protection Group, LLC (represented by Blackstone Law)
• Dennis Johnson (represented by Voorhees & Bailey, LLP)
• Ecological Alliance, LLC (represented by Custodio & Dubey LLP)
• Ecological Rights Foundation (represented by Law Offices of Brian Gaffney)
• Ema Bell (represented by Brodsky & Smith, LLC)
• Environmental Health Advocates, Inc. (represented by Nicholas & Tomasevic LLP and Glick Law Group)
• Environmental Research Center, Inc. (represented by Michael Freund & Associates, Law Office of Richard M. Franco and Aqua Terra Aeris Law Group)
• EnviroProtect, LLC (represented by Kawahito Law Group APC)
• Erika McCartney (represented by Environmental Law Foundation)
• Evelyn Wimberley (represented by Law Offices of Stephen Ure, PC)
• Gabriel Espinoza (or Gabriel Espinosa) (represented by Brodsky & Smith, LLC)
• Keep America Safe and Beautiful (represented by Custodio & Dubey LLP and Sy & Smith, PC)
• Key Sciences, LLC (represented by Kyle Wallace and Davitt, Lalley, Dey & McHale)
• Kim Embry (represented by Nicholas & Tomasevic LLP and Glick Law Group)
• Kimberly Ann Harrison (represented by Law Office of Rick Morin, PC)
• Laurence Vinocur (represented by The Chanler Group)
• Mary Elizabeth Romero (represented by Agency D&L)
• Maureen Parker (represented by Law Offices of Stephen Ure, PC)
• My Nguyen (represented by Seven Hills LLP)
• Paul Wozniak (represented by The Chanler Group)
• Precila Balabbo (represented by Brodsky & Smith, LLC)
• Public Health and Safety Advocates, LLC (represented by Law Offices of Danialpour & Associates)
• Ryan Acton (represented by O’Neil Dennis)
• Sara Hammond (represented by Joseph D. Agliozzo, Law Corporation)
• Shefa LMV, Inc. (represented by Law Office of Daniel N. Greenbaum)
• Susan Davia (represented by Sheffer Law Firm)
• Tamar Kaloustian (represented by KJT Law Group PLC)
• The Chemical Toxin Working Group, Inc. (represented by Khansari Law Corporation)
• Zachary Stein (represented by KJC Law Group APC)

Businesses should be aware of and ensure compliance with Proposition 65’s requirements if their products are sold in California. In the event a Notice of Violation is received, businesses should contact qualified legal counsel. Conkle, Kremer & Engel attorneys are highly experienced in defending businesses against Proposition 65 claims as well as counseling businesses on compliance, in order to minimize the risk of enforcement actions.

2019 Prop 65 By the Numbers:

• 1,000: Notices of Violation Served
• 909: Number of Settlements/Consent Judgments
• $29.7 Million: Paid by Businesses to Resolve Claims
• $23.7 Million: Attorneys’ Fees & Costs Collected by Noticing Parties’ Attorneys
• $2.7 Million: Payments Collected by Noticing Parties
• $3.3 Million: Payments to OEHHA
• $32,706: Average Settlement/Judgment Amount

The number of enforcement actions in 2019 was not a fluke. Similar numbers have been accumulated in prior years. Just in the first few months of 2020, a considerable number of new enforcement actions have been pursued. 2020 Prop 65 enforcement actions will be reviewed in an upcoming blog post.

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New SBA Rule Clarifies PPPFA Loan Forgiveness

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We previously posted about the Paycheck Protection Program Flexibility Act (“PPPFA”), which updated the Paycheck Protection Program (“PPP”) to provide loan recipients with more flexibility. When we posted, we noted that questions remained about how the important loan forgiveness aspect of the PPP would work under the new flexibility rules. The Small Business Association, in connection with the Treasury, has now issued further guidance that provides some greater clarity.

The PPPFA expanded the covered period, for all borrowers who received their PPP loans on or after June 5, 2020, from the original 8 weeks to 24 weeks (or December 31, 2020, whichever is earlier). Loan recipients who obtained PPP loans before June 5, 2020 could elect either the 8 or the 24 week covered period. The “covered period” refers to the time during which the borrower must use the loan for PPP’s allowed costs, notably payroll, rent and utilities.

The text of the U.S. Treasury Department’s earlier Interim Final Rule stated that a loan recipient must wait until the covered period ended before applying for loan forgiveness. The updated Interim Final Rule states that a loan recipient may apply for loan forgiveness anytime during its covered period as long as it has already expended the entirety of its PPP loan. For example, if a loan recipient elects the 24 week covered period and expends all of its PPP loan funds by week 10, it may apply for loan forgiveness immediately rather than wait until week 25. Remember, though, that the last day to file for loan forgiveness remains 10 months after the end of the loan recipient’s covered period.

While loan recipients have the ability to apply for loan forgiveness immediately after expending its PPP loan, the 10 month window provides flexibility to apply for loan forgiveness at the most opportune moment. The loan forgiveness application requires loan recipients to provide information about any decreases in workforce and reductions in wages/salary. Those changes in workforce will result in a corresponding decrease in the amount of loan forgiveness for which the loan recipient is eligible.

If a loan recipient believes that, within a few months, it will be able to hire or re-hire employees and return wages/salary to “pre-COVID-19” levels, then waiting to fill out the loan forgiveness application may be prudent. On the other hand, if the loan recipient anticipates future layoffs and compensation cuts, then applying sooner would be advantageous to avoid loan forgiveness reductions. But keep in mind that December 31, 2020 is the last day for a loan recipient to return its workforce to the requisite levels in order to receive full loan forgiveness.

Conkle, Kremer & Engel attorneys will continue to monitor the COVID-19 relief program landscape for updates to guide clients.

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