Epsten, APC, one of the oldest and largest Southern California Community Association Law Firms, announces it will change its name to Epsten, APC effective January 1st, 2020. The decision to shorten the firm’s name honors it’s past while acknowledging how the firm has been largely recognized by most of the firm’s clients and colleagues since its inception.
There will be no changes in leadership or attorneys as a result of this change. It will be “Same firm. Same service. Same name – just shorter.” It has always been the firm’s goal to foster a culture based on traditional professional values and service to its clients. This will not change. The firm practices law in an industry where trust, relationships, and excellence define success for its clients and itself. The firm will continue to provide the same continuity and stability as it has for 33 years.
Managing Shareholders, Jon H. Epsten, Esq., CCAL and Susan M. Hawks McClintic, Esq., together, with fellow shareholders Kieran J. Purcell, Esq., Anne L. Rauch, Esq., Rian W. Jones, Esq. and Dea C. Franck, Esq. agree this new name will better position the firm for its next decade of growth.
Epsten, APC, soon to be Epsten, APC, is one of the largest, strongest teams of common interest development attorneys in the industry with a team of 24 attorneys and three offices in Southern California. The firm is known for its professionalism and quality as well as the reliable legal services it provides to its more than 1,900 community association and commercial common interest development clients.
Despite the new (shorter) name, it is business as usual for the firm as their team of attorneys and staff focus on the recent changes in legislation, to ensure their clients are prepared for the complex legal requirements also taking effect January 1, 2020 and prepare for their well-known and highly regarded Annual Legal Symposium later this year – in which their attorneys will educate more than 1,000 local community association managers and board members in San Diego and the Coachella Valley.
Now that SB 323 has passed… What do you need to do and when?
This document is formatted to print on legal size, 11×14 paper.
By Jacquelyn E. Quinn, Esq.
In recent years, the California Legislature has enacted several laws aimed at limiting the authority of local agencies to restrict accessory dwelling units (“ADUs”) and junior ADUs and streamlining the construction of ADUs and junior ADUs. Up until now, state law hasn’t addressed private restrictions on ADUs, such as in an association’s CC&Rs.
However, effective January 1, 2020, AB 670 adds section 4751 to the Common Interest Development Act that will prohibit associations from “unreasonably” restricting the construction of an ADU or junior ADU on a lot zoned for single-family residential use. (An association’s governing documents may continue to prohibit the construction of an ADU on a lot zoned for multi-family residential use. ) The intent of the Legislature in passing this bill is to encourage the construction of ADUs or junior ADUs that are either owner-occupied or are used for rentals for longer than thirty (30) days.
An ADU, sometimes referred to as mother-in-law units or granny flats, is a dwelling unit designed to serve as independent living quarters for at least one person. These dwelling units can be both attached and detached from the primary dwelling unit. A junior ADU is simply a unit that is 500 square feet in size or less, attached to the home, and has entrances from within the primary dwelling unit as well as from outside. A garage, carport or covered parking structure on the lot may also be converted to an ADU or junior ADU.
AB 670 makes any governing document void and unenforceable to the extent that it prohibits, or effectively prohibits, the construction or use of ADUs or junior ADUs. However, AB 670 does allow an association to place “reasonable restrictions” on ADUs and junior ADUs in common interest developments, as long as the restrictions do not discourage or effectively prohibit ADU or junior ADU construction or unreasonably increase the cost to construct them.
Although the new law does not define what sort of restrictions are “reasonable,” the law does not require an association to follow the same exact standards that the city or county has adopted concerning ADUs or junior ADUs, leaving open the option for an association to adopt its own “reasonable restrictions” that may differ from those of local agencies. Such “reasonable restrictions” may include requirements related to aesthetics and design of the new unit, submitting and receiving approval of an architectural application, size of the new unit, use of shared facilities in the community, and parking.
There are bound to be disagreements over what constitutes a “reasonable restriction.” What constitutes a “reasonable restriction” for one association may not qualify as “reasonable” for another. Therefore, it is important for associations to conduct a diligent inquiry into what restrictions are truly reasonable for their community and members before adopting ADU guidelines for members to follow.
With respect to new provisions that local agencies must follow, sections 65852.2 and 65852.22 of the Government Code set forth specific standards that local agencies must follow in adopting local ordinances related to ADUs and junior ADUs. For instance, local ordinances cannot establish a maximum square footage requirement for an ADU that is less than 850 square feet, or 1,000 square feet if the ADU contains more than one bedroom. The local ordinance also cannot require a property owner who built an ADU to occupy the primary home on the property or the ADU. In addition, a local ordinance may not impose a requirement to replace lost parking spaces somewhere else on the property when converting a garage to an ADU. While an association may adopt ADU restrictions that differ from local regulations, it is important and helpful for associations to be aware of their city’s or county’s local ordinances concerning ADUs and the ways in which the association’s restrictions vary, as residents are bound to raise comparisons.
Civil Code section 5200 currently requires associations to disclose membership names, property addresses, and mailing addresses to other members upon request unless a member opts-out of sharing their information.
A new law mandating the disclosure of member email addresses to requesting members will go into effect on January 1, 2020. As such, we have updated our “Disclosure of Member Information Opt-Out Form” template, which is available upon request.
Associations may send updated opt-out forms to their membership now in anticipation of the change in the law. After January 1, 2020, member email addresses on file with the association must be disclosed to requesting members unless a member completes and submits a form to the association opting-out of having their information shared.
Note: Some of our clients may already provide member email addresses to requesting members. For those clients, their current opt-out form may be adequate.
NEW UPDATE: Associations That Have Five or More Employees Must Provide Sexual Harassment Training by January 1, 2021
(Rather than January 1, 2020).
Employers with five or more employees no longer have to provide sexual harassment training by January 1, 2020 as previously required under Government Code section 12950 (Senate Bill 1343). Rather, pursuant to Government Code section 12950.1 (Senate Bill 778 signed by Governor Newsom on 8/30/19), an employer with five or more employees (which include seasonal and temporary employees, unpaid interns, unpaid volunteers, and independent contractors), must provide two hours of sexual harassment training to all supervisory employees and at least one hour of sexual harassment training to non-supervisory employees by January 1, 2021.
Subsequently, the employer must provide the training once every two years. This new law also requires an employer to provide initial training for non-supervisory employees within six months of hire. However, if your supervisory employees received training in 2019, they need not be trained again until two years thereafter. Employers must keep the training documentation for at least two years.
More information about the training requirements, other related requirements, and resources for the required trainings can be found on the DFEH’s website at: https://www.dfeh.ca.gov/resources/frequently-asked-questions/employment-faqs/sexual-harassment-faqs/
Congratulations to Dick Stern and the Board of Directors at the Encinitas Ranch Community Association for their recent award from the City of Encinitas!
Their work to create one of San Diego North County’s largest recycled water projects (13.7 million gallons of water per year), along with upgrading their irrigation system to a state-of-the-art system with automation and sensor technology, as well as working with their landscape contractor to convert their landscape maintenance equipment to be exclusively battery powered earned them the “Excellence in Environmental Stewardship Non-Profit Organization Award” from the City.
Special thanks also goes to our own Vincent Sincek, Esq., and Jon Epsten, Esq., CCAL for their help in making this project a success.
For more information, view the City of Encinitas Press Release.
Does Your Association Have Independent Contractors Providing Services?
If so, Assembly Bill 5 Will Further Impact the Ability of Companies Including Associations to Classify Workers as Independent Contractors.
What Are the New Laws?
You may have seen or heard the recent uproar in the news by Uber and Lyft over the so-called “gig worker bill.” Unfortunately, this new bill will impact not just the “Gig Economy,” but almost all California businesses including community associations and community management companies.
On September 18, 2019, California Governor Gavin Newson signed into law Assembly Bill 5 (“AB 5”) to be incorporated into the California Labor Code beginning January 1, 2020, as Labor Code section 2750.3, with an amendment to the definition of “employee” in Labor Code section 3351 and other related amendments to the Unemployment Insurance Code at sections 606.5 and 621.
What is the Proper Classification of Individual Workers?
This new law essentially requires employers to comply with the California Supreme Court decision in Dynamex (Dynamex Operations West, Inc. v. Superior Court of Los Angeles County 4 Cal.5th 908 (2018)) concerning classification of workers as independent contractors rather than employees and creates statutory liability for not complying with these new limitations on worker classifications. AB 5 and the Dynamex case permit California hirers to classify individual workers as independent contractors only if it meets the ABC Test, which provides workers are employees unless: (A) the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under contract and in actual fact; (B) whether the worker performs work that is outside the usual course of the hiring entity’s business; and (C) the worker is “customarily engaged” in an independently established trade, occupation, or business of the same nature as the work being performed for the hiring entity. AB 5 includes some exceptions for certain businesses or industries. However, there are no specific exceptions for community associations or community management companies.
What if There is a Bona Fide Business-to Business Relationship? Should Associations or Management Companies Be Worried?
Yes. AB 5 also provides guidance when there is a “bona fide business-to-business contracting relationship.” AB 5 defines what is a legitimate “business-to-business contracting relationship” and sets forth further requirements to determine whether a “business service provider” is a properly classified independent contractor (e.g., janitorial services, etc.).
- First, the two parties contracting must both be “business service providers” which are either a business entity formed as a sole proprietorship, partnership, limited liability company, limited liability partnership, or corporation, which includes nonprofit mutual benefit corporations, such as many common interest developments (Labor Code section 2750.3(e)(a)(1)).
- Second, the determination of employee or independent contractor status of the business service provider in a business-to-business relationship shall be governed by a different test as opposed to the ABC Test that applies to individuals (Labor Code section 2750.3(e)(a)(1)). This business-to-business test is known as the Borello Test from the California Supreme Court case that historically and previously set forth the applicable test to determine proper worker classification (G. Borello & Sons, Inc. v. Dept. of Industrial Relations (1989) 48 Cal.3d 341). The Borello Test has been in use since approximately 1989 and sets forth 12 factors, all of which must be satisfied to have a bona fide business-to-business/independent contractor relationship, not an employer-employee relationship:
- The business service provider is free from the control and direction of the contracting business in connection with the work, both under the contract for the performance of the work and in fact.
- The business service provider is providing services directly to the contracting business rather than to customers of the contracting business.
- The contract with the business service provider is in writing.
- If the work is performed in a jurisdiction that requires the business service provider to have a business license or business tax registration, the business service provider has the required business license or business tax registration.
- The business service provider maintains a business location that is separate from the business or work location of the contracting business.
- The business service provider is customarily engaged in an independently established business of the same nature as that involved in the work performed.
- The business service provider actually contracts with other businesses to provide the same or similar services and maintains a clientele without restrictions from the hiring entity.
- The business service provider advertises and holds itself out to the public as available to provide the same or similar services.
- The business service provider provides its own tools, vehicles, and equipment to perform the services.
- The business service provider can negotiate its own rates.
- Consistent with the nature of the work, the business service provider can set its own hours and location of work.
- The business service provider is not performing the type of work for which a license from the Contractor’s State License Board is required, pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code.
(Labor Code section 2750.3(e)(a)(1)(A)-(L); S.G. Borello & Sons, Inc. v. Dept. of Industrial Relations (1989) 48 Cal.3d 341.)
Are There Any Other Considerations Related to Misclassification of Employees?
In addition to this new law, associations should continue to be cognizant of the risks of being deemed a joint employer and plan ahead to minimize their liability for these potential joint employer risks. For example, an association should understand that when it has onsite workers who are employed by their management companies or vendors, these onsite workers could also be deemed employees of the association under the joint employer doctrine and under AB 5 which amends the definitions of “employee” and “employer” in Labor Code section 3351 and Unemployment Insurance Code sections 606.5 and 621.
What Can Associations Do In Response to These New Laws?
Community associations should consult with legal counsel about whether to reclassify all of their workers as employees unless they are confident their workers can meet the ABC Test set forth in the Dynamex case and AB 5. If employees are misclassified as independent contractors, these workers could file a lawsuit in state court or initiate a claim with the Labor Commissioner’s Office, the Employment Development Department, and the Franchise Board, all of which have jurisdiction and authority over worker misclassification matters. If such a claim or lawsuit is filed against an association, these claims are considered “wage and hour” or “misclassification” claims and are typically not covered by the standard Employment Practices Liability Insurance (“EPLI”) policies that cover associations or their management companies. Nonprofit corporations and smaller companies are not financially equipped to participate in protracted litigation or administrative proceedings in an attempt to prove their workers are properly classified.
What are Some Options to Minimize the Risks of Misclassification?
What can associations do to try to protect themselves if they are concerned about workers providing services that may be misclassified as independent contractors by the association or its vendors or contractors?
- Classify association workers as employees and ensure that your onsite workers are being classified as employees by your vendors or contractors if these workers cannot satisfy the ABC Test.
- Contact your insurance agent to obtain an EPLI policy for the association that covers wage and hour claims, misclassification claims, third party claims as well as coverage for your independent contractors, especially if there are independent contractors providing services for the association. It is best to make this inquiry now before the next budget disclosures are distributed to the owners in case the association will need to increase assessments to cover increased insurance costs.
- Timely and immediately notify any applicable EPLI carrier of facts or circumstances that may give rise to a claim if you have any concern you may have misclassified workers as independent contractors.
- Carefully draft new written contracts or revise existing contracts with vendors or contractors, in order to minimize risks of liability for misclassification claims because it is possible that the association may be deemed a joint employer of the workers provided by the vendors or contractors. For example, an association can require its vendors or contractors to (i) indemnify the association for employment-related claims; (ii) have EPLI insurance including wage and hour, misclassification, independent contractor and third party coverage; and (iii) require an additional insured endorsement in favor of the association on these EPLI policies, if available.
Please be advised that we are upgrading our computer systems beginning at 5 p.m. Friday, March 28th through Sunday evening, March 31st. As a result, we will not receive any emails after 5 p.m. Friday, March 31st until our systems are back up and running Monday morning, April 1st. If you have a time sensitive matter, please call our office on Monday.
Thank you in advance for your patience and understanding.