California Supreme Court Cases to Watch in 2021

By Nicholas Grether, Esq., The Maloney Firm, APC

The California Supreme Court’s calendar is unpredictable, but there are a couple of cases that bear watching for California employers in 2021. Both of these cases are fully briefed and are awaiting their time for oral argument in front of the California Supreme Court. Both have implications on the premium wages that employers must pay when employees do not receive a compliant meal or rest break.

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Naranjo v. Spectrum Security Services, S258966

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In this case, employees experienced a meal and/or rest break violation, but no premium wage was paid as a penalty. The Court is deciding if an employee is owed derivative penalties flowing from the failure to pay a premium wage.  One argument routinely made in wage and hour cases is that the failure to pay premiums for meal or rest break violations renders the wage statement inaccurate.  Employees would then be entitled to additional penalties when their wage statement is inaccurate. Similarly, an argument is made that any unpaid premium wages  subject the employer to a penalty for failing to pay all wages upon termination of employment.

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Employers, on the other hand, argue that the wage statement is accurate, as it shows what was actually paid to the employee. They also argue that there is usually a good faith dispute as to whether premium wages were actually owed, thus they could not possibly put this information on a wage statement.

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Additionally, attorneys for employees argue that, upon the end of employment, as a result of unpaid meal or rest break premiums, the employee has not been paid in full.  Thus, additional “waiting time penalties” are owed to employees who do not receive their final check in a timely fashion upon the end of employment, whether by termination or resignation. 

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Plaintiffs’ attorneys will surely be hoping that failing to pay a premium wage leads to these derivative penalties. Employers will hope that the court will not punish them for what is potentially a good faith dispute as to whether or not a premium wage is even owed. This case bears watching as a single violation may end up being worth a far more significant amount in damages.

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Ferra v. Loews Hollywood Hotel, S259172

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The primary issue in this case centers around determining how to properly calculate premium wages when an employee does not receive a compliant meal or rest break. Attorneys for the employer argued that any premium wage due should be calculated at the employee’s base rate of pay, without additional compensation built in. Unlike overtime, they reasoned that the premium wage for a missed break is not additional compensation for hours worked, so it should not be treated like overtime. The employees’ attorneys argued that meal and break premiums should be calculated the same way as the regular rate in the context of calculating overtime.

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In general, before calculating overtime, an employer must determine the employee’s regular rate. The regular rate of pay includes hourly earnings, salary, piecework earnings, flat sum bonuses, commissions, and any other non-discretionary income. As an example, if an employer gives a $100 bonus for working on the weekend, that has to be included in the regular rate, because that bonus would be additional wages earned by the employee for their work. Once the additional earnings are factored in to calculate the regular rate, employees earning overtime wages receive 1.5x or 2x that rate, depending on the number of hours worked that day or week.

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On the other hand, when a bonus is purely discretionary, those additional earnings do not have to be factored in to find the regular rate. Calculating premium wages in the same fashion would lead to higher premium wages owed when an employee does not receive a compliant meal or rest break.

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The Appellate Court agreed with the employer’s attorneys and found a distinction between the terms “regular rate of pay” and “regular rate of compensation.” This distinction meant that employees receive their base hourly rate for any meal/rest break premiums, absent any additional non-discretionary income.

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The California Supreme Court will clarify exactly what an employer must account for when it does pay a premium wage for a meal or rest break violation. Both sides have reasonable arguments, and while the going rate for premium wages may go up, this ruling will at least provide clarity for everyone involved.

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What Can Employers Do?

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Given that these cases have the potential to increase exposure for meal and rest break violations, employers should ensure they have policies and procedures in place to prevent violations and, when appropriate, pay the applicable meal or break premium to the employee. Providing proper meal and rest breaks to employees ensures that they are properly rested and serves as the best defense to such claims. Employers should also be mindful that if they include any non-discretionary bonuses when paying hourly employees, these may need to be included when calculating premiums owed. While employers likely are relying on the current state of the law in good faith, they should be prepared if the California Supreme Court reverses course.

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About the Author:

Nicholas Grether is an employment attorney in the Employment Law Department at The Maloney Firm, APC. If you have questions regarding this article, contact Nicholas Grether at ngrether@maloneyfirm.com.

A COURTROOM CLIFFHANGER: 11th Circuit Appellate Court Ruling Strikes Blow To ADA Website Accessibility, Setting Up Possible Showdown In The United States Supreme Court

By Carl I. S. Mueller, Esq., The Maloney Firm, APC

In certain parts of the United States, including California, there are increasing numbers of lawsuits against business owners claiming that the businesses’ websites are not accessible to those with disabilities, and therefore violate the Americans with Disabilities Act (“ADA”). A recent decision by the 11th Circuit of the United States Court of Appeals, Gil v. Winn-Dixie Stores, Inc.,____ F.3d _____ (11th Cir. 2021), 2021 WL 1289906, held that “public accommodations are limited to actual, physical places,” in finding that the plaintiff, Juan Carlos Gil, a man with a visual disability, could not bring a claim against Winn-Dixie Stores, Inc. under the ADA on the grounds that Winn-Dixie’s website was not compatible with Gil’s screen-reader as a matter of law. To summarize, the Court considered two possible legal theories of liability and rejected both.

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First, the Court considered Gil’s claims that Winn-Dixie’s website was “a place of public accommodation in and of itself,” and therefore must comply with the requirements of the ADA. In making this inquiry, the Court considered the definition of “public accommodation” within the language of the ADA. Reviewing the examples of “public accommodations” therein, the Court found that “[n]o intangible places or spaces, such as websites, are listed,” and the Court would therefore not expand the language of the statute to include websites.

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Second, the Court considered whether Winn-Dixie’s website could otherwise violate the ADA, even if not a public accommodation. The ADA disallows “‘intangible barriers,’ that prevent an individual from fully and equally enjoying the goods, services, privileges, or advantages of a place of public accommodation.”  In short, the Court found Gil still could not make a case against Winn-Dixie because he admitted that his inability to use Winn-Dixie’s website did not result in a barrier to actually obtaining the services provided at Winn-Dixie’s brick-and-mortar locations. Notably, this determination rested on the fact that Winn-Dixie offered goods for sale only at its brick-and-mortar locations, and all services it offered via its website could still be obtained at its physical locations.

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However, the decision does not completely foreclose the possibility of website liability under the ADA for those within the jurisdiction of the 11th Circuit. The decision specifically states that it rests on the premise that Winn-Dixie’s website does not allow the ability to make purchases, and no services are available through the Winn-Dixie website that are not otherwise available at Winn-Dixie’s stores. As such, ADA liability may still exist for those companies that offer sales or services through their websites. Considering the high number of companies that now offer such services as a result of COVID-19 limitations, ADA litigation could very well continue in the 11th Circuit.

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Closer to home, the Gil v. Winn-Dixie Stores, Inc. decision will not directly affect California ADA litigation in the near term. California has explicitly adopted the “nexus” test as set out by the 9th Circuit in Robles v. Domino’s Pizza, LLC, 913 F.3d 898 (9th Cir. 2019), which will remain the law of the land in California until that standard is explicitly rejected by the California Supreme Court or the United States Supreme Court. See Thurston v. Midvale Corp, 39 Cal.App.5th 634 (2019). Under the same, Californians face liability under the ADA and Unruh Act for websites that are inaccessible to those with disabilities.

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For those keeping track, the current split for United States Appellate Circuits’ rulings for whether websites can create liability under the ADA are as follows: The Third and Eleventh Circuit do not allow for liability for website accessibility under the ADA. As an intermediate position, the Sixth and Ninth Circuits have found that a “nexus” must exist between the website and a physical place of public accommodation for an application of the ADA to occur. In contrast, the First, Second, and Seventh Circuits have created the most expansive application of the ADA, finding that there is no requirement for a physical location for the application of the ADA. In short, these varying rules, clearly discussed in the Gil decision, beg for clarification by the U.S. Supreme Court. Currently, a national business provider is left to deal with different restrictions in different jurisdictions.

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Litigators and business owners will be watching this case closely to see if this is the one that gets considered by the Supreme Court for the purposes of issuing a nationwide rule that will allow consistent application of the ADA (and by extension, California’s Unruh Act) to website accessibility.

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About the Author:

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Carl Mueller is a business litigation attorney that represents clients in all phases of civil litigation. Mr. Mueller’s practice has a focus on attorney-client disputes of all kinds. If you have questions regarding this article contact Carl Mueller at cmueller@maloneyfirm.com.

Newsom Announces Tentative Reopening Plans for California on June 15

On April 6, 2021, Governor Gavin Newsom announced that if California is able to maintain stable and low hospitalization rates and a sufficient vaccine supply, the state’s economy will fully reopen on June 15, 2021.

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While risk reduction measures such as contact-tracing, vaccination programs, and the statewide mask mandate will remain in place, California is now scheduled to move past the tiered reopening system under the Blueprint for a Safer Economy program to fully reopen the economy.

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California and COVID-19: Conditions for Reopening

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As of April 6, 2021, over 20 million COVID-19 vaccine doses have been administered in California, and over 30% of the state’s population is at least partially inoculated.1 As the state’s immunization rates remain far below the estimated thresholds for herd immunity, all industries will be permitted to reopen on June 15, 2021 with common sense risk reduction measures such as vaccinations and required masking.

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According to the California Department of Public Health (CDPH), the state’s reopening schedule hinges on the following two conditions:

  • 1. Equitable vaccine availability: If vaccine supply is sufficient for Californians 16 years or older who wish to be inoculated, and
  • 2. Consistently low burden of disease: Hospitalizations are stable and low, and specifically, hospitalizations among fully vaccinated individuals are low.

The CDPH notes that these criteria will only be met if vaccination rates stay high, the vaccines remain effective against variants, and individuals continue taking precautions such as masking. California will continue monitoring hospitalization and vaccine access rates, as well as updated information on vaccine efficacy against variants, and, if necessary, adjust the June 15 reopening date.

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What will a “full reopening” of California’s economy look like?

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As the state’s economy fully reopens, “common-sense” public health policies, such as vaccination, testing, contact tracing, and required masking programs, will remain in effect. All sectors listed by California’s Blueprint for a Safer Economy program will be able to return to normal operations, in compliance with Cal/OSHA’s emergency standards and other applicable statewide guidelines. Public health restrictions, such as testing, masking, and testing or vaccination verification requirements for large, high-risk events such as concerts and festivals, will still apply.

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Workplaces

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Employers should promote policies in the workplace that reduce the risk of COVID-19 transmission, such as improving indoor ventilation and requiring mask wearing in indoor and other high-risk settings. Additionally, when it is possible without impacting business operations, employers are encouraged to allow remote work.

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Conventions

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Conventions will be limited to 5,000 attendees until October 1, 2021, unless the testing or vaccination status is verified for all attendees. International convention attendees may only attend if they are fully vaccinated.

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Educational Institutions

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The CDPH indicates that schools and higher education institutions should conduct full-time, in person instruction, in compliance with Cal/OSHA’s emergency temporary standards and other public health guidelines.

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Travelers

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Travelers and Californians in general will remain subject to CPDH and CDC travel restrictions.

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California will also be required to continue maintaining and updating its vaccination, testing, monitoring, hospital, and other public health and medical infrastructure.

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Resources for California Employers

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Find out more about Cal/OSHA’s temporary COVID-19 prevention standards here and the California DFEH’s COVID-19 related guidance here, and stay tuned for updated guidance from these and other California statewide regulatory organizations.

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Find Governor Newsom’s full press release here.

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Find the California Department of Public Health’s announcement here.

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If you have questions regarding the upcoming reopening of California’s economy, please contact one of the following attorneys in The Maloney Firm’s Employment Law Department: Patrick MaloneyLisa Von EschenSamantha Botros, or Nicholas Grether.


[1] https://covid19.ca.gov/vaccines/#California-vaccines-dashboard

California DFEH Issues Updated COVID-19 Related Guidance for Employers

As pandemic-related restrictions on business operations in California begin to subside, employers have been left with unanswered questions about reopening the workplace. On March 4, 2021, the Department of Fair Employment and Housing (DFEH), issued COVID-19 related guidance for employers, which covers topics such as:

  • COVID-19 Symptoms or Infections in the Workplace
  • Imposing Mandatory COVID-19 Related Policies
  • Accommodations for Employees with Disabilities/Vulnerable Populations

Below find a summary of the most significant provisions of the DFEH’s updated guidance for handling COVID-19 related issues in the workplace.

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COVID-19 Symptoms or Infections in the Workplace

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Inquiring About COVID-19 Symptoms

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Under the current guidance, employers may take employees’ temperatures and ask employees if they are experiencing symptoms of COVID-19. Relatedly, employers are entitled to ask why an employee did not report to work if the employer suspects the absence was for a medical reason. Employers are required to keep any and all health information obtained from their employees confidential, including by separating employee medical files from personnel files.

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Displaying Symptoms or Testing Positive for COVID-19 in the Workplace

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If an employee becomes ill with symptoms of COVID-19 and/or tests positive for COVID-19, they should not enter the workplace, and may be sent home by their employer. According to the CDC, “decisions to continue home isolation for workers with COVID-19 and allow them to return to work may follow either a symptom-based, time based, or a test-based strategy.”

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In order to comply with privacy laws, employers must not identify employees who are under quarantine, test positive for COVID-19, or come into contact with the virus by their name. Instead, employers should follow the relevant local, state, or federal requirements when an employee is suspected to have COVID-19, which may include notifying affected employees of a COVID-19 exposure, closing and deep cleaning the worksite, and requiring telework.

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Job-Protected Leave

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On March 19, 2021, Governor Newsom signed Senate Bill 95 (SB 95), which renews and expands California’s COVID-19 related supplemental paid sick leave requirements that expired on December 31, 2020. Read more about the new paid sick leave legislation here.

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Under the California Family Rights Act (CFRA), employees may also be entitled to job-protected leave to care for certain family members or for their own serious health condition. COVID-19 generally qualifies as a serious health condition under the CFRA if it results in inpatient care or continuing treatment or supervision by a health care provider, or if it leads to pneumonia.

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Imposing Mandatory COVID-19 Related Policies

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Testing

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The FEHA allows employers to mandate medical examinations for employees when the examination is “job-related and consistent with business necessity.” Under current guidance from the FEHA, the CDC, and the EEOC, employees may be required to submit to viral testing, not antibody testing, before entering the workplace.

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Vaccination

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In short, as the EEOC indicated in December, employers may impose mandatory vaccination policies. However, any policy or practice that requires employees to receive an FDA-approved COVID-19 vaccination must comply with the Fair Employment and Housing Act. If an employer chooses to implement a mandatory vaccination policy, they must:

  • Provide reasonable accommodations for employees with disabilities or sincerely-held religious beliefs or practices,
  • Not discriminate against or harass employees or job applicants based on protected characteristics, such as disabilities, perceived disabilities, or religious beliefs, and
  • Not retaliate against anyone for engaging in protected activities, such as requesting reasonable accommodations.

Reasonable accommodations might include allowing the employee to work from home, job reassignment or restructuring, or creating procedures and safeguards that would allow the employee to work at the worksite without endangering the employee or others.

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Employers may require proof of vaccination from employees and job applicants, as this is not a disability-related inquiry. However, in order to avoid eliciting disability-related medical information, employers may ask their employees or job applicants to omit other medical information from this documentation.

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Employers that administer their own vaccination programs may ask questions that elicit disability-related information, such as pre-vaccination screening questions, if the inquiries are “job-related and consistent with business necessity.”

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Employers are required to engage in an interactive process with qualifying employees to identify how to provide reasonable accommodations. When an employee is unable to receive the COVID-19 vaccine because of a disability or sincerely-held religious belief or practice, the employee may only be excluded from the workplace if:

  • Providing reasonable accommodations to the employee poses an undue hardship on the employer,
  • The employee is unable to perform their essential duties, even with reasonable accommodations, or
  • The employee cannot perform their duties in a manner that would not endanger their own or others’ health or safety, even with reasonable accommodations.

The FEHA does not require employers to accommodate employees who object to vaccination with an FDA-approved vaccine without a disability-related or sincerely-held religious reason for doing so.

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Personal Protective Equipment

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During the COVID-19 pandemic, employees may be required to wear personal protective equipment, such as face masks, gowns, and gloves, designed to reduce the transmission of COVID-19 in the workplace. Absent undue hardship, employers must provide accommodations, such as non-latex gloves or gowns designed for individuals who use wheelchairs, to employees with disabilities.

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Other Accommodations for Employees with Disabilities/Vulnerable Populations

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As described above, employers are required to reasonably accommodate for disabilities when enforcing vaccination and personal protective equipment requirements, absent undue hardship. Employers may also have to provide reasonable accommodations for employees when an illness related to COVID-19 rises to the level of a disability.

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The CDC distinguishes between medical conditions that increase or might increase an individual’s risk of contracting a severe illness related to COVID-19. Employers must provide reasonable accommodations for employees with the underlying medical conditions specified by the CDC if the condition qualifies as a disability.

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As age is not considered a disability, employers are not required by the DFEH to accommodate for employees who are at a higher risk of contracting severe illness from COVID-19 due to their age. Employers must also not discriminate against older employees by, for example, only allowing employees under age 65 to return to the workplace.

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Resources for California Employers

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As employers and employees collaborate to create policies that mitigate the spread of the COVID-19 pandemic, it is essential that employers keep their employees apprised of their rights to job-protected leave and other protections, and keep their employees’ medical information, elicited through testing or vaccination procedures, or otherwise, confidential.

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Find the DFEH’s full employment information on COVID-19 here.

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Find the CDC’s guidance for businesses and employers responding to COVID-19 here.

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Find guidance from the California Department of Public Health here.

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Find guidance from Cal/OSHA here.

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Find more information about California’s newly extended sick leave laws here.

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If you have questions regarding the application of the DFEH’s updated COVID-19 guidance to your business, please contact one of the following attorneys in The Maloney Firm’s Employment Law Department: Patrick MaloneyLisa Von EschenSamantha Botros, or Nicholas Grether.

Newsom Signs Expanded COVID-19 Related Supplemental Paid Sick Leave Law

On March 19, 2021, Governor Newsom signed Senate Bill 95 (SB 95), which renews and expands California’s COVID-19 related supplemental paid sick leave requirements that expired on December 31, 2020. The new legislation covers more employers and more qualifying reasons for taking leave than the previous legislation. Find out more about the updated paid sick leave requirements under SB 95 below.

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Expired Legislation

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Last September, the California legislature passed Assembly Bill 1867 to codify and extend the mandatory sick leave protections established in Executive Order (EO) N-51-20 and the federal Families First Coronavirus Response Act (FFCRA). Under these supplemental paid sick leave laws, which both expired on December 31, 2020, most California employers were required to provide their employees with up to 80 hours of paid leave for certain COVID-19 related reasons. Read more about the expired supplemental sick leave laws here.

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Provisions and Effective Time Period

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Beginning March 29, 2021, eligible “full-time” employees will be entitled to a new allotment of up to 80 hours of supplemental paid sick leave. “Part-time” employees with regularly scheduled hours will be eligible for supplemental paid sick leave up to the total amount of hours they are regularly scheduled to work in a two-week period. “Part-time” employees who work a variable number of hours are eligible for this leave up to 14 times the average number of hours the employee has worked each day in the preceding six months. Employees who have worked 14 or fewer days for the employer are eligible for sick leave amounting to the total number of hours they have worked for the employer.

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As an urgency statute, SB 95 took effect immediately upon Governor Newsom’s signature; however, the mandate to provide supplemental paid sick leave will not take effect until March 29, 2021, ten days after the bill’s enactment. While the leave requirements under this legislation will expire on September 30, 2021, an employee who is taking leave while the law expires is permitted to use their full amount of leave.

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Significantly, the law’s provisions also apply retroactively to January 1, 2021; upon the oral or written request of a qualifying employee, an employer will be required to compensate the employee for qualifying leave taken on or after January 1, 2021 if the employer did not already compensate the employee the required amount. These hours reimbursed retroactively would count towards the maximum amount of paid sick leave required by SB 95.

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Leave under the new legislation must be granted in addition to other available paid sick leave, and employees may not be required to use other leave in lieu of or before using SB 95’s leave. However, an “employer may require a covered employee to first exhaust their COVID-19 supplemental paid sick leave” under SB 95 before the employer is required “to maintain an employee’s earnings when an employee is excluded from the workplace due to COVID-19 exposure under the Cal-OSHA COVID-19 Emergency Temporary Standards.” COVID-19 related paid sick leave already provided under any federal or local law that was in effect on or after January 1, 2021 may offset the total hours of additional leave the employer must provide under SB 95.

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Employers must pay their nonexempt employees at the highest of the following rates:

  • The regular rate of pay for the workweek in which the covered employee uses COVID-19 supplemental paid sick leave, whether or not the employee actually works overtime in that workweek;
  • The rate calculated by dividing the covered employee’s total wages, not including overtime premium pay, by the employee’s total hours worked in the full pay periods of the prior 90 days of employment;
  • The state minimum wage; or
  • The local minimum wage to which the covered employee is entitled.

Exempt covered employees must be paid at the same rate that they normally receive for paid leave. Unless federal legislation is passed that increases the following limits, the new law also stipulates that employers are not required to pay more than $511 per day and $5,110 total to a covered employee for COVID-19 supplemental paid sick leave taken under SB 95.

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Eligibility and Notification Requirements

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Importantly, the bill’s provisions apply to employers with over 25 employees, unlike AB 1867 (California’s prior COVID-19 supplemental paid sick leave statute), which only covered employers with 500 or more employees. While smaller businesses that employ 25 or fewer workers are exempt from the legislation, they may still offer supplemental paid sick leave and, if eligible, receive a federal tax credit.

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The bill also allows employees to utilize paid leave when they are unable to work or telework, which means that employees who do not leave home for work will be eligible for paid leave under the statute.

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The legislation carries separate provisions for firefighters and In-Home Supportive Services (IHSS) workers.

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The new legislation carries over two of the three qualifying reasons for using SB 95’s supplemental COVID-19 paid sick leave from the previous legislation, including:

  • The covered employee is subject to a quarantine or isolation period related to COVID-19 as defined by an order or guidelines of the State Department of Public Health, the federal Centers for Disease Control and Prevention, or a local health officer who has jurisdiction over the workplace. (If the covered employee is subject to more than one of the foregoing, the covered employee shall be permitted to use COVID-19 supplemental paid sick leave for the minimum quarantine or isolation period under the order or guidelines that provides for the longest such minimum period.)
  • The covered employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19.

Additionally, SB 95 expands the covered reasons to include the following situations:

  • The covered employee is attending an appointment to receive a vaccine for protection against contracting COVID-19;
  • The covered employee is experiencing symptoms related to a COVID-19 vaccine that prevent the employee from being able to work or telework;
  • The covered employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis;
  • The covered employee is caring for a family member who is subject to a quarantine or isolation period, or who has been advised to self-quarantine; or
  • The covered employee is caring for a child whose school or place of care is closed or otherwise unavailable for reasons related to COVID-19 on the premises.

Employers will be required to notify qualifying employees of their remaining available leave balances on their wage statements or in separate documents. This wage statement obligation will not be enforceable until the first full pay period after the bill’s effective date on March 19, 2021. Within these notice statements, COVID-19 supplemental paid sick leave must be set forth separately from other paid sick days.

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Additionally, employers may meet the wage statement requirement for employees with variable schedules by doing an initial calculation of COVID-19 supplemental paid sick leave available and indicating “(variable)” next to that calculation. However, employers are obligated to update these calculations on the wage statement when employees request leave or request their payroll records under Labor Code Section 247.5.

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On March 22, 2021, the California Labor Commissioner issued a poster that covered employers must distribute to their employees, which details the covered reasons for leave and the amount of leave available for eligible employees under SB 95. Employers must display the poster in the workplace, and may satisfy the notice requirements for employees who do not regularly visit the workplace by distributing the notice by electronic means, such as email. While it is recommended that employers circulate and/or display the notice poster as soon as feasible, the bill does not require employers to do so until March 29, 2021.

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Resources for California Employers

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Find the full text of SB 95 here.

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Find the required notice poster issued by the California Labor Commissioner here.

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Find out more about California’s expired supplemental paid sick leave laws here.

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If you have questions regarding the application of SB 95 to your business, please contact one of the following attorneys in The Maloney Firm’s Employment Law Department: Patrick MaloneyLisa Von EschenSamantha Botros, or Nicholas Grether.

Adjudicating Attorney Fee Disputes: A New Pech-ing Order

Patrick Maloney and Carl Mueller pen an article for the Daily Journal on the California Court of Appeal’s recent ruling in Pech v. Morgan, in which the appellate court found that where an attorney and client have entered into a valid and enforceable fee agreement, the standard for recovering fees is one of unconscionability, not reasonableness.

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Read the full article in the Daily Journal here: https://www.dailyjournal.com/articles/361891

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About the Authors:

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Patrick Maloney is the founder of The Maloney Firm, APC, a boutique law firm that represents clients in business litigation and related matters.   Mr. Maloney has represented both lawyers and clients in a number of legal fee disputes and legal malpractice matters.  Mr. Maloney may be reached at pmaloney@maloneyfirm.com or 310-540-1505.

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Carl Mueller is a business litigation attorney that represents clients in all phases of civil litigation. Mr. Mueller’s practice has a focus on attorney-client disputes of all kinds. If you have questions regarding this article contact Carl Mueller at cmueller@maloneyfirm.com.

Federal COVID-19 Relief Bill Includes COBRA Subsidy

On March 11, 2021, President Biden signed into law the far-reaching American Rescue Plan Act (ARPA, codified in HR 1319), a $1.9 trillion coronavirus relief bill. The legislation aims to address both the health and economic crises caused by the COVID-19 pandemic by allocating funds for vaccination programs, small business assistance, emergency rental assistance, and other initiatives. Significantly, between April 1 and November 30, 2021, the bill will offer free COBRA health insurance coverage to qualifying employees and their family members who lose their group health insurance coverage after an involuntary loss of work.

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Provisions and Effective Time Period

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The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a health insurance program that gives eligible employees the opportunity to choose to stay on their company-sponsored health plan for a limited time under certain circumstances, such as involuntary job loss or reduction in work hours, where they would otherwise lose their health coverage. Find more details about COBRA Continuation Health Coverage here.

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As employers often cover a portion of employees’ health insurance costs, COBRA continuation coverage is often more expensive than health coverage for active employees. However, COBRA coverage under the ARPA is free; during the six-month period between April 1 and November 30, 2021, the ARPA will allocate funds to cover 100% of COBRA insurance premiums for employees and their covered relatives who experienced a loss in coverage due to a COVID-19 related loss of work. A qualifying loss of work includes involuntary termination or a reduction in work hours. If a qualifying individual elects COBRA coverage under the ARPA, employers will be required to keep the individual and their family members on the group insurance plan and pay their premiums, and will be reimbursed by the federal government for those premiums.

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This free COBRA coverage will be effective during the six-month period between April 1 and September 30, 2021; the subsidy will last for up to six months, and will expire earlier if the qualifying individual’s maximum COBRA coverage period ends before September 30, 2021. COBRA coverage under the ARPA generally extends for 18 months from the date of the eligible employee’s termination of employment or reduction in employment hours.

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Employers may also offer qualifying employees up to 90 days after their receipt of a COBRA eligibility notice the option to elect enrollment in a different group health plan offered by the employer. The premium for this alternate coverage must not be higher than the premium for the preexisting health plan.

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Eligibility and Notification Requirements

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Importantly, under the ARPA, eligible individuals who did not elect COBRA coverage by April 1, or who discontinued their previously elected COBRA coverage, may elect COBRA coverage during an enrollment period beginning April 1 and expiring 60 days after their receipt of the COBRA eligibility notification. Individuals who are eligible for Medicare or other group health coverage are not eligible for the ARPA’s COBRA subsidy.

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The ARPA will require employers to notify eligible individuals of the COBRA subsidy within 60 days of April 1, 2021 by including separate documentation with or amending existing COBRA notice forms to include the following information:

  • 1. The forms necessary for establishing eligibility for COBRA premium assistance;
  • 2. The name, address, and telephone number necessary to contact the plan administrator and any other person maintaining relevant information in connection with premium assistance;
  • 3. A description of the extended election period provided for by the ARPA;
  • 4. A description of the qualified beneficiary’s notification requirements and the penalty provided under section 6720C of the Internal Revenue Code of 1986 for failure to carry out these requirements;
  • 5. A description of the right to a subsidized premium and any conditions on entitlement to the subsidized premium; and
  • 6. A description of the option to enroll in different coverage, if adopted by the employer.

Employers will also be required to notify individuals if their COBRA subsidy under the ARPA expires before September 30, 2021, except when their subsidy expires because they are eligible for other coverage.

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The U.S. Department of Labor will also be required to issue model COBRA subsidy notices within 30 days of the enactment of the bill.

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Resources for California Employers

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Employers should begin to compile a list of individuals that would be eligible for the ARPA’s COBRA subsidy, and keep on the lookout for further guidance from the federal government on updating COBRA notice forms and other subsidy-related issues.

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View the full text of the American Rescue Plan Act of 2021 (ARPA, HR 1319) here.

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View the U.S. Department of Labor’s informational website on COBRA continuation coverage here.

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If you have questions regarding the application of the ARPA’s COBRA subsidy to your business, please contact one of the following attorneys in The Maloney Firm’s Employment Law Department: Patrick MaloneyLisa Von EschenSamantha Botros, or Nicholas Grether.

Carl Mueller Quoted by the Daily Journal on Attorney Ethics

Carl Mueller was quoted in the article “Incivility can be basis for reducing fees, panel rules,” which was published in the March 12, 2021 issue of the Daily Journal. Carl weighs in on the California Court of Appeal’s recent ruling in Karton v. Ari Design and Construction, Inc., in which the appellate court upheld a trial court’s reduction of an attorneys’ fees award in the face of incivility by the prevailing parties’ attorneys.

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Read the full article here: https://www.dailyjournal.com/articles/361819

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Carl Mueller is a business litigation attorney that represents clients in all phases of civil litigation. Mr. Mueller’s practice has a focus on attorney-client disputes of all kinds. If you have questions regarding this article contact Carl Mueller at cmueller@maloneyfirm.com.

The Cost of Being a Jerk

By Carl I. S. Mueller, Esq., The Maloney Firm, APC

The California Court of Appeals incentivizes attorneys to be civil by creating black letter law that allows trial courts to reduce fee awards based on the incivility of the prevailing attorneys.

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In Karton v. Ari Design & Construction, Inc., a recent decision from the Court of Appeals of the State of California, the phrase “Civility is an aspect of skill” has been made black letter law. As a result, trial courts across California can—and should—reduce attorneys’ fees awards in the face of incivility by the prevailing parties’ attorneys.

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In Karton, the appellate court upheld a trial court order reducing a request for statutory attorneys’ fees due to the lack of civility displayed by counsel. The case arose from a dispute between the plaintiff, Karton, and an unlicensed contractor, Ari Design & Construction, Inc. (“Ari”). Karton succeeded at trial, and then sought attorneys’ fees of $271,530. The trial court employed a lodestar method for determining the fees, agreeing with the requested hourly rate of $450 per hour, but adjusting the lodestar to reduce the total reasonable hours to 200 hours, for a total award of $90,000.

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After a discussion of the relevant law, the Court of Appeals recognized and explicitly approved the trial court’s five justifications for cutting down the fees requested by the prevailing plaintiff. Three of the five justifications were commonplace: (1) that “the questions in this case were relatively simple,” and therefore did not justify incurring such a large fee; (2) the plaintiffs “over-litigated this matter” when comparing the actual dispute—$35,000, soaking wet—with the attorneys’ fees incurred; and (3) the requested fee was properly reduced to seek “an appropriate relationship between the result achieved and the size of the fee.”

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More interesting, the Court of Appeal also approved two less-common justifications for reducing the requested fee award. First, Karton, an attorney himself, was personally active in the matter, and actually appeared on his own behalf at the final hearing in the trial court as to the requested attorneys’ fees. The court repeatedly noted Karton’s behavior as “agitated” during the hearing. Based thereon, “the trial court fairly attributed some of the over-litigation to Karton’s personal embroilment in the matter,” reducing the requested attorneys’ fees. The court found that Karton’s helicopter-attorney approach and boorish behavior resulted in over-litigation, requiring a reduction in the lodestar calculation. The following quote, taken directly from the trial court during oral argument on Karton’s motion for fees, summarizes the trial court’s view on Karton’s handling of the matter:

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“Can you not interrupt me. I would appreciate your letting me finish my sentence.” 

Second, the Court of Appeal approved of a reduction of the requested attorneys’ fees based on the incivility of the attorneys seeking those fees:

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Civility is an ethical component of professionalism. Civility is desirable in litigation, not only because it is ethically required for its own sake, but also because it is socially advantageous: it lowers the costs of dispute resolution. The American legal profession exists to help people resolve disputes cheaply, swiftly, fairly, and justly. Incivility between counsel is sand in the gears.

In finding that Kantor lacked civility, the court cited repeated ad hominem attacks by Kantor against his opposing counsel that (1) clearly lead to extensive discovery disputes, and (2) were not supported by the underlying records. On this very issue, the Court of Appeal noted that “Calling opposing counsel a liar, for instance, can invite destructive reciprocity and generate needless controversies.” In short, when incivility generates needless and additional litigation, trial courts should not award the resulting attorneys’ fees to the offending party.

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While attorneys are often admonished and educated on civility, those wise words from judges, mentors, and educators generally lack any real force. The Karton decision gives attorneys a concrete example of what incivility might cost them, in dollars and cents. Specifically, Karton saw his fees get slashed by $181,530. Through this decision, the Court of Appeal spoke clearly to attorneys in the language they understand best. Further, when clients expect incivility of their lawyers as a litigation tactic, those put-upon lawyers can now point to Karton as an example of why such tactics will cost their clients in the long run.

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About the Author:

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Carl Mueller is a business litigation attorney that represents clients in all phases of civil litigation. Mr. Mueller’s practice has a focus on attorney-client disputes of all kinds. If you have questions regarding this article contact Carl Mueller at cmueller@maloneyfirm.com.

LA County Extends Eviction Moratorium Through June 30, 2021

On February 24, 2021, the LA County Board of Supervisors extended the County’s Temporary Eviction Moratorium, which imposes a countywide ban on evictions for residential and commercial tenants, until June 30, 2021. The updated legislation protects covered renters facing COVID-19 related financial hardships from eviction, integrates additional protections introduced by Assembly Bill 3088 and Senate Bill 91, and imposes stricter penalties for landlords’ noncompliance. Learn more about LA County’s extended and updated Eviction Moratorium below.

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Covered Commercial Tenants

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While the Moratorium is in effect, commercial tenants may not be evicted for failing to pay rent due to COVID-19 related hardship. Commercial tenants in both the unincorporated areas and incorporated cities of Los Angeles County are covered by the County’s moratorium, except tenants in cities that have adopted an eviction moratorium with equal or greater protections to tenants than that of the County’s. However, tenants that are multi-national, publicly-traded, or employ over 100 employees are not covered by this moratorium. Moreover, effective September 1, 2020, tenants who rent space or property within airports in the County are no longer covered.

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Effective Time Period

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Between March 4, 2020 and June 30, 2021, commercial tenants may not be evicted for nonpayment of rent due to COVID-19 related financial hardship. However, the moratorium is not a cancellation of rent; tenants must repay any past due payments according to the following terms:

  • Small Employers: Tenants with nine or fewer employees will be granted up to twelve months following the end date of the moratorium to repay any past due rental payments, and
  • Larger Employers: Tenants with 10 or more, but less than 100, employees will be granted up to six months following the end date of the moratorium to repay any past due rent in equal payments, unless prior arrangements have been made with the landlord.

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Tenants and Landlords: Notice Obligations

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Tenants must provide their landlords with notice within seven days after rent is due if they are unable to pay rent for a covered reason. Tenants with nine or fewer employees may self-certify their inability to pay rent either in writing or orally. Tenants with 10 or more, but fewer than 100, employees must provide written documentation demonstrating their inability to pay rent due to COVID-19 related financial hardship.

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Landlords must accept self-certification as a valid form of notice from tenants with nine or fewer employees, and are prohibited from harassing or intimidating any tenants that exercise their rights under the Moratorium. The updated moratorium clarifies that tenants or their representatives may sue their landlords for violating the provisions of the moratorium, and enhances the fines and civil penalties landlords face for noncompliance.

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Protections for Covered Residential Tenants

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The County’s moratorium:

  • Prohibits evictions for the following reasons:
    • Nonpayment of rent due to COVID-19 related financial hardship through September 30, 2020;
    • No-fault reasons, including but not limited to, substantial remodels or demolition of property;
    • COVID-19 related violations due to unauthorized occupants or pets;
    • Nuisance; or
    • Denying entry to a landlord
  • Prohibits rent increases or new pass-throughs for:
    • Rent-stabilized units in unincorporated Los Angeles County subject to Chapter 8.52.050 of the County Code and
    • Mobilehome spaces subject to Chapter 8.57.050 of the County Code.
  • Prohibits imposing or charging late fees, interest, and any related charges for unpaid rent accrued during the Moratorium Period (except between October 1, 2020 and June 30, 2021).

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Covered Residential Tenants

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Residential tenants and mobilehome space renters in the unincorporated areas of Los Angeles County are covered by the County’s moratorium, as well as tenants in cities in the County that do not already have a moratorium in place, or have a moratorium that does not address residential tenants or mobilehome space renters. As of September 1, 2020, LA County’s moratorium provisions were established as baseline protections for all residential and commercial tenancies in Los Angeles County, with some exceptions.

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Effective Time Period

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Between October 1, 2020 and June 30, 2021, residential tenants that face eviction for nonpayment of rent due to COVID-19 related financial hardship are not covered by Los Angeles County’s eviction moratorium; instead, they are covered by the State’s eviction moratorium.

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Tenants must repay past due rent accrued between March 1, 2020 and September 30, 2020 by August 31, 2021. Tenants that accrue past due rent between October 1, 2020 and June 30, 2021 must follow the mandates under California State’s Assembly Bill 3088 (AB 3088) and Senate Bill 91 (SB 91) to establish protections against eviction.

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California State’s Eviction Moratorium

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AB 3088, signed by Governor Newsom on September 1, 2020, protects residential tenants and mobilehome space renters from eviction if they are unable to pay rent for COVID-19 related reasons between March 1, 2020 and January 31, 2021. SB 91 extends AB 3088’s protections through June 30, 2021 and creates a framework for distributing federal rental assistance funds to renters and property owners in the state.

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During the period between October 1, 2020 and June 30, 2021, the California State eviction moratorium applies for residential tenants and mobilehome space renters. While LA County’s protections for residential tenants and mobilehome space renters for non-payment of rent due to COVID-19 related financial hardship are ineffective during this time, all other Tenant protection provisions apply.

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Tenants and Landlords: Notice Obligations

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While the LA County moratorium is in effect, tenants must provide their landlords with notice through a self-certification within seven days after rent is due if they are unable to pay rent for a covered reason, barring extenuating circumstances. During the period that the State moratorium supersedes the County’s protections, tenants must comply with the notice and certification requirements established in AB 3088 and SB 91 to be protected from eviction. Landlords must accept self-certification as a valid form of notice under the County’s moratorium.

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While landlords may not evict residential tenants for failing to pay back unpaid rent under the terms of a payment plan, tenants and landlords should collaborate to create payment plans for after the expiration of the eviction moratorium. Moreover, tenants should pay partial rent, if they are able to do so, during the moratorium.

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View LA County’s informational site for the Temporary Eviction Moratorium here.

View LA County’s FAQs for Commercial Tenants here.

View LA County’s FAQs for Residential Tenants here.

View the full text of Assembly Bill (AB) 3088 here.

View the full text of Senate Bill (SB) 91 here.

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The following cities in Los Angeles County have a temporary eviction moratorium, as of February 26, 2021:

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Residential and Commercial:

Beverly Hills, Downey (Residential & Commercial), Gardena, Hawthorne (Residential & Commercial), Hermosa Beach, Inglewood, Lawndale, Lomita, Los Angeles (Ordinance No.186585 & Ordinance No. 186606), Lynwood, Manhattan Beach, Maywood, Monrovia (ResidentialCommercial), Pasadena, San Marino (page 226-230), Santa Monica, South El Monte (ORDINANCE NO. 1244-U, amendment: ORDINANCE NO. 1249-U), South Pasadena (South Pasadena Resolution 7678), West Hollywood (Residential: 1101U, 1108U, 1105U, 1113U Commercial: 1103U, 1105U, 1113U), Westlake Village  (amendment)

Residential Only:

Baldwin Park, Glendale

Commercial Only:

Burbank, Culver City , Pico Rivera, Rosemead, Whittier

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If you have questions regarding the application of Los Angeles County’s Temporary Eviction Moratorium to your business, please contact one of the following attorneys in The Maloney Firm’s Employment Law Department: Patrick MaloneyLisa Von EschenSamantha Botros, or Nicholas Grether.