December 2012 - Issue 10

End of Year Message from Jonathan Shull, Chief Executive Officer

Legislative Update

Two New Employment Discrimination Laws Go into Effect in 2013 

New Pregnancy Leave Regulations Take Effect December 30, 2012

Lessons Learned: Contractual Indemnity: Self-Insured Retentions (SIRs) and Deductibles

City of Merced settles discrimination suit with firefighter

Contractual Risk Transfer Manual Now Available

Jon Shull

End of Year Message from Jonathan Shull, Chief Executive Officer

2012 has been a poignant year for the California JPIA. The passing of President Larry Van Nostran was a tremendous loss to the Authority and Executive Committee. Larry’s years of service to the Executive Committee and the members will be remembered by many. 

I’m grateful to be surrounded by such a great team. Many of you interact frequently with the Authority’s risk managers, training specialists, and program managers. However, I would like to acknowledge the Authority’s administrative and support staff that work in the office and take care of the many details–coordinating training workshops, preparing meeting agendas, drafting coverage letters, and responding to members’ inquiries–that allow us to better serve the members.

The coming year will bring significant changes to the California JPIA. The risk management program will kick-off in January with regional risk managers working in the field providing a constant presence for member interaction with the Authority. The role of these individuals will be somewhat of a utility player–being present for training presentations that are planned from the Authority campus, attending city council and board meetings, staff meetings, and generally being recognized as a regular and accessible presence in the members’ operations.

Three new staff members have joined the California JPIA team. Alex Mellor is the Authority’s new Risk Manager and will serve members in the Desert/Mountain region (Imperial, Riverside, San Bernardino Counties). Jeff Rush is the newest member of the team. Jeff will join the California JPIA in January as its Workers’ Compensation Program Manager. Rachel Lara joined the staff in September as Office Assistant. Rachel’s voice is the friendly greeting you hear when you call the California JPIA office.

Thank you for your continued support of the California JPIA. We wish you a very happy holiday and New Year. 

Legislative Update

The Authority engages in multiple advocacy efforts on behalf of the members. California JPIA staff actively advocates on a wide range of legislative issues including: workers’ compensation, employee relations, public safety, risk management, and joint powers authorities. 

The Authority collaborates with other associations and organizations in its legislative efforts including the California Association of Joint Powers Authorities, the League of California Cities, and the Association of Governmental Risk Pools. To further augment its advocacy efforts, staff writes a number of position letters to the legislature and Governor on issues affecting the members.

The Authority wrote opposition letters on the following bills that would have had a significant impact for members–AB 2231 was defeated and AB 2451 was vetoed by Governor Brown.

  • AB 2231 (Fuentes). Sidewalks: Liability for Repair. 
    California JPIA Position: Oppose 

    This measure would have required voter approval before cities and counties could implement state law that states that property owners adjacent to sidewalks are responsible for sidewalk repair. This measure passed the Assembly but did not proceed to a floor vote in the Senate. 
    Status: Died in Senate Appropriations.
  • AB 2451 (Pérez). Public Safety: Death Benefits Increase. 
    California JPIA Position: Oppose 

    This measure would have significantly increased local costs by doubling the statute of limitations from 240 weeks to 480 weeks for a presumptive death benefit claim for cancer, tuberculosis, or MRSA to be filed on behalf of a firefighter or peace officer. 
    Status: Vetoed by Governor.

While the focus was on AB 340 (Furutani) Pension Reform and SB 863 (de León) Workers’ Compensation Reform, following are bills that were passed by the legislature and of interest to members.

    • AB 2298 (Solorio). Insurance. Public Safety Employees. Accidents. 
      Chapter 823, Statutes of 2012 
      California JPIA Position: Oppose

      The Authority’s risk managers recommend members revise their agency’s Vehicle Use Policy to reflect the provisions of AB 2298. 

      This measure provides that in the event of loss or injury that occurs as a result of an accident during any time period when that private passenger motor vehicle is operated by an employee who is a peace officer or firefighter and is used by him or her at the request or direction of the employer in the performance of the employee’s duty, the police officer or firefighter shall not be held liable. Instead, within 10 days of the accident, the public safety officer must report and provide to his or her private automobile insurer all documentation and information known to him or her related to the accident. The employer in these cases will be considered the owner of the vehicle for liability purposes and defense of the claim and any losses will be borne by the employer. 

    • AB 1844 (Campos). Employer Use of Social Media. 
      Chapter 618, Statutes of 2012 

      This measure prohibits an employer from requiring or requesting an employee or applicant for employment to do any of the following:
      • Disclose a username or password for the purpose of accessing personal social media;
      • Access personal social media in the presence of the employer; or
      • Divulge any personal media, except as provided.
      Employers maintain their existing rights and obligations to request an employee to divulge personal social media reasonably believed to be relevant to an investigation of allegations of employee misconduct or employee violation of applicable laws and regulations. Employers maintain the authority to request an employee to disclose a username, password, or other method for the purpose of accessing an employer–issued device. 

      This measure also provides that an employer cannot discharge, discipline, threaten to discharge or discipline or otherwise retaliate against an employee or applicant for not complying with a request or demand that violates this section. Social media is defined as an electronic service or account, or electronic content, including, but not limited to, videos, still photographs, blogs, video blogs, podcasts, instant and text messages, email, online services or accounts, or Internet website profiles or locations.
    • AB 1964 (Yamada). Discrimination in Employment. Reasonable Accommodations.
      Chapter 287, Statutes of 2012 

      This measure expands the definition of "religious creed" in the Fair Employment and Housing Act (FEHA) to include religious dress or grooming practices as defined in the measure and provides that a reasonable accommodation for an individual’s dress or grooming practice is not reasonable if it requires segregation of the individual from employees or the public. This measure also provides that an accommodation for religious belief, observance, or dress or grooming practices is not required if it would result in a violation of any other law prohibiting discrimination or protecting civil rights.
  • AB 2386 (Allen). Employment and Housing Discrimination. Sex. Breastfeeding.
    Chapter 701, Statutes of 2012 

    This measure adds breastfeeding to the definition of "sex," which is a protected characteristic under the Fair Employment and Housing Act (FEHA). This measure is intended to provide protection from employment discrimination for breastfeeding or medical conditions related to breastfeeding.


Legislative Update

Two New Employment Discrimination Laws Go into Effect in 2013

by Joseph Naddour and Ryan Crosner, Law Offices of Rutan and Tucker

(Reprinted from the Society for Human Resource Management website)

Effective January 2013, two new California laws will broaden what constitutes discrimination based on an employee’s sex or religion. Practices that may have been lawful for 2012 could now create liability and litigation for 2013.

Breast-Feeding Discrimination 

Gov. Jerry Brown signed into law Assembly Bill (AB) 2386, which amends the statutory definition of sex under the California Fair Employment and Housing Act (FEHA). This bill is intended to prevent breast-feeding discrimination in the workplace. Although the California Labor Code already requires employers to provide accommodations for women who are breast-feeding, this new law goes a step further by providing additional recourse for women who have encountered breast-feeding discrimination.

Historically, federal and state laws have offered little protection for women who have been discriminated against for requesting special accommodations for breast-feeding. Title VII has been the most common statute for women seeking recourse for breast-feeding discrimination, but several federal courts have rejected these claims. For instance, a Texas federal court recently held that firing someone because of lactation or breast-pumping is not sex discrimination (Equal Employment Opportunity Commission v. Houston Funding II (S.D. Tex. 2012)). The Obama administration’s health care reform law requires employers to provide nursing mothers with a reasonable break time and place to express breast milk, but it does not provide recourse for discrimination related to breast-feeding.

Until recently, California courts took a similar approach. But in DFEH v. Acosta Tacos, the Fair Employment and Housing Commission ruled that the termination of an employee because she insisted on her right to breast–feed constituted termination on account of the employee’s sex and violated the FEHA. This case proved to be the spark that led to AB 2386.

Businesses must be ready to meet the challenges of implementing this new law. First, employers should consider updating their employee handbooks or implementing a breast-feeding policy. Second, employers should take seriously any complaints from employees relating to breast-feeding and should treat these complaints with the same seriousness as they would a complaint based on race or age discrimination.

Religious Dress and Grooming Practices

Another new law for 2013, AB 1964, deals with religious discrimination. It requires employers to reasonably accommodate an employee’s appearance at work. The law clarifies that "religious dress and grooming practices" are covered by the protections against religious discrimination. These terms are broadly construed to include religious clothing and coverings (such as turbans, yarmulkes and hijabs) and jewelry and artifacts (such as a cross or Star of David), or anything else that is part of the observance of an individual’s religious beliefs. An employee’s head, facial or body hair that are part of the observance of an individual’s religion are also protected. 

Employees observing their religion must be reasonably accommodated. However, the new law specifically states that segregating an employee from the public or other employees is not a reasonable accommodation. 

Disneyland encountered such a situation when a Muslim employee, Imane Boudlal, filed a religious discrimination lawsuit in a California federal court. She alleged, among other things, that Disneyland did not permit her to wear her hijab. Disneyland purportedly offered several accommodations, including proposing that Boudlal work in the back where she would be unseen by park-goers. Under the new law, this accommodation would be unreasonable and would not absolve an employer’s duty to accommodate its employees’ religious attire and grooming practices. 

Employers may fear that this new law requires them to acquiesce to employee demands regarding their dress without taking into account the company’s business policies and procedures. The new law provides at least limited safeguards to prevent employees from exploiting this law. Employers do not have to accommodate an employee if it would create an "undue hardship" for the company. Unfortunately, this term is fact-specific and does not provide the greatest clarity for employers that want to accommodate an employee’s religious dress and grooming practices while minimizing any interference with business. 

So what do employers do? When an employee requests an accommodation, employers should take the request seriously and avoid giving the impression that the request is insignificant or creates a hassle for the company. Just as they do with disability accommodations, employers should work with employees to find a solution suitable to both parties. Any inclination to isolate or segregate an employee, or any other solution that may be perceived as a punishment or a demotion, should be avoided. Of course, documenting an employer’s proposed reasonable accommodations is a must. Given the ambiguity of "reasonable accommodation" and "undue hardship," employers should consider contacting legal counsel when a solution does not appear readily achievable. 

Implementing these solutions may help prevent 2012’s policies from becoming 2013’s liabilities. 

Legislative Update

New Pregnancy Leave Regulations Take Effect December 30, 2012

Existing California law requires employers with five or more employees to provide up to four months of unpaid pregnancy disability leave and to continue employer sponsored health benefits for employees disabled by pregnancy, childbirth, or a related medical condition. The federal Family and Medical Leave Act (FMLA) and the California Family Rights Act (CFRA) provide unpaid leave and benefits continuation for serious health conditions and certain other specified circumstances. FMLA and CFRA cover employees who have worked for an employer for at least 12 months and for at least 1,250 hours in the 12 months preceding the leave.

Unlike FMLA and CFRA, pregnancy disability leave has no such service requirements. In California, FMLA generally covers the period a woman is disabled due to pregnancy or childbirth and will run concurrently with pregnancy disability leave. CFRA leave, which does not cover leave for pregnancy-related conditions, is then used to provide a subsequent 12 weeks of baby bonding time.

The California Fair Employment and Housing Commission recently finalized amended pregnancy disability leave regulations that will go into effect on December 30, 2012. The new regulations contain significant changes and clarifications:

  • A clarification of the definition of "four months" as the number of days the employee would normally work within four calendar months (one-third of a year equaling 171/3 weeks). If an employee’s schedule varies from month to month, a monthly average of the hours worked over the four months prior to the beginning of the leave is used for calculating the employee’s normal work month.
  • An expanded definition of "disabled by pregnancy" to include time off for postnatal care, bed rest, gestational diabetes, pregnancy-induced hypertension, preeclampsia, post-partum depression, childbirth, loss or end of pregnancy, or recovery from childbirth, loss or end of pregnancy.
  • An expanded definition of "related medical condition" that includes lactation-related medical conditions such as mastitis. A reasonable accommodation for an employee affected by pregnancy may include lactation accommodation.
  • Updated notices to employees of pregnancy disability leave rights.
  • A new requirement regarding the process employers must follow in accommodating leave and transfer requests.
  • A clarification that the requirement to maintain health benefits for up to four months during pregnancy disability leave is in addition to any applicable requirement to maintain health coverage during a leave under CFRA. This is a significant change in that it mandates up to seven months of benefit continuation for CFRA eligible employees disabled by pregnancy or childbirth.

Members should review and revise their employee handbooks and leave policies and practices to reflect the new regulations. Additionally, members should display updated workplace posters and notices to be viewed by all employees in accordance with these new regulations. 

Legal Matters

Lessons Learned: Contractual Indemnity: Self-Insured Retentions (SIRs) and Deductibles

by Paul Zeglovitch, Liability Program Manager

Several years ago the Authority enacted a program mandating that at the conclusion of any litigated case a process would take place to understand the cause and make recommendations to prevent it from happening again. This program is a key component in the prevention of future losses for the Authority and its members. This "lessons learned" was the focus of the Liability Update session at this year’s Risk Management Educational Forum in San Francisco. The following claim involving contractual indemnity when dealing with large deductibles or SIRs, was discussed at the session.

The case involves a plaintiff slipping and falling on an accumulation of sand on a member- owned concrete ramp leading to the beach. The plaintiff claimed that recent modifications to the ramp by the member agency increased the amount of sand that was being tracked onto the ramp, making it slick. The fall itself was not an issue that was difficult to evaluate, but the case brought to light some issues regarding tenders of defense and indemnity to contractors and insurance issues.

The Member had a maintenance agreement with TruGreen Landcare to maintain various areas including the referenced ramp. The agreement included a typical promise for the contractor to hold harmless, defend and indemnify the Member in the event of a claim, and to name the member as an Additional Insured. The Member was provided with an Accord Certificate of Insurance which confirmed the existence of primary coverage without mentioning the existence of a self-insured retention (SIR).

Upon tendering of the Member’s defense and indemnity it was learned that TruGreen’s insurance policy contained a SIR, rather than a deductible, and as a result, TruGreen’s insurance carrier refused to accept the tender of defense until such time that the SIR was exhausted. Furthermore, TruGreen was not cooperative in picking-up the tender of defense and indemnity directly despite its contractual obligation to the Member to hold it harmless. 

As a result, the California JPIA stepped in to defend the Member, and incurred litigation costs in defense of the lawsuit and also contributed toward the settlement, which otherwise should have been paid by TruGreen and its insurer. Fortunately, the matter was settled for a reasonable amount and the majority of the settlement funds were recouped from TruGreen. 

The lesson learned in this case is that often times contractors--in an attempt to lower their premiums--take on higher SIRs instead of reasonable deductibles. 

What’s the difference between a deductible and SIR?

A deductible is a pre-set amount that is the portion of a loss that the insured will be responsible for paying, typically to the insurance company. An SIR is a pre-set amount that will need to be completely exhausted before the insurance carrier will even get involved. In essence, the contractor is uninsured up to that pre-set amount. As a result, the contractor technically would not be in compliance with the language of the contract with the member obliging it to provide insurance for the member. 

Generally, the Accord Certificate of Insurance that is provided will show the amount of the SIR or deductible, but that was not the case in this instance. So what does a member do in an effort to avoid this problem? 

The Authority recommends obtaining an actual copy of the insurance policy and the Additional Insured endorsement (with the proliferation of electronic documents this is no longer a cumbersome practice), and most important, require contractors to maintain only deductibles, not SIRs, whenever possible. 

Members are encouraged to submit any contracts being considered to your assigned Risk Manager for review. There is no cost to members for this service, and often, another set of eyes can be invaluable.

The Court Report

City of Merced settles discrimination suit with firefighter
November 27, 2012

(The following is reprinted from the Department of Fair Employment Housing (DFEH) listserv)

The city of Merced has agreed to settle a disability discrimination lawsuit for $425,000.

The move comes after a Merced County Superior Court judge determined the city had violated the rights of Ryan Staiger, who filed a complaint against the Merced Fire Department.

The city of Merced hired Staiger as a firefighter in 2007. However, the offer was retracted after several medical exams concluded he had "residual affects" from an arm fracture he suffered as a teenager.

The city initially appealed the judge's decision, which would have forced the city to offer to rehire Staiger. However, officials recently decided to accept the settlement offer, which severs ties with the disgruntled party.

Staiger could not be reached for comment.

Nationwide standards

Based on the National Fire Protection Association standards, a city doctor and a private specialist each said Staiger was not fit to perform the essential duties of the job because of the limited range of motion in his right wrist and elbow, said Greg Diaz, city attorney.

"The standards that the city has adopted are nationwide standards," he said. "If we're going to err on the side of caution, I want to air on the side of making sure the public is safe and fellow firefighters are safe, rather than on the fear of lawsuits."

Staiger, who now works for the California Department of Forestry and Fire Protection, disagreed with the city's conclusion. In 2008, he reached out to the California Department of Fair Employment and Housing Commission.

The commission took up the case, arguing Staiger's condition had not prevented him from working as a wilderness firefighter, and that the city failed to properly establish his inability to perform all essential tasks.

According to the commission, the city should have done a more personal and thorough assessment, looking specifically at his ability to compensate for the limited range of motion in his right arm by rotating his shoulder.

"Employers cannot discriminate against job applicants perceived to be disabled," said Phyllis W. Cheng, Department of Fair Employment and Housing director. "The Fair Employment and Housing Act requires that employers engage in an interactive process to identify reasonable accommodations to perform essential job functions."

Right to Second Opinion 

At the same time, the commission asserted that the city failed to properly inform Staiger of his right to choose a doctor for a secondary medical opinion. 

The city said it notified Staiger of his right to get his own doctor by phone, and maintained that the medical professionals employed by the city made the appropriate decision. 

"This has been frustrating, because we think we ought to be able to rely upon the medical determination of our own doctors," Diaz said.

The settlement amount was largely based on wages and benefits Staiger would have accrued over the duration of the court battle, which started in Dec. 2009.

The city's insurance carrier has agreed to pay about $200,000 of the settlement amount. 

Risk Solutions

Contractual Risk Transfer Manual Now Available

by Bob May, Risk Management Program Manager

The fifth edition of the California Joint Powers Insurance Authority’s Contractual Risk Transfer Manual is now available to members. The manual was last revised in 2005. 

In response to member feedback, the California JPIA has made the manual much more user friendly by streamlining the basic content for easy reference and adding more templates and resource information for those who need a more in-depth understanding. This was accomplished by removing detailed discussion about the risk transfer process in the manual and by adding resource hyperlinks and including more reference materials in appendices.

New are chapters addressing several common contracts used by members including: leases, agreements between public agencies, waivers, and environmental issues. Also new are the Frequently Asked Questions and A.M. Best Rating System appendices, and Contractual Risk Transfer Quick Reference Guide and Interactive Decision Tree to help users draft proper specifications for a particular contract. 

For the first time, the manual is also distributed in electronic form. This means the manual provides hyperlinks to additional information located online including websites and file download locations. In addition, updates can be distributed instantaneously via email or downloads from the California JPIA website. It will also be easier to get news of the update to members, as the California JPIA will maintain a distribution list for notification.

For additional information about this manual and its various forms visit the California JPIA Resource Center. You will need to log in with your username and password.

If you have questions about the manual, please contact your assigned Risk Manager