John V. Giardinelli, Esq.
GIARDINELLI, DUKE & SIMMONS, LLP
31594-C Railroad Canyon Road Canyon Lake, CA 92587
(951) 244-1856 telephone
(951) 246-2400 facsimile
e-mail:jvg@gdslaw.org

BUSINESS ISSUES

USE OF SOCIAL SECURITY NUMBERS
Businesses are restricted in mailing materials containing social security numbers. SB 1730 clarifies prior legislation, Businesses can mail materials containing a person's social security number to that person to confirm the accuracy of the number, or if the document is part of an application or enrollment process or to commence, amend or terminate a contract, policy, or account.

TRADE SECRETS
Loss of trade secrets has been ruled not to be covered as "tangible property" under a policy of insurance. A California Court of Appeals has thrown out an company's suit challenging its insurer's denial of claim for losses resulting from its employee selling its trade secrets to a competitor. The court found tangible property is something that can be touched, smelled or seen, and the trade secrets themselves were not tangible even though they were embodied in physical papers. Businesses should not rely on insurance coverage for such losses, but rather should focus on preventing loss of trade secrets by requiring all employees to sign nondisclosure agreements as a condition of employment and maintaining policies and procedures to protect the proprietary and secret information, such as marking documents as confidential and restricting access on a need-to-know basis.

EMPLOYMENT ISSUES

POSTING REQUIREMENTS
Employers covered by Cal/OSHA must post annual injury and illness report by February 1st. With certain exemptions, California employers must record workplace injuries and illnesses. The two principal exemptions are small employers (10 or fewer employees) and employers with certain industrial classifications. Private employers with a Standard Industry Classification of 52-89 (except 52-55, 57, 70, 75, 76, 781, 79 and 80) are not required to maintain the log. Cal/OSHA record keeping requirements require covered employers to post their 2002 Summary Of Work-Related Injuries And Illnesses form (Cal/OSHA Form 300-A) in a conspicuous place no later than February 1. The form must remain posted where notices to employees are customarily posted through April 30, 2003. The Form 300-A must be certified by an owner of the company (if the company is a sole proprietorship or partnership), an officer of the corporation, the highest ranking company official working at the establishment, or the immediate supervisor of the highest ranking company official working at the establishment. A substitute form may be used but must include the employee access and penalty statements certification found on the official form. In addition to posting the form, employers should start a new Log 300 to record occupational injuries and illness effective January 1, 2003.

UNDOCUMENTED WORKERS
California law now protects undocumented workers and applicants. SB1818 was passed and provides employment and anti-discrimination protection to undocumented workers and applicants at the same level as other workers, including back pay. However, the law still prevents undocumented workers from receiving remedies that are prohibited under federal law, including reinstatement.

COBRA AND CAL-COBRA
Benefits have been extended to 36 months. AB1401 extends conversion coverage for group health benefits to 36 months for individuals who have exhausted their federal COBRA entitlement. The Consolidated Omnibus Budget Reconciliation Act of 1985 applies to group health plans maintained by certain employers. Such plans must offer to employees who have lost group coverage because of termination or another qualifying event the opportunity to continue such coverage for up to 18 months. (U.S.C. § 1162, et seq.) Extended coverage will apply to all individuals who begin receiving continuation coverage on or after January 1st. The bill also requires insurers to offer an increased level of basic coverage to individuals converting from a group to an individual plan on or after September l, 2003.

DRUG TESTING
Employers must have a legal requirement to test or a sufficient need that outweighs the individual's right to privacy. Based on the Constitutional right to privacy, California courts have substantially restricted a private employer's right to drug test employees. The right to privacy has prevailed over the employer's need to know in drug testing cases involving promotion, random drug testing, and reasonable suspicion testing. The employer's right to test varies depending on the situation:

Pre-employment testing of applicants: Employers have a right to require drug and alcohol testing as a condition of employment after an offer of employment is made. Job applicants give up privacy rights when providing information on their work history, experiences, references, and education.

Mandatory testing of commercial drivers pursuant to federal and state law: The federal Department of Transportation (DOT) and the California Highway Patrol (CHP) regulates transportation in the state (commercial and charter airlines, railroads, bus companies, transit, trucking and delivery companies). Public safety interests and federal and state regulations require drug and alcohol testing of both applicants and employees who work in public safety-sensitive jobs in the transportation industry, including commercial drivers with Class A or Class B driver's licenses who operate vehicles with a gross weight of 26,001 pounds, vehicles that can transport a drive and 15 or more passengers, and vehicles of any size used to transport hazardous materials requiring placards (with some exceptions for farm pesticides). Six tests are required: pre-employment, random, reasonable suspicion, post-accident, at time of driver's required physical, and return to duty and follow-up testing.

Test restrictions by municipalities or union contracts: Union contracts are subject to federal law and usually require testing in safety-sensitive jobs Some municipalities have ordinances restricting drug testing, particularly random testing. Employers working on a public works contract should determine their right to test before testing is done.

Employees being promoted, random testing and reasonable suspicion testing: In these circumstances, the courts have held the employee's right to privacy outweighs the employer's right to know. It is still an open question whether employers not subject to national security interests, DOT or CHP regulations may test after an employee is involved in an accident or returns to work following rehabilitation. Employers who do test must treat the test result as confidential medical information. If a test is positive, the employer should not take adverse employment action until a second test done to confirm the results and a doctor is consulted to eliminate causes other than illegal or controlled substances. (For example, prescription and over-the-counter medications can result in a false positive drug test: Advil can read as marijuana, Vicks Formula 44 can read as heroin, and Nyquil can read as amphetamines.) To terminate an employee based on a drug test, the employer must have reliable proof of the substance that was used, when it was used (on the job or days or weeks previously), and how the employee's work performance was affected.

Alternatives to testing may be preferable. Employers have a right to supervise employees work, require employees to meet job performance expectations, and make employment decisions based on company policy. Employers should establish and consistently enforce a zero tolerance policy that prohibits possession, use, or sale of drugs or alcohol at work. Employers should train managers to watch for and recognize signs of drug and alcohol abuse. Employers should focus on the employee's work performance, and where an employee exhibits observable signs of alcohol or drug use apply the policies to make decisions regarding promotion, suspension, or termination. Employers who have more than 25 employees must allow time off work for drug and alcohol rehabilitation.