Deadline Is October 1, 2023 To Apply for Continuation Under Napa County’s Winery Waste Discharge Program
DEADLINE IS OCTOBER 1, 2023 TO APPLY FOR CONTINUATION UNDER NAPA COUNTY’S WINERY WASTE DISCHARGE PROGRAM
The deadline to apply for Napa County’s Winery Waste Discharge Program was recently extended. For wineries currently enrolled in Napa County’s Winery Waste Discharge Program, the deadline to apply for continuation under the program is coming up on Sunday, October 1, 2023. Below is additional information on how to apply for continuation and additional information for wineries that are not currently enrolled in the program.
As California winery operators are likely aware, the new California Statewide General Waste Discharge Requirements for Winery Process Water Order requires compliance for most existing wineries beginning January 20, 2024. However, Napa County has arranged to continue its existing Winery Waste Discharge Program for an additional three years. If you have not yet applied for continuation, you can submit the application here (the application page still references the prior August 1, 2023 deadline).
More information can be found on the County’s website here.
Wineries that do not have current enrollment in the County’s program are NOT eligible for apply for this continuation and will be required to enroll in the new Statewide General Winery Discharge Program by January 20, 2024, which can be found here.
Canadian Court Gives 👍 to Contract Accepted by Emoji
Harvest is underway in wine country. During this season there is increased demand for skilled labor, transportation, and crush facilities. Buyers and sellers of fruit have a short window to make deals. A busy harvest season also lends itself to casual communication about crops, like this:
Now, did you just tell your friend you are happy for him, or did you just commit to buying $30K worth of fruit?
According to at least one Canadian court, the thumbs-up 👍 emoji could qualify as acceptance of a contract. A recent decision from the Court of King’s Bench in Canada discussed the “new reality in Canadian society” facing courts as the forms of communication broaden.
The Canadian court examined a dispute between a farmer and grain buyer over an alleged contract for 87 metric tons of flax, to be delivered in November 2021. The grain buyer and farmer spoke by phone, and the buyer texted the farmer a photo of the contract signed by buyer for November delivery. The text message said “please confirm flax contract.” The farmer texted back a “thumbs-up” emoji.
Later, when November rolled around, the price of flax had gone up, and the farmer attempted to say that his “thumbs-up” in response to the buyer only signaled that he had received the contract, not that he had accepted it. The court also looked at the prior dealings between the farmer and buyer, noting that in prior contracts for durum wheat, the farmer had various formed agreements with the buyer employing similarly concise responses, including “looks good,” “ok,” or “yup.”
Here, the court ultimately found that yes, the “thumbs-up” was sufficient acceptance, and the farmer was ordered to pay C$82,000 for the unfulfilled contract.
Canadian law is not controlling in the United States. However, this case reminds us that as forms and methods of communication grow, U.S. courts may eventually find that an emoji can qualify as acceptance of an agreement.
So, during important business negotiations, consider the potential consequences of casually firing off that “thumbs-up” emoji to the other side. Finally, when in doubt, seek the advice of an attorney.
Deadline to Apply for Continuation Under Napa County’s Winery Waste Discharge Program
DEADLINE IS AUGUST 1, 2023 TO APPLY FOR CONTINUATION UNDER NAPA COUNTY’S WINERY WASTE DISCHARGE PROGRAM
As California winery operators are likely aware, the new California Statewide General Waste Discharge Requirements for Winery Process Water Order requires compliance for most existing wineries beginning January 20, 2024. However, Napa County has arranged to continue its existing Winery Waste Discharge Program for an additional three years. If your winery is currently enrolled in Napa County’s Winery Waste Discharge Program, the deadline to apply for continuation under the program is coming up on Tuesday, August 1, 2023. If you have not yet applied for continuation, you can submit the application here: Napa County Winery Waste Discharge Program Application.
More information can be found on the County’s website here: Winery Waste Discharge Requirements (WDRs).
Wineries that do not have current enrollment in the County’s program are NOT eligible for apply for this continuation and will be required to enroll in the new Statewide General Winery Discharge Program by January 20, 2024, which can be found here: General Waste Discharge Requirements for Winery Process Water.
For more information or for assistance with enrollment in either of the above, please contact Josh Devore.
Attention Online Content Creators…
Online content creators, bloggers, influencers — wineries producing content for digital distribution — it’s time to file copyright applications for your works. The U.S. Copyright Office now offers the Group Registration for Short Online Literary Works (GRTX) registration option for “short online literary works” such as articles, columns, essays, blog entries, short stories, poems and social media posts. The GRTX option allows applicants to register up to fifty (50) works with a single application and filing fee.
In order to use GRTX registration option, the literary work must contain between 50 and 17,500 words and must be published first as part of a website or online platform, including online newspapers, social media websites, and social networking platforms. Please note that emails, podcasts, audiobooks and computer programs cannot use the GRTX registration option, even if they contain 50 to 17,500 words and were first published online.
For assistance in getting your literary content registered with the U.S. Copyright Office under the economical GRTX registration option or otherwise, please contact Katja Loeffelholz.
EFFECTIVE JANUARY 1, 2024, CA WINERIES AND DISTILLERIES WILL HAVE REPORTING AND PAYMENT OBLIGATIONS TO CALRECYCLE UNDER THE BOTTLE BILL
With the passage of Senate Bill No. 1013, beginning on January 1, 2024, wine and spirits will be included in California’s state container deposit system established by the California Beverage Container Recycling and Litter Reduction Act (known as the “Bottle Bill”). As such, wineries and distilleries will now be required to comply with the Bottle Bill’s CA Redemption Value (CRV) payment and reporting obligations beginning January 1, 2024, and CRV labeling requirements for all wine and spirits sold after July 1, 2025. Beer and certain other non-alcoholic beverages were already previously covered by the Bottle Bill.
Importantly, because all wines and spirits sold in California after July 1, 2025 must be labeled with some type of approved CRV statement, producers should start including this information on their bottles and/or labels as soon as possible for all products to be offered for sale on or after January 1, 2025.
Below we have included a brief summary of the rules applicable to wines and spirits under Bottle Bill, the new registration and payment obligations, and labeling changes required to comply with the new laws.
TYPES OF BEVERAGES:
The Bottle Bill applies to beer, malt beverages, wine, spirits, wine and spirit coolers (regardless of ABV), and certain other non-alcoholic beverages intended for sale in California. Section 14504 and 14560.
CA REDEMPTION VALUES (CRV): Section 14560
- For bottles smaller than 750 mL (less than 24 fluid ounces), the CRV is 5 cents/bottle.
- For bottles 750 mL or larger (24 fluid ounces or more), the CRV is 10 cents/bottle.
- For boxes, bladders, pouches, or similar containers (regardless of size), the CRV is 25 cents/container.
REGISTRATION & PAYMENT OBLIGATIONS BEGINNING JANUARY 1, 2024:
- All wineries and distilleries should register with CalRecycle as soon as possible to prepare for payment and reporting requirements beginning 1/1/2024 (information regarding registration can be found here).
- All producers and importers of wine and distilled spirits should register as a Beverage Manufacturer. Brand owners that contract with producers for the manufacture of wine or distilled spirits are not considered Beverage Manufacturers.
- Any wineries and distilleries that sell wine or spirits in California Direct to Consumer or Direct to a Retailer (for wine) should also register as a Distributor.
2. Report and pay the applicable CRV to CalReycle.
- The winery or distillery may pass on this cost to consumers (as the consumers can return the bottles to a recycling center for the redemption). Section 14560
- The processing fee is variable depending on container material (size does not matter) and changes each calendar year, but is currently 0.452 cents/glass bottle. The Wine Institute has noted that the hope is for the processing fee to be reduced to zero.
3. Report and pay the applicable Processing Fee.
- The processing fee is paid on all containers a winery or distillery sells, whether to wholesalers, retailers, or consumers. Section 14575(g)
- The processing fee is variable, but is currently 0.426 cents/glass bottle or for new containers, 0.574 cents/container. The Wine Institute has noted that the hope is for the processing fee to be reduced to zero.
LABELING OBLIGATIONS FOR ALL WINES AND SPIRITS SOLD AFTER JULY 1, 2025:
- All wines and distilled spirits sold in California after July 1, 2025, must be labeled with: “CA Redemption Value,” “California Redemption Value,” “CA Cash Refund,” “California Cash Refund,” or “CA CRV”.
- The CRV statement must be clearly, prominently, and indelibly marked and can be added on the actual label or by sticker (not on aluminum cans), stamp, embossment, or other similar method. Labeling size and location requirements are set forth below: CCR 2200(b).
- For glass and plastic, the CRV statement must be on the container body label or secondary label with:
- a text height of 3/16”, or
- a minimum text height of 1/8” and in a contrasting color to the background and nearby text.
- For aluminum, the CRV statement must be on the top lid:
- for tops greater than 2 inches in diameter, the CRV statement must be 3/16” in height; and
- for tops 2 inches or less in diameter, the CRV statement must be 1/8” in height.
- Requirements for box, bladder, and pouch containers to be determined.
3. Currently, there is no exemption for wines or spirits labeled before July 1, 2025. While the Wine Institute is working on legislation to create an exemption for wines labeled before January 1, 2024, wineries and distilleries should start including the required labeling on all applicable containers as soon as possible.
4. Senate Bill No. 1013 also revised Section 14561(d) of the Bottle Bill to allow for CRV labeling by the inclusion of a scan code or quick response (QR) code on the container. This new language is currently under review by CalRecycle.
EXCEPTION FOR TASTING ROOM SALES:
If any wines or spirits are sold for on-site consumption in a tasting room, then those products are exempt from the Bottle Bill’s requirements. Any products sold for offsite consumption are subject to the requirements of the Bottle Bill. Section 14510.
The Caribbean is Calling
As of February 24, 2023, Belize has officially joined the Madrid Protocol, becoming the 113th member of the system. This marks the fourth Commonwealth Caribbean nation and the third in three years to join, with the other members being Antigua and Barbuda (2000), Jamaica (2022), and Trinidad & Tobago (2021). Cuba is also a member from the Caribbean, while Curacao, Sint Maarten, the Caribbean Netherlands, and the French Caribbean jurisdictions are part of Madrid due to their status within the Kingdom of Netherlands and France.
Trademark protection is essential for every wine brand name, fanciful name and vineyard designation. Trademarks secure a wineries’ brand identity and help avoid infringement issues. However, obtaining international trademark rights can be a daunting task.
The Madrid Protocol provides a simplified and cost-effective solution for wineries to secure their trademark rights across multiple countries. By filing a single application with the World Intellectual Property Organization (WIPO), they can secure their trademark rights in numerous countries that are members of the treaty. The process is easier, faster and more cost-effective compared to traditional routes of filing trademark applications individually in each country saving on filing, translation and legal fees.
The Madrid Protocol provides flexibility for businesses to add or remove countries as required, and ensures that trademark rights are enforced uniformly across all member countries. This is particularly helpful for wineries that are expanding into new markets gradually or need to remove countries where they no longer wish to operate. By leveraging the benefits of the protocol, businesses can maintain the integrity of their brands, avoid infringement issues and increase their brand value.
FTC Issues Proposed Non-Compete Ban To Spur Employee Mobility, Aligning with Existing California Law
Thursday, January 5, 2023, the FTC issued its proposal to prohibit non-compete clauses in employment agreements in an effort to boost wages and competition, citing worker mobility as essential to a thriving U.S. economy. California has long prohibited such clauses pursuant to Business and Professions Code Section 16600. The FTC’s proposed rule is shining a light on the issue, which makes it a good opportunity to focus California and non-California employers’ attention on what can be done to protect their businesses from unlawful competition.
The rule flows from President Biden’s 2021 Executive Order Promoting Competition, which directed the FTC to address unfair use of non-compete and similar agreements to stifle employee mobility and depress wages. Like California’s law, the proposed rule would invalidate existing non-compete agreements in place and would provide exception for the sale of certain types of businesses. If promulgated, the new FTC rule would supersede and preempt inconsistent state laws, and employers will be required to issue notice to employees, rescinding existing employment agreements to remove objectionable non-competition clauses.
Similar to California, under the proposed FTC rule, nondisclosure and non-solicitation agreements would also be scrutinized, e.g., as to whether such agreements are invalid in that they so broad as to effectively function as noncompete agreements.
The rule is currently open for public comment until March 6, 2023, and employers will be subject to enforcement 180 days after final publication.
For workers, the rule provides more flexibility to pursue future employment in a worker’s area of expertise, to market one’s talents and seek increased compensation. For employers, this rule is another wake-up call for the need to safeguard and secure trade secret assets of the business to which an individual has access.
Given the reality of increased mobility, employers should be ensuring that:
- Employees with access to sensitive information are covered by up-to-date confidentiality and lawful non-solicitation obligations; and
- Employers must redouble efforts to keep organized, diligent records of the existence, inventory and location of any employer assets or property, including devices and customer lists, so as to expediently secure such assets should an employee or contractor depart on short notice.
We continue to monitor developments and will make ourselves available to concerned clients to discuss what can be done to favorably address business impacts and requirements flowing from the new FTC rule and California’s existing non-compete prohibitions. For more information as to how this will impact IP rights, contact Chris Passarelli. For more information about how this will impact your employment agreements, contact Jennifer Douglas.
Ninth Circuit Rules Time Booting Up Computer Before Clocking In Is Compensable
The Ninth Circuit Court of Appeals issued a decision earlier this week holding that employees who worked at a call center were entitled to compensation for the time spent booting up their computers at the start of the work day prior to clocking in. The call center employees conducted the majority of their jobs using their computers, thus the Court determined that turning on and booting up the computers was “integral and indispensable” to the workers’ duties. Under the FLSA, duties that are “integral and indispensable” are considered principal activities and must be compensated.
For employers in California, this is another sign that both state and federal courts are moving towards requiring employers to compensate employees for time spent prior to clocking in where employees are completing tasks that are required by the employer or indispensable for their jobs. Some examples include: booting up computers, cleaning and preparing tools, and putting on a uniform or safety equipment.
Employers should review the tasks that non-exempt employees undertake prior to clocking in each day to determine if those duties are related to their jobs and should be compensated. If employees are completing tasks that are “integral and indispensable” to their jobs prior to clocking in, employers should determine the average amount of time the tasks take to complete each day and add that amount to employees’ paychecks.
For those who are interested in reading the full decision, the case is Cariene Cadena and Andrew Gonzales v. Customer Connexx, LLC and Janone, Inc., case number 21-16522.
Flexible Workplace Options for Employers
As more employees return to the workplace, employers are searching for ways to retain existing employees and attract new talent in a changing landscape where remote work and shorter workweeks are becoming more common. This article looks at two options for employers who are seeking to give employees greater flexibility in their schedules and how to remain compliant with California labor laws in the process.
Alternative Workweek Schedule
One option for employers is to implement an alternative workweek schedule (“AWS”), which provides greater flexibility by allowing employees to work longer shifts on less workdays. The AWS also permits non-exempt employees to work more than 8 hours in a day without incurring daily overtime. The most common AWS is the 4/10, where employees work 4 days a week for 10 hours each day.
Under an AWS, no overtime is required for a regular schedule of not more than 10 hours per workday within a 40-hour workweek. If employees work longer than 10 hours a day on an AWS, they are entitled to overtime pay at one-and-one-half times their regular rate of pay for all time worked between 10 and 12 hours, and double their regular rate of pay for any hours worked over 12 hours. Additionally, employees are entitled to overtime for all hours worked on any day that is not included in the AWS at one-and-one-half times their regular rate for the first 8 hours and double their regular rate of pay for any hours worked over 8 hours.
An AWS can be used for an entire company, or any identifiable “work unit” including a department, a shift, or a particular location. The AWS must be approved by a secret ballot election of at least two-thirds of the affected employees in the work unit. Employers can propose one schedule for all employees in the work unit or provide a menu of schedule options that each employee can choose from.
Once the work unit and AWS is determined, employers should follow the steps below to implement the AWS.
- Notice. Send a notice to all employees in the work unit regarding the proposed schedule change and describe how the change will affect their hours, wages, and benefits.
- Pre-Election Meeting and Disclosure. Employers are required to hold a pre-election meeting at least 14 days before the secret ballot election to discuss the proposed alternative workweek schedule. Employers must also provide all employees with a written disclosure that includes the information discussed at the meeting. If at least 5% of the employees in the work unit speak a language other than English, employers must provide the disclosure in that language as well.
- Secret Ballot Election. Hold the election at the worksite during regular work hours. If some employees in the work unit are not present for the election, they can provide an absentee ballot upon their return.
- Notify DLSE. If the AWS is approved by the employees in the work unit, the election results must be mailed to the Department of Industrial Relations. Employers should follow the instructions on the DLSE website regarding where to send the notice and what information to include: https://www.dir.ca.gov/databases/oprl/dlsr-awe.html.
- Implement Schedule: Employers may not require employees to work the new AWS for at least 30 days after the final results of the election.
Employers must also make reasonable efforts to accommodate a schedule with 8-hour work days for employees who voted in the election but are unable to work the AWS, employees who have a religious belief or observance that conflict with the AWS, and employees who are hired after the date of the election and are unable to work the AWS.
Hybrid Work Schedule
While remote work has gained popularity amongst employees and employers, for many companies it is necessary to have employees physically present in the workplace. One option for employers is to create a hybrid remote work schedule that allows employees to work remotely part of the time. Employers can require a certain number of days at the workplace each week, or create set schedules designating the specific days of the week on which employees will work remotely.
Employers should have a written policy in place that describes which employees or groups of employees are eligible for remote work, how to request a remote work schedule and who needs to approve it, and the expectations for employees when working remotely.
If remote work is provided as a purely voluntary option for the benefit of the employee, and it is not a requirement of their job, employers are not obligated to reimburse employees for expenses incurred in working remotely.
We recommend working with counsel to implement either an AWS or a remote work policy to ensure compliance with all California labor laws.
The Metaverse and Your Wine Brands
Every winery and wine brand will eventually need a Metaverse strategy.
During the pandemic, some wineries have become adept at conducting on-line tastings and enhancing customer experience by providing virtual vineyard, winery and cellar tours. Wineries were compelled to connect online with customers like never before. This is just the beginning. Wine businesses will need to adapt to an increasing technological sales process not only online but in the Metaverse.
The Metaverse is a virtual and immersive digital world that that reflects our real lives in many respects. The Metaverse is inhabited by digital representations of people, places and things (including brands). The Metaverse experience can provide experiences on par with the real world, while also offering experiences beyond those of the real world, for example, the sensation of human flight.
Of importance to brand owners, the Metaverse hosts a growing virtual marketplace that allows users to buy, sell and share digital assets like NFTs (non-fungible tokens), virtual real estate, experiences, information and virtual goods. It will be inhabited by users living second (or even third) lives – wholly digital lives. Just as the Metaverse parallels our real lives, where branding is used in the real world it will have a digital partner in the Metaverse.
Wineries should be interested in the Metaverse because retail will be one of the largest sectors in it, with social experiences, a close second. In addition, wineries should care about the Metaverse because it will have real world impact on their marketing and branding. Not only will the Metaverse be a new market for products and services, it will also be a new source of data collected from users of the Metaverse that can be leveraged by businesses in the real world. Just as real-world sales drive sales in the Metaverse, the Metaverse can drive sales in the real world.
There will be opportunities in the Metaverse for wine product placements (branded products in games or experiences), virtual events like cellar, winery and vineyard tours, virtual tastings, computer generated retail stores featuring wine, and virtual online education featuring branded content or sponsorship. The Metaverse can also offer wineries opportunities for sales of NFTs, for example, NFT Wine Club has more than three thousand real-life vines in Napa, California which are tied to a digital NFT. In addition, Wine Bottle Club will replicate its physical cellar in a virtual shop in the OVER (OVR) Metaverse.
The Metaverse is likely to become an important part of the wine industry marketing and sales. In addition to real world brands make sure your trademarks are registered for virtual goods, goods for use in online environments, virtual online environments and extended reality virtual environments, retail store services featuring virtual goods, etc. A trademark for a real-world brand may not protect you in the Metaverse. Ensure that your trademarks are registered for digital and virtual reality products. This is the key to protecting a brand in the Metaverse.
For assistance with branding protection in the Metaverse or the real world, contact Katja Loeffelholz.
Napa County Micro-Winery Ordinance Goes Into Effect May 5, 2022
On, April 5, 2022 the Napa County Board of Supervisors adopted a new “Micro-winery Ordinance”, allowing Napa Valley winegrape growers to produce and sell wine at their family farms. The Ordinance will go into effect May 5, 2022.
The Ordinance will amend the Napa County Code to allow farmers to obtain a use permit for a “micro-winery” via approval by the zoning administrator, instead of the planning commission. This change allows applicants under the Ordinance to avoid public hearings, potentially reducing costs of acquiring a use permit. Note however that a new winery application, even without a planning commission hearing, is still complex, requiring detailed materials from architects, engineers, and potentially other experts.
The Ordinance allows micro-wineries to produce small amounts of wine primarily made from estate-grown fruit, provide limited on-site tastings, and make direct consumer sales. Applicants must follow the below requirements to qualify:
Micro-wineries are only permitted within the Agricultural Preserve (AP) and Agricultural Watershed (AW) zones. The parcel on which the winery is located must be at least 10 acres in size.
Micro-wineries must produce at least 201 gallons of wine onsite annually, up to a maximum of 5000 gallons. At least 75 percent of the fruit must be estate grown either on the property or on contiguous parcels under the same ownership.
Square footage limits
Micro-winery facilities are limited to a maximum of 5,000 square feet, including storage, processing, tasting, and caves.
Trips, tours and tasting, and marketing events.
Micro-wineries can generate no more than 20 average daily trips—equivalent to 10 daily round trips—between visitors, employees, and deliveries. Note that the County assumes each visitor vehicle carries 2.6 visitors. For example, a micro-winery that produced 2,500 gallons pre year with one full-time and one part-time employee could host 19 visitors per day.
Tours, tastings, and retail sales are limited to 9:00 am to 6:00 pm. No marketing events outside of tours and tastings are allowed.
Sunsets in 3 years (May 5, 2025); Convert to Regular Winery Use Permit 2 years After Approval.
Importantly, applications will only be accepted for a 3-year period, at which point the County will evaluate whether to amend, extend, or re-adopt it. Further, any micro-wineries who have use permits approved under the Ordinance may not modify or amend their permit within 2-years after approval.
All use permits are discretionary approvals subject to the California Environmental Quality Act. Micro-wineries should qualify for a Categorical Exemption unless special circumstances exist.
Dickenson, Peatman & Fogarty has represented a number of wine producers in the use permit process. For more information on the new micro-winery ordinance and the application process, please contact Thomas Adams or Joshua Devore.
TTB Approves San Luis Obispo Coast (SLO Coast) Viticultural Area
Last week was an exciting week for producers and consumers of California Central Coast wine. On Wednesday, March 9, the Alcohol and Tobacco Tax and Trade Bureau (the “TTB”) published a final rule establishing a new “San Luis Obispo Coast,” or “SLO Coast,” American Viticultural Area (“AVA”).
The SLO Coast AVA (identified in orange below) spans approximately 408,505 acres in San Luis Obispo County and is home to over 50 wineries and an estimated 78 commercial vineyards covering approximately 3,942 acres. It lies entirely within the multi-county Central Coast AVA and fully encompasses the established Edna Valley and Arroyo Grande Valley AVAs.
Located along the westernmost portion of the Central Coast AVA, the SLO Coast AVA is a region of coastal terraces, foothills, and small valleys along the Pacific Coast. Its westward orientation provides more marine fog and cool marine air compared to other regions of the Central Coast AVA, using the powerhouse of the Pacific Ocean to moderate temperatures and foster optimal vineyard conditions for growing early-to-mid-season grape varietals such as Chardonnay and Pinot Noir.
Aaron Wines in Paso Robles, CA falls within the boundaries of the new SLO Coast AVA and has planted 90% of its 4,000 planted acres within 6 miles of the Pacific Ocean. Winemaker Aaron Jackson is thrilled by the important addition of the SLO Coast AVA to the “few truly coastal AVAs” in the state of California. Brian Talley of Talley Vineyards in Arroyo Grande, CA shares Mr. Jackson’s sentiments, adding that the approval of the SLO Coast AVA will “drive awareness of the coastal part of San Luis Obispo County as a world class winegrowing region.”
The establishment of the SLO Coast AVA formally recognizes the unique topography, climate, and soils of the area and offers winemakers more diversity and flexibility in marketing their wines to consumers.
Effective April 9, 2022, vintners will be able to label bottles with “San Luis Obispo Coast,” “SLO Coast,” and “Central Coast” as appellations of origin if at least 85% of the wine is derived from grapes grown within the boundaries of the SLO Coast AVA and the wine otherwise meets the statutory requirements of 27 CFR 4.25(e)(3). Vintners producing wine from grapes grown in the Edna Valley or Arroyo Grande Valley AVAs can also continue to label bottles with “Edna Valley” or “Arroyo Grande Valley” as appellations of origin for their wines.
Dickenson, Peatman & Fogarty has represented a number of AVA petitioners before the TTB, including the SLO Coast petitioners. For more information on AVA petitions and labeling compliance, please contact Carol Kingery Ritter or John Trinidad.
COVID-19 Supplemental Paid Sick Leave: New California State COVID Leave Law Applies to all California Employers with 26 or More Employees
On February 9, 2022, Governor Newsom signed the new COVID-19 Supplemental Paid Sick Leave law (SB-114), which is retroactive to January 1, 2022 and extends through September 30, 2022.
Similar to the previous law that provided COVID-19 supplemental paid sick leave and expired last year, the new COVID-19 Supplemental Paid Sick Leave law requires employers in California with 26 or more employees to provide up to a total of 80 hours of paid sick leave to employees for certain COVID-19 related reasons. While we expect updated FAQs on the new law from the DIR soon, the key details from the statute are included below.
- 26+ Employees: The law requires employers with 26 or more employees to provide supplemental paid sick leave for certain COVID-19 related reasons.
- Retroactive to January 1 and through September 30: The requirement to provide the paid sick leave will take effect on February 19 (10 days after the law was signed by the Governor), at which point it will be retroactive to January 1 and extend until September 30, 2022. Employers are required to provide retroactive payments to any employees who were provided with an unpaid leave for qualifying reasons since January 1 at the request of the employee (either orally or in writing). The retroactive payment must be paid on or before the payday for the next full pay period after it is requested by the employee.
- Two Categories of Paid Leave (up to 40 hours each): The new supplemental paid sick leave is split into two categories – the first allows employees to take up to 40 hours of leave for COVID related reasons similar to the prior law, and the second allows employees to take an additional 40 hours of leave if they or their family member test positive for COVID-19.
- First Category: Employers must provide up to 40 hours of supplemental paid sick leave for employees that are unable to work or telework due to any of the following reasons:
- Employee is subject to quarantine or isolation order or guidelines due to COVID-19;
- Employee is advised to quarantine or isolate by heath care provider;
- Employee is attending an appointment for themselves or a family member to get a vaccine or booster and/or experiencing symptoms from a vaccine or booster or caring for a family member who is experiencing symptoms from a vaccine or booster (limit of 24 hours per vaccination/booster – see below);
- Employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis;
- Employee is caring for a family member who is subject to quarantine, or has been advised to isolate;
- Employee is caring for a child whose school or child care is closed or unavailable due to COVID-19.
- Second Category: Employees who test positive for COVID-19, or have to care for a family member who tests positive, are entitled to an additional 40 hours of supplemental paid sick leave. Employers can request proof of a positive test for the employee or family member prior to providing the supplemental paid sick leave. If an employee refuses to get tested or provide test results to the employer, employers are not obligated to provide the additional 40 hours of supplemental paid sick leave. Employers can require documentation of a positive COVID test for retroactive payments requested by the employee as well. Employers are required to pay for the test for employees, but it is unclear if employers will also be required to pay for tests for family members of employees.
- Amount of Leave: Full-time employees that work at least 40 hours per week on average are entitled to 40 hours of supplemental paid sick leave under each category, for a total of 80 hours of supplemental paid sick leave. Other non-full-time employees are entitled to the average amount of hours they normally work over a 14-day period.
- 24-hour Limit for COVID Vaccine/Booster: Employers can limit the supplemental paid sick leave an employee can use for each vaccine or booster and any related side effects, for themselves of a family member, to three days (24 hours), unless the employee provides verification from a healthcare provider that the symptoms are continuing after three days.
- Amount of Pay: Supplemental paid sick leave should be paid at the employee’s regular rate of pay, up to a maximum of $511 per day and no more than $5,110 total per employee. An employee’s regular rate includes any commissions or non-discretionary bonuses.
- Must List Amount Used on Wage Statements: The COVID-19 Supplemental Paid Sick Leave is a separate entitlement from other paid sick leave provided by the employer and must be listed separately on the written notice or wage statement provided to employees each pay period. However, instead of listing the available balance of supplemental paid sick leave, employers are only required to list the amount of leave that has been used to date. If an employee has not yet used any leave, their statement should list “zero.”
- Cannot Require Substitution of Other Leaves: The supplemental paid sick leave is in addition to other paid leave. Thus, employers cannot require employees to substitute their vacation, PTO, or other paid sick leave when using supplemental paid sick leave.
- Distinct from Cal/OSHA ETS Exclusion Pay: Employers cannot require employees to first exhaust their supplemental paid sick leave when exclusion pay is required to be paid under the Cal/OSHA ETS. Based on this, it appears employers cannot apply these hours toward the exclusion pay obligation when employees are required to be excluded from the workplace due to a workplace exposure to COVID-19 but we expect clarification on this requirement in the forthcoming FAQs.
- Notice Requirement: The Labor Commissioner is required to make a model notice available for employers to send to employees, which should be available shortly. The notice should be posted in the workplace and must be emailed to employees who do not frequent a workplace.
New Laws Expand Winery Off-Site Tasting Room Privileges and Manufacturer Charitable Donation Advertising
This week, Governor Gavin Newsom signed three bills that expand certain winery off-site tasting room privileges and grant alcohol beverage manufacturers the right to advertise and promote charitable donations in connection with the sale of alcohol. The laws will become effective on January 1, 2022. We have summarized the new bills and how they amend current law below.
Number of Winery Off-Site Tasting Rooms (SB 19)
Under current California law, Type 02 wineries are permitted to operate tasting rooms only at their licensed Type 02 premises (i.e., the same premises where the winery’s wine is crushed and fermented), and at an off-site Duplicate Type 02 premises (where crushing and fermentation of wine is not permitted). Current law permits a winery to operate only one off-site Duplicate Type 02 tasting room.
SB 19 amends Section 23390.5 of the California Alcoholic Beverage Control Act (“ABC Act”) to increase the number of Duplicate Type 02 locations that a winery can operate to two locations.
Duplicate Type 02 tasting rooms can be quite helpful for wineries to reach consumers, as they allow wineries to operate a tasting room in another location in California and sell wine to consumers there without having to maintain a production facility on the same premises.
Sale and Delivery of Consumer-Provided Containers at Duplicate Type 02 Tasting Rooms (AB 239)
Under current law, a winery may exercise all the same privileges at its Duplicate Type 02 tasting room as at its Type 02 winery premises (such as the sale and delivery of wine), with certain important exceptions. One of those exceptions is that a winery may not, at its Duplicate Type 02 premises, sell or deliver wine to consumers in containers that have been supplied, furnished, or sold by the consumer.
AB 239 amends Section 23390 of the ABC Act to delete that exception. Starting on January 1, 2022, consumers may provide their own bottles and containers to be filled at a Duplicate Type 02 tasting room premise. AB 239 provides an additional means by which wineries can provide wine to consumers that can be cost-effective for both the winery and the consumer.
Advertisements of Charitable Donations in Connection with the Sale of Alcohol (AB 1267)
Generally, California law prohibits an alcohol beverage licensee from giving a gift or “thing of value” in connection with the sale and distribution of alcoholic beverages, unless there is a statutory exception. The ABC Act permits licensees to donate to specified charities and nonprofit organizations (typically 501(c)(3)s). However, where such donations are tied to sales of alcohol beverage products and/or advertised as such – for example, when a licensee advertises that it will donate a portion or percentage of the proceeds from the sale of a product to a charity – the California Department of Alcohol Beverage Control (“ABC”) views these types of donations as “gifts” or “things of value” to consumers that “incentivize” or “entice” consumers to purchase and consume alcohol in violation of California law. During COVID-19, the CA ABC temporarily created an exception for the enforcement of this prohibition; however, this relief is limited to COVID-19 related charities only.
AB 1267 expands and codifies the CA ABC’s relief with respect to charitable donation advertising by amending Section 25600 of the ABC Act. Starting on January 1, 2022, specified manufacturers – winegrowers, beer manufacturers, distilled spirits manufacturers, craft distillers, brandy manufacturers, rectifiers, and wine rectifiers – may donate a portion of the purchase price of alcohol beverages to nonprofit charitable organizations (not limited to just COVID-19 related charities), subject to all of the following limitations:
- The donation is only in connection with the sale or distribution of alcoholic beverages in manufacturer-sealed containers.
- The promotion does not directly encourage or reference the consumption of alcoholic beverages.
- The donation does not benefit a retail licensee or a charity established for the specific purpose of benefiting the employees of retail licensees, and the advertisement for any donations does not promote or reference any retail licensee. (Note that a manufacturer may identify – but not otherwise promote – the name, address, and website of two or more unaffiliated retailers who sell the manufacturers’ product being offered in the charitable campaign, subject to the restrictions in Sec. 25500.1 of the ABC Act).
Note that this new statutory exception will sunset on January 1, 2025, so unless the exception is made permanent or extended, licensees may not advertise any donations related to the sale of alcoholic beverages at all after the date.
The bills’ text can be found on the California Legislative Information website at the following links: SB 19 (Winegrowers: tasting rooms); AB 239 (Winegrowers and brandy manufacturers: exercise of privileges: locations); and AB 1267 (Alcoholic beverages: advertising or promoting donation to a nonprofit charitable organization).
COVID-19 Leave: Employer Obligations After September 30
State and Federal COVID-19 Leave Laws Are Set to Expire on September 30, 2021
As of the date of this article, both the federal and the California COVID-19 leave laws are set to expire on September 30, 2021 and it does not appear that either the State or Federal legislatures will be extending these provisions. The California law, SB-95, requires employers with 26 or more employees to provide up to 80 hours of supplemental paid sick leave for COVID-19 reasons from January 1 to September 30, 2021. The American Rescue Plan Act, which was passed by Congress earlier this year, extended the ability of employers to take a tax credit against their payroll taxes for offering leave to employees for COVID-19 reasons through September 30, 2021. Additionally, the optional COVID-19 related leaves under the federal law, Emergency Paid Sick Leave and Emergency FMLA, both expire on September 30.
After September 30, 2021, employers with 26 or more employees will no longer be required to provide the COVID-19 supplemental paid sick leave under California law. Employers of any size may still choose to put their own COVID-19 policies in place that provide pay for employees who miss work for COVID related reasons, however, employers will no longer receive a tax credit for those payments.
California’s law required employers to initially give notice to employees regarding the availability of the COVID-19 supplemental paid sick leave and the time period of the leave. However, employers may want to remind employees that the leave is expiring on September 30. Note that if an employee is already taking COVID-19 supplemental paid sick leave at the time the leave expires on September 30, they are permitted to take the full amount of leave that they are entitled to even if it extends past September 30.
Employer Pay Obligations After September 30
Although employers will no longer be required to provide separate supplemental paid sick leave for COVID-19 purposes after September 30, under the Cal/OSHA Emergency Temporary Standards (“ETS”) employers must maintain all pay and benefits for employees who are required to be excluded from the workplace due to COVID-19 and otherwise able to work. Employees may choose to use their regular paid sick leave during the exclusion period; however, employers cannot require employees to use their regular paid sick leave.
The exclusion pay is only required for cases of workplace exposure to COVID-19, therefore, if employers are able to show that an employee’s exposure to COVID was outside the workplace no exclusion pay is required in that case. Employers also do not have to pay an employee that receives disability payments or worker’s compensation during the exclusion period. For more information on the Cal/OSHA ETS exclusion pay you can access the DIR’s FAQ page here.
Additionally, many employers are now requiring vaccinations and/or regular COVID-19 testing as a condition of employment. If employees are required to receive the vaccine as part of their job, employers must pay for the cost of the vaccine, if any, and the time it takes the employee to get vaccinated. Further, the DIR issued an FAQ on COVID-19 testing that states that employers must pay for the cost of COVID-19 testing if it is a requirement of the job. This includes paying for the test itself, the time it takes the employee to get tested (including any travel time), and reimbursing employees for travel expenses if the testing location is not at their regular workplace. You can read the DIR’s full FAQ on COVID-19 testing here.
Employee Leave Options After September 30
Even though the State and federal COVID-19 leaves are expiring on September 30, many employees will still need to take time off from work for COVID-19 related reasons. Unless their employers have their own COVID-19 policies in place, much of this time off work may be unpaid.
If an employee is sick with COVID-19 symptoms or is caring for a family member who has COVID-19 symptoms, they can use their regular California paid sick leave if they have accrued time available. Employees can also take family and medical leave under CFRA to care for themselves or their family members if their symptoms rise to the level of a serious health condition. Leave under CFRA is unpaid but employees may qualify for disability insurance from the state.
Regular Rate Blues: California Supreme Court’s Decision on Premium Payments and Other Pay Practice Reminders
On July 15, 2021, the California Supreme Court decided in Ferra v. Loews Hollywood Hotel, LLC that employers must pay premium payments to employees for missed meal, rest, and recovery breaks at the employee’s “regular rate of pay” instead of the employee’s base hourly rate, as many employers were doing. The ruling is retroactive, and employers should audit their practices to determine if a true-up payment is necessary.
Under California wage and hour laws, an employer must provide and permit nonexempt employees who work more than five hours in a day an unpaid duty-free meal period of at least 30 minutes in length starting no later than the end of the fifth hour of work. Employees who work no more than six hours in a day may waive the meal period upon written agreement between the company and the employee. In addition, nonexempt employees who work at least three and one-half hours in a day must be provided and permitted a paid 10-minute duty-free rest period for every four hours of work or major fraction thereof, and a second rest period if working up to six hours a day. Employees who work outdoors are entitled to cool-down recovery periods in fixed, shaded areas whenever needed to prevent heat illness.
If an employer doesn’t provide compliant meal, rest, or recovery periods, the employer must pay the employee one additional hour of pay as a “premium” for each workday that the meal, rest or recovery period was not provided. (Labor Code § 226.7.) Before the recent ruling, it was unclear whether this premium should be paid at the employee’s base hourly rate or their “regular rate of pay” which includes all nondiscretionary incentive payments such as bonuses and commissions. The Court settled this issue: the premium must be paid at the regular rate of pay, not the base rate. This is bad news for employers that acted in good faith by paying premium pay at the base hourly rate.
How To Calculate “Regular Rate of Pay”
Regular rate calculation requires employers to include all compensation for hours worked and divide that number by the total hours worked. “All compensation” includes hourly wages, nondiscretionary bonuses, shift differentials, on-call pay, and commissions. In general, most bonuses are considered nondiscretionary and include any bonus that employees know about and expect such as: production bonuses, bonuses for quality of work, bonuses to induce employees to work more efficiently, attendance bonuses, and safety bonuses. Thus, if nonexempt employees are paid a commission, non-discretionary bonus, or other incentive payment, such payment must be factored into the employees’ regular rate in order to compute any applicable overtime or break premium compensation.
Different Rule for Flat Sum Bonus: Note that California law requires the use of a different rule for calculating “regular rate of pay” when employees earn a non-discretionary, flat sum bonus. A flat sum bonus is typically a bonus paid for working a shift that is not tied to any measure of production or efficiency, for example a flat sum bonus for working on a weekend. When calculating the regular rate of pay from a flat sum bonus, the bonus is divided by only the regular, non-overtime hours worked in the workweek instead of all hours.
For examples showing regular rate calculations you can review the Labor Commissioner’s website here.
When To Use Regular Rate
The regular rate of pay is used when calculating overtime, California paid sick leave (see sick leave section below) and now meal and rest pay premiums.
Overtime “True Up” Calculations
If the employees’ bonus or commission is paid out on a weekly basis, the calculation is simple and the additional pay is added to all other wages earned in the workweek and then divided by the total hours worked in that workweek to come up with the regular rate. However, the majority of bonuses and commissions are not paid on a weekly basis and are more often earned and calculated on a monthly or quarterly basis.
If employees earn nondiscretionary bonuses or commissions on a monthly, quarterly, or other non-weekly basis, the amount of the bonus or commission earned must be spread out over the period it was earned by the employee for purposes of the overtime calculation. Employers must apportion the bonus or commission payments to each workweek during the period the amount was earned on a pro rata basis. Once that is done, employers must then recalculate any additional overtime amounts that may be owed over the period the bonus or commissions was earned, and “true up” the amount by paying the employee the difference.
The true up process for overtime or premium payments should be done whenever the bonus or commission payments are made to employees. Any additional overtime or premium amount owed to employees should be paid at the same time as the bonus or commission or in the following pay period. If you have questions regarding the method of calculating the regular rate or “truing up” payments, you should work with legal counsel to ensure employees are being compensated appropriately.
Paid Sick Leave Pay for Hourly Employees Is Also Regular Rate
An often-overlooked provision of California’s paid sick leave law is that the rate of pay for paid sick leave for hourly (non-exempt) employees is also the regular rate, not the straight hourly rate of employees. This is different than how an employer usually pays vacation or PTO time, so it can often slip by even the most seasoned of HR professionals and payroll personnel.
Nonexempt employees must be paid their regular non-overtime hourly rate for the amount of time taken as paid sick leave. To determine the rate of pay for nonexempt employees taking sick leave, the employer may either:
- Calculate the regular rate of pay for the workweek in which the employee used paid sick leave, whether or not they actually worked overtime in that workweek (see above; this is calculated like the “flat sum” bonus), or
- Divide your total compensation for the previous 90 days (excluding overtime premium pay) by the total number of non-overtime hours worked in the full pay periods of the prior 90 days of employment
For exempt employees, paid sick leave is calculated in the same manner the employer calculates wages for other forms of paid leave time (for example, vacation pay or PTO).
This is a good time for employers to review their pay practices and contact their legal counsel to determine what, if any, corrections should be made. Because the ruling is retroactive, there may be an increase in litigation surrounding meal and rest breaks. It is important to be proactive in evaluating risk.
Top Three Tips for Employers in Implementing Remote Work Policies
The COVID-19 pandemic has created many challenges and changes in the workplace, with one of the biggest changes being the increase in remote work for employees. As the economy reopens this year, employers are now able to bring employees safely back to the workplace. However, many employers are also exploring flexible work arrangements that allow their employees to continue to work remotely.
Implementing a remote work policy can be a benefit to employers in retaining employees by allowing flexibility in their schedules and may also help attract new employees that would not otherwise live close enough to the employer’s workplace. Here are three tips employers should follow when implementing a remote work policy for their workplace.
1) Create a written policy for remote work. Having all or part of your workforce working remotely presents new challenges for both employers and employees, thus it is important to lay out the policy clearly in writing. A remote work policy should clearly state which employees are eligible for remote work (and any employees that are not eligible) and the requirements for working remotely, including the ability to still meet the essential functions of the position. Employers can implement a general work from home policy that allows employees to voluntarily work from home when it is necessary for the employee’s convenience. Alternatively, employers can approve remote work arrangements with employees on an individual basis that allow employees to work remotely either full or part time, in which case the employer should enter into a separate remote work agreement with each employee. Either way, the policies should be signed by employees to acknowledge receipt and should include a statement that the employer has the right to revoke the remote work option at any time.
2) Comply with all labor laws for non-exempt employees working remotely. Remote work for non-exempt employees can pose challenges for employers in ensuring that hours worked are tracked properly, all overtime is paid, and adequate meal and rest breaks are provided. Employees must track their time, including meal and rest breaks, as accurately as possible when working remotely just as they would in the workplace. Employers should be clear about the working hours for non-exempt employees to ensure they are not working off the clock. Policies requiring pre-approval for overtime should also be reiterated in the remote work policy. Working hours and breaks can be difficult to track when employees are not present at the worksite, thus it is important to layout the requirements in writing and set up a system of communication with your remote employees.
3) Reimburse employees business expenses where required. Under California law, employers must reasonably reimburse workers for all “necessary” business expenses incurred by the employee in carrying out their job duties. If the remote work policy is voluntary and employees have a designated office at the workplace that they can use anytime, their expenses for remote work will likely not need to be reimbursed since the remote work is voluntary and not “necessary.” However, during the pandemic most employees were required to work remotely and it became necessary for their job. If employees are still required to work remotely under an employer’s policy, employers must reimburse employees for expenses incurred in working remotely including paying all or part of their cell phone and internet bills, providing or paying for office supplies, and even paying for necessary office furniture.
Employers should work with legal counsel to ensure their remote work policies are compliant.
U.S. Supreme Court Rules Against Union Access to Agricultural Employer’s Land
On June 23, the U.S. Supreme Court held that a California regulation allowing union organizers to enter an agricultural employer’s property is unconstitutional. The regulation, on the books since the mid-1970s, requires farms to permit unions to speak with and recruit farmworkers in the hour before and after work and an hour during lunchtime for up to 120 days each year. (Cedar Point Nursery v. Hassid (U.S., June 23, 2021, No. 20-107) 2021 WL 2557070.)
In the case, a strawberry plant nursery and a fruit shipment company sued the California Agricultural Labor Relations Board arguing that the regulation gave farmworker unions an easement to enter and conduct business on their land without authorization or compensation. The Court agreed, holding that the regulation took away the agricultural employer’s right to exclude trespassers from its private property, amounting to a “taking” of company property without “just compensation” in violation of the Fifth Amendment.
With the regulation essentially gone (barring the unlikely scenario that the government or the unions decide to pay farms for access to their workers), labor unions will have to find alternative means to communicate with and recruit agricultural union members. This ruling is hailed as a resounding victory for agricultural employers. For more information about this contact Sarah Hirschfeld-Sussman or anyone on DP&F’s employment team.
End in Sight for Temporary Covid Relief Measures from CA ABC
The California Department of Alcoholic Beverage Control announced today end dates for the temporary relief measures announced in 2020 in response to the Covid-19 pandemic. Depending on the specific regulatory relief in question, the relief granted by ABC, and the expanded privileges granted to many licensees during Covid, will come to an end on either June 30 or December 31, 2021.
To assist licensees during the difficulties that arose from shut downs and restricted operations during Covid, the ABC issued various Notices of Regulatory Relief, advising the industry that certain practices would essentially be temporarily permitted With the end of Covid somewhat in sight here in California, the ABC has now provided the end dates for these measures.
The following Notices of Regulatory relief will be rescinded and no longer effective as of the close of business on June 30, 2021.
- Returns of Alcoholic Beverages
- Retail-to-Retail Transactions
- Extension of Credit
- Drive-Thru Windows for Off-Sale Transactions
- Hours of Operations for Retail Sales
- Delivery Hours Extended to Midnight
- Distilled Spirits Manufacturers Providing High-Proof Spirits for Disinfection Purposes
- Virtual Wine Tastings
- Extension of Regulatory Relief for Club Licenses: Type 50, 51 and 52
The ABC is allowing certain items of regulatory relief to remain in place until the end of the year. The following Notices of Regulatory Relief will thus temporarily remain in place until December 31, 2021 and rescinded immediately thereafter.
- On-Sale Retailers Exercising Off-Sale Privileges
- Sales of Alcoholic Beverages To-Go
- Deliveries to Consumers
- Free Delivery
- Expansion of Licensed Footprint
- On-Sale Licensees without Kitchen Facilities
- “Virtual” Meet the Winemaker or Brewer Dinners
- Renewal of Relief for Charitable Promotions and Sales
- Relief from Type-75 Requirement to Produce 100 Barrels of Beer Annually
These changes will have a big impact on industry members who have spent over a year incorporating some of these practices into their sales, marketing and distribution programs. For example, as of June 30, Virtual Wine Tastings with consumers (where samples of wine were shipped to the consumer for the tasting) will no longer be permitted, although Virtual Winemaker Dinners in conjunction with licensed retailers can continue until December 31.
Absent legislative changes to the ABC Act, none of the regulatory relief measures provided by ABC during Covid will become permanent, so licensees should start preparing now to make these shifts. It should be noted that proposals are already pending in the legislature to keep some of these measures in place for the long term. For example, a bill is currently pending that would allow certain licenses to donate a portion of their proceeds to charities, which was previously prohibited.
For more information on what each of the Notices of Regulatory Relief specifically provided, please visit https://www.abc.ca.gov/law-and-policy/coronavirus19/ or contact Bahaneh Hobel.
Regulating Social Media in the Workplace
The proliferation of social media creates new and difficult situations for employers. Many employers wonder to what extent they can regulate their employee’s social media activities or legally take an employment action based on an employee’s off-duty conduct.
For better or worse, most of us carry smart phones with the capacity to text, email, comment, and upload photos and videos instantaneously. Platforms like Facebook, Twitter, Instagram and YouTube allow us to easily share our personal, and potentially controversial, opinions publicly. In addition, our viewpoints or activities can easily be disseminated by others. Take, for example, an employee is recorded saying something offensive outside of work and the video is published on someone else’s social media account.
Navigating these situations is not simple. While the First Amendment’s right to free speech generally does not apply to actions taken by private employers, there are other privacy laws in California that do. For example, the California Constitution, at Article I, Section 1, gives every citizen a right to privacy, and California Labor Code Section 980 prohibits employers from asking employees for their social media log-ins and passwords or asking them to access their social media accounts on demand. However, depending on the circumstances, once an employee publishes on social media, the right to privacy may be considered waived.
California law, found at Labor Code Section 96(k), protects employees’ rights to engage in lawful off-duty conduct, and provides remedies when employment is adversely affected in violation of these laws. However, off-duty conduct that harms or potentially harms the employer’s business interests or involves a crime may be a valid basis for an employment decision. Since these are tricky situations, the individual facts must be considered and an employer may want to consult with legal counsel before taking action.
We recommend employers adopt a standard policy to handle these situations. Below are some guidelines to keep in mind when adopting a social media policy.
What Employers Can Regulate
Employers can restrict an employee’s social media behavior in the following ways:
- Use of personal social media during work time or on the employer’s equipment (company computers, phones)
- Use of the employer’s name, logos, brand names, slogans or trademarks and appearing to speak on behalf of the employer
- Communications about confidential or proprietary employer information including non-public information that may be valuable to competitors, such as client lists, product information, and pricing
- Posts about co-workers, supervisors, or the employer, competitors or suppliers that are vulgar, obscene, threatening, harassing, libelous, or discriminatory based on a protected class (but be careful about regulating negative posts made in the context of discussing terms and conditions of employment protected by the National Labor Relations Act, discussed below)
- If the employee chooses to identify themselves as an employee of the employer on any social media network, you can require them to state in clear terms that the views expressed on the social media network are theirs alone and that they do not necessarily reflect the views of the company
- Unlawful conduct, even when it occurs off-duty
What Employers Can’t Regulate
Employers should not prohibit or restrict the following:
- An employee’s communications about wages, hours, or other terms and conditions of their employment as these may be protected under the National Labor Relations Act
- Disclosure of facts related to sexual harassment in the workplace, as these may be protected depending on the circumstances
- An employee’s communications about their political beliefs, political associations or affiliations, engaging or participating in politics, and/or becoming candidates for public office
Before taking any adverse action against an employee based on a social media post or other off-duty conduct, employers should consider the following:
- Does the activity negatively affect the employer’s business? How?
- Does the activity violate the employer’s social media policy?
- Is the employer enforcing the policy uniformly? For example, have other employees posted similar content or about similar topics without being disciplined?
- Can the employer legally take action, or is the activity in question protected under the law? Consult legal counsel if you have any doubts.
- How did the employer learn of the posting or conduct? Did they learn in a way that could be considered an invasion of privacy?
- How will taking action affect employee morale?
- How will the action be perceived by the employer’s customers, community and the public if it is publicized?
Taking action based on an employee’s off-duty conduct or social media activity can be challenging for employers, and there are many factors to consider. Employers should think about the legal risks involved and adopt a legally compliant policy. As always, we recommend employers work with legal counsel when handling these sensitive issues.