By: Jizell K. Lopez

On September 30, 2023, Governor Gavin Newsom signed California Senate Bill 553 (“SB 553”) into law. Among other things, SB 553 added section 6401.9 to the California Labor Code, which requires that virtually all employers, implement a workplace violence prevention plan by no later than July 1, 2024.

The California Occupational Safety and Health Act of 1973 (“Cal-OSHA”) already imposes many safety-related obligations on employers, including the requirement that they establish, implement, and maintain an effective injury and illness prevention program (“IIPP”). SB 553, which is the first law of its kind in the nation, now requires that employers in non-healthcare settings take additional steps to address the specific threat of workplace violence. As mentioned above, this new law covers virtually all employers. However there are some exceptions, including: places of employments with fewer than 10 employees—these locations must not be accessible to the public; teleworking employees; healthcare facilities already covered by Cal/OSHA’s Workplace Violence in Healthcare Standards; law enforcement agencies; and certain public entity employers. 

Starting July 1, 2024, covered employers must establish, implement, and maintain a Workplace Violence Prevention Plan and must meet four broad categories of obligations: (1) the creation of a workplace violence prevention plan; (2) the creation of a workplace violence incident log; (3) employee training requirements; and (4) recordkeeping requirements.   

Creating a Workplace Violence Prevention Plan

The intention of this violence prevention program is to provide a roadmap to both employees and employers to address actual and potential incidents of workplace violence. By July 1st, employees and employers should be able to identify and mitigate against workplace violence incidents or threats. Labor Code section 6401.9 defines “workplace violence” as any action of violence or threat (excluding lawful acts of self-defense and defense of others) that occurs at a worksite. The Labor Code further provides definitions for four types of “workplace violence” that employers must be able to recognize and identify in its incident log and train employees to recognize these specific types of workplace violence:

• “Type 1 Violence”—workplace violence committed by a person who has no legitimate business at the worksite, including violent acts by anyone who enters the workplace or approaches workers with the intent to commit a crime.
• “Type 2 Violence”—workplace violence directed at employees by customers, clients, patients, students, inmates, or visitors.
• “Type 3 violence”— workplace violence against an employee by a present or former employee, supervisor, or manager.
• “Type 4 violence”— workplace violence committed in the workplace by a person who does not work there, but has or is known to have had a personal relationship with an employee.
• The Workplace Violence Prevention Plan must include the following:
• Names or job titles of individuals responsible for the plan;
• Procedures to obtain the active involvement of employees and employee representatives in developing and implementing the plan, including hazard identification and evaluation, training, and incident reporting;
• Methods the employer will use to coordinate implementation of the plan with other employers, when applicable, to ensure that those employers and employees understand their respective roles, as provided in the plan;
• Procedures for the employer to accept and respond to reports of workplace violence and to prohibit retaliation;
• Procedures to ensure that supervisory and non-supervisory employees comply with the plan;
• Procedures to communicate with employees regarding workplace violence matters, including how employees can report violent incidents, threats, or other workplace violence concerns, how employee concerns will be investigated, and how employees will be informed of investigation results and corrective actions;
• Procedures to respond to actual or potential workplace violence emergencies, including how employees will be alerted, evacuation and sheltering plans, and how to obtain staff and law enforcement assistance;
• Training procedures;
• Procedures to identify, evaluate, and correct workplace violence hazards, including periodic inspections;
• Procedures for post incident response and investigation; and
• Procedures to review the effectiveness of the plan itself, including potential revisions.

For convenience, Cal-OSHA has released a model Workplace Violence Prevention Program for employers to use. This can be found directly on Cal-OSHA’s website.

Violent Incident Log Requirements

Employers must document and maintain a log of all incidents of workplace violence, even if the incident did not result in an injury. The log record must be based on information solicited from the employees who experienced the workplace violence, witness statements, and investigation findings. Further, the log must be anonymous and must be periodically reviewed.

The log must include the following information:

• Incident date, time, location.
• Workplace violence “Type” (1, 2, 3, and/or 4).
• Detailed description of the incident.
• Classification of who committed the violence.
• The circumstances at the time of the incident.
• Where the incident occurred.
• Specific incident characteristics, such as physical attacks, weapon involvement, threats, sexual assault, animal incidents, or other events.
• What the consequences of the incident were, including any involvement of law enforcement.
• What steps were taken to protect employees from further threat or hazards.
• Who completed the log, including their name, job title, and the date completed.

Employee Training

Employers must also provide employee training regarding the hazards specific to that employer’s workplace by July 1, 2024 and annually thereafter. The training must address all of the following:

• The Company’s plan and how to access it at no cost.
• How to participate in development and implementation of the employer’s plan.
• The “definitions and requirements” in SB No. 553.
• How to report workplace violence incidents or concerns to the employer or law enforcement without fear of reprisal.
• Workplace violence hazards specific to the employees’ jobs, the corrective measures the employer has implemented, how to seek assistance to prevent or respond to violence, and strategies to avoid physical harm.
• Details about the violence incident log, and how to obtain copies of records (described below).
• An opportunity for interactive questions and answers with a person knowledgeable about the employer’s plan.

Recordkeeping Requirements

Finally, employers must also comply with certain recordkeeping obligations and retention periods as follows:

• Records of workplace violence hazard identification, evaluation, and correction: 5 years.
• Training records shall be created and maintained and include training dates, contents or a summary of the training sessions, names and qualifications of persons conducting the training, and names and job titles of all persons attending the training sessions: 1 year.
• Violent incident logs: 5 years.
• Records of workplace violence incident investigations: 5 years.
• Records must be available not only to Cal/OSHA but also to employees or their representatives upon request and free of charge, within 15 days of their request.

Conclusion

California’s new Workplace Violence Prevention Program is a landmark initiative aimed at enhancing worker safety and reducing the risk of violence in the workplace. As the July 1, 2024, implementation date approaches, employers must prepare to comply with the new regulations by developing comprehensive and effective Workplace Prevention Plans. This proactive approach not only protects employees but also fosters a culture of safety and respect in California’s workplaces, setting a precedent for other states to follow.

By Shur Erdenekhuu

On January 1, 2024, the federally enacted Corporate Transparency Act (“CTA”) came into effect. The CTA requires certain entities to disclose information regarding their beneficial owners to the Financial Crimes Enforcement Network by the end of the year. These reporting requirements seek to prevent private use of shell entities as a tool to facilitate money laundering and other financial crimes.

As the deadline quickly approaches, closely held businesses should examine their reporting requirements.

Who is required to report?

Reporting companies are corporations, limited liability companies, limited liability partnerships, and other similar entities created by, or registered to do business under, “the filing of document with a secretary of state or similar office under the law of a State or Indian Tribe.”[1] This definition includes non-profit corporations and trusts that have secretary of state filings.

What companies qualify for exemption?

The CTA provides several exemptions which generally cover entities already subject to other federal reporting requirements.[2]

• Public companies that issue securities registered under the Securities Exchange Act.
• Any entity registered with the Securities Exchange Commission, such as brokers, exchange dealers, investment companies, investment advisors, and clearing agencies.
• Pooled investment vehicles that are operated or advised by an entity exempt from the CTA.
• Any company registered under the Commodity Exchange Act.
• Any government agency established under federal, state, or tribal laws.
• Registered public utility companies and designated market utility companies.
• Banks, federal and state credit unions, bank holding companies, and other money transmitting businesses registered with the Secretary of Treasury.
• Public accounting firms registered under the Sarbanes-Oxley Act.
• Insurance companies.
• Entities that (1) employ more than 20 full-time employees within the United States, (2) demonstrate more than $5,000,000 in aggregate gross receipts or sales in the previous year federal income tax return, and (3) has physical operating presence within the United States.
• Subsidiaries of other entities exempt from the CTA.
• Certain inactive entities.
• What must be reported?
• A reporting company, unless exempt, must provide (1) its full legal name, (2) any trade or “doing business as” names, (3) a complete current street address of its principal place of business, (4) its jurisdiction of formation, and (5) its taxpayer identification number.[3]
• A beneficial owner of a reporting company must provide his or her (1) full legal name, (2) date of birth, (3) current residential or business street address, and (4) copy of a current U.S. passport, state identification, driver’s license, or foreign passport if no other document is available.[4]
• Entities formed after January 1, 2024 must provide information about its “Company Applicant” – this is the same information required of beneficial owners.[5]
• Who is a beneficial owner?
• A beneficial owner is an individual who, directly or indirectly, owns or controls at least 25% of the ownership interests of the entity or exercises substantial control over the entity.[6] An individual exercises “substantial control” over a reporting company if the individual (1) serves as a senior officer of the entity, (2) has authority over the appointment or removal of any senior officer or a majority of the board, (3) directs, determines, or has substantial influence over important decisions made by the entity, such as decisions regarding the sale, lease, or transfer of any principal assets, the reorganization, dissolution, or merger of the entity, major expenditures or investments of the entity, the selection or termination of business lines or ventures, compensation schemes and incentive programs for senior officers, the entry into or termination of significant contracts, and amendments of any substantial governance documents.[7]
• This definition expressly excludes minor children, individuals acting as nominees, custodians or agents, employees who are not senior officers, and creditors of a reporting company.[8] The parent or legal guardian of a minor child will be required to disclose instead.[9]
• Who is a Company Applicant?
• A Company Applicants is an individual who files, or is primary responsible for the filing of, the document creating the reporting company.[10] This definition includes the business owner, the entity’s hired lawyer or agent acting on the client’s directions, and employees designated to file the formation documents. Although many may fall within the definition only a maximum of two individuals will be considered the Company Applicant.[11]
• Entities existing before January 1, 2024 are not required to designate a Company Applicant.
• When is the deadline to file?
• Entities formed before January 1, 2024 will have until January 1, 2025 to file the report. Entities formed between January 1, 2024 and December 31, 2024 will have 90 days from incorporation to file the report. Entities formed after January 1, 2025 will have 30 days from incorporation to file the report.
• Where will the disclosures be filed?
• Filing will be done through the Financial Crimes Enforcement Network’s website.
• Estate Planning Implications
• Reporting Company
• Entities formed for the purpose of estate planning are not exempt from reporting requirements if formation required the filing of a document with the secretary of state, or other similar government agency. Although trusts generally do not require secretary of state filings, estate plans formed under limited liability companies may trigger reporting requirements.
• Beneficial Ownership
• A revocable or irrevocable trust may be implicated if it has a beneficial ownership interest in a reporting company. In these situations, beneficial ownership reporting is required (1) by the trustee if the trustee has the authority to dispose of the trust assets, (2) by the beneficiary if the beneficiary is the sole permissible recipient of income and principal from the trust, or has the right to withdraw or cause distribution of substantially all the trust assets, and (3) by the grantor or settlor of a revocable trust.[12]
• Current Status
• On March 1, 2024, a federal district court in Alabama ruled that the CTA is unconstitutional, citing lack of Congressional authority. As part of the judgment, the court issued a limited injunction, preventing enforcement against the only case plaintiffs. At this time, the U.S. government has filed an appeal.
• In light of the ruling, the Financial Crimes Enforcement Network has announced that it will comply with the court’s order. Meaning, other than named plaintiffs in the court case, CTA enforcement will continue.
• If you have more questions regarding your CTA reporting requirements, contact a counselor today.

By: Jizell Lopez

For several years noncompete agreements have been largely unenforceable in California, subject to narrowly tailored exceptions. However, this has not dissuaded employers from including noncompete agreements in employment contracts nor has it dissuaded employers from drafting broad policies that function as noncompete agreements. Thus, in October of 2023, Governor Newsom signed Senate Bill 699 (“SB 699”) and Assembly Bill 1076 (“AB 1076”) to enhance and clarify California’s prohibition against noncompete agreements which took effect on January 1, 2024.

SB 699 now prohibits employers from enforcing employee noncompete agreements that do not fit within one of the exceptions under Business and Profession Code section 16600—this includes the sale of a business, the dissolution of partnership, or upon a termination of interest in a limited liability company. SB 699 clarifies that noncompete agreements that do not fit within a statutory exception are void, regardless of where the agreement was signed or where the employee worked when the agreement was signed. Further, SB 699 bans employers from entering into a contract with an employee or prospective employee that includes a prohibited noncompete provision.

More importantly, AB 1076 requires employers to provide a written and individualized notice advising employees that their prohibited signed noncompete provision is void. Employers must provide this written and individualized communication by February 14, 2024, to any current or former employees who were employed after January 1, 2022. Violation of the notification requirement could result in a penalty of $2,500 per violation, plus additional sanctions. Should you be uncertain of these new requirements, please consult with an experienced employment attorney.