March 2012 - Issue 1

California JPIA Debuts New Online Monthly Newsletter

March Forward With Authority!

California JPIA Introduces its Executive Academy

Bob May, Senior Risk Consultant

At-Will Employment

Identities of Officers Held Not Exempt From Disclosure Under California Public Records Act

Defining the Employment Relationship

News: Worthy

California JPIA Debuts New Online Monthly Newsletter

Welcome to the premiere issue of The Authority, the new online California JPIA newsletter will be emailed monthly to members and strategic partners. Redesigned to serve as a valuable tool for the organization and its members, The Authority is composed of various sections aimed at informing, educating, enlightening, and oftentimes entertaining readers within our California JPIA community.

Each month, The Authority begins with a timely and personal message from California JPIA CEO Jonathan Shull. There are also opportunities to hear from and learn about various California JPIA principals, experts and members via sections such as Pro: Files and Re: Members. Legal Matters are addressed in each issue by one of California JPIA’s esteemed defense panel attorneys followed by The Court Report which tracks case law and relevant recent rulings. Risk Management Solutions tackles a variety of pertinent topics, offering answers to risk management questions. The Authority also includes interesting articles and a monthly calendar complete with important dates, deadlines, events and special days of interest.

California JPIA members are encouraged to send suggestions for each section, ask questions they would like answered, and share photos of special occurrences. Submissions may be sent to Tammie Haller, Human Resources Manager at thaller@cjpia.org.


Jon Shull

News: Worthy

March Forward With Authority!
March Madness

by Jonathan Shull, CEO

As we welcome March 2012, I felt it especially appropriate to address the California JPIA team. Sports metaphors aside, madness prevails, so a winning team is always imperative. A team, simply defined, but complex, is different people or groups on the same side or a group organized to work together. Team members are often the determining factor between success and failure. Teamwork is one of our core values as we continuously pursue productive relationships through communication, collaboration, understanding, and respect.

At California JPIA we choose success and we choose each other to achieve it. Whether you work at California JPIA or are a valued agency member, you are a vital piece of the ever-changing puzzle that we call risk management. Therefore, three months into the New Year and with countless years ahead of us, there is no time like the present to not only reflect but to reconnect...as a team.

That is why the California JPIA is building upon its commitment to provide innovative risk management solutions for our public agencies through various services such as advice and assistance in risk management, loss control, operational audits, general insurance advice, and more. In addition, we are focused on strengthening the team aspect between California JPIA and its members.

Currently, the California JPIA, the state’s largest municipal insurance pool, is proud to report a membership of more than 120 esteemed public agencies...each composed of people with unique expertise and experience from which the rest of the team can benefit.

Through our Executive Academy training seminars to our new and improved monthly newsletter to our one-on-one and day-to-day operations, we want to share what has happened, is happening and will or might happen in our industry so that we can all continue to grow as a team. Here’s to a winning season!


Executive Academy

News: Worthy

California JPIA Introduces its Executive Academy

The California JPIA, long committed to exceptional proactive training programs, continuing education and resources, recently held its first Executive Academy on January 18 - 20 in Pasadena. With over 20 executive managers in attendance, the two-day session focused on current issues and challenges facing city managers and agency executives including legal, financial, and structural constraints of governmental agencies. Equally important, the Executive Academy offered pragmatic solutions and a variety of ways to avoid situations before they become problematic.

"It was amazing how much I learned," said Buellton City Manager John Kunkel of the academy. "I sit on the Managers Committee and still I walked away learning so much valuable information that I did not know before. It was so beneficial; I would have even liked it to be one more day." Following an in-depth introduction to the California JPIA by CEO Jonathan Shull and City Manager of La Palma Dominic Lazzaretto, attendees participated in a variety of informative and thought-provoking sessions including Executive Leadership, Protecting Your City in a Crisis, Local Government Issues, and Working Effectively with Councils and Boards.

"I was excited to share what I learned with my employees and to implement new procedures designed to reduce risk and help us to operate more efficiently," continued Kunkel, who believes the Executive Academy should be a requirement for all city managers. "In addition to becoming more educated about relevant issues and preventative measures, you learn so much about the California JPIA and the services it provides."

Among the many lessons learned by Kunkel, to always have the California JPIA review contracts before they are signed. "We have attorneys review contracts before they are signed; how is it that we do not have California JPIA assess them when it is the entity insuring us? I think it is because many of us were not aware that that is one of the invaluable ways that the California JPIA is there to serve and protect its members."

Echoing the sentiment is Loma Linda City Manager Jarb Thaiperj who left the Executive Academy with a greater appreciation and understanding about the California JPIA. "As with many City Managers, I used to view California JPIA solely as our insurance agency. It is so much more. The classes and training it provides are invaluable - and free - which does not reflect negatively on the budget. I encourage all my employees to take as many of the courses as possible."

Thaiperj, who also serves as the city’s Public Works Director, City Engineer, and Human Resources Manager, said sessions at the Executive Academy he found particularly beneficial included "The LossCAP Program" with Norm Lefmann and "How To Strengthen Your Agency" with Kelly Trainer and Tim Davis. Another stand-out for Thaiperj: "The Guide to Public Liabilities" with Attorney Scott Grossberg who recently defended a case for his city. "I learned the majority of claims come from Public Works. I am definitely paying more attention to that area now."

Thaiperj also appreciates the networking aspect of the Executive Academy and the opportunity it allows to share with and learn from his peers. "Loma Linda is a little city. It is fantastic to be able to hear about and discuss the issues that cities of all sizes are facing and how to deal with them."


Bob May

Pro: Files

Bob May, Senior Risk Consultant

As a Senior Risk Consultant with the California JPIA, Bob May is committed to discovering new and innovative ways to manage risk and exposures inherent to municipalities. Having served as fire chief for a number of public agencies, Bob’s extensive experience in municipal government and fire districts brings a considerable wealth of knowledge that he readily shares with Authority staff and members.

A valued member of the Member Services Department team since 2007, May calls himself a "task guy who gets things done." Among his responsibilities, Bob manages the Authority’s LossCAP (Loss Control Action Plan) program and oversees member agency action plans. Always staying on top of what is happening in the industry, he advises members on complex legal and regulatory matters related to member risk and loss, and reviews insurance requirements in member contracts to ensure appropriate coverage is secured and maintained.

"No two days are alike," says May, "it’s what I enjoy most about the job." That said, members may find May presenting a session at the California JPIA Parks and Recreation Academy one day and then running off to attend a member agency city council or board meeting the next.

May, who maintains a home in Burney, California, spends much of his free time fishing, hiking, and taking long rides on his Harley Davidson. But his greatest pleasure comes from being a devoted grandfather of three grandchildren.


Legal Matters

At-Will Employment

Written by California JPIA Defense Panel Attorney, Ed Richards with Kutak Rock LLP

The legal foundation for at-will employment in California is found in Labor Code section 2922, which provides in pertinent part that "[a]n employment, having no specified term, may be terminated at the will of either party on notice to the other." This statute is based on public policy considerations and creates a presumption that the employment is at will. Haycock v. Hughes Aircraft Co. (1994) 22 Cal. App. 4th 1473. In other words, the statute shifts the burden to the employee to prove the employment was not at will by evidence of a contract, express or implied, for a fixed term or to terminate only for cause. Absent evidence of a limitation on the employer’s ability to terminate employment, an employer may discharge an at-will employee at any time, with or without notice, for any lawful reason. Guz v. Bechtel Nat’l, Inc.(2000) 24 Cal.4th 317.

However, the classification of an employee as an at-will employee can be lost if the status is not properly documented. In a recent case, a member city discharged an at-will employee who sued the city for wrongful termination. The employee had been employed for ten years during which the city always considered him to be an at-will employee. However, upon being discharged, the employee alleged that he was never informed that he was an at-will employee, and denied that he was subject to that classification. He argued that during his employment an implied-in-fact employment agreement was created because of the member agency’s conduct in twice promoting him and increasing his salary on 15 separate occasions over a 10 year period. He also alleged that oral and written statements related to each of his yearly performance evaluations supported the implied-in-fact employment agreement. In sum, the employee argued he was not an at-will employee and had been terminated without cause.

The member agency denied the existence of an implied employment agreement and insisted that it had always contemplated the employment relationship to be at will. Unfortunately, the employee’s personnel file was void of any document categorizing the employment as at will, and there was no document in which the employee acknowledged that he was an at-will employee. Without such documentation, the member city could not affirmatively show that the employee had knowledge of his at-will employment status, and the employee had an arguable theory to advance to a jury that an implied-in-fact employment contract existed. Jurors, who are more often employees rather than employers, are often receptive to evidence that the employer implicitly promised, through promotions and pay raises, to not terminate the employee without good cause. In order to avoid a potential negative outcome at trial, the litigation was settled at mediation. An express at-will employment agreement signed by the employee, or at least a written acknowledgement of that status signed by the employee, would have protected from this outcome.

You can help protect against wrongful employment termination litigation as an employer by proactively taking steps to require each at-will employee to execute a written agreement acknowledging their at-will employment status. The agreement need not be complex, but it must be signed by the employee in order to rebut later arguments by the employee that he/she was unaware of his/her at-will status.


The Court Report

Identities of Officers Held Not Exempt From Disclosure Under California Public Records Act

Reprinted from the Metropolitan News-Enterprise

C.A. Rules for Newspaper in Suit Over Long Beach Police Shootings
Metropolitan News-Enterprise
Wednesday, February 8, 2012

By KENNETH OFGANG, Staff Writer

The identities of police officers involved in shootings are not exempt from disclosure under the California Public Records Act, the Court of Appeal for this district ruled yesterday.

Div. Two affirmed a ruling by Los Angeles Superior Court Judge Patrick T. Madden, who denied a motion for preliminary injunction by the Long Beach Police Officers Association. The union sought to block the city from complying with two public records requests by Los Angeles Times police reporter Richard Winton.

Winton made his requests after officers shot and killed Douglas Zerby, an intoxicated, unarmed 35-year-old man on Dec. 12, 2010. Officers said they mistook a garden hose nozzle that Zerby was carrying for a gun.

All Officers
Winton asked for the identities of all officers involved in the Zerby shooting, and separately requested that the city name all officers involved in shootings since 2005. The city notified the LBPOA that it would make the disclosure absent a court order to the contrary. The union filed suit, the city responded by supporting the union, the Times’ parent company intervened, and the judge granted a temporary restraining order pending a hearing on the preliminary injunction motion. The union said it feared for the safety of officers once their identities as having been involved in shootings became disseminated online.

Following a hearing, however, Madden said the information did not fall under the CPRA’s exemptions for unwarranted invasion of personal privacy, investigative reports, or personnel records. He also rejected an argument under the "catchall" provision that the public interest in nondisclosure outweighed the public interest served by disclosure of the names.

Motion Denied
The judge denied the preliminary injunction motion without prejudice, saying the union or the city could seek to block disclosure upon a stronger evidentiary showing that a particular officer’s safety would be jeopardized by disclosure.

The Court of Appeal granted a stay, delaying disclosure pending the outcome of the appeal. But yesterday the court concluded that Madden was correct. "We share the [trial court’s] view that relevant case law leads to the inexorable conclusion that the names of officers involved in officer-involved shootings over a five-year period must be disclosed under the CPRA, absent any particularized showing of the interests served by nondisclosure," Justice Kathryn Doi Todd wrote for the court. The justice said the names of officers, unconnected with any disclosure of what action, if any, was taken against them as a result of the shooting, does not fall under the privacy or personnel records exemptions, under prior cases. Nor can the parties "transform an officer’s identity into confidential information by asserting that the officer’s involvement in a shooting has resulted in an appraisal or discipline." She distinguished Copley Press, Inc. v. Superior Court (2006) 39 Cal.4th 1272, in which the court held that an officer’s identity was protected in a situation in which the disclosure would necessarily have made public the fact that he was subjected to discipline. Doi Todd went on to say that neither the privacy exemption, nor the catchall exemption, could support barring disclosure, given the substantial interest in disclosure.

Dismissed as Speculative
She dismissed as speculative a declaration by a police lieutenant asserting that officers, including two who had been involved in shootings, had been the subject of threats. The declarant also noted that gang graffiti threatening police had recently appeared and was under investigation, and that the Internet could be used to locate the home addresses of officers whose names were known.

Similar evidence has been rejected in other cases, the justice explained.

"We agree with the trial court that appellants’ assertion of possible threats was inadequate under the [personal privacy] exemption, absent any evidence indicating that the safety or effectiveness of any particular officer was threatened by the disclosure of his or her name," the jurist wrote.

Nor had the city or the union offered anything more than speculation in support of its claim that secrecy was in the public interest, which must be shown in order for the catchall exemption to apply, the justice said.

Attorneys on appeal were James E. Trott and Larry J. Roberts of the Law Offices of James E. Trott for the union; Deputy City Attorney Christina L. Checel for Long Beach; and house counsel Karlene W. Goller, with Kelli L. Sager, Rochelle L. Wilcox and Jeff Glasser of Davis Wright Tremaine, for the Times.

The Los Angeles Police Protective League filed an amicus brief for the Long Beach officers, while several ACLU affiliates supported the Times. The case is Long Beach Police Officers Association v. City Of Long Beach (Los Angeles Times Communications LLC), 12 S.O.S. 635.

Copyright 2012, Metropolitan News Company


Risk Management Solutions

Defining the Employment Relationship

On February 9, 2012, California and the U.S. Department of Labor agreed to work together to go after employers who misclassify employees as independent contractors. California is the 12th state to join with the DOL in this regard. While it’s not clear how they will work together, this remains an area where employers face significant exposure from various state and federal regulatory agencies including: Division of Labor Standards Enforcement, Department of Industrial Relations, IRS, and the Employment Development Department.

The lines between employee, independent contractor and intermediate relationships become blurred very quickly with significant legal consequences for the unwary employer. In many cases, working relationships which may not at first sight appear to be employment relationships (e.g., individuals hired under contract as consultants or contractors) might, indeed, in fact and in law, be deemed by regulatory authorities and the courts to be employment.

Recently enacted California Senate Bill 459 allows the state to impose civil penalties of $5,000 to $25,000 for "willful" misclassification of employees. While these classifications face increased government scrutiny, the underlying decisions remain challenging. The states and federal government and the various agencies within those jurisdictions each use slightly different tests to determine an individual's status.

Under common-law rules, anyone who performs services for you is your employee if you can control what will be done and how it will be done. This is so even when you give the employee freedom of action. What matters is that you have the right to control the details of how the services are performed.

Facts that provide evidence of the degree of control and independence fall into three categories:

  1. Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
  2. Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
  3. Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

Employers must weigh all these factors when determining whether a worker is an employee or independent contractor. Some factors may indicate that the worker is an employee, while other factors indicate that the worker is an independent contractor. There is no "magic" or set number of factors that "makes" the worker an employee or an independent contractor, and no one factor stands alone in making this determination. Also, factors which are relevant in one situation may not be relevant in another.

In 2010, the City of Dana Point challenged the IRS after a routine audit in which the IRS determined that the City’s recreation class instructors were improperly classified as independent contractors and should have been classified as employees for federal employment tax purposes. http://www.westerncity.com/Western-City/July-2010/Challenging-the-IRS-on-the-Status-of-Independent-Contractors/ The City and its attorney, Patrick Munoz, partner with the law firm of Rutan & Tucker, were prepared to take its case all the way to the U.S. Tax Court (the IRS dropped its case against the City just prior to going to court).

In Hofman Ranch v. Yuba County Local Agency Formation Commission, 172 Cal.App.4th 805 (2009), the Court of Appeal, Third Appellate District held that an independent contractor hired by the Local Agency Formation Commission ("LAFCo") acting as LAFCo’s executive officer, was, for the purpose of the Brown Act, an employee of LAFCo. Because the independent contractor was an employee, LAFCo lawfully held a closed session to discuss the contractor’s employment terms pursuant to the Ralph M. Brown Act.

In this case, LAFCo held a closed session to evaluate the performance of John Benoit, whom LAFCo hired as an independent contractor to provide executive officer services. The plaintiffs sued LAFCo on the grounds that the closed session violated the Brown Act because John Benoit was not a public employee.

The trial court held that Mr. Benoit was a public employee and denied the plaintiffs’ petition. The appellate court agreed.

The keys are to look at the entire relationship, consider the degree or extent of the right to direct and control, and finally, to document each of the factors used in coming up with the determination.

The U.S. Supreme Court has on a number of occasions indicated that there is no single rule or test for determining whether an individual is an independent contractor or an employee for purposes of the FLSA. The Court has held that it is the total activity or situation which controls. Among the factors which the Court has considered significant are:

  1. The extent to which the services rendered are an integral part of the principal's business.
  2. The permanency of the relationship.
  3. The amount of the alleged contractor's investment in facilities and equipment.
  4. The nature and degree of control by the principal.
  5. The alleged contractor's opportunities for profit and loss.
  6. The amount of initiative, judgment, or foresight in open market competition with others required for the success of the claimed independent contractor.
  7. The degree of independent business organization and operation.

There are certain factors which are immaterial in determining whether there is an employment relationship. Such facts as the place where work is performed, the absence of a formal employment agreement, or whether an alleged independent contractor is licensed by State/local government are not considered to have a bearing on determinations as to whether there is an employment relationship. Additionally, the Supreme Court has held that the time or mode of pay does not control the determination of employee status.

Because the potential liabilities and penalties are significant if an individual is treated as an independent contractor and later found to be an employee, each working relationship should be thoroughly researched and analyzed before it is established.