Legal Information that Matters to You
Fenton & Keller Celebrates Opening of New Office in King City on June 12, 2023
Fenton & Keller opened its new law office in King City at 218 Bassett Street, Suite A, with an open house and ribbon-cutting ceremony on June 12.
The office opening was attended by more than 50 people and featured a special presentation from Sen. Anna Caballero’s office, food from a local taco truck [CONTINUE READING]
Meet Matthew D. Ferry
Matthew’s practice focuses on civil litigation, employment law, and personal injury matters. Matthew is a graduate of Monterey College of Law, where he received an award for Outstanding Academic Achievement and a Certificate of Recognition for his substantial contribution to the school’s community [CONTINUE READING]
Using Artificial Intelligence in the Workplace by Marco Lucido
Many employers are starting to use artificial intelligence (AI) systems to help their companies recruit, hire, and evaluate employees. Although the use of AI in employment is relatively new, employers still must ensure that their use of this new technology does not violate long-standing federal and state anti-discrimination laws. Under [CONTINUE READING]
Career Opportunities with Fenton & Keller
If you’re a qualified individual with a passion for the law and helping clients, our professional and collaborative team wants to hear from you. [CONTINUE READING]
Fenton & Keller Celebrates Opening of New Office in King City on June 12, 2023
Fenton & Keller opened its new law office in King City at 218 Bassett Street, Suite A, with an open house and ribbon-cutting ceremony on June 12.
The office opening was attended by more than 50 people and featured a special presentation from Sen. Anna Caballero’s office, food from a local taco truck, wine, tours of the office, meet-and-greet with the King City office’s team and a ribbon-cutting ceremony with the King City Chamber of Commerce & Agriculture and Salinas Valley Chamber of Commerce.
“It was a great event and we are so proud to be part of the King City community,” said John E. Kesecker.
The new office, led by attorney John E. Kesecker, has a reception area, four offices, a kitchen area, and a conference room. Initially, the King City office will be staffed by Kesecker, Stefanie King, and Lesly Valdez as well as Kesecker’s wife Kerry, who helped in establishing the new office. Mr. Kesecker intends to be in King City three to four days a week, with Ms. King and Ms.Valdez working there full time. The office will be fully networked with the Monterey office, from a technology standpoint.
John and Kerry Kesecker are residents of South County and he practiced in King City for 10 years before joining Fenton & Keller — ironically, at the 218 Bassett Street, Suite A, location.
“We are excited about becoming a physical presence in King City,” said Kesecker. “I get to come back to a community I care about, and it will provide an ability for local residents to sit across from their attorney without having to travel to Salinas, Monterey, or Paso Robles.”
Fenton & Keller to Open New Office in King City Starting May 1
Fenton & Keller will open a new law office in King City, led by attorney John E. Kesecker, with a soft opening on May 1, and an official opening and ribbon-cutting ceremony on June 12.
The King City Chamber of Commerce and Salinas Valley Chamber of Commerce will hold a joint ribbon-cutting ceremony from 4-6 p.m. Monday, June 12. Guests can sip, savor and mingle, tour the office and meet the King City team at the new office, located at 218 Bassett Street, Suite A — right next to the King City Post Office. It has a reception area, four offices, a kitchen area, and a conference room.
Initially, the King City office will be staffed by Kesecker, Stefanie King, and Lesly Valdez as well as Kesecker’s wife Kerry, who will help in establishing the new office. Kesecker intends to be in King City three to four days a week, with King and Valdez working there full time. The office will be fully networked with the Monterey office, from a technology standpoint.
Kesecker and his wife made their home in South County and he practiced in King City for 10 years before joining Fenton & Keller — ironically, at the 218 Bassett Street, Suite A, location.
“We have a lot of clients from South County, and we believe that this will give us a good physical presence in the Salinas Valley,” said Kesecker. “King City has historically supported two to four lawyers at any given time. Since closing my law office in King City, however, only one attorney remained with any kind of physical presence — Peter Anderson. Unfortunately, Peter passed away late last year, leaving a void in the community down there — both legal and otherwise — that Fenton & Keller intends to fill. I was asked by Peter’s family to handle the winding down of his practice, and we have been taking care of closing Peter’s law office over the last few months, and word is already out that Fenton & Keller is coming.”
In practice since 1993, Kesecker’s principal areas of practice are business and real estate transactions; estate planning, trust administration and probate litigation.
He counsels businesses and families who need practical and timely advice in a challenging legal and regulatory environment. He has extensive experience in forming entities, advising clients in business and real estate transactions, and planning for business succession from one generation to the next.
Kesecker received a bachelor’s degree in 1990 from California State Polytechnic University, San Luis Obispo, and his Juris Doctor degree from University of the Pacific, McGeorge School of Law in 1993 and was admitted to the California Bar that same year.
He is a member of the Monterey County Bar Association, Monterey County Barristers (past member, board member, and president), Legal Services For Seniors (past board member and president), Soledad Mission Restoration Committee (past board member) and the Mission-Soledad Rural Fire Protection District.
Kesecker began his legal career as a litigator, which provided him with an ability to structure transactions with clarity and precision to minimize the risks of future disputes. He has worked extensively with businesses in the Salinas Valley, and understands the unique challenges facing the agricultural industry, as well as the opportunities presented in these changing times.
He has enrolled thousands of acres into Farmland Security Zone contracts saving his clients hundreds of thousands of dollars annually in property taxes. He has also handled many probates and trust administrations and has represented clients in probate and estate litigation matters that have required court intervention.
“We are excited about becoming a physical presence in King City,” said Kesecker. “I get to come back to a community I care about, and it will provide an ability for local residents to sit across from their attorney without having to travel to Salinas, Monterey, or Paso Robles.”
School-Related Leaves of Absence
Question: Some of my employees have children that are going back to school soon. These employees have already used most of their sick and vacation time. Are they entitled to any other time off for school-related purposes?
Answer: Employees may be entitled to additional unpaid leave for school-related purposes if they work for a covered employer and if the leave is for a qualified reason. Generally, California law provides two types of school-related leaves.
School activities leave allows employees who work for employers with 25 or more employees at the same location to take up to 40 hours of unpaid, job-protected leave each year to find, enroll, or reenroll the child in a school or with a licensed childcare provider, or to participate in school (or childcare provider) activities. The employee qualifies as a “parent” who may be entitled to this leave if the employee is the child’s parent, guardian, stepparent, foster parent, grandparent, or a person who stands in place of the child’s “parent.” To qualify for school activities time off, the parent must provide the parent’s employer with reasonable notice before any planned absence. Additionally, any time off for attending school or child-care enrollment or child related activities coordinated by the school or licensed child-care provider cannot exceed eight hours in any calendar month of the year.
If eligible, parents may also use the annual 40 hours of unpaid, job-protected school activities leave for unplanned absences resulting from a licensed child-care provider or school “emergency,” which occurs when a child cannot remain with a child-care provider or in school due to one of the following:
- Behavioral or discipline problems;
- The school or child-care provider is closed or unexpectedly unavailable, excluding planned holidays;
- A natural disaster; or
- The school or child-care provider has requested the child be picked up, or has a policy that prohibits the child from attending, or the school requires the child to be picked up.
When school activities leave is needed for one of these types of emergency situations, employees are required to give notice of the need for leave to their employer as soon as possible. If requested by the employer, the employee must provide documentation from the school or childcare provider as proof that the employee participated in permitted activities on a specific date and at a particular time.
Unless a collective bargaining agreement provides otherwise, the employee may be required to use existing vacation, personal leave, or paid time off (“PTO”) while on school-related leave. If such time is unavailable or already exhausted, the time off for school related leave is unpaid.
The second school-related leave is available if the employee’s child is suspended from school and the school requests the employee attend a portion of the child’s school day. To be eligible for such leave, the employee must give the employer “reasonable advance notice.” Leave taken for this purpose is unpaid.
Because these leaves are protected, an employer may not discharge, demote, suspend, or in any other manner discriminate against an eligible employee for taking school-related leave off as long as the employee has given appropriate notice and documentation when requested.
Managing Employee Misconduct
Question: As employees are returning to in-person work in the office, I am noticing an increase in workplace conflict. What can I do to minimize disruptions and foster a positive workplace?
Answer: Employers may find that employees need to reacclimate to the workplace environment as employees return to the workplace after working from home during the COVID-19 pandemic. Some workplaces are experiencing an increase in improper workplace behavior, interpersonal conflicts, and performance issues. The COVID-19 pandemic, the accompanying lockdowns, and working from home have taken their toll on individuals in many ways. Employers should help employees during the transition back to an in-person workplace by acknowledging the challenges of COVID-19 but also reminding everyone of the workplace expectations, such as the expectations regarding job performance and interactions with other employees.
Improper behavior in the workplace can range from the unwanted to the unlawful. Certainly, unlawful actions, such as harassment, discrimination, and retaliation are improper behavior and are not acceptable in the workplace. But, improper behavior can also include other types of disruptive behaviors such as bullying, yelling, gossiping, tardiness, uncooperativeness, sabotaging or mocking others, fighting, and dishonesty. While these examples may not always rise to an unlawful level, they can nevertheless run afoul of an employer’s code of conduct.
Employers can minimize workplace disruptions by setting clear expectations and explaining the consequences for failing to follow those expectations. Employers may decide to re-distribute their policies to employees and remind employees of workplace expectations. For example, an employer could re-post or re-distribute the company’s code of conduct, which typically sets forth these expectations. Employers should also remind employees about the company’s policies prohibiting harassment, discrimination, and retaliation. This may even be a good time for employers to review and update their employee handbook and distribute it to returning employees. Another way to establish good workplace behavior is to ensure that supervisors and managers exhibit proper workplace behavior.
It is important for employers to have protocols for addressing conflicts and disruptions in the workplace, and to create a work environment where employees feel comfortable asking for help when conflicts occur. This ensures that workplace issues are addressed in a consistent manner. Employers can remind employees who are returning to work about the procedure for raising concerns and issues in the workplace, which can include raising the issue with a supervisor, manager, or human resources. When an employee raises an issue or concern, the employer should schedule a meeting with the employee to obtain information about the situation. In situations when harassment, retaliation, or discrimination are alleged, employers have a legal duty to investigate and take remedial action as needed. For other concerns, the employer should determine if improper workplace behavior has occurred and explain why the conduct violates the employer’s policy. Inform the offending employee(s) what the performance expectations are, and that failure to improve may result in discipline or termination of employment.
Good workplace behaviors are those that foster a company culture of positivity, civility, and respect. Some examples of good workplace behavior include respectful communication, honesty, punctuality, positive attitude, and reliability. When an employer fosters good workplace behavior, it increases morale, increases productivity, promotes employee retention, and builds a business’s reputation as a good place to work.
Responsible Beverage Service Training Program Act
Question: I have heard about a new training that is required for workers who serve alcohol. What exactly is this training and who is required to take it?
Answer: The Responsible Beverage Service Training Act will go into effect on July 1, 2022. The Act, which was created by Assembly Bill 1221, creates a new training and certification requirement for alcohol servers and their managers. The Act authorized the California Department of Alcoholic Beverage Control (ABC), the agency that regulates the granting of licenses to businesses regarding alcohol, to establish the Responsible Beverage Server Training Program (RBSTP). Under the program, certain alcohol servers and their managers must have a valid Responsible Beverage Server (RBS) certification from the ABC to serve alcohol.
August 31, 2022 is the deadline for alcohol servers and managers to receive the RBS certification. New employees hired after the law’s effective date must receive training and certification within 60 days of their hire date. An alcohol server is defined as anyone who does any of the following:
- Checks customer identification for purposes of alcoholic beverage service or entry to an ABC on-premises licensed establishment;
- Takes customer alcoholic beverage orders;
- Pours alcoholic beverages for customers; or
- Delivers alcoholic beverages to customers.
An alcohol manager is anyone who trains, directly hires, or oversees alcohol servers at an ABC licensed premises, or who trains alcohol servers how to perform the service of alcohol for consumption for an ABC on-premises licensee.
The purpose of the new certification is to ensure servers and their managers are educated on the dangers of serving alcohol to minors and of over-serving alcohol to patrons, with the intention of reducing alcohol-related harm to local communities.
To begin the process of receiving the certification, alcohol servers and their managers can create an account in the Responsible Beverage Service Portal at https://abcbiz.abc.ca.gov/ and can then complete the following three-step process:
- Register with ABC as a Server on the RBS Portal;
- Take RBS training from an approved RBS Training Provider; and
- Return to the RBS Portal to take ABC’s alcohol server certification exam.
Once alcohol servers and managers have an account on the portal, they can search through a list of training providers and sign up for the required program. Within 30 days of taking the training, alcohol servers and managers must take and pass an exam. The certifications are valid for three years and must be renewed thereafter. Employers cannot register their staff for the trainings. Each server or manager needs to register and sign up for the training themselves through their own individual portal.
The ABC estimates that this certification requirement applies to approximately 56,000 ABC licensees with on-premises alcohol sale privileges and one million servers in California. While this Act applies very broadly, the ABC FAQ suggests some potential exemptions to certification, such as, alcohol distributors who provide trainings on how to feature products for marketing purposes; academic instructors who teach a college or university course where beer or wine is tasted; salon or barbershop owners or stylists who provide their customers with complimentary beer or wine; and employees of a licensed plane or boat (Type 54 and 55). The FAQs can be viewed at https://www.abc.ca.gov/education/rbs/frequently-asked-questions/ It is important to consult with counsel if you have any questions whether this Act applies to your business or ABC license.
Prepare for Changes in the Minimum Wage
Question: I am confused about the minimum wage in California. What is the current minimum wage, and when does it increase?
Answer: You are not alone in the confusion about the minimum wage in California. Although there are some exceptions, almost all employees in California must be paid at least the minimum wage. Based on Senate Bill 3, a schedule of step increases in the minimum wage was effective starting January 1, 2017. These step increases were scheduled to continue each year through 2023, and the applicable minimum wage varies by the size of the employer. For example, the minimum wage for 2022 is $14.00 per hour for employers with 25 employees or less and $15.00 per hour for employers with 26 employees or more.
California Labor Code 1182.12 requires the state Director of Finance to annually determine, based on certain factors, whether economic conditions can support a scheduled minimum wage increase. On May 12, 2022, Governor Newsom announced California’s minimum wage is projected to increase to $15.50 per hour for all workers on January 1, 2023. The California Department of Finance announced it projects inflation for the 2022 fiscal year, which ends June 30, 2022, will be 7.6% higher than the year before, triggering the minimum wage increase. Governor Newsom subsequently announced that all California employers will be required, regardless of size, to pay a new minimum wage of $15.50 per hour, effective January 1, 2023.
To further complicate matters, currently 53 counties and cities have minimum wage ordinances that require payment of a minimum wage that is different, and usually higher, than the state minimum wage. It is advisable to check the city and county minimum wage ordinance in all cities and counties where your employees perform any work. Some of these ordinances increase the minimum wage on July 1 of each year. The UC Berkeley Labor Center maintains a database of city and county minimum wage ordinances at https://laborcenter.berkeley.edu/inventory-of-us-city-and-county-minimum-wage-ordinances/
In California, the minimum wage is the same for adult and minor employees. Additionally, an employer may not use an employee’s tips as a credit toward the obligation to pay the minimum wage.
The increase in the state minimum wage also increases the minimum salary that must be paid to exempt employees. California law requires employers to pay exempt employees a monthly salary of at least two times the state minimum wage for full-time employment. Full-time employment is defined in Labor Code Section 515(c) as 40 hours per week. The minimum exempt salary requirement in 2022 is $58,240 per year ($4,853.33 per month) for employers with 25 employees or less, and $62,400 per year ($5,200 per month) for employers with 26 employees or more. If the minimum wage increases to $15.50 for all employers in 2023, the minimum exempt salary will be $64,480 per year ($5,373.33 per month).
Also in May 2022, supporters of the Living Wage Act of 2022, which will raise California’s minimum wage incrementally based on the size of the employer, announced they submitted more than one million signatures to qualify the initiative for the November 2022 ballot.
Employers are required to post a California Minimum Wage Notice along with the Industrial Welfare Commission Wage Order applicable to your industry.
The minimum wage order is available here: https://www.dir.ca.gov/IWC/MW-2022.pdf and the Wage Orders are available here: https://www.dir.ca.gov/iwc/wageorderindustries.htm
Mandatory Tip Pooling Arrangements
Q. Business at my restaurant is picking up, and I want to make sure that everyone is rewarded equally for their hard work. Can I ask my tipped employees to share part of their tips with other employees?
A. Yes, as long as you follow some important guidelines. The practice of requiring employees to share their tips in previously agreed percentages is commonly known as a mandatory “tip pool.” In California, employers can require employees to participate in a tip pool if the pool meets certain conditions. These conditions are:
- Tipped employees should generally not be asked to contribute more than 15% of their tips to the tip pool;
- Owners and supervisors should not be allowed to participate in any portion of the tip pool;
- Tip pool participants should be limited to those employees who contribute in the “chain of service”; and
- The money from the tip pool must be distributed to the eligible employees in the “chain of service” based on the number of hours they worked.
Sometimes, the most difficult requirement to navigate is the requirement to limit the tip pool participants to employees in the “chain of service.” This is because employers often want to allow back of the house employees such as chefs and dishwashers to participate in the tip pool. There is currently conflicting authority on whether back of the house employees can participate in a valid tip pool. Historically, the Labor Commissioner’s position is that only front of the house employees who provide direct table service can participate in a tip pool. In a 2005 Opinion Letter, the Labor Commissioner indicated that in the restaurant industry employees in the “chain of service” include “waitpersons, buspersons, bartenders, hostesses, wine stewards and ‘front room’ chefs.” Though the Labor Commissioner excluded back of the house employees from this list, it acknowledged that industry standards are likely to evolve over time.
In 2009, a California Court of Appeal disregarded the 2005 Opinion Letter and expanded the types of employees who may participate in a tip pool. Specifically, the court held that back of the house kitchen staff may legally participate in a tip pool because they are part of the “chain of service.” The court reasoned that a customer’s experience is not limited to employees the customer can see, and a customer may tip a waiter more or less depending on the customer’s satisfaction with the food. This decision by the Court of Appeal is clear and should allow employers to include kitchen staff in a valid tip pooling policy. Unfortunately, to date, the Labor Commissioner has not revised its general guidance that only front of the house employees who provide direct table service can participate in a tip pool. Given this apparent conflict in authority, restaurant employers who are risk averse should continue to limit tip pools to front of the house staff only.
The central theme in the guidelines for tip pools is that the pool be reasonable in terms of its funding and participation. This is a case-by-case analysis based on the division of duties at each restaurant and should be analyzed carefully. Though it is not a requirement, it is recommended that employers with tip pooling arrangements create a written tip pooling policy that is signed by each participant.
Spring Newsletter
Legal Information that Matters to You.
The Shareholders of Fenton & Keller are delighted to announce:
Joseph J. Sarto has joined the firm as the Business Operations Officer
Before joining Fenton & Keller, Joseph served as the Business Administrator/Human Resources Manager for The Salvation Army. Prior to that, he worked in the residential care industry, managing several facilities, including Merrill Gardens in Monterey, Northstar Senior Living in Castro Valley, and most recently at Paradise Villa Assisted Living in Santa Cruz.
Joseph is a native of the San Francisco Bay Area and enjoys playing golf and playing piano.
Did You Know?
California Property Taxes: A New World Under Prop 19
On November 3, 2020, California voters approved Proposition 19, The Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act. This new law became effective February 16, 2021, and effectively gutted most... [CONTINUE READING]
PAGA Ballot Initiative - Californians for Fair Pay and Employer Accountability Act
Several business organizations joined together in October 2021 to file a proposed proposition with the California Attorney General entitled “Californians for Fair Pay and Employer Accountability Act,” which seeks to repeal and replace the Private Attorneys General Act (the “PAGA”). The PAGA is a law that authorizes individual employees to... [CONTINUE READING]
Firm News
Fenton & Keller attorneys Elizabeth Leitzinger and Gladys Rodriguez Morales recently obtained a $2.1 million dollar award for their client in a harassment and discrimination lawsuit. The case, against the California Department of Corrections and Rehabilitation, involved the unauthorized distribution of an explicit video of a prison employee among staff and supervisors. The award followed a ten day jury trial in Monterey County Superior Court.
Upcoming Seminars
2022 Labor Law Update
- Date: Wednesday, June 22, 2022
- Time: 8:30 AM – 12:00 PM
- Location: Bayonet Blackhorse Golf Course, Seaside, CA
Christopher Panetta and Sara Boyns are presenting for the Employer Advisory Council Monterey Bay on June 22, 2022.
Join us for this employment law update to receive the latest information on employment law topics impacting California employers! Registration required.
PAGA Ballot Initiative - Californians for Fair Pay and Employer Accountability Act
Several business organizations joined together in October 2021 to file a proposed proposition with the California Attorney General entitled “Californians for Fair Pay and Employer Accountability Act,” which seeks to repeal and replace the Private Attorneys General Act (the “PAGA”). The PAGA is a law that authorizes individual employees to file lawsuits to recover civil penalties on behalf of themselves, other employees, and the State of California for Labor Code violations. Since its enactment, the PAGA has been a controversial law that has driven substantial litigation.
The proposed Fair Pay and Employer Accountability Act (the “Act”) would provide California workers and businesses with an alternative mechanism to resolve employment claims without civil lawsuits under the PAGA. Under the Act, rather than allowing individual employees to bring civil claims on behalf of the state, the California Legislature would instead provide additional funding for the Labor Commissioner to enforce Labor Code violations itself. The Act also proposes that the California Labor Commissioner provide pre-enforcement advice to employers and allow employers to cure alleged Labor Code violations without risk of penalties. To accomplish this, the Act would create the Consultation and Policy Publication Unit (“CPPU”). The CPPU would serve as a resource for employers and employees to receive information and report potential violations of law. Employees would be able to receive information from the CPPU on how to file complaints. Employers with no pending enforcement action against them would be able to receive a confidential consultation with the CPPU to correct, without penalty, any Labor Code violations within 60 days. Additionally, if employers are unsure what a particular law requires, or if there is an ambiguity in a law, employers would be able to contact the CPPU to receive advice and assistance.
One primary difference between the Act and the PAGA is how claims settlement proceeds would be distributed. In settlements under the PAGA, the California Labor and Workforce Development Agency and the plaintiff’s attorney typically each receive a large portion of the settlement proceeds. Under the Act, Labor Code violations would be adjudicated directly through the Labor Commissioner, without court involvement, and claims proceeds would be distributed primarily to employees involved in alleged Labor Code violations. The proposed law would also eliminate “stacking,” which refers to the practice of claiming multiple penalties for one substantive Labor Code violation.
California’s Secretary of State approved the circulation of the Act’s petition for signatures. Supporters of the initiative have until June 6, 2022, to collect at least 623,212 valid signatures to qualify the measure for placement on the ballot. As of early February 2022, the campaign reported that it had obtained twenty-five percent of the signatures necessary to qualify for placement on the ballot. In May 2022, the campaign announced they would target the 2024 ballot. Many California organizations have voiced support for the Fair Pay and Employer Accountability Act. The California Chamber of Commerce, New Car Dealers Association, Western Growers Association, and the California Restaurant Association are sponsors of the ballot initiative. More information on the ballot initiative can be found at https://cafairpay.com/.
California’s Right to Recall Law
Question: As a result of the pandemic, I was forced to layoff most of my janitorial employees. Business is picking up, so I need to start hiring. Is it true that I first need to offer jobs to employees that I laid off before I can make job offers to others?
Answer: Probably. On April 16, 2021, the Right to Recall law (Senate Bill 93) was signed into law with the purpose of ensuring that employees who were laid off in response to the pandemic are given the opportunity to get their jobs back.
However, the Right to Recall law only applies to employers in the following industries: (1) hotels and private clubs with 50 or more guest rooms; (2) event centers with more than 1,000 seats or 50,000 square feet; (3) airports; (4) airport service providers; (5) airport hospitality operation businesses; and (6) businesses engaged in providing building services such as janitorial, maintenance and security services at retail, office, and commercial buildings.
This law only applies to employees who:
- worked two or more hours per week;
- worked six months or more in calendar year 2019; and
- were laid off due to the impact of COVID-19 (i.e., a public health directive, lack of business, a reduction in the workforce, government shutdown order, or other economic, nondisciplinary reasons related to the pandemic).
Compliance with this law requires employers to do the following:
- Within five business days of a job opening, the employer must communicate in writing the availably of the position to the qualified laid off employee. A laid off employee is deemed qualified if the individual held the same or similar job with the employer at the time of their layoff. The communication must be by hand or mail delivery, and by email and text message if available;
- When there is one available position but more than one qualified laid off employee for the position, an employer may make simultaneous, conditional offers of employment to all the qualified laid off employees. However, the employer must rehire the employee with the greatest seniority;
- A qualified laid off employee has five business days to accept or decline the offer;
- When a laid off employee is not given an offer of employment because the employee is not qualified for the position, the employer is required to provide written notice to the employee within 30 days. The notice must include the reason for the employer’s decision not to make an offer to the employee and state the length of service of the employee who was hired instead of the laid off employee who was not given the offer of employment; and
- For each laid off employee, the employer is required to maintain the following records for three years (from the date each employee was laid off): the employee’s personal and employment information, a copy of the written layoff notice, and all records of communication between the employer and the laid off employee regarding offers of employment made pursuant to this law.
Employers subject to the Right to Recall law will want to make sure they have a system in place to comply with its requirements since the law is in effect until December 31, 2024, and those who violate this law may be subject to significant penalties and damages.
California Property Taxes: A New World Under Prop 19
On November 3, 2020, California voters approved Proposition 19, The Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act. This new law became effective February 16, 2021, and effectively gutted most prior property tax exclusions between parents and children (and grandparents and grandchildren), which means that most properties in California that are distributed from parents to children will be reassessed for property tax purposes as of the date of transfer.
Under the former Proposition 13 rules, real property was originally assessed at either the value that was on the property’s 1975-76 tax bill, or at the “full cash value” (i.e. fair market value) of the property when it undergoes a change in ownership (or undergoes new construction) after 1975. That value is referred to as the “base year value” (sometimes also referred to as the “assessed value”). Without going into exhaustive details regarding the prior rules, under Prop 13 each parent used to be able to transfer $1,000,000 of assessed value (collectively $2,000,000 in assessed value between both parents) to children without the property being reassessed. These $1,000,000 exclusions for each parent applied to any properties other than a principal residence, whereas a principal residence under the prior rules could be of unlimited value.
For example, let’s assume Husband and Wife own a home and two rental properties. Let’s assume the fair market value of the home is $2,000,000 (with an assessed value of $500,000), one rental property has a fair market value of $1,000,000 (with an assessed value of $300,000) and then other rental property has a fair market value of $800,000 (with an assessed value of $400,000). Under the prior rules, if structured properly, those properties could be distributed upon the death of Husband and Wife to Child(ren) without being subject to reassessment.
Proposition 19 limits the parent-child and grandparent-grandchild exclusions to transfers of a primary residence that will be used as the recipient’s primary residence or of a “family farm.” If the fair market value of the property (which must be a primary residence or family farm) at the time of transfer exceeds its assessed value by $1 million or less, then the property will retain its original assessed value. If the fair market value of the property at the time of transfer exceeds its assessed value by $1 million or more, then the property will be reassessed as to the amount exceeding the $1 million (see the example below). The exclusion must be claimed either at the time of purchase or transfer or within one year thereafter in which the recipient must file a homeowner’s exemption with the county assessor’s office.
“Family farm” is defined as “any real property which is under cultivation or which is being used for pasture or grazing, or that is used to produce any agricultural commodity, which is defined as “any and all plant and animal products produced in this state for commercial purposes, including, but not limited to, plant products used for producing biofuels.”
Applying the same example above to the new rules imposed by Proposition 19, both rental properties would be reassessed as to the fair market value on the date of transfer and the residence would have $500,000 added to its assessed value ($500,000 original assessed value + $1,000,000 exclusion = $1,500,000 so the extra $500,000 would effectively be added to the current assessed value of $500,000 and the new total assessed value of the residence would be $1,000,000).
As you can see, the impact of Proposition 19 on property taxes is substantial. Using the example above, under the old rules all properties would retain their assessed values. Whereas, under the new rules both rental properties would be reassessed in full, and the assessed value of the residence would double. While the amount of property tax can vary depending on county, and even location within a particular county, if using an approximation of 1% then Proposition 19 under this example increased the annual property taxes by $16,000 per year. It may be possible under certain circumstances to limit this impact using entities, such as a limited liability company, for rental properties. The main takeaway is to be aware of the ramifications of Proposition 19 when considering distribution of real property. In many cases it makes it impractical to distribute real property in kind to a recipient who is unable to afford the property taxes, or to keep a rental property if the increased property taxes substantially impair the profitability of a rental property. Therefore, when considering distributions of real property, it’s a good idea to consider these issues when making such decisions.