Nonprofit News: Fall 2023

Fall 2023

Nonprofit News

Table Of Contents 03

18

Employee Handbooks

Did You Know?

04

19

Governance

FMLA

05

21

Legal Updates

Tendering Claims To Insurance

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22

Business & Facilities

Labor Relations

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Discrimination

15

Harassment

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Construction Corner 25 Benefits Corner

16 Retaliation

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Consortium Call Of The Month

Contributors: Heather DeBlanc Partner | Los Angeles Alison Kalinski Senior Counsel | Los Angeles Jacqueline Lee Associate | Los Angeles

Stephanie Lowe Senior Counsel | San Diego Victoria Gomez Philips Associate | Los Angeles

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Nonprofit News is published monthly for the benefit of the clients of Liebert Cassidy Whitmore. The information in Nonprofit News should not be acted on without professional advice. To contact us, please call 310.981.2000, 415.512.3000, 559.256.7800, 916.584.7000 or 619.481.5900 or e-mail info@lcwlegal.com.

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NLRB Creates New, Stricter Test For Evaluating Employee Handbook Rules.

By: Jacqueline Lee The National Labor Relations Board (Board) issued a decision this month in Stericycle, Inc., 372 NLRB No. 113 (2023), which evaluates challenges to employer work rules, such as policies in employee handbooks on recording and confidentiality. Under Section 7 of the National Labor Relations Act (NLRA), employees have the right to unionize, to join together to advance their interests as employees, and to refrain from such activity.

It is unlawful for an employer to interfere with, restrain, or coerce employees in the exercise of their rights.

The Board’s previous precedent for evaluating work rules was a balancing test that weighed an employee’s rights under Section 7 of the NLRA against the employer’s legitimate justifications associated with the work rule.

The Board felt this balancing test gave too much weight to employer interests.

In Stericyle, the Board instead focused on making sure work rules do not chill employees’ exercise of their statutory rights for fear of discipline or discharge if they violate them. The Board noted that there is an increased potential for intimidation because employees have an economic dependence on their employment and do not want to be terminated for breaking any workplace rules.

At the same time, employers have the right to maintain discipline and otherwise protect their legitimate and substantial business interests by evaluating employees’ workplace conduct. The Board’s decision in Stericycle is meant to balance those competing interests, by allowing employers leeway to maintain rules of their own choosing that advance their business interests, while at

Fall 2023

Employee Handbooks the same time, making sure those rules are narrowly tailored to minimize or eliminate any coercive potential.

Under the Board’s new test, ambiguous work rules must be interpreted from the perspective an employee who wishes to engage in protected activity, but who also wishes to avoid the risk of being disciplined or discharged for violating this rule. The test first requires a showing that an employee could reasonably interpret a rule to restrict or prohibit protected activity. If this showing is made, the work rule is presumptively unlawful. This is true even if the employer did not intend for its rule to restrict employees’ rights.

If the rule is established as presumptively unlawful, the employer then has the burden to show the rule advances a legitimate and substantial business interest and the employer is unable to advance that interest with a more narrowly tailored rule.

The Board ruled that the evaluation of work rules should be done on a case-by-case basis, examining the specific language of the particular rules and the employer interests actually invoked to justify them. The Board noted that the context and specific wording of the rules should also be considered. These rules apply retroactively to all pending cases.

Stericycle, Inc., 372 NLRB No. 113 (2023).

Note: This case is relevant for nonprofit organizations as they review their employee handbook policies. LCW is prepared to assist organizations in reviewing and revising their employee handbooks to ensure the rules are not restricting employee rights under the NLRB.

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Governance Board Members Retain Standing to Pursue Enforcement Actions Under the Corporations Code After Removal From Board.

Debra Turner was a director on the Board of the Conrad Prebys Foundation, a nonprofit public benefit corporation named for its founder, who was a wealthy philanthropist.

In addition to the foundation, Prebys created a trust, and directed it to make distributions to specific beneficiaries after his death. The assets remaining after the gift distributions were to go to the Foundation to be used for charitable purposes.

Under the Foundation’s bylaws, all of its directors were members of the Foundation, and the Foundation had no other members. Most of the directors had a personal relationship with Conrad Prebys. For example, Turner was Prebys’ longtime partner, and the two lived as a couple for over 16 years.

After Prebys passed, there was a contest over Prebys’ trust, as Conrad Prebys’ son, Eric, was originally a beneficiary of the trust and eliminated from the trust two years before Conrad Prebys died. Laurie Anne Victoria, another Board member and the trustee of the trust, wanted to settle Eric’s claims and discussed an appropriate settlement amount with the Board. Turner was the only director who opposed the settlement. Eventually, the Board authorized a settlement amount of $12 million, and Victoria settled with Eric for a total of $15 million, paying $9 million to Eric directly and the remainder in taxes.

In May 2017, Turner filed a petition in probate court against her fellow Board members (director-defendants), seeking to enforce provisions of the Corporations code related to breach of charitable trust against the Corporation under Corporations Code section 5142, the approval of self-dealing transactions in violation of the Board members’ duty of loyalty under Corporations Code section 5233, the removal of members of the Board for dishonest acts and gross abuse of authority under Corporations Code section 5223. All of these statutes give certain persons’ standing to bring such actions, including, but not limited to directors of the corporation. All causes of action were based on the Board’s handling of the settlement with Eric.

The directors were aware of Turner’s lawsuit prior to a

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Board meeting held in November 2017, at which the Board conducted an election of Foundation directors and officers.

The four director-defendants nominated and seconded one another for reelection. No one nominated Turner for reelection, despite Turner making it clear that she wanted to remain on the Board. As a result, Turner was no longer a director, officer, or member of the Foundation, which she alleged was an act of retaliation in response to her lawsuit.

The probate court transferred Turner’s claims to a civil court and made clear that the new proceeding would relate back to the date of the original filing, when Turner was still a director of the Foundation. Nonetheless, when Turner filed the civil complaint, the directors argued that Turner no longer had standing to maintain the enforcement action because she was no longer a director or member of the Foundation. The trial court agreed and dismissed the claims, and the Court of Appeal affirmed.

The California Supreme Court reversed the Court of Appeal’s ruling, finding that Turner was not required to maintain a continuous relationship with the Foundation to proceed with her suit. The Court considered the language of these statutes and the legislative history of the statutes, and held that these enforcement statutes clearly indicate that they require an individual who brings an action under them as a director to be a director at the time that person initiates the action.

However, they do not contain a continuous directorship requirement that would require dismissing the suit if a director fails to stay in a director position.

The Court was also concerned about the practical effects of upholding the Court of Appeal decision, namely the gamesmanship by directors accused of wrongdoing. For example, director-defendants would be able to end a director’s enforcement action by removing director-plaintiffs from office, refusing to reelect these director-plaintiffs, or otherwise making it more difficult for director-plaintiffs to retain their positions. At the same time, a director-plaintiff would have little incentive to bring a lawsuit, knowing it could lead to the loss of their directorship and then an end to the lawsuit.

Turner v. Victoria (2023) 15 Cal.5th 99.

Note: This case establishes a new precedent in California. It is relevant for boards at nonprofit organizations who should be aware that former directors can bring enforcement actions under the Corporations Code against board members after those former directors are removed or otherwise leave the board.

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1. Collect from the employee copies DHS Announces New and back, if the document is Alternative Approach (front two-sided) of Form I–9 documents To Verifying I-9 or an acceptable receipt and examine Employment Eligibility. such documents to ensure that the On July 21, 2023, the U.S. Department of Homeland Security (DHS) announced a new final rule, which provides an alternative procedure for employers to verify employment eligibility.

The alternative procedure took effect on August 1, 2023, and is available for employers who are participants in good standing in E-Verify, a web-based system through which employers electronically confirm the employment eligibility of their employees.

documentation presented reasonably appears to be genuine; 2. Conduct a live video interaction with the employee presenting the document(s) to ensure that the documentation reasonably appears to be genuine and related to the employee. During the live video interaction, the employee must present the same document(s) that the employee transmitted to the employer in Step 1;

3. Indicate on the new Employment Eligibility Verification Form I–9 (effective August 1, 2023 – July 31, 2026), by completing the Employers must verify the corresponding box, that an alternative employment eligibility of newly hired procedure was used to examine employees within three business documentation to complete Section days of their first day of employment 2 or for reverification, as applicable. and must re-verify the employment If using the prior Employment eligibility of existing employees Eligibility Verification Form I–9 as required by law and regulation.

(October 19, 2019 – October 31, Generally, employers are required to 2023), indicate in Section 2 in the verify employment eligibility through Additional Information field that the a physical, in person examination of alternative approach was used; the employee’s Form I-9 documents.

Under the new final rule, the 4. Retain, consistent with applicable alternative procedure provides a regulations, a clear and legible copy substitute to this physical, in person of the documentation (front and back examination requirement. if the documentation is two-sided); According to the final rule, the alternative procedure is as follows:

and

5. In the event of a Form I–9 audit • www.lcwlegal.com •

Fall 2023

Legal Updates or investigation by a relevant federal government official, make available the clear and legible copies of the identity and employment authorization documentation presented by the employee for document examination in connection with the employment eligibility verification process.

Adopting the alternative procedure is optional. However, employers who choose to adopt the alternative procedure must either (a) adopt it consistently for all employees or (b) adopt it just for employees who perform remote work only and continue to apply the physical, in person examination procedures to any and all employees who work onsite or in a hybrid capacity. If employers choose to differentiate between remote only workers and onsite and hybrid workers in this manner, such practice cannot be adopted for a discriminatory purpose or to treat employees differently based on a protected characteristic.

While the alternative procedure does not have an expiration date, the DHS Secretary has the authority to amend or cancel it. The final rule from the DHS is available here.

On August 1, 2023, DHS also launched a new version of the Employment Eligibility Verification Form, which reflects a number of updates, including a new box that eligible employers must check if the

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employee's Form I–9 documentation was examined under the alternative procedure set forth above. The new Employment Eligibility Verification Form is available on the U.S. Citizenship and Immigration Services website, and employers may begin using the new Form immediately. On November 1, 2023, the new Employment Eligibility Verification Form will become standard and the old form will expire.

The California Supreme Court Significantly Expands The Liability Of An Employer’s Agents.

Kristina Raines and Darrick Figg sued on behalf of themselves and a class of conditional offer of employment recipients. They alleged that they received offers of employment that were conditioned on pre-employment medical screenings that U.S. Healthworks Medical Group (USHW) performed.

USHW conducted the medical screens as agents of the prospective employers. Raines and Figg claimed that USHW violated the California Fair Employment and Housing Act (FEHA) by requiring job applicants to complete a written health history questionnaire that included numerous questions that had no bearing on the applicant’s ability to perform job functions.

Government Code Section 12940 of the FEHA makes it an “unlawful employment practice” for an employer of five or more persons “to make any medical or psychological inquiry of an applicant.” The FEHA only allows these inquires “after an employment offer has been made but prior to the commencement of employment duties, provided that the examination or inquiry is job related and consistent with business necessity and that all entering employees in the same job classification are subject to the same examination or inquiry.”

The federal district court dismissed the FEHA claim, finding that FEHA does not impose liability on agents of an employer. Raines and Figg appealed the dismissal to the U.S. Court of Appeals for the Ninth Circuit.

The Ninth Circuit heard oral argument and then asked the California Supreme Court to answer this question: “Does California’s [FEHA], which defines ‘employer’ to include ‘any person acting as an agent of an employer,’ …, permit a business entity acting as an agent of an employer to be held directly liable for employment discrimination?”

as federal antidiscrimination laws and public policy, all support the conclusion that an employer’s businessentity agents that have at least five employees and that “carr[y] out FEHA-regulated activities on behalf of an employer” can fall within FEHA’s definition of “employer” and may be directly liable for FEHA violations. The Court specifically stated that it was not deciding the significance of any employer control over the agent’s acts that gave rise to the FEHA violation, nor whether its decision applied to business-entity agents with fewer than five employees.

Raines v. U.S. Healthworks Medical Group, 2023 Cal. LEXIS 4619.

Note: This ruling significantly expands the scope of FEHA liability to an employer’s business-entity agents that employ five or more people. Although this case does not involve the employers who extended the conditional offers, the case also does not immunize an employer from liability for delegating FEHA regulated functions to business agents.

As a result, nonprofit organizations should carefully vet prospective agents to confirm that their practices are FEHA-compliant.

new to the Firm!

Jacqueline “Jackie” Lee is an Associate in the Los Angeles office of Liebert Cassidy Whitmore where she provides advice and counsel on all employment law and litigation related matters.

The California Supreme Court answered yes. The FEHA’s plain meaning and legislative history, as well

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Fall 2023

Employers Do Not Have Duty To Prevent Spread Of COVID To Household Members.

On May 6, 2020, Robert Kuciemba began working for Victory Woodworks, Inc. at a construction site in San Francisco.

About two months later, Victory transferred a group of workers to the San Francisco site from another location where they may have been exposed to COVID-19. Victory made this transfer without taking precautions required by the county’s health order. After being required to work in close contact with the new workers, Robert was infected with COVID-19.

Robert carried the infection home and transmitted it to his wife Corby. Corby was hospitalized for several weeks, and at one point, on a respirator.

On October 23, 2020, the Kuciembas sued Victory, asserting claims for negligence and premises liability. The trial court dismissed the case concluding that: (1) the claims that Corby contracted COVID-19 through direct contact with Robert were barred by California’s Workers’ Compensation Act’s (WCA) exclusive remedy provisions; (2) the claims that Corby contracted COVID-19 through indirect contact with infected surfaces were subject to dismissal for failure to plead a plausible claim; and (3) the claims failed because Victory’s duty to provide a safe workplace did not extend to nonemployees, such as Corby, who contracted a virus away from the worksite. The Kuciembas appealed and the CA Supreme Court agreed to answer, among other questions, whether California Law imposes a duty of care on employers to prevent the spread of COVID-19 to their employees’ household members.

In response to this question, the CA Supreme Court noted that the general rule of duty in California establishes that each person has a duty to exercise reasonable care for the safety of others. There are exceptions to this rule, including

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when a person’s injuries are inflicted by a third party, not the defendant. Under these circumstances, there is no duty to control, warn, or protect unless there is a special relationship between the parties that gives rise to a duty.

The Kuciembas allege that Corby was harmed by Victory’s misconduct in transferring potentially infected workers to Robert’s jobsite and forcing Robert to work in close proximity to them. The Kuciembas allege that Victory created a risk of harm by violating a county health order designed to limit the spread of COVID-19.

The CA Supreme Court determined that an employer does have a duty in the COVID-19 context not to create an unreasonable risk of the disease’s transmission. The Supreme Court then considered whether there were any policy reasons to create an exception to this duty, first considering whether it was foreseeable that there would be transmission to a family member and then considering whether the burdens on the community outweighed such a duty.

The Court determined that it was foreseeable that Victory’s failure to adhere to the workplace precautions against the spread of COVID-19 could result in transmission of the virus to employees’ households.

The City and County of San Francisco’s health orders mandated specific health and safety precautions to prevent the spread of COVID-19 at construction jobsites, including, but not limited to screening workers for symptoms daily upon arrival and removing any infected worker from the jobsite immediately. An employee’s return home at the end of a workday was expected and predictable, and transmission could be attributed to the employer’s negligence in failing to take reasonable precautions to prevent workplace exposure.

Victory argued that due to COVID-19’s highly contagious nature, it is impossible to trace an employee’s infection, and many factors could affect the likelihood that an employee would contract and transmit COVID-19.

Employees may exercise varying levels of diligence in properly wearing a mask and avoiding crowds. The Court agreed that the connection between Victory’s wrongful conduct and injury was somewhat attenuated, but nonetheless, it is still foreseeable that an employee exposed to the virus through the employer’s negligence will pass the virus to a household member.

The Court then considered whether the anticipated burdens on defendants and the community weighed against imposing such a duty. Victory expressed concern that recognizing a duty to employees’ household members would impose enormous and unprecedented financial

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burdens on employers, both in potential damages awards and litigation costs. The Court considered the cost to defendants of upholding the duty of care. Because it is impossible to eliminate the risk of infection, even with perfect implementation of best practices, the prospect for liability for infections outside the workplace could encourage employers to adopt precautions that unduly slow the delivery of essential services to the public.

The Court also noted that imposing a duty to prevent secondary COVID-19 infections would extend to all workplaces, making every employer in California a potential defendant. The Court reasoned that the virus is extremely contagious, making infection possible after a relatively brief exposure. The pool of potential plaintiffs would be enormous. The Courts would be flooded with litigation, forced to decide fact-specific disputes that could be complex and time-consuming.

The Court determined that the significant and unpredictable burden of imposing this duty of care on California businesses, the court system, and community at large weighed in favor if recognizing the exception.

Although it was foreseeable that employees infected at work would carry the virus home and infect their loved ones, the Court determined that the dramatic expansion of liability had the potential to destroy businesses and end essential public services.

The Court concluded that employers do not owe a duty of care under California law to prevent the spread of COVID-19 to employees’ household members.

Kuciemba v. Victory Woodworks, Inc. (2023) 14 Cal. 5th 993.

Note: This case is a win for employers across California, including nonprofit organizations, because it acknowledges that employers have little control over the spread of COVID-19 to household members and establishes that employers do not owe a duty of care to employee’s family members in preventing the spread of COVID-19.

IBM Must Reimburse Employees For Costs Incurred While Working Remotely During Pandemic.

Paul Thai was employed by International Business Machines Corporation (IBM) in March 2020 when Governor Gavin Newsom issued a stay-at-home order due to the COVID-19 pandemic. Thai needed internet access, telephone service, a phone headset, a computer and accessories in order to perform his work. IBM provided these items to its employees in its offices. After the Governor’s order went into effect, IBM directed Thai and several thousand other employees to continue performing

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Fall 2023

their regular job duties from home. Thai and his coworkers personally paid for the services and equipment necessary to do their jobs while working from home. IBM never reimbursed its employees for these expenses, despite knowing that its employees incurred them.

Thai filed suit, on behalf of him and his coworkers, arguing that he should be reimbursed for these expenses under Labor Code Section 2802(a). The trial court disagreed with Thai and determined that IBM’s instructions to employees to work from home were due to government orders and therefore did not need to be reimbursed as necessary business expenses.

Thai appealed.

On appeal, Thai argued that the trial court’s ruling was contrary to the plain language of Labor Code Section 2802(a), which requires employers to reimburse employees for all necessary expenditures or losses that are a direct consequence of the discharge of their duties. The Court of Appeals agreed with Thai.

The Court of Appeals reasoned that Section 2802(a) is designed to protect workers from bearing the costs of business expenses incurred by workers doing their jobs. The elements of a Section 2802(a) cause of action are: (1) the employee made expenditures or incurred losses; (2) the expenditures or losses were incurred in direct consequence of the employee’s discharge of his or her duties, or obedience to the director of the employer; and (3) the expenditures or losses were necessary.

The only element at issue here was the second element. IBM argued that Thai began to incur work from home expenses, not because his job duties changed, but because the government required him to stay at home. Therefore, IBM argued, they were not the direct cause.

Conversely, Thai argued that in a recent similar case in California involving Amazon, the federal trial court ruled that Amazon was liable to pay for the expenses because Amazon expected the plaintiff to continue to work from home after the stay-at-home orders were issued. This meant that Amazon had to pay the reasonable expenses incurred even if Amazon was not the “but-for” cause of the shift to remote work.

The Court of Appeals agreed with the Amazon case and likewise reasoned that even though the Governor’s order was the “but-for” cause of certain work-from-home expenses, there is no language in the statute that exempts an employer from the reimbursement obligation. Under the statute’s plain language, the obligation does not turn on whether the employer’s order was the proximate cause of the expenses, it turns on whether the expenses were actually due to the performance of the employee’s duties. The Court of Appeals reversed the trial court’s judgment and remanded the case for further proceedings.

Thai v. International Business Machines Corporation (2023) 93 Cal. App. 5th 364.

Note: This case serves as an important reminder that if employees are expected to work from home, even due to situations such as a COVID-19 exposure or a stay-at-home order, employers must reimburse employees for the necessary expenses they incur to perform their job duties.

LCW has launched our 35th consortium, dedicated specifically to California Nonprofit organizations! Membership includes: • Three workshops to which members may send as many people as they would like • Recordings of the workshops that members may access and share internally for three months • Access to our growing resource Library • Twelve (12) hours of complimentary telephone consultation • A copy of our Nonprofit News, an LCW newsletter published quarterly • Ability to attend the other 34 consortium’s workshops at no additional charge (space permitting) • Discounts on other LCW sponsored webinars and events • www.lcwlegal.com •

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Nonprofit Telephone Consultation Questions & Answers Consortium services include telephone consultations. Members of each consortium have come to rely on the opportunity to pick up the phone and ask questions of an attorney. The following examples are designed to illustrate this aspect of consortium services.

What is a consortium call?

A consortium call is the member’s opportunity to consult with an attorney on any legal issue that does not require factual analysis, document review, or ongoing advice. This includes matters relating to operations and governance, maintaining tax-exempt status, employment matters, grants and contracts, fundraising, labor relations, and construction.

Is this phone call covered by the general consortium fee?

Yes.

What if the question requires the attorney to do legal research or write an opinion letter?

The attorney will advise you that it will be billed at the attorney’s regular hourly rate. No work will be done until you have given authorization.

What if the attorney tells me my call will require them to quickly look something up and will call me right back?

Normally that is considered part of a normal consortium call covered by the annual consortium fee.

How many aggregate hours of consortium calls do I get in one year?

You get 12 hours per year. The time will be tracked in minimum units of one tenth of an hour.

How many times a day or week can I call with a consortium question?

There is no limit on the number of times you may call in a day or week, as long as it falls within the 12 hours.

Who should be using this service?

Leadership team member (Executive Directors/CEOs, CFOs, COOs, VPs), director level employees (e.g., HR Directors, Compliance Directors), directors, business officers, and other and any other administrators, managers, or other team identified to us by the member organization.

What phone number should I use?

You are welcome to call any of our offices or submit your question via email.

310.981.2000 (Los Angeles) 415.512.3000 (San Francisco) 619.481.5900 (San Diego) 10

559.256.7800 (Fresno) 916.584.7000 (Sacramento) AskLCW@lcwlegal.com

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Fall 2023

Business & Facilities IRS Warns Of Complexity Of Qualifying For ERC And Associated Scams.

The Internal Revenue Service (IRS) recently issued a warning regarding the Employee Retention Credit (ERC). The ERC is a complex tax credit available to certain businesses and tax-exempt entities affected by the pandemic. The IRS advises that applying for the credit requires careful review before filing. Further, they warn that there are numerous scams involving the ERC and businesses and tax-exempt organizations should be cautious of aggressive ERC marketing.

The ERC was enacted as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) in order to encourage employers to keep employees on payroll by providing employers with a tax credit refund on certain employment taxes paid by the employer, up to a certain amount, on qualified wages. The ERC applies to qualified wages paid between March 13, 2020 and December 31, 2021. Eligible employers may claim a credit of up to $5,000 for 2020 and $28,000 for 2021, for each employee. Employers are eligible if they carried on a business or trade during 2020 or 2021 that was either (1) fully or partially suspended during 2020 or the first three quarters of 2021; (2) experienced a significant decline in gross receipts in 2020 or during the first three quarters of 2021; (3) or qualified as a recovery startup business. The deadlines for filing for the ERC are April 15, 2024, for 2020 tax periods and April 15, 2025, for 2021 tax periods.

Determining eligibility for the ERC requires a careful analysis of the employer’s tax records and the specific circumstances surrounding the employer during the pandemic (e.g. the specific dates of mandated closure). Incorrectly filing for the ERC may result in an employer being required to repay the credit and the assessment of interest and penalties.

Nonprofit organizations should heed the warnings of the IRS and be wary of companies that advertise assistance in the ERC filing process. Organizations should do their due diligence investigating these companies and should not provide confidential employee records or business information to these companies. LCW attorneys can assist in determining whether an organization qualifies for the ERC.

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Discrimination University Wrongly Denied Professor’s Accommodation Request To Work Remotely Due To COVID-19 Risks.

Stephen Oross III was a tenured faculty member at Kutztown University. He worked for the University for over 20 years as a psychology professor. In 2014, Professor Oross suffered a major heart attack and underwent double bypass surgery and the installation of a pacemaker and internal defibrillator.

Due to the COVID-19 pandemic, the University operated online for part of the Spring 2020 semester.

During the 2020-2021 academic year, the University allowed faculty and staff to submit requests for flexible work arrangements. Professor Oross requested and was granted a flexible work arrangement, where he taught his full academic load, held office hours, and served on faculty committees, all remotely.

During the Fall 2020 semester, Professor Oross experienced a severe worsening of his heart condition, which resulted in a full-time medical leave of absence for the Spring 2021 semester. During this semester, Professor Oross received a heart transplant.

The University reopened for the 2021-2022 academic year. The Director of HR emailed all employees that they would need to return from their flexible work arrangements for the Fall 2021 semester. Faculty were required to teach in-person and hold office hours in-person. Mask requirements were lifted and the University did not have a vaccine requirement.

As a result of his heart transplant, Professor Oross was required to take immune-suppressing medications and his doctors believed he was at increased risk of severe illness or death from COVID-19.

Professor Oross requested to work remotely for the Fall 2021 semester. His doctor provided a note stating that Professor Oross’ immunosuppressed state and increased rates of COVID-19 infections created a serious concern about teaching in-person and being in close contact with students. Other than working remotely, Professor

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Oross’ doctor placed no other restrictions on Professor Oross’ ability to return to his job.

The Director of HR denied the request. Other faculty members had requested remote work accommodations for the Fall 2021 semester, but the University denied all of them. The University’s rationale for all requests was that the ability in teach in person is an essential function of the faculty position and converting classes from inperson to online would be a fundamental alteration of the University’s course offering to students, thus creating an undue hardship to the University.

At the same time, the University did not receive any documentation from the Dean or the Department Chair suggesting that providing Professor Oross remote work accommodations would provide any difficulty or added expense. In fact, the University had the existing technology to provide online classes. Professor Oross brought suit against the University alleging disability discrimination under Section 504 of the Rehabilitation Act. To establish a prima facie case of discrimination, a plaintiff must show (1) that he or she has a disability; (2) that he or she is otherwise qualified to perform the essential functions of the job, with or without reasonable accommodations by the employer; and (3) that he or she was nonetheless terminated or otherwise prevented from performing the job. If the plaintiff is able to meet these burdens, the defendant then bears the burden of proving, as an affirmative defense, that the accommodations requested by the plaintiff are unreasonable, or would cause an undue hardship on the employer. An undue hardship involves significant difficulty or expense in providing the accommodation.

Here, the Court determined that no union agreement, job description, or course description stated that teaching in-person and conducting office hours in-person were essential functions of a faculty member’s job in general and of Professor Oross’ position in particular. To the contrary, the University published marketing materials that said distance education was critical to the University’s mission. The University had a team dedicated to creating a distance education infrastructure. The University offered approximately 15% of their course offerings online

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worship and rest. In 2012, Groff took a mail delivery job with the United States Postal Service (USPS).

Groff ’s position generally did not involve Sunday work, but that changed after USPS began facilitating Sunday deliveries for Amazon. To avoid the requirement to work Sundays on a rotating basis, Groff transferred to a rural USPS station that did not make Sunday deliveries.

Soon, Amazon deliveries began at that station as well, so USPS redistributed Groff ’s Sunday deliveries to other USPS staff. During peak season, Sunday deliveries that would have otherwise been performed by Groff were carried out by the rest of the USPS station’s staff.

During other months, Groff ’s Sunday assignments were assigned to the regional hub.

Finally, the Court concluded that the University’s policy of denying any request for remote work was problematic. The Court determined that it would not have been a fundamental alteration of the University’s pedagogical model to allow Professor Oross to teach four courses and office hours online for one semester.

The Court also determined that the University did not make any effort, let alone a good faith effort to accommodate Professor Oross. As a result, the Court found in favor of Professor Oross.

Groff sued under Title VII of the Civil Rights Act of 1964, asserting that USPS could have accommodated his Sunday practice without undue hardship on USPS’s business. Under Title VII, it is unlawful for covered employers to discriminate against any individual because of that individual’s religion. The EEOC has held that employers are required to provide reasonable accommodations to the religious needs of employees whenever that would not work an undue hardship on the employer’s business.

Oross v. Kutztown Univ. (E.D. Pa. July 25, 2023, No. 21-5032).

The trial court determined that USPS had a valid undue hardship defense and granted summary judgment to USPS. The Court of Appeals upheld the trial court’s decision, holding that requiring an employer to bear more than a de minimis cost to provide a religious accommodation is an undue hardship under the Court of Appeals’ current precedent. The de minimis cost standard was a low standard to meet and the Court of Appeals determined that exempting Groff from Sunday work imposed a cost on his coworkers, disrupted the workplace and workflow, and diminished employee morale. This was enough to establish undue hardship.

The case was then appealed to the U.S. Supreme Court, and the Supreme Court granted certiorari.

Note: Although the Rehabilitation Act only applies to organizations that receive federal funding, the framework for a disability discrimination claim under the Americans with Disabilities Act is largely the same. A couple of important takeaways from this case are that (1) nonprofit employers should be aware that blanket denials for remote work can be legally risky—the interactive process requires a case-by-case analysis; and (2) nonprofit employers should include language in their employment agreements and/or job descriptions that certain positions are required to be in-person in order to help defend against similar claims.

U.S. Supreme Court Establishes Higher Standard When Denying Religious Accommodations Due To Undue Hardship.

Gerald Groff is an Evangelical Christian who believes for religious reasons that Sunday should be devoted to

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in the Fall semester of 2021. Professor Oross had his certificate in online teaching from the University and had taught various online classes over the last seven years. The University offered no evidence that the quality of a class decreased due to the class being offered online. The Dean and Psychology Department Chair did not object to Professor Oross’ request. The Court therefore concluded that teaching in-person was not an essential function of Professor Oross’ job.

The Court also determined that the University did not provide any evidence of an undue hardship. The University had a framework for providing remote teaching and existing technology allowed Professor Oross to interact with his students in real time without significant difficulty or expense to the University. The Court found that student preferences that classes be in-person do not qualify as an undue burden under the Rehabilitation Act.

Throughout this time, Groff continued to receive progressive discipline for failing to work on Sundays.

Eventually, Groff resigned.

The Supreme Court held that the de minimis cost standard did not suffice to establish undue hardship under Title VII. Rather, undue hardship is shown when a burden is substantial in the overall context of an employer’s business. This is a fact-specific inquiry.

The Supreme Court noted that undue hardship is more severe than a mere burden and more than imposing some sort of additional costs on the employer, rather, it must rise to the level of excessive or unjustifiable.

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The Supreme Court also held that all relevant factors must be considered when evaluating reasonable accommodations, including the practical impact of the accommodations in light of the nature, size, and operating cost of the employer.

The Supreme Court remanded the case to the lower courts to apply the context-specific application of the standard.

Groff v. DeJoy (2023) 143 S. Ct. 2279.

Note: Title VII generally applies to nonprofit employers, though there are some exceptions for religious organizations. Nonprofit employers should make note of this decision and consult LCW when responding to religious accommodation requests, as employers will need to meet a higher burden if denying any requests.

new to the Firm!

Dana Segal, an Associate in the Los Angeles office, provides advice and counsel on all employment law and litigation related matters. Prior to joining LCW, Dana served as a Deputy District Attorney in the Los Angeles District Attorney’s Office.

Louis Lee, an Associate in the San Francisco office, provides advice and counsel to our clients in all matters pertaining to labor and employment law. Louis has experience in all phases of litigation and has handled matters ranging from investigations and antitrust class actions to administrative actions and False Claims Act suits.

Kelsey Ridenhour, an Associate in the Los Angeles office, provides labor and employment law expertise in matters pertaining to our public agency clientele. Prior to joining LCW, Kelsey served as a Judicial Clerk with the Central District of California.

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• Los Angeles • San Francisco • Fresno • San Diego • Sacramento •

Offensive Lyrics That Discussed Violence Against Women And Permeated The Workplace Each Day Were Sex Harassment.

The musician Bob Marley once said “one good thing about music, when it hits you, you feel no pain”. At least eight former employees of S&S Activewear would disagree. S&S operated a 700,000 square foot warehouse in Reno, Nevada where many of its employees worked.

The company permitted managers and employees to routinely play “sexually graphic, violently misogynistic” music throughout the warehouse. According to the male and female employees who sued, the song lyrics used offensive terms that denigrated women. Songs like “Blowjob Betty” by Too $hort contained “very offensive” lyrics that “glorifie[d] prostitution.” Likewise, “Stan” by Eminem described extreme violence against women.

The music overpowered operational background noise and was impossible to escape because it blasted from commercial-strength speakers placed throughout the warehouse. Sometimes employees placed the speakers on forklifts and drove around the warehouse, making it more difficult to predict—let alone evade—the music’s reach. The music allegedly served as a catalyst for some male employees, who frequently pantomimed sexually graphic gestures, yelled obscenities, made sexually explicit remarks, and openly shared pornographic videos. The music was particularly demeaning toward women, who comprised roughly half of the warehouse’s workforce, but some male employees also took offense. Despite “almost daily” complaints, S&S management defended the music as motivational and allowed it to be played for nearly two years, until litigation loomed.

The former employees filed suit, alleging that the music and related conduct created a hostile work environment in violation of Title VII. The district court granted S&S’s motion to dismiss and denied leave to amend the music claim. The district court reasoned that because the music was offensive to multiple genders and no one individual or group was targeted, there was no discrimination because of sex. The employees appealed to the Ninth Circuit.

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Harassment An employee who brings a hostile work environment claim must show that the employer discriminated because of an employee’s membership in a protected group.

The offensive conduct must be “sufficiently severe or pervasive to alter the conditions of employment.” There is no requirement that the harassing conduct only target an individual; nor does one protected class need to be treated differently than another to establish a Title VII hostile work environment violation.

Other U.S. Circuit courts have decided that a workplace saturated with sexually derogatory content can constitute harassment “because of sex” and that lyrics loaded with sexist slurs expose female employees to uniquely “disadvantageous terms or conditions of employment.”

According to those precedents, the Ninth Circuit determined that the music at issue in this case was actionable conduct under Title VII. The Ninth Circuit also disagreed with S&S that no harassment because of sex had occurred since the music was offensive to both men and women. An employer cannot evade liability for a gender harassment claim by cultivating a workplace that is broadly hostile and offensive to both men and women. The Ninth Circuit remanded the case back to the district court for further consideration.

Sharp v. S&S Activewear, L.L.C. (9th Cir. 2023) 69 F.4th 974.

Note: This case illustrates two important maxims of discrimination and harassment law. First, the Ninth Circuit has joined other Circuits to find that music or sound that pervades a workplace can create a hostile work environment under Title VII. Second, an employer has no “equal opportunity harasser” defense. The fact that employees of different protected classifications are impacted does not provide a defense to a Title VII claim.

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RetaLIation Employee Wins $7M On Claims That He Was Fired For Reporting Code Violations.

Karl Zirpel began working at Alki David Productions, Inc. in 2013. ADP is an entertainment and media company.

In 2014, ADP began focusing on hologram technology, by which images are projected for audience viewing.

By March 2014, Zirpel was ADP’s vice president of operations.

In September 2017, Zirpel began working at a theater that ADP was converting for hologram productions.

Zirpel was to install the hologram equipment. ADP had publicized an invitation-only special event at the theater on September 28, 2017, for celebrities and potential investors.

Zirpel was at the theater on September 25, 2017, when four different Los Angeles City inspectors arrived. Zirpel, ADP’s in-house counsel Manuel Nelson (Nelson), and ADP’s general contractor completed four walk-through inspections. The inspector identified many deficiencies that required correction, and said the approvals would not occur before the September 28 event. The Los Angeles Department of Building and Safety issued a correction notice identifying multiple violations of municipal code sections.

After the inspectors left, ADP’s principal Alkiviades David ordered the construction crew to use plywood and drapes to cover exposed electrical wiring on the theater walls. Zirpel felt that David’s “fix” created a fire hazard and jeopardized ADP employees and the

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public. On September 26, 2017, Zirpel informed ADP’s senior vice president of operations, Ian Robertson, that two inspectors had said the theater could not open on September 28, 2017. Zirpel told Robertson he intended to telephone the fire inspector about these concerns.

Zirpel called a Los Angeles County fire inspector on September 26. Zirpel eventually spoke to a receptionist.

Without giving his name, Zirpel said: the theater was scheduled to open on September 28; that inspectors had come, but “none of the work was approved;” no permits had been issued; and someone should come to the theater.

On September 27, 2017, Zirpel and ADP’s chief technical officer, “Nick,” met a fire inspector. The inspector stopped all work, told everyone to leave, and said that no work could be done without posted fire exit signs. Zirpel understood this to mean “when those signs were posted, we had the clearance to go back in and work again.”

Nick left the theater to purchase fire exit signs and Zirpel left in a U-Haul truck to retrieve the hologram equipment. Zirpel texted in-house counsel Nelson about the conversation with the fire inspector. Zirpel asked if there was a time frame for the permit, and said he would be “on standby to unload” the hologram equipment.

Nelson texted back, stating that a permit application had been submitted; that he was meeting with the inspectors the following day; and that until the application was denied, “all of us need to continue working toward the special event.”

David texted Zirpel, stating, “We need this setup done.

I read this text you sent. The permits will be given tomorrow morning. Nothing stops.” When Zirpel

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returned to the theater, he saw work being done. Zirpel met with Ian Robertson and Nick and expressed concerns about installing the hologram equipment without approvals. Zirpel said the work should not be proceeding because it was unsafe. Zirpel stopped all work.

David arrived at the theater and demanded to know why no work was being done. Zirpel responded, “we’ve got none of the inspectors signed off on any of the work done.” He then listed reasons why the theater should not open on September 28.

David “immediately blew up,” and told Zirpel to shut up and “go with the program,” and that he was either “in or out.”

Zirpel repeatedly stated what they were doing was not safe. David went into a “fit of rage,” yelled in Zirpel’s face, and using numerous obscenities, told Zirpel to “get out,” to “get the f . . . out, you faggot,” and that Zirpel was fired.

Zirpel handed David the U-Haul keys and left the theater. David sarcastically told him to perform a sexual act. Zirpel found David’s conduct “traumatic,” because Zirpel “wasn’t out to a lot of people.” David followed Zirpel out of the theater and continued yelling. David walked away, and then returned and “came to his senses,” realized “the mistakes he made,” and tried to embrace Zirpel. Zirpel told David to get away. Zirpel did not return to work. The September 28 event occurred as scheduled.

Zirpel then filed a lawsuit alleging that his termination constituted retaliation under the Labor Code for disclosing information: 1) that Zirpel believed violated building codes (Section 1102.5); and 2) about his working conditions (Section 232.5). The case went to trial and the jury returned a verdict for Zirpel, and awarded him nearly $7M in total damages.

ADP then appealed the verdict.

Labor Code Section 1102.5(c) states: “An employer, or any person acting on behalf of the employer, shall not retaliate against an employee for refusing to participate in an activity that would result in a violation of state or federal statute, or a violation of or noncompliance with a local, state, or federal rule or regulation.”

A person suing for violation of Labor Code Section 1102.5 must identify both the specific activity and the statute, rule, or regulation at issue; the court then determines whether the activity would result in a violation or noncompliance, and, if so, the jury determines whether the person was retaliated against for refusing to participate in the activity.

The activity at issue in this case was the installation of the hologram equipment. At trial, Zirpel showed that continued construction work would have violated county and city codes. ADP appealed to the California Court of Appeal.

ADP first argued that ADP did eventually get a permit, and therefore there was no unlawful activity. The Court noted that there was no evidence that any permit was approved before the September 28 event. The Court also found that the trial court was correct to find that Zirpel’s continued work at the theater would have violated a statute, rule or regulation, as required to prove a violation of Section 1102.5.

The Court next turned to the Labor Code Section 232.5 claim. That law states in part: “No employer may . . . [d]ischarge,

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formally discipline, or otherwise discriminate against an employee who discloses information about the employer’s working conditions.” Here, the key question was whether Zirpel’s disclosures were a substantial motivating reason for terminating his employment.

The Court found evidence that Zirpel repeatedly told David about the unsafe working conditions. David responded by becoming enraged, yelled obscenities, and telling Zirpel he was fired. Very close temporal proximity can establish retaliation. Here, the temporal proximity was immediate. Also, the jury applied the correct legal standard when it determined that Zirpel’s disclosures were “substantial motivating” factors in his termination.

Finally, the Court found that the $6 million in punitive damages that the jury awarded would stand because it was not excessive, given this evidence of David’s malice and reprehensible conduct: screaming obscenities at Zirpel in the presence of coworkers; using a slur to disclose and describe Zirpel’s sexual orientation; sarcastically requesting Zirpel perform a sexual act; standing so close to Zirpel that spittle flew into Zirpel’s face; and firing Zirpel for standing up for the safety of others.

Zirpel v. Alki David Productions, 93 Cal.App.5th 563 (2023).

DidYou Know?

Note: This case is notable for the six-to-one ratio between the punitive and economic damages. This case demonstrates how strongly juries condemn those who retaliate against whistleblowers.

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Beginning January 1, 2024, California’s minimum wage will increase from $15.50 per hour to $16 per hour for all employers, regardless of size. In cities and counties with their own higher local minimum wage rates, such as Berkeley, Los Angeles, and San Francisco, the higher local rate must be paid.

Regardless of whether there is a local minimum wage, only the state minimum wage can determine the minimum salary requirements for exempt employees.

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The U.S. Equal Employment Opportunity Commission (EEOC) recently released an updated technical assistant document titled Visual Disabilities in the Workplace and the Americans with Disabilities Act (ADA). The document explains how the ADA applies to job applicants and employees with visual disabilities and addresses the types of reasonable accommodations applicants or employees with visual disabilities may need. The document also highlights new technologies for visual reasonable accommodations, many of which are free or low-cost.

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The EEOC released its proposed regulations for implementing the Pregnant Workers Fairness Act (PWFA) a new law that requires employers to make changes in the workplace to help employees who have pregnancy-related limitations perform their jobs. The proposed rule will provide nonprofit organization and other employers with details about how the EEOC will enforce the PWFA, including how employers can offer reasonable accommodations to individuals with health issues related to pregnancy or childbirth.

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The U.S. Equal Employment Opportunity Commission (EEOC) announced that the 2022 EEO-1 Component data collection will begin on October 31, 2023. All employers (including nonprofit organizations) with 100 or more employees are required to report their EEO-1 Component data, which includes information on the racial, ethnic, and gender composition of an employer’s workforce by specific job categories. The deadline to submit this data will be December 5, 2023. The EEOC has published an instructional booklet that consolidates into one place the existing information about the filing process and data requirements. The booklet can be found here: https://www.eeocdata. org/pdfs/2022_EEO_1_Component_1_Instruction_Booklet.pdf

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Supervisor And Employer Potentially Liable For Adverse Employment Actions Taken Against Employee While Employee Was On FMLA. Clark, a private university, hired Randi Rousseau as a Cataloging Librarian in 2003 and promoted Rousseau to Head of Cataloging in 2012. During the 2019-2020 academic year, Rousseau also served as acting Head of Collections. From 2013-2019, Rousseau received positive performance reviews, with overall rankings of “Commendable” or “Satisfactory.” In 2020, the University hired Laura Robinson as the University Librarian.

Robinson became Rousseau’s supervisor. Since Robinson was hired, Rousseau underwent three surgeries requiring use of medical leaves in June 2020, August-September 2021, and December 2021-February 2022.

Rousseau said that shortly after Robinson learned of Rousseau’s need for Medical Leave in December 2021, Robinson issued Rousseau a written warning, raising alleged dress code violations (i.e., wearing jeans and sneakers in the office) that had previously never been brought to Rousseau’s attention, and harmless interview questions asked by Rousseau to an internal candidate (i.e., whether the candidate would feel comfortable supervising her former supervisor).

During Rousseau’s leave in January 2022, Robinson requested a change of title for Rousseau to “Cataloging and Metadata Librarian,” due to the alleged needs of the library. This change removed Rousseau’s supervisory responsibilities.

When Rousseau returned from leave on February 7, 2022, she needed to attend approximately ten medical appointments upon her return and through June 2022.

On June 13, 2022, the University terminated Rousseau.

The termination letter noted Rousseau had been given feedback multiple times and follow-up over the past months on several areas of poor performance, including communication, calendar management, time keeping inaccuracies, and failure to adopt a “more enthusiastic approach to projects specific to [her] new job description.” Rousseau alleged that these performance

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FMLA

issues were not previously brought to her attention as issues worthy of discipline or termination, nor were they raised in her December 2021 written warning.

Rousseau filed suit against Robinson and the University alleging retaliation against, and interference with her exercise of rights under the Family and Medical Leave Act (FMLA). FMLA and its accompanying regulations prohibit an employer from interfering with, restraining, or denying the exercise of any FMLA right and from retaliating or discriminating against employees who have used FMLA. Rousseau argued that Robinson interfered with her FMLA rights and retaliated against her for exercising those rights.

To establish a case for interference with FMLA, Rousseau must show that (1) she was eligible for FMLA; (2) her employer was covered by FMLA; (3) she was entitled to leave under FMLA; (4) she gave her employer notice of her intention to take leave; and (5) her employer denied her FMLA benefits to which she was entitled.

Rousseau argued that Robinson interfered with her FMLA benefits by demoting her and stripping her of her supervisory responsibilities in the middle of her approved leave. Rousseau also argued that she was not reinstated to a position equivalent to the Head of Cataloging upon returning from leave. Robinson did not challenge Rousseau’s eligibility for FMLA, and instead argued that she is not an employer within the meaning of FMLA and therefore not individually liable. Robinson also argued that Rousseau’s new position upon returning from leave was equivalent to her former position.

The Court concluded that “employer” includes any person who acts, directly or indirectly, in the interest of an employer to any of the employees. Robinson exercised sufficient control over Rousseau to be considered an employer because she supervised Robinson and controlled the conditions of her employment by issuing Rousseau discipline, changing her job title and duties, and playing a role in terminating Rousseau.

The Court also concluded that the change in title impacted Rousseau’s status and job duties, in violation of Rousseau’s reinstatement rights under the FMLA. Rousseau lost her supervisory responsibilities, which plausibly reduced her workplace status. Rousseau’s termination letter identified her failure to adopt a more enthusiastic approach to her new job description as a reason for her termination. This acknowledgment of a “new job description” undercut Robinson’s argument that the position was equivalent to her former role.

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To establish a case for retaliation, Rousseau must show that (1) she availed herself of a protected FMLA right; (2) she was adversely affected by an employment decision; and (3) there was a causal connection between her protected conduct and the adverse employment action. Robinson argued that there was no causal connection between use of FMLA and the adverse employment actions (i.e., the written warning, the demotion, and the termination). None of Rousseau’s supervisors expressed displeasure at her use of FMLA or connected that use to adverse employment actions. Rousseau argued that a causal connection should be inferred due to the prior positive performance reviews and the short time between her exercise of FMLA rights and adverse actions.

Rousseau’s performance reviews from 2013-2019, prior to her leaves, were positive, and there were no performance reviews for the years immediately preceding the December 2021 to February 2022 leave. Then, shortly after learning of the need for medical leave in December 2021 and shortly before taking that leave, Robinson issued the written warning. The Court concluded that the timing of these events suggested that Robinson and the University retaliated against Rousseau for exercising her FMLA rights. The Court noted that the concerns raised in the termination letter were not brought to Rousseau’s attention prior to her exercise of FMLA rights, and the lack of performance reviews prior to her leave undercut the credibility of several potential legitimate reasons for Rousseau’s termination.

The Court denied Robinson’s motion to dismiss.

Rousseau v. Clark University (D. Mass., May 12, 2023) 2023 U.S. Dist. LEXIS 83599.

Note: This case is an important reminder that nonprofit employers should be documenting any performance concerns as they arise.

In this case, the employee was not aware of the performance concerns until after she had indicated her need to take FMLA, creating an inference that the adverse employment actions were in retaliation for taking protected leave. This case is also a good reminder that supervisors’ actions can potentially create liability for an employer, as was the case here.

Congratulations to

Scott Tiedemann for being awarded an

Ally of the Year

by Corporate Counsel's 2023 Women, Influence and Power in Law Awards!

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Tendering Claims to Insurance Harvard’s Failure To Give Insurance Provider Notice Of Lawsuit Results In Denial Of Coverage.

In 2014, Harvard purchased a one-year liability insurance policy from the American International Group, Inc. (AIG). The policy covered litigation costs in the event a claim was brought against Harvard, as well as the liabilities resulting from a judgment or settlement, up to $25 million. The policy included “claims-made coverage,” meaning Harvard was required to provide prompt written notice of any claim filed against them.

In addition to the AIG policy, Harvard purchased a secondary policy from Zurich American Insurance Company (Zurich) to insure against an additional $15 million in costs should a claim exhaust the AIG coverage. The Zurich policy also required prompt written notice of any claims, in the same manner as the AIG policy.

Under both policies, Harvard had to report the claims within 90 days of the end of the policy period. The policies provided coverage from November 1, 2014 to November 1, 2015, so any claim against Harvard had to be reported no later than January 30, 2016.

On November 17, 2014, the Students for Fair Admissions sued Harvard for unfair admissions practices, which culminated in the recent affirmative action decision by the Supreme Court. On November 19, 2014, in anticipation of the legal costs, Harvard notified AIG of the pending suit, securing coverage under the primary policy. Harvard did not notify Zurich of the suit until May 23, 2017. Zurich denied coverage under the excess policy due to failure to furnish timely notice.

Harvard sued Zurich, seeking damages for breach of contract. Zurich argued that Harvard forfeited any entitlement to coverage. The trial court ruled in favor of Zurich and Harvard appealed.

On appeal, Harvard argued that the trial court misapplied the law by requiring strict compliance with the notice requirement. The Court of Appeals was not persuaded. The Court looked at the plain language of the insurance policy.

Harvard purchased a claims-made policy from Zurich, and failed to provide notice until long after the deadline stipulated had passed. Therefore, Zurich had every right to deny coverage based on a lack of timely notice.

The Court of Appeals also considered the practical importance of timely notice, which allows the insurance company to promote fairness in setting its rates. Harvard had the responsibility to understand the type of coverage it purchased, and the Court of Appeals was not willing to rewrite the policy or Massachusetts law to conform to Harvard’s expectations.

President & Fellows of Harvard Coll. v. Zurich Am. Ins. Co. (1st Cir. 2023) 77 F.4th 33.

Note: This case is an important reminder that nonprofit employers need to tender claims to their insurance companies in a timely manner, especially when they have multiple insurance policies, in order to ensure coverage. In this case, the impact on Harvard was several million dollars’ worth of lost coverage.

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NLRB Decision Makes Concerted Activity Claims Easier For Employees To Win. Ronald Vincer worked in a manufacturing plant. Vincer was very social. He talked with others at their workstations, especially coworker James Boustead. Vincer’s superiors periodically counseled him about performance deficiencies, including excessive talking, distracting coworkers, and using his cell phone.

His most recent counseling occurred on March 5, 2020.

On March 16, 2020, the state’s governor announced that a stay-at-home order and the closure of nonlife-sustaining businesses would be effective the following day due to COVID-19. Vincer’s supervisors periodically updated employees about developments. Vincer and Boustead talked every day at work about the pandemic, including the fact that Boustead was at high risk because of his medical history.

Vincer told Boustead and other employees that the plant should close because it was not an essential or life-sustaining business. Vincer also told Boustead that someone should tell the authorities that the plant was still open.

Also on March 16, two supervisors convened an all-hands meeting. One stated that the plant was an essential business; he outlined the health and safety measures the plant was taking. Vincer was upset; he said that the plant did not take proper precautions and that the employees should not be working.

Several others also questioned whether the plant was an essential business. The supervisor stated that employees needed to keep working until there was clarification from the state government.

Two days later, a plant employee learned that his wife had been sent home from her job because of flulike symptoms. The employee shared that information with Vincer, who counseled the employee to tell the supervisor. The supervisor sent the employee home, but he returned to work two days later. Vincer asked the supervisor about the return-to-work requirements after having or being exposed to COVID. Vincer asked the supervisor if the plant should be operating. The supervisor said he believed the plant was a life-sustaining business.

Vincer spoke to Boustead and urged him to speak with supervisors about Boustead’s health vulnerabilities and the plant’s safety protocols. The supervisor assured Boustead that the plant would direct anyone who had or who was exposed to COVID to stay home and be tested.

On March 24, a supervisor observed Vincer text messaging and reported this to another supervisor.

Almost immediately, and without further investigation, the supervisors went to a third supervisor and recommended that Vincer be terminated. The third supervisor agreed. Shortly thereafter, Vincer was terminated for poor attitude, talking, and lack of profit.

The administrative law judge found that Vincer’s conduct – raising concerns to his supervisors about COVID protocols and the plant’s decision to remain open for business – was concerted activity and for mutual aid or protection of other employees within the meaning of the National Labor Relations Act (NLRA). The judge rejected the plant’s arguments that Vincer’s complaints were only individual griping and not concerted. The judge did not accept the plant’s arguments that it terminated Vincer for poor performance and policy violations. The plant appealed to the National Labor Relations Board (NLRB).

The NLRB agreed that the plant’s decision to terminate Vincer interfered with Vincer’s rights to participate in concerted activities for mutual aid or protection. The NLRB decided that even an activity that starts with only a speaker and a listener can be concerted if the activity is an indispensable preliminary step to employee self-organization. Moreover, an employee’s statement need not explicitly induce group action, but can implicitly elicit support from other employees. The NLRB must conduct a thorough review of all the evidence to determine whether an individual employee’s protest had “some linkage to group action.”

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The NLRB held that Vincer’s COVID-related comments were concerted because they sought to bring “truly group complaints” to management’s attention. Vincer’s one-on-one conversation with a supervisor was concerted because it was a logical outgrowth of the “truly group” complaint that Vincer had raised in the prior all-hands meeting. The NLRB held that Vincer’s conduct was concerted under the NLRB’s totality-of-the-circumstances test.

Miller Plastic Products, Inc. and Ronald Vincer, NLRB Case No. 06-CA-266234 (8-25-2023).

Note: A key takeaway for nonprofit employers is to never discipline an employee with a long-standing performance problem without thoroughly analyzing what precisely is precipitating the employer’s decision to now deal with a long-standing issue. In this case, the plant had tolerated the employee’s social activity for about five years, but fired the employee within two weeks after he raised safety concerns at an all hands meeting.

Construction Corner

LCW represents and advises nonprofit organizations in various business, construction, and facilities matters, including all aspects of construction projects from contract drafting and negotiations to course of construction issues. Through this Construction Corner, LCW will be giving organizations monthly helpful tips on a variety of topics applicable to construction projects. LCW attorneys are available should you have any questions or need assistance with any construction projects no matter what phase you may be in currently.

Design Professionals – Working With A Design Professional.

By: Heather DeBlanc Under the California Civil Code, a design professional can be any of the following types of professions: a licensed architect, a licensed landscape architect, a registered professional engineer, or a licensed land surveyor. These types of individual professions plan and calculate the design and engineering of a particular construction project.

Nonprofit organizations who undertake construction will need to hire a design professional to prepare the detailed plans for the project. Once construction starts and the organization provides the plans to the contractor, the organization becomes responsible for any errors and omissions in those plans in any dispute with the contractor. Organizations may want to consider hiring a design-build contractor or hiring a contractor early on to coordinate with the design professional for a more integrated project delivery approach. When the design professionals and contractors are able to coordinate with each other early on, the project experiences fewer instances of miscommunication which can lead to costly change orders. Along with project managers and a contractor, a design professional is a critical component of the team that holds the success or failure of your construction project in their hands.

Generally, design professionals are hired after interviews and face-to-face meetings, as communication and a mutual understanding of the goals and limitations of your construction project are integral to the project’s eventual success.

Design professionals draft the plans and specifications for the construction project and then assist with executing those details.

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Fall 2023

The NLRB overruled its 2019 decision in Alstate Maintenance, which held that concerted activity only occurs if there is evidence of group activities, such as prior or contemporaneous discussion between or among members.

At the pre-design stage, the design professional will review local zoning and land-use restrictions and assess the project scope, neighborhood, and site conditions. The formation of design ideas and options arise from this early stage.

Once the organization selects the general design idea, the schematic phase begins. Here, the design professional will develop a design proposal that describes the project and its parameters. This includes floor plans, building elevations, and all structural, mechanical, electrical, plumbing and HVAC systems. The organization should also be able to explore a range of alternative concepts proposed by the design professional. This is the phase where the organization will want to provide all of its feedback and make design decisions so that the design professional can revise the design until it reflects a design that the organization wants. Making changes after this stage can become costly to the organization.

Next, the design professional builds out a more detailed plan during a design development phase. During this phase, the design professional works with a cost estimator and a structural engineer who provide details, materials, finishes, equipment, fixtures, and cost estimates for the project. This stage also involves some back and forth with the organization to ensure that the project is within the organization’s budget.

The final phase of the beginning of a construction project is the construction documents phase, wherein the design professional drafts construction documents which describe the quality, configuration, size, and relationship of the components and overall project. The construction documents are submitted to the city or county for review and to obtain a building permit. The timing for securing a building permit can vary greatly depending on the specific city or county and the project size.

The design professional will also deliver a construction set of the construction documents to the contractor to use during construction. Once construction begins on a project, design professionals will help oversee various aspects of the construction process. Specifically, a design professional may be tasked with responding to requests for information that the contractor submits when it has questions about the design, reviewing and certifying applications for payment, attending project meetings, certifying the progression of the work, reviewing and responding to change order requests and other submittals, and acting as an initial decision maker if there is a dispute during the project. The key to a project’s success is hiring a qualified design professional with relevant experience and fostering continued collaboration and communication from inception of the design through project completion.

To LCW! Ana Fuentes

Director of Human Resources 24

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Fall 2023

Tips To Consider When Entering Into An Agreement For Solar Power.

By: Victoria Gómez Philips Nonprofit organizations can benefit from solar power as an energy source because solar power can lower traditional energy bills. To obtain solar power, an organization generally has two options. It can purchase solar panels through a solar panel purchase agreement. Alternatively, it can allow a solar company to install solar panels on its property and purchase power from that solar company through a power purchase agreement. Regardless of the route the organization determines is best, the organization should pay attention to the agreement it is entering into to ensure it reflects the organization’s understanding of the agreement. Solar companies tend to present organizations with form contracts that favor the solar company and that do not always reflect the organization’s situation. The organization should take the following into consideration prior to executing a contract with a solar company: - The contract should clearly identify which party will obtain the federal and state tax incentives. If the organization is purchasing the solar panels, it is more likely to be eligible for the tax incentives. If the organization is entering into a power purchase agreement, the solar company would likely receive the federal and state tax incentives.

- The contract should address who will be responsible for the maintenance and repairs of the solar panels. If the organization is purchasing the solar panels, it will likely be responsible for the cost of any repairs but will need assistance from the solar company. If the organization is entering into a power purchase agreement, the solar company should be responsible for any ongoing maintenance and repairs.

- The contract should address the organization’s financial obligations if the solar panels stop providing power.

If the organization is purchasing the solar panels, the contract should delineate the organization’s payment obligations if the solar panels stop functioning. If the organization is entering into a power purchase agreement, there should be terms explaining how the organization is made whole when power is not provided pursuant to the performance requirements.

- The contract should contain insurance provisions that cover the potential liability and losses associated with the installation, system operations, and system removal, such as worker’s compensation insurance, general liability insurance.

- The contract should not grant the solar company broad access to the organization’s property to access the solar system. Sometimes the contract grants the solar company an easement on the property. An easement is an encumbrance on the property that provides the solar company with real property interests. Organizations should only agree to grant the solar company the right of access through a revocable license. A revocable license is permission to access the property within the specified limits for a specified purpose and does not provide an encumbrance on or an interest in the land.

- The contract should accurately reflect whether the organization is the owner or the lessor of the property where the solar panels will be installed. If the organization is leasing the property, it will likely require permission from the landlord to install the solar panels.

- For a power purchase agreement, the contract should contain provisions that explain whether the organization can relocate the solar panels if the organization moves, sell the solar panels to the new tenant or owner, or assign the power purchase agreement to the new tenant or owner.

- The contract should accurately reflect the costs to the organization. If the organization is purchasing the solar panels, it should be aware of the associated installation and maintenance costs in addition to the costs for the panels. If the organization is entering into a power purchase agreement, it should be aware of the costs of the power, how those costs may change over time and any costs it may incur if it wants to purchase the panels during or at the end of the agreement.

When presented with a power purchase agreement or solar panel purchase agreement, the organization should consult with legal counsel to modify the contract provisions to ensure the organization’s interests are protected.

• www.lcwlegal.com •

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Benefits Corner No Intentional Infliction Of Emotional Distress For Lapse Of COBRA Coverage Due To Mishandled Paperwork.

By: Stephanie J. Lowe Allentown School District terminated administrator Joseph LiCausi’s employment on April 30, 2020. As part of LiCausi’s lawsuit against the District for his termination, he filed a claim against the District’s Human Resources Director for intentional infliction of emotional distress (IIED) based on the termination of his health coverage under the District’s group health plan.

At the time of termination, the Human Resources Director (Director) notified LiCausi that he would be sending LiCausi a Consolidated Omnibus Budget Reconciliation Act (COBRA) notice about continuing health insurance.

The Director testified that he provided LiCausi with the COBRA notice in May 2020, while LiCausi claimed that he never received it. The District’s health insurance provider Highmark Blue Shield (Blue Shield) informed LiCausi that his health coverage ended on April 1, 2020. There was no clear explanation why Blue Shield ended coverage one month before LiCausi’s formal termination date of April 30, 2020. Since LiCausi’s health insurance coverage ended April 1, 2020, there was a lapse in his health insurance coverage, which occurred during the height of the COVID-19 pandemic.

An IIED claim requires evidence of intentional outrageous or extreme conduct by the defendant, which causes severe emotional distress to the plaintiff. Additionally, a plaintiff must suffer some type of resulting physical harm due to the defendant’s outrageous conduct. The U.S. District Court found LiCausi did not show that the Director’s conduct was outrageous. Instead, the Director properly notified LiCausi of his right to COBRA when it notified him of termination. The Director testified that he did not direct Blue Shield to terminate LiCausi’s health insurance. The Director also testified that his office sent COBRA information to LiCausi in May 2020.

The Court stated that at most, LiCausi showed that the Director was not diligent in his efforts to ensure LiCausi was able to maintain health insurance coverage under COBRA. However, the failure to follow-up on health insurance paperwork was not so outrageous or extreme to meet the standard required for IIED. The Court granted summary judgment in favor of the Director and District on this claim.

LiCausi v. Allentown School Dist., et al., 2023 WL 4471686 (E.D. Pa. 2023).

Note: This case serves as a reminder for employers to timely provide COBRA notices to employees and former employees who lose employer-sponsored health coverage due to a qualifying event. Employers are encouraged to keep clear records of when COBRA notices were sent out to document compliance with COBRA requirements.

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• Los Angeles • San Francisco • Fresno • San Diego • Sacramento •

Fall 2023

Consortium Call Of The Month Members of Liebert Cassidy Whitmore’s consortiums are able to speak directly to an LCW attorney free of charge to answer direct questions not requiring in-depth research, document review, written opinions or ongoing legal matters. Consortium calls run the full gamut of topics, from leaves of absence to employment applications, disability accommodations, construction and facilities issues and more. Each Newsletter, we will feature a Consortium Call, describing an interesting call and how the issue was resolved. All identifiable details will be changed or omitted.

Question:

Answer:

Medical certification returning from leave: A nonprofit administrator asked whether an employee who was scheduled to return from medical leave must submit a fitness for duty certification from their doctor before returning to work.

The attorney advised the nonprofit organization that a fitness for duty certification is not required for a return from family medical leave. The attorney advised that an employer may only require a fitness for duty certification as a condition of reinstatement if it uniformly requires fitness-for-duty certifications for all employees returning from work after illness, injury or disability. In other words, if the employer chooses to require or has required the certification, it must do so on a consistent basis. In addition, in order to require a fitness for duty certification, the employer must have notified the employee of this requirement in the family leave designation notice and provided the employee a list of the employee’s essential job functions.

A “Scent-sitive” Situation: A human resources manager of a nonprofit employer reached out with how to address concerns about a new employee who had a “strong scent.” The employer explained the new employee wears a lot of essential oils. While some employees complimented her scent, others were voicing concerns that the smell was overpowering and was permeating the building. The manager wanted to know the best way to address this situation.

The attorney advised that smell and scent issues arise in the workplace from time to time for employees and it can feel awkward to address. The attorney recommend the human resources manager meet with offending employee and kindly explaining that while some employees have complimented her scents, other employees have expresses they find the scent overpowering and kindly ask if she can wear less essential oils to work. The attorney also advised the manager to keep in mind if the employees who expressed concerns complained about scents in the past or indicated if they have a true sensitivity or conditions about scents. This information could be useful to determine if they were just picking on this one employee, or if they had a true sensitivity which if it rose to the level of a disability could require reasonable accommodations.

• www.lcwlegal.com •

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Introducing LCW's New Partners!

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Amy Brandt

Nathan Jackson

Alexander Volberding

Casey Williams

• Los Angeles • San Francisco • Fresno • San Diego • Sacramento •

Fall 2023

new to the Firm!

Patrick Skahan, a Senior Counsel in the Los Angeles office, provides advice and counsel to our public agency and nonprofit clients in all matters pertaining to business and facilities, employment law, discrimination, and litigation.

Simone Del Barco, an Associate Attorney in the Los Angeles office, provides advice and counsel to our clients in all matters pertaining to labor and employment law with experience in all phases of litigation.

Phillip Murray, an Associate Attorney in our Sacramento office, provides labor, employment, and education law expertise to our clients. Prior to joining LCW, Phillip served at the California Correctional Peace Officers Association where he represented correctional peace officers in a variety of proceedings including interrogations, reviews, and appeals.

Scott Fera, a Senior Counsel in our Sacramento office, provides advice, counsel, and trainings to our public agency, public and private education and nonprofit clients in a wide range of matters spanning from labor and employment, business and facility use, nonprofit governance, Title IX, and student issues.

• www.lcwlegal.com •

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