Category: Client Alerts

Governor Gavin Newsom recently signed Senate Bill 778 into law, extending by one year the deadline for employers to implement new harassment prevention training requirements. The urgent legislation addresses concerns relating to Senate Bill 1343, which passed in September 2018 and substantially expanded state law training requirements that had been in place for more than a decade. SB 1343 gave employers until January 1, 2020 to comply with extensive new anti-harassment training requirements, including additional course content and training of all employees — supervisory and non-supervisory. SB 778 now gives employers an additional year, until January 1, 2021, to develop and implement new anti-harassment training that meets the new mandates outlined below.

What Are the New Training Requirements?
By January 1, 2021, California employers with five or more employees must provide:

• At least two hours of harassment prevention training to all supervisory employees once every two years
• At least one hour of harassment prevention training to all non-supervisory employees once every two years
• At least two hours of harassment prevention training to new supervisory employees within six months after assuming the supervisory position
• At least one hour of harassment prevention training to new non-supervisory employees within six months after the hire date

Beginning January 1, 2020, at least one hour (non-supervisory positions) or two hours (supervisory positions) of harassment prevention training to seasonal, temporary, or other employees hired to work for less than 6 months, by the time whichever event occurs first — 30 calendar days after the hire date or 100 hours worked.

What Should Employers Do Now To Prepare?
Though the one-year extension grants temporary relief, all employers are required to implement training of their supervisors and employees during calendar year 2020. The new legislation also clarifies that employees who completed the requisite harassment prevention training in 2019 are not required to receive refresher training courses until 2021.

The myriad of new California anti-harassment laws make clear that employers must take affirmative steps to prevent harassment in the workplace and failure to do so can lead to increased liability. Employers should not simply “check the box” when it comes to training. Instead, training must meet the needs of each employer’s unique workplace, as well as the type of employees being trained. Meyers Nave offers harassment prevention training for supervisory and non-supervisory employees that satisfy the requirements mandated under SB 778, and that promote positive, respectful and inclusive workplace culture. For more information about our training programs, please click here or send an email to info@meyersnave.com.

On September 18, 2019, Governor Gavin Newsom signed Assembly Bill 5 (AB 5) into law, which codifies the California Supreme Court’s unanimous 2018 decision in Dynamex Operations West, Inc. v. Superior Court of Los Angeles.  AB 5 will take effect on January 1, 2020. The landmark legislation is intended to reduce the misclassification of workers by adopting and expanding the “ABC” test established in Dynamex for determining whether a worker should be classified as an employee or an independent contractor. The law makes it more difficult for employers to improperly classify workers as independent contractors instead of employees. In California, it is estimated that AB 5 may impact over one million workers currently classified as contract workers. Unlike employees, independent contractors are not entitled to minimum wage, rest breaks, overtime pay, unemployment and disability insurance, mandatory leaves of absence, workers’ compensation, and are not protected by anti-discrimination and retaliation laws.

Which Employing Entities Are Affected?
The Legislature’s intent was to clarify which industries will be subject to the new “ABC” test. While AB 5 targets ride-share companies, it has the potential to regulate virtually every private sector employer in the state. However, the new law expressly excludes certain occupations from its purview, including, but not limited to, doctors, dentists, psychologists, insurance agents, stockbrokers, lawyers, accountant, architects, private investigators, real estate agents, and some classes of engineers, among many more classifications. Whether public entities are exempt from the new law is not specifically addressed, although AB 5’s empowerment of the Attorney General and specified “local prosecuting agencies” to enforce the law suggests that its provisions may not apply to public employers. In addition, public entities are exempted from numerous provisions in the labor code and wage orders. Accordingly, there is ambiguity surrounding the law’s application to public employers.

What Does This Mean for Employers?
Under the “ABC” test, to prove that a worker is properly classified as an independent contractor as opposed to an employee, the putative employer must establish all three of the following elements:

1. The worker is free from the employer’s control and direction in connection with the performance of the work, both under the contract and in fact.
2. The worker performs work that is outside the usual course of the employer’s business.
3. The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.

For professions that are exempt from AB 5 or otherwise outside the bounds of coverage as determined by the courts, the pre-Dynamex common law standard will be used to assess a worker’s status as an employee or independent contractor.

What to Watch Out For
It is important to note that methods for enforcing AB 5’s provisions have been added, authorizing California’s Attorney General, local prosecutors, and specified city attorneys to take legal action against entities violating AB 5. The new law also broadens the Dynamex ruling by applying the “ABC” test to all claims brought under California’s Labor Code, unemployment insurance laws, and wage orders.

What’s Next
The provisions of AB 5 will prospectively apply to work performed on and after January 1, 2020, but for existing claims and actions, AB 5 will apply retroactively. Though AB 5 will take effect on January 1, 2020, it will likely face legal challenges which could delay the implementation of its key provisions. It is expected that new legislation will be introduced in January 2020 to further clarify AB 5’s applicability and potentially grant additional exemptions. All employers, particularly public entities, need to consult with legal counsel and carefully review AB 5’s potential application.

The California Environmental Quality Act (“CEQA”) requires that an Environmental Impact Report (“EIR”), or other environmental review document, must describe and analyze the impacts of a project – and the project itself must be consistently described, throughout the process of local agency consideration, in terms that are “accurate,” “stable” and “finite.” Local agencies and developers regularly face the question of how to formulate the description of a proposed project in a CEQA document that meets this standard. On July 31 in Stopthemillenniumhollywood.com v. City of Los Angeles (“Millennium”), the Second Appellate District added to the growing body of recent case law that answers this question. Millennium follows and expands upon the guidance provided in Washoe Meadows Community v. Department of Parks & Recreation (2017) 17 Cal.App.5th 277 (“Washoe Meadows”) and South of Market Community Action Network v. City and County of San Francisco (2019) 33 Cal.App.5th 321 (“South of Market”). Together, these three cases assist local agencies and developers in understanding what is and is not adequate or permissible for a project description under CEQA.

Millennium – Analyzing a set of environmental impacts vs. impacts for a defined project
Millennium involved a large construction project on Vine Street in the City of Los Angeles (“City”). As noted by the Court, the Millennium project described and analyzed impacts of an “illustrative scenario” for a “potential development program” that would implement certain land use and development standards, but which provided the developers with “flexibility regarding the final arrangement and density of specific land uses, siting, and massing characteristics” of the project. The Millennium Court found that the project description was “not simply inconsistent” but also that it failed “to describe the siting, size, mass, or appearance of any building proposed to be built at the project site.” The Court held that this did “not meet the requirement of a stable or finite proposed project.” The City and project proponents argued that the EIR was adequate under CEQA because it examined maximum environmental impacts of any of the potential development scenarios. However, the Court rejected this argument, concluding that “[a]nalyzing a ‘set of environmental impact limits,’ instead of analyzing the environmental impacts for a defined project, was not consistent with CEQA.”

Washoe Meadows – Describing range of possible projects vs. preferred or actual project
Millennium relied, in part, on Washoe Meadows, which addressed an EIR that did not meet CEQA’s requirements for a stable and finite project description. The EIR in Washoe Meadows identified five “very different” alternatives as potential projects, did not identify a preferred or proposed project, and left the selection of the preferred alternative until after receiving public input. As in Millennium, the local agency in Washoe Meadows argued that it had complied with CEQA because it thoroughly analyzed the environmental impacts of the alternative the agency ultimately selected as the project. The Court held, however, that the CEQA flaw was not with the “informative quality of the EIR’s environmental forecasts,” but rather that a “description of a broad range of possible projects, rather than a preferred or actual project, presents the public with a moving target and requires a commenter to offer input on a wide range of alternatives that may not be in any way germane to the project ultimately approved.” The Washoe Meadows Court did allow that “there may be situations in which the presentation of a small number of closely related alternatives would not present an undue burden on members of the public wishing to participate in the CEQA process,” but that in the case under review the differences between the five alternatives were “vast” with each option creating a different set of impacts and requiring different mitigation measures, resulting in an impermissible project description.

South of Market – Describing and evaluating substantially similar project options
Finally, Millennium distinguished South of Market, which involved a mixed-use development project. The South of Market EIR examined two “schemes” for the project, consisting of different allocations of uses (the “Residential Scheme” and the “Office Scheme”) within the proposed project buildings. The two options involved substantially the same overall square footage , though the Office Scheme had a larger building envelope and higher density than the Residential Scheme. The Court rejected petitioners’ challenge that the EIR failed to provide an accurate, stable project description because of the use of the two options. In reaching this decision, the South of Market Court noted favorably that the two options were substantially similar, that the EIR fully evaluated the impacts of each option independently, and that information presented in the EIR was not confusing.

Project description check list
Taken together, these three cases provide agencies and developers with bookends on the degree of flexibility that may be built into a project description under CEQA. Under South of Market, some degree of flexibility is permissible, and the EIR may go so far as to include project “options,” so long as the options are independently evaluated, represent true variations on a single project rather than vastly different projects, and do not confuse the reviewing public. Conversely, under Millennium and Washoe Meadows, excessive vagueness or uncertainty in the description of the proposed project may be a violation of CEQA and courts are unlikely to find that examination of “maximum environmental impacts” of any proposal corrects this flaw. As such, agencies and developers should avoid indefinite project descriptions, though carefully crafted options for project implementation may be acceptable.

In a decision released on August 19, Union of Medical Marijuana Patients, Inc. v. City of San Diego, the California Supreme Court addressed the definition of a “project” under the California Environmental Quality Act (“CEQA”) and clarified the appropriate scope of review for when an activity constitutes a “project.” As a practical matter, the decision will likely result in fewer findings that actions are not “projects” and a greater reliance on findings that projects are exempt from CEQA.

CEQA defines a “project” as an activity that (1) is a discretionary action by a governmental agency and (2) will either have a direct or reasonably foreseeable indirect impact on the environment. (Pub. Res. Code, § 21065.) Petitioners argued that a second CEQA statute controlled, which states that CEQA “shall apply” to a list of discretionary projects including, but not limited to, the “enactment and amendment of zoning ordinances.” Petitioners’ position was that this meant all zoning changes were subject to CEQA regardless of whether those changes would have any environmental impacts. (Pub. Res. Code, § 21080, subd. (a).)

• Actions Subject to CEQA — In the first part of the opinion, the Court concluded that the separate list of actions was not a list of actions that would automatically be subject to CEQA. Rather, the Court held, the specific definition of “project” controls, and actions by governmental agencies must both be discretionary and have a direct, or reasonably foreseeable indirect, impact on the environment.
• Test to Determine a “Project” — In the second part of the opinion, the Court clarified that the test for whether an action constitutes a “project” must take place in the abstract. The Court held that the “likely actual impact of an activity is not at issue in determining its status as a project.” Instead, “a proposed activity is a CEQA project if, by its general nature, the activity is capable of causing a direct or reasonably foreseeable indirect physical change in the environment. This determination is made without considering whether, under the specific circumstances in which the proposed activity will be carried out, these potential effects will actually occur.”

What It Means for Government Agencies
The much-anticipated decision arose in the context of whether proposed new or changed zoning ordinances must first undergo CEQA review, particularly those that concentrate or shift property uses within a jurisdiction. However, the decision has wider application. Following this opinion, government agencies examining whether an action constitutes a project under CEQA should be sure to focus on whether the activity could, in general, have a direct or indirect environmental impact and not on whether the action is likely to have specific impacts.

In the highly anticipated case involving President Trump’s Twitter account, the U.S. Court of Appeals for the Second Circuit found that the President’s blocking of followers on his @realDonaldTrump account was unconstitutional viewpoint based discrimination. In its unanimous July 9, 2019 opinion in Knight First Amendment Institute v. Donald J. Trump, the Second Circuit affirmed the lower court in full, finding the account to be a public forum because it was opened as an “instrumentality of communication” for “indiscriminate use by the general public.” The Second Circuit’s decision makes clear that where government officials open their social media accounts to the public at large as a way of communicating about official business, then their accounts will be analyzed under the public forum doctrine where blocking users as a result of their criticism is not allowed.

In deciding whether the President’s Twitter account constituted a public forum, the Court examined the policy, practice and intent in operating the account. The Second Circuit took note that the header photograph of the account shows the President engaged in his official duties, the President and his aides have characterized his tweets as official statements, and the President extensively uses his account to announce, describe and defend his official policies. Moreover, the interactive features of the President’s Twitter account are accessible to the public without limitation. Thus, the Second Circuit found that @realDonaldTrump was intentionally opened for public discussion as an official vehicle for governance. As the evidence of the official nature of the account was “overwhelming,” the Court held that the President could not selectively exclude users from his account when they expressed views that he disliked.

The Second Circuit opinion clearly calls out that not every social media account operated by a public official will necessarily be a public forum. The outcome of that inquiry will be informed by how the official describes and uses the account, to whom features of the account are made available, and how others, including government officials and agencies, regard and treat the account. The Second Circuit also explained that while the President’s initial tweets were government speech, it was not the initial tweets that were at issue but the responses and comments to the initial tweets found in the interactive space (i.e. public discussion) of the President’s Twitter account. The Second Circuit recognized that the President’s Twitter account was intentionally opened for public discussion and accordingly public forum analysis and the protections of the First Amendment were applicable to the interactive space of the account.

To date, neither the Ninth Circuit nor the Supreme Court have weighed in on this issue but social media platforms have also been examined by the Fourth and Fifth Circuits. See, e.g., Davison v. Randall, 912 F.3d 666 (4th Cir. 2019) [finding the interactive component of a Facebook page was a public forum]; Robinson v. Hunt Cty., Texas, 921 F.3d 440 (5th Cir. 2019) [finding that plaintiff alleged facts sufficient to state a claim that removal of posts from the Sheriff’s Office Facebook page was unconstitutional viewpoint discrimination.] In light of these recent decisions from sister Circuits, public officials should be cognizant that if they want their social media platforms to remain private (and beyond the reach of the First Amendment) they should not post information that relates to the conduct of their official duties nor should they open the interactive portion of their accounts to the general public. Final determinations as to whether an account has been intentionally opened to the public will be a fact-specific inquiry.

On June 21, in a 5-4 decision, the U.S. Supreme Court overruled the 34-year old precedent of Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City (1985) 473 U.S. 172 (“Williamson County”) in holding that a plaintiff seeking just compensation for an alleged taking under the Fifth Amendment of the U.S. Constitution does not need to first have the claim heard in state court before seeking relief in federal court. Under Williamson County, the rule had been that a property owner had not suffered a violation of his or her Fifth Amendment rights until a state court had denied the claim for just compensation under state law. In Knick v. Township of Scott (2019) 588 U.S. ___ (“Knick”), however, Chief Justice Roberts, writing for the majority of the Court, determined that this precedent was incorrect and that a property owner could seek just compensation for a taking in federal court as soon as the government takes his or her property without paying for it.

What Doesn’t the Knick Ruling Change?
“Takings” under the Constitution can constitute a myriad of government actions and include not only the taking of possession of private property, such as for roadway construction, but also temporary takings, and land use and environmental regulations that go “too far.” Justice Roberts opined that the Knick ruling would not halt government action through injunctions because of the availability of monetary remedies of just compensation. Thus, Knick should not be read as a vehicle for halting government regulation. Roberts also clearly pointed out that the Knick ruling did not overrule Williamson County’s requirement that a taking must be “final.” Therefore, potential takings plaintiffs still need to obtain a final ruling from local governments regarding any land use approvals, and laws and regulations will need to become final before any takings claims can be brought.

What Does the Knick Ruling Change?
Despite what remains intact, Knick’s dramatic change to takings law cannot be understated. For local governments and regulatory agencies, any ordinances, regulations, or decisions potentially affecting private property rights can immediately become violations of the federal constitution and subject those governments and regulatory agencies to financial liability for takings. For private property owners, Knick represents a powerful new tool to influence government and regulatory agencies regarding the regulation of property rights. For all practitioners, Knick also likely means that most takings claims will now be heard in federal court instead of state court.

Government entities and elected officials are becoming more accessible and connected to constituents through the ubiquitous use of social media, email, text messaging and other communication technologies. The 21st century question is what may government entities and elected officials do and not do to block or otherwise regulate the public’s participation in their social media accounts? Part of the answer to that question took place on March 26, 2019 when a three-judge panel for the U.S. Court of Appeals for the Second Circuit heard oral argument in the precedent-setting case of Knight First Amendment Institute et al. v. Trump et al. (Case Number 18-1691). The U.S. Department of Justice is appealing a lower court’s ruling that President Donald Trump’s blocking of critics from his Twitter account is unconstitutional.

Deborah Fox, Chair of Meyers Nave’s First Amendment Practice, and Of Counsel Margaret Rosequist recently published an article in The Recorder that explains the state of the law regarding this nuanced area of constitutional concern. On May 1, they also provided a webinar that analyzed the March 26 oral arguments in Knight and the legal and practical insights gained from the judge’s questions and comments. The webinar included an update on litigation in California, Kentucky, Texas and Virginia, as well as practical tips for government entities and elected officials setting policies and standards for public engagement on social media platforms. Please click here to read their article and here for a recording of their webinar.

First Amendment law recognizes four types of fora – public forum, designated public forum, nonpublic forum and limited public forum – and the classification of the forum at issue is key to whether a government entity’s or an elected official’s restrictions on a particular social media account can withstand a First Amendment challenge. The critical inquiry is whether a digital channel of communication is open for expressive activity and on what terms. A court’s analysis will focus on the actions and policies of the government entity or elected official. Please contact Deborah or Meg for assistance regarding this rapidly evolving area of First Amendment law.

On April 4, 2019, the California Supreme Court issued a unanimous decision upholding the First District Court of Appeal’s ruling that telecommunications facilities must comply with a municipal ordinance that enforces aesthetic guidelines. The case, T-Mobile West LLC v. City and County of San Francisco, was brought by T-Mobile, Crown Castle, and ExteNet Systems against the City and County of San Francisco, seeking to invalidate San Francisco’s Wireless Ordinance. This case supports local control over telecommunications providers’ use of the public right-of-way, but, as noted below, recent developments in federal law may impose other limits on the application of land use, aesthetics, and other regulations on telecommunications providers.

Plaintiffs’ Position

In their lawsuit, plaintiffs argued that the local statute was preempted by, and in violation of, provisions of the California Public Utilities Code. The San Francisco ordinance at issue requires any entity seeking to install or modify wireless equipment in the public right-of-way to obtain a permit, and requires additional aesthetic review for specific areas within the city. For example, wireless facility installations proposed in historic districts or “excellent view” designated areas may only be approved if the planning department determines the proposed facility would not “significantly degrade” the district’s aesthetic attributes or “significantly impair” an area’s protected views.

Plaintiffs based their claims on Public Utilities Code sections 7901 and 7901.1. Section 7901 provides that telephone companies (which includes wireless carriers) may construct lines, poles and equipment in the public right-of-way if they do not “incommode” the public use of the right-of-way or interrupt the navigation of waters. Section 7901.1, on the other hand, permits local governments to exercise “reasonable control as to the time, place and manner in which roads, highways, and waterways are accessed” but requires such control be applied equally to every entity. Plaintiffs argued that the city’s ordinance is preempted by section 7901 because it does not allow conditioning approval on aesthetic grounds. Specifically, plaintiffs argued that the term “incommode” should be read narrowly to mean obstructing the public’s path of travel and thus, aesthetic regulations are outside the scope of local authority. Likewise, the plaintiffs asserted that the city violated section 7901.1 by only targeting wireless providers with aesthetic requirements. Both the trial court and the appellate court had previously rejected the plaintiffs’ position.

Court’s Analysis

On review, the California Supreme Court agreed with the lower courts. The Court first held that the ordinance is not preempted by section 7901 because the legislature did not intend to deprive local governments of the ability to impose aesthetic regulations. Citing prior judicial decisions and California Public Utilities Commission policies, the Court reasoned that section 7901 leaves room for local regulatory action in addition to preventing road obstructions. In particular, the term “incommode” does not only mean obstruction to paths of travel; it could also include things like noise generation, negative health consequences, or safety concerns that may come from telecommunication deployment and could disturb the use and quiet enjoyment of the public road. Further, cities and counties have inherent, constitutional police power to impose land use regulations including aesthetic requirements. Therefore, absent the Legislature’s clear preemptive intent as is the case here, section 7901 does not preempt San Francisco’s ordinance.

Likewise, this local statute does not violate section 7901.1. The Court observed that the city requires all utility and telephone companies, regardless of whether they are wireless carriers, to obtain temporary permits to begin construction in the public right-of-way. These permits are not subject to aesthetic review. The city only requires aesthetic approval for the subsequent, continuing occupancy and operation of wireless facilities in the right-of-way. The Court reasoned that section 7901.1’s “reasonable” and “equally-applied” mandates only applied to the requirements to temporarily access the public right-of-way at the start of construction, but not to subsequent regulations for other long-term impacts to the public right-of-way under section 7901. Furthermore and specifically for this case, the parties had explicitly admitted that the city treats all companies equally when it comes to obtaining that initial temporary permit. Thus, no section 7901.1 violations occurred.

Implications – Scope of Local Authority

Many cities in California have been confronted with an influx of requests from carriers proposing to deploy wireless telecommunications technology in their jurisdictions, both for the purpose of expanding existing service connectivity and setting the stage for the upcoming 5G technology rollout. During this process, cities will certainly be required to make decisions regarding the type of local regulatory action that it is permitted to take in light of different state and federal protections afforded to telecommunication companies. This case clarifies local entities’ authority to enforce time, place and manner restrictions for wireless carriers deploying equipment in the public right-of-way.

Implications – FCC’s Sept. 2018 Ruling on Small Cell Wireless Deployment

Municipalities, however, should keep in mind that while this case resolves a longstanding question of the scope of local authority under California law, there still exists additional federal mandates and regulations that are protective of the wireless telecommunications industry. To illustrate, the FCC ruling issued in September 2018 interprets federal telecommunications law to strictly limit local authority over wireless facilities. That ruling has since become effective and is not affected by the outcome of this case. With particular relevance to the main issue in T-Mobile West LLC v. City and County of San Francisco, the September 2018 ruling provides that local aesthetic regulations must be objective, reasonable, non-discriminatory, and published in advance, regardless of whether they apply to the public right-of-way. For more information about the FCC’s September 2018 rule, please click here for Meyers Nave’s recorded webinar on “How Do Municipalities Comply with the FCC’s New Rule on Small Cell Wireless Deployment?”

In light of these recent legal developments, public entities may desire to create new or revisit existing aesthetic requirements that preserve the character of their communities while remaining objective and reasonable to comply with federal mandates.

In its March 4 ruling in Cal Fire Local 2881 v. California Public Employees’ Retirement System, the California Supreme Court held that the Legislature’s elimination of the opportunity for employees to purchase additional retirement service (ARS) credit does not violate the state or federal constitution because the opportunity to purchase such credit is not a vested right protected by the constitutional contract clause. (Cal Fire Local 2881 v. California Public Employees’ Retirement System (March 4, 2019, S239958) ___ Cal.4th___.)

California adheres to a long-standing rule, known as the “California Rule,” which provides that pension benefits in place when a worker is hired can never be reduced without equivalent compensation. While the Cal Fire Court avoided the California Rule, the holding suggests that state and local governments may reduce pension costs by repealing certain benefits without running afoul of constitutional protections for public pensions. However, benefits enacted with clear legislative intent to create contractual rights and other “core pension rights” that have traditionally been seen as deferred compensation are still constitutionally protected.

Cal Fire Background

State employees and other members of CalPERS were granted the opportunity to purchase ARS credit in 2003 by the enactment of Government Code § 20909. Participating employees could receive pension benefits calculated on the basis of up to five years’ more public employment than they actually worked. Because ARS credit was untethered to actual service, it acquired the nickname “air time.” In September 2012, the Legislature enacted the Public Employees’ Pension Reform Act (PEPRA), which effectively repealed the statute granting public employees the opportunity to purchase ARS credit. (see Gov. Code, §§ 7222 et seq.)

Plaintiffs and appellants Cal Fire Local 2881 (a labor association) and four individual employees of the California Department of Forestry and Fire Protection (known as “Cal Fire”) filed a petition for a writ of mandate against CalPERS challenging the elimination of the ARS credit, contending that the opportunity to purchase ARS credit was a vested right protected by the contract clause of the California Constitution.

Both trial and appellate courts entered judgment denying Plaintiffs’ petition concluding that eliminating the benefit did not impair or violate any pension right of plaintiffs. The California Supreme Court granted Plaintiff’s petition for review.

California Supreme Court’s Discussion

Plaintiffs’ argued that PEPRA’s elimination of the opportunity for existing public employees to purchase ARS credit violated the constitutional contracts clause, in both the United States and California Constitutions, which prohibits the enactment of laws effecting a “substantial impairment” of contracts, including contracts of employment. The Court pointed out that the terms and conditions of public employment, unlike those of private employment, generally are established by statute or other comparable enactment rather than by contract. The Court also recognized that it is well settled that public employees have no vested right in any particular measure of compensation or benefits and that these may be modified or reduced by the proper statutory authority.

However, the Court articulated two exceptions that could create rights protected by the contract clause in public employment: (1) when the statute or ordinance establishing the benefit and the circumstances of its enactment clearly evince a legislative intent to create contractual rights; and (2) where certain benefits of public employment, such as pension rights, are protected by implication, even in the absence of a clear manifestation of legislative intent.

Key Elements of Court’s Ruling

• There was no clear evidence suggesting the Legislature made an affirmative commitment to make the opportunity to purchase ARS credit available indefinitely.

The Court did not find evidence that the Legislature intended to create a contractual right by allowing the opportunity to purchase ARS credits. Rather, the Court found that the Legislature had simply enacted more of a policy to allow the one-time election to purchase ARS credits. When read as a whole, the Court did not find the language of section 20909 suggested an affirmative promise by the Legislature to make the opportunity to purchase ARS credit available indefinitely.

• The opportunity to purchase ARS credit is not entitled to the same type of constitutional protection as public employee pension rights.

Pension rights have historically been afforded constitutional protection because they are seen as deferred compensation that becomes part of the contract of employment itself. This is because pension benefits are earned by an employee’s work – the benefit flows directly from a public employee’s service, and their magnitude is roughly proportional to the time of that service. Thus, even in the absence of a manifest legislative intent to create contractual rights, the Court has held pension rights cannot be destroyed without impairing a contractual obligation. However, the Court held the opportunity to purchase ARS credits was not akin to deferred compensation. The Court found the opportunity to purchase ARS credit was “so unconnected to actual service time” because a public employee could increase his or her pension benefit merely by purchasing the ARS credit and not through the employee’s time in service.

• The Court did not opine on the California Rule.

California’s long-standing rule, known as the “California Rule,” provides that pension benefits in place at the moment of a worker’s hiring can never be reduced without equivalent compensation. The protective legal doctrine has hindered state and local lawmakers’ ability to revise the laws governing public employee pensions. Although the state and many amici curiae urged the Court to use the Cal Fire decision as an occasion to re-examine the California Rule, the Court did not reach the issue because, as a preliminary matter, it concluded that California’s public employees do not have a contractual right to the continued availability of the opportunity to purchase ARS credit. Therefore, the question of whether PEPRA worked as an unconstitutional impairment of protected rights did not arise.

Next Steps

Unfortunately, despite great anticipation, the California Supreme Court did not opine on the California Rule. For now, the precedent that forbids public agencies from reducing pension benefits for current employees and retirees unless they provide additional compensation to offset the loss of income remains intact. However, the Court is expected to hear cases that touch on the California Rule and may potentially affect the Rule’s application to other pension benefits. Two such cases in Alameda County and Marin County relate to benefits that “spike” the final compensation that is used to calculate pensions. (see Alameda County Deputy Sheriff’s Association et al. v. Alameda County Employees’ Retirement Association, et al. (2018) 19 Cal.App.5th 61, and Marin Association of Public Employees’ Retirement Association (2016) 2 Cal.App.5th 674.)

In response to increasing concerns regarding contamination from potential exposure to per- and polyfluroalkyl substances (PFAS), the U.S. Environmental Protection Agency has now released its PFAS Action Plan. The Plan affects thousands of PFAS substances that have been manufactured since the 1940s, used most prominently in products such as fire-fighting foams, non-stick cookware, food packaging, water-resistant coatings, and in the aerospace, electronics, semi-conductor and automotive industries, among many others. The impacts to the regulated community of this increased attention on PFAS are considerable. Whether it be airports, railroads, developers, manufacturers, or retailers, the prospect of state and federal enforcement of environmental, health and safety laws, of citizen actions under those laws, of toxic tort or product liability actions, and of project delays, are significant.

Recent studies have suggested potential toxicological effects from PFASs on human health, including carcinogenic, developmental and immunological effects. Exposures can occur through drinking water, groundwater, cooking, clothing, air, and other occupational exposures. Two PFAS compounds, perfluorooctanoic acid (PFOA) and perfluorooctane sulfonate (PFOS), have been added to the California Proposition 65 list of chemicals that have evidence of reproductive toxicity, and a number of states have developed drinking water standards for those substances.

EPA’s Immediate and Long-Term Actions

Now, with its PFAS Action Plan, and although some have contended that it has not acted fast enough, EPA is entering the arena in a significant way, and is planning to initiate a number of steps on a national level that will address PFAS. Among other measures, under its Action Plan, EPA will:

• Institute a regulatory process under the Safe Drinking Water Act to develop maximum contaminant levels (MCLs) for PFOA and PFOS, as well as assess whether MCLs for a broader class of PFAS is appropriate.
• Initiate a process to list PFOA and PFOS as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), which will expand the range of potentially responsible parties with CERLA lability and increase cleanup costs at CERCLA sites.
• Expand and strengthen enforcement with regard to PFAS.
• Require reporting of PFAS releases under the Toxics Release Inventory.
• Propose nationwide drinking water monitoring for PFAS.
• Develop guidance to facilitate cleanup of contaminated groundwater.
• Institute new chemical reviews under the Toxic Substances Control Act.
• Expand testing and analytical methods, treatment and remediation technologies, and research, and develop broader data sets, with regard to PFAS.
• Assess ecological risks presented by PFAS.

The PFAS Action Plan greatly impacts compliance costs, requirements, enforcement actions, and litigation for manufacturers – past and current – and users of PFAS. It is critical to address these potential risks now, and be aware of and get involved in regulatory efforts before the onset of enforcement actions or lawsuits occur. Please click here to view the Action Plan.