Los Angeles California Business Law Blog

By Bryan SheldonWhen ICE officers show up at a business and request access to the premises or to see employment records, it is the natural reaction of most employers to fully cooperate, regardless of concern about the potential impact on the wellbeing of their employees. After all, ICE (technically the U.S. Immigration and Customs Enforcement Agency, which is charged with enforcing U.S. immigration laws) is a police agency, and who doesn’t want to cooperate with the police when they make a seemingly lawful request? And after all, aren’t we legally obligated to open our doors and employment records to inspectors from OSHA, the U.S. Department of Labor or the State Labor Commissioner upon reasonable request?The answer to the second question is “yes.” Subject to some restrictions, employers must open their shops and employment records to U.S. DOL and state DLSE inspectors. But if you are a California employer, you are now prohibited by law from offering the same cooperation to ICE.Several recently enacted California laws forbid employers from certain types of cooperation with ICE and impose substantial fines against employers who violate these laws. New California Government Code sections 7285.2 and 7285.3 prohibit employers from allowing ICE agents to “enter any nonpublic areas of a place of labor” or (except for I-9 Employment Eligibility Verification forms, which are subject to Federal law) to “access, review or obtain” employee records “without a subpoena or judicial warrant.” That is, unless they have a subpoena or warrant, employers generally cannot let ICE officers into their facility other than the reception area and cannot show ICE officers any employment records other than I-9 forms. The penalty for violation of the new law is $2,000-$5,000 for a first offense, and up to $10,000 for subsequent offenses.The I-9 exception to the “no-cooperation with ICE” rule recognizes that federal law requires employers to comply, and state law usually cannot override federal law. But the state law can and does require strict compliance by ICE with the I-9 regulations. Under existing federal regulations, which still apply, ICE must provide employers with a Notice of Inspection indicating its intent to inspect I-9 forms at least three business days in advance of the inspection. California employers must insist upon the formality of a written Notice of Inspection in order to comply with other new laws, discussed below. After receipt of a proper Notice of Inspection, the employer must allow inspection of the requested I-9 forms, but only the I-9 forms. ICE frequently includes requests for records other than just the I-9 forms when it issues a Notice of Inspection. Often ICE requests payroll records and a list of all current employees. California employers may not produce records other than the I-9 forms, even if they are requested by ICE through a formal Notice of Inspection. A Notice of Inspection is not a “subpoena or judicial warrant” sufficient to allow the employer to comply without violating the new state law.A California employer which is served with a Notice of Inspection of I-9 records is also subject to new California Labor Code section 90.2. That section requires employers which receive such a Notice to notify “each current employee” within 72 hours of receipt of the inspection request, of the details of the request. (See the text of the law for specifics of what the employer notification must contain and how it must be delivered.) Violation of section 90.2 is subject to the same financial penalties described above. Obviously, an employer can only give the required notice to its employees if it has received from ICE a formal Notice of Inspection allowing three days to comply, and even then, the employer must give the notice to its employees immediately upon receipt of the Notice from ICE.Finally, new Labor Code section 1019.2 provides that “Except as otherwise required by federal Law,” a California employer “shall not reverify the employment eligibility of a current employee at a time or in a manner not required by Section 1324a(b) of Title 8 of the United States Code.” The penalty for violation is up to $10,000. Employers should be aware that the caveats for compliance with federal law included in section 1019.2 add significant complexity to this new provision of the Labor Code, and employers considering re-verification of eligibility of any employee for any reason should proceed with caution and may be well served to first consult with their attorney.The obvious tension between the policies of the administration in Washington and those of the California legislature is not likely to abate anytime soon, and will continue to put businesses and employers at jeopardy of inadvertent violation of state law while trying to comply with federal law, or vice-versa. Cooperation with ICE inspections, which might seem like good corporate citizenship, may actually result in fines and penalties. As has always been the case, and is now even more evident, California employers must exercise caution in all decisions or policies having any potential impact on their employees.The text of the new laws and the Legislative Counsel’s Digest can be found here:https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201720180AB450Bryan Sheldon is a partner in the Los Angeles office of LimNexus LLP, where he practices commercial litigation and trials. He is co-chair of the firm’s Litigation Department and serves as the firm’s Administrative Partner. Mr. Sheldon’s clients include regional, national and international companies and he is always on the lookout for legal traps and pitfalls which might ensnare them.

LimNexus Partner, Pio Kim’s article on IRS whistleblower program was recently published in Volume 18 of the 2017 Korean American Certified Accountants Society of Southern California Journal (“KACPA Journal). The article informs the program’s background and process of the whistleblower claims. Mr. Kim indicates that filing an IRS whistleblower application is not advisable unless there is a solid basis for filing an application and the whistleblower is prepared to wait a long time. Click to see the full article.

LimNexus is proud to announce that it is boosting its international arbitration and intellectual litigation prowess with the addition of Grant L. Kim as a partner. Mr. Kim has over 30 years of experience in both international arbitration and in litigating patent, copyright, trade secret and other intellectual property disputes along with other complex litigation. Over his distinguished career, Mr. Kim has obtained favorable results for clients based in the U.S., Asia, and Europe in arbitrations under the rules of the International Chamber of Commerce (ICC), the International Centre for Dispute Resolution (ICDR), the American Arbitration Association (AAA) and the Korean Commercial Arbitration Board (KCAB). He also serves as an arbitrator and is a member of the Panel of Arbitrators of the ICDR, the KCAB, the Hong Kong International Arbitration Centre and the Tech List of the Silicon Valley Arbitration and Mediation Center. Mr. Kim has authored several articles and is a frequent speaker on various topics concerning international arbitration.Mr. Kim has been active with many professional organizations, including the Chartered Institute of Arbitrators (Fellow, Chair of Northern California Chapter, and Member of Executive Committee of North American Branch), Silicon Valley Arbitration and Mediation Center (Board Member), the Council of Korean Americans (former Board Member), the International Association of Korean Lawyers (former President), and the Korean American Bar Association of Northern California (Co-Founder and former President). Mr. Kim served in various positions (including partner and of counsel) at Morrison & Foerster LLP in San Francisco (from 1986 to 2000 and 2004 to February 2017), and was previously a foreign legal consultant at Kim & Chang in Seoul (2000 to 2004), where he helped to set up the firm's international arbitration group. He is a graduate of University of California, Hastings College of the Law and Pomona College.

The LimNexus team of Bryan Sheldon and David D. Yang secured an important anti-SLAPP victory in defense of a former Opus Bank employee. Following the bank’s written procedures for reporting suspicious conduct, the employee, who was employed by the bank as a Senior Loan Review Analyst, reported what he felt were improper banking practices and that his supervisor told him he was “making the bank look bad.” The bank responded by not only firing the employee for making the report, but, along with two of its officers, filing a lawsuit against him for defamation and other claims.LimNexus filed a Special Motion to Strike the complaint under California Code of Civil Procedure section 425.16. Under this code section, a lawsuit against a person arising from any act of that person in furtherance of the person’s right of petition or free speech under the United States Constitution or the California Constitution in connection with a public issue can be stricken unless the court determines that the plaintiff has established that she or he is likely to win on the claim. In enacting this law, the Legislature found and declared that “there has been a disturbing increase in lawsuits brought primarily to chill the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances.” The Legislature further found and declared that “it is in the public interest to encourage continued participation in matters of public significance, and that this participation should not be chilled through abuse of the judicial process.”In granting the Special Motion to Strike, the Court noted that the former employee “engaged in protected activity under Civ. Proc. Code §425.16(e).” The court also held that “Plaintiffs failed to establish that their causes of action had a probability of success” because the statements made by the employee were privileged communications that could not form the basis of a legal action. Accordingly, the complaint of Opus Bank and its senior officers’ was stricken by the Court.Under Code of Civil Procedure section 425.16(c), the law provides that “a prevailing defendant on a special motion to strike shall be entitled to recover his or her attorney’s fees and costs.” Accordingly, LimNexus will seek to recover its client’s attorney fees and costs expended in defending this lawsuit forthwith.