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September 2026

Client Update

Table Of Contents 03

Firm Victories Labor Relations

Litigation

Consortium Call Of The Month

First Amendment

10 11

Religious Accommodation

Did You Know? Benefits Corner

Retaliation Discrimination

Benefits Compliance Question LCW Benefits Best Practices Timeline

Contributors: Bryce Bakewell Associate | Los Angeles Stephanie J. Lowe Senior Counsel | San Diego

Cynthia O’Neill Partner Emeritus | San Francisco Juliana Pech Associate | Los Angeles

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Client Update is published monthly for the benefit of the clients of Liebert Cassidy Whitmore. The information in Client Update should not be acted on without professional advice. To contact us, please call 310.981.2000, 415.512.3000, 559.256.7800, 916.584.7000 or 619.481.5900 or e-mail info@lcwlegal.com.

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September 2026

firm victories Associate Attorney Chris Frederick Defeats Challenge To Detention Services Officer’s Discipline. A county issued a five-day suspension to a Detention Services Officer based on the officer’s horseplay with juvenile detainees and repeated failures to properly document significant incidents. The civil service commission upheld the suspension, and the officer filed a writ petition to overturn the commission’s decision. The California Superior Court issued a tentative ruling for the county and found that the commission’s findings were supported by the evidence, the findings supported the disciplinary decision, and the five-day suspension was not an abuse of discretion. The officer’s counsel submitted on the tentative ruling, eliminating the need for oral argument. The Court adopted its tentative ruling as the final order and denied the petition.

Labor Relations

County Did Not Give Union Access To, Or Advance Notice Of, New Employee Orientation. The County of San Mateo hired hundreds of temporary Elections Division employees for the March 2024 election. These employees attended mandatory onboarding sessions where they received system access, completed required training and employment forms, and took the constitutional loyalty oath. The County did not give SEIU Local 521 advance notice of the sessions, allow the union to attend, or negotiate over the terms of union access to the orientation. Local 521 filed an unfair practice charge with the Public Employment Relations Board (PERB). PERB noted that this case was its first opportunity to interpret and apply the provisions of the 2017 Public Employee Communication Chapter (PECC) regarding exclusive representative access to new employee orientations. (Gov. Code section 3556(a).) The County argued that the parties’ MOU satisfied its obligations because it allowed the union to participate in separate, optional new employee benefits orientations and to arrange later meetings with employees who did not attend. PERB disagreed and found that both the mandatory onboarding sessions and the optional benefits orientations were part of the County’s new employee orientation process. PERB held that the PECC required the County to provide the union access to both, give the union at least 10 days’ advance notice, and negotiate over the structure, time, and manner of access. www.lcwlegal.com

PERB also found that the MOU did not waive the union’s statutory rights. Although parties may negotiate different orientation procedures, any waiver of statutory rights must be clear and unmistakable. Here, the MOU addressed benefits orientations but did not mention the 10 days’ advance notice or access to new employee orientations. PERB ordered the County to provide the required notice and access, negotiate with Local 521 over access to the onboarding sessions, and proceed to compulsory interest arbitration if the parties could not agree. PERB also ordered the County to reimburse the union for certain losses or increased costs caused by the violations and post notices regarding the decision. SEIU, Local 521 v. County of San Mateo, PERB Decision No. 3044-M (July 24, 2026).

PERB Finds City Unilaterally Changed Educational Incentive Pay Criteria. The City of Pleasanton’s MOU with AFSCME Local 955 provided educational incentive pay to employees at the top salary step who held a college degree that exceeded the minimum qualifications for their position. In 2017, the City and Local 955 revised several job descriptions to allow experience to substitute for the college degree. Up until February 2023, the City continued providing incentive pay for employees with degrees who worked under the revised job descriptions, which now stated that holding a degree was an optional, as opposed to minimum, qualification. Then in May 2023, the City interpreted the education incentive pay criteria to mean that the degree listed in the revised job description was still a minimum qualification, such that an employee holding the listed degree met—but did not exceed—the minimum requirement, and was not eligible for the incentive pay. The City denied new requests for educational incentive pay, revoked incentive pay previously approved, and announced that employees would have to repay amounts the City now considered to be overpayments. The City did not notify Local 955 or provide an opportunity to bargain before applying this interpretation. Local 955 filed an unfair practice charge that alleged that the City made a unilateral change in the criteria for educational incentive pay. PERB held that the City violated the MMBA by using different criteria to award educational incentive pay; applying the new criteria to withhold the pay; and requiring repayment of the pay provided under the City’s previous criteria. PERB held that the City departed from the MOU, the negotiated job descriptions, and its established practice. PERB ordered the City to return to the eligibility criteria it applied as of February 2023, withdraw the repayment decision, make affected employees and Local 955 whole with interest, and provide notice and an opportunity to bargain before making similar changes. Pleasanton City Employees Association v. City of Pleasanton, PERB Decision No. 3043-M (July 23, 2026).

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September 2026

First Amendment District Could Discipline Social Worker For On-Duty Speech In Violation Of Policy. Roderick E. Theis II, a licensed clinical social worker, worked for the InterMountain Education Service District (IMESD) as an Education Specialist. His duties included meeting individually with students in his office, administering assessments, and preparing reports. Theis displayed three children’s books in his office: two books that conveyed the message that gender is binary and cannot be changed; and a third book that used allegory to comment on transgender issues. After receiving a complaint, IMESD investigated and concluded that displaying the books while meeting with students was a bias incident in violation of its policy. IMESD directed Theis to stop displaying the books in his school offices and warned that noncompliance could result in discipline, including termination. www.lcwlegal.com

Theis sued IMESD and its officials under 42 U.S.C. section 1983, alleging that the directive violated his First Amendment free-speech rights. He sought a preliminary injunction permitting him to display the books. The district court partially granted the request, ruling that Theis could display the books when students were not present, but that IMESD could prohibit the displays while he was meeting with students. After Theis resumed displaying the books with students in his office, IMESD conducted another investigation and began disciplinary proceedings. Theis appealed both the district court’s partial denial of his preliminary injunction request and the district court’s later refusal to prevent IMESD from disciplining him. The U.S. Court of Appeals for the Ninth Circuit affirmed the partial denial of the preliminary injunction. It held that Theis’s display of the books during student-facing duties was speech he made as a government employee, rather than as a private citizen. The displays occurred in Theis’ office; were visible to students; and occurred in the course of his work. Because his speech was part of his official duties, it was not protected by the First Amendment. In a companion memorandum, the Court also concluded that IMESD’s policy was neutral and generally applicable, and that Theis received adequate notice and an opportunity to be heard. Theis v. InterMountain Education Service District–Board of Directors, Nos. 25-5641, 25-8039 (9th Cir. 2026).

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September 2026

RELIGIOUS ACCOMMODATION Employee Provided Sufficient Notice Of Her Religious Accommodation Request. An employee worked fully remotely for the Permanente Medical Group (TPMG) when TPMG implemented a COVID-19 vaccination requirement. The employee requested a religious exemption and stated that receiving the vaccine conflicted with her sincerely held religious beliefs. TPMG asked the employee for additional information about her beliefs. Although the employee provided further explanation, TPMG denied her exemption request and ultimately terminated her employment for failing to comply with the vaccine mandate. The employee sued TPMG under Title VII of the Civil Rights Act of 1964 and California’s Fair Employment and Housing Act (FEHA), alleging that TPMG failed to reasonably accommodate her religious beliefs. The district court dismissed her religious accommodation claims, finding that the employee had not provided sufficient notice of her religious objection to the vaccine. The employee appealed, asking the Court to outline how much information an employee must provide an employer to satisfy the notice requirement for religious accommodation. The U.S. Court of Appeals for the Ninth Circuit reversed the dismissal of the employee’s religious-accommodation claims. It held that an employee does not need to prove the sincerity or validity of a religious belief when requesting an accommodation. Instead, the employee must provide enough information for the employer to understand that a religious belief conflicts with an employment requirement. The Court concluded that the employee’s exemption request and subsequent explanations gave TPMG sufficient notice of the religious conflict and allowed her Title VII and FEHA accommodation claims to proceed. Weiss v. Permanente Medical Group, Inc., No. 24-6609 (9th Cir. July 24, 2026).

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RETALIATION Project Director’s Disclosures Were Not Protected Whistleblowing. Wellpinit School District (District) planned a student-staff trip to Hawaii. The District then hired an employee to work under contract as a project director for a federally funded grant. The District used the federal grant funds to pay for the trip without obtaining federal approval. The employee participated in the trip, but told his supervisor he planned to leave the District as soon as he could train his successor. The District decided not to renew the employee’s contract, and the employee claimed the decision was retaliation for his reporting of the alleged misuse of federal grant funds. The employee sued the District and its superintendent, alleging, among other claims, whistleblower retaliation under the National Defense Authorization Act (NDAA), 41 U.S.C. section 4712, which governs federal contracting and procurement. The District won a motion for summary judgment on the grounds that the employee had not made an NDAA-protected disclosure and that the expiration and nonrenewal of his contract was not a discharge under state law. The employee appealed. The U.S. Court of Appeals for the Ninth Circuit affirmed the District’s summary judgment. The employee claimed that he had disclosed the misuse of the funds by 1) his description of the Hawaii trip in an annual report that did not contain any suggestion of misconduct; 2) his rhetorical question to a supervisor (“So this is how we do things?”) when he learned that the federal grant funds were drawn without prior authorization; and 3) a telephone conversation with the U.S. Department of Education, during which a grant administrator said drawing from the federal grant for the Hawaii trip was fraud. The Court held these instances did not qualify as protected disclosures because they did not objectively communicate suspected misconduct. Even assuming his later conversation with the federal grant official was protected, the District had already decided not to renew his contract by the time of that call, so the disclosure did not cause the decision. Krzesni v. Wellpinit School District, 182 F.4th 1147 (9th Cir. July 27, 2026).

DISCRIMINATION Arbitration Agreement Did Not Apply To Disability Discrimination Or Leave Claims. An employee worked for San Diego Gas & Electric Company (SDG&E) before being terminated. The employee alleged that SDG&E discriminated against her based on disability, failed to reasonably accommodate her, and retaliated against her for exercising her rights. She sued SDG&E under California’s Fair Employment and Housing Act (FEHA), the California Family Rights Act (CFRA), and for wrongful termination. SDG&E moved to compel arbitration based on an employment agreement the employee signed when she was hired in 2005. The employment agreement required arbitration of disputes concerning any aspect of the agreement or conduct allegedly violating the agreement. The California Superior Court granted SDG&E’s motion, reasoning that the employee’s claims arose from her employment and termination.

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September 2026

The employee petitioned the California Court of Appeal, arguing that her claims fell outside the scope of the arbitration provision. The Court granted the employee’s petition and directed the lower court to deny SDG&E’s motion to compel arbitration. The Court determined that the arbitration clause was limited to disputes concerning or alleging violations of the employment agreement. Since the employee’s FEHA and CFRA claims arose from independent statutory and public-policy grounds, rather than from violations of her employment agreement, she had not agreed to arbitrate those claims. Morales v. Superior Court (San Diego Gas & Electric), 122 Cal. App. 5th 239 (2026).

Litigation City Wins Anti-SLAPP Motion Because Developer Failed To Properly Present Its Governmental Claim. In 2012, Eagle Real Estate Investment Group and associated entities (Eagle) partnered with the City of Colton on a project that was funded in part by a City loan. In 2019, Colton issued a notice of breach of the promissory note that stated that Eagle was required to provide “independent audited financial statements on an annual basis,” which Eagle disputed but ultimately provided. Colton rescinded the notice of breach shortly afterwards. In 2023, while Eagle was pursuing a similar project with the City of Yucaipa, Colton officials allegedly made false statements to Yucaipa about Eagle’s performance and loan obligations. Yucaipa allowed its agreement with Eagle to expire. Eagle sued Colton for interference and related claims. Colton filed an anti-SLAPP motion, arguing its communications with Yucaipa were protected speech because they were statements and writings of governmental entities and public officials on matters of public interest and concern. Colton also argued that Eagle could not prevail in the case because Eagle failed to comply with the Government Claims Act (GCA). The trial court agreed that Colton’s conduct constituted protected activity but denied the motion because it found Eagle had demonstrated a probability of prevailing because Eagle substantially complied with the GCA by giving its claim letter to a single Colton City Council Member. Colton appealed. The California Court of Appeal reversed on the substantial compliance issue. It found that Eagle failed to properly present its claim under the GCA requirements because giving the claim letter to one council member during a private meeting was not proper presentation to the City’s governing body or an authorized recipient. Since Eagle could not show a probability of prevailing, the Court granted the City’s anti-SLAPP motion. Eagle Colton 55, L.P. v. City of Colton, 121 Cal. App. 5th 1143 (2026).

2027 Annual Public Sector Employment Law Conference FEB. 18 - 19 • HILTON SAN DIEGO BAYFRONT www.lcwlegal.com

Consortium Call Of The Month Members of Liebert Cassidy Whitmore’s employment relations consortiums may speak directly to an LCW attorney free of charge regarding questions that are not related to ongoing legal matters that LCW is handling for the agency, or that do not require in-depth research, document review, or written opinions. Consortium call questions run the gamut of topics, from leaves of absence to employment applications, disciplinary concerns and more. This feature describes an interesting consortium call and how the question was answered. We will protect the confidentiality of client communications with LCW attorneys by changing or omitting details.

Question:

An employee submitted a doctor’s letter that describes the employee’s mental health condition and states that the employee has been prescribed medication for this condition. What, if any, questions can we ask to learn more about the employee’s condition and the medication?

Answer: Employers may generally ask questions that are job-related or consistent with business necessity, such as whether the condition or medication will impact the employee’s ability to perform their essential job functions. (2 CCR section 11071(d)(1).)

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Under the California Public Employees’ Pension Reform Act (PEPRA), a legacy county employee’s pension calculation may not include payments for cashed-out leave exceeding the annual limit established by the employee’s terms of employment, even if the selected final compensation period straddles two or more calendar years. Government Code section 31461(b)(2) prevents employees from increasing pensionable compensation by combining leave cashouts from successive calendar years. Ventura County Employees’ Retirement Assn. v. Criminal Justice Attorneys Assn. of Ventura County, No. S283978 (Ca. Supreme Ct., 7/27/26).

benefits Corner IRS Issues Proposed Regulations On Trump Accounts. On August 11, 2026, the Department of the Treasury and the Internal Revenue Service (IRS) released proposed regulations with guidance for employers who have elected to make contributions to Trump Accounts for employees or their dependents. Trump accounts are treated like individual retirement accounts (IRAs). Employers have the option to contribute up to $2,500 per year (adjusted annually after 2027) to the Trump account of an eligible employee or employee’s dependent. The employer contribution is excluded from the employee’s gross income for federal income tax withholding purposes. Employers that have chosen to provide contributions to Trump Accounts should be aware of the following key points from the proposed regulations: • Written Plan: To set up a valid Trump account contribution program, there must be a separate written plan. The separate written plan must specify the classes of eligible employees; the rules governing employer contributions including the amount and whether contributions may be made through a section 125 cafeteria plan; the procedures for an employee to designate the Trump account to receive contributions; certification, notice, and reporting procedures; the plan year; the procedure for correcting administrative failures; and the procedure for notifying employees if their Trump account contributions are subsequently determined to be includable in gross income. • Reasonable Notification: Employers must provide reasonable notification to all eligible employees of the availability and terms of the Trump account contribution program. • Written Statement for Employees: Employers must furnish a written statement to employees, on or before January 31, showing the amount of Trump account contributions made during the previous calendar year. This requirement may be satisfied by including the amount on the Form W-2. • Certifications: Employers are allowed to rely on an employee’s certification that the employee or the employee’s dependent is the beneficiary; the beneficiary’s date of birth; and the beneficiary is eligible to receive a contribution www.lcwlegal.com

September 2026

Did You Know?

Whether you are looking to impress your colleagues or just want to learn more about the law, LCW has your back! Use and share these fun legal facts about various topics in labor and employment law.

for that calendar year. The employer may rely on this certification unless the employer has actual knowledge the certification is incorrect. However, an employer may not rely solely on an employee certification to establish that the recipient account is a valid Trump account. The employer must use a method reasonably designed to verify that the contribution is made to a valid Trump account. For example, the employee could provide the employer with a unique identifying number that corresponds to a particular Trump account, which the employer could then use to verify the account. • Notification to Trustees: When an employer contributes to a Trump account, the employer is required to notify the Trump account trustee. If the employer subsequently determines the contribution should not have gone to a Trump account, the employer must notify the trustee. A trustee is a bank or non-bank institution that administers Trump accounts on behalf of beneficiaries. • No Limitations on Trustees: Employers cannot limit contributions to only Trump accounts held by a particular trustee or trustees. • Cafeteria Plan Contributions: A Trump account contribution program may allow an employee to contribute to pre-tax salary reduction under a section 125 cafeteria plan if the contribution is made to the Trump account of the employee's dependent but not if it is made to the Trump account of the employee. This is because a contribution to an employee’s Trump account would provide deferred compensation, which is prohibited under Internal Revenue Code section 125. • Nondiscrimination Rules: Trump account contribution programs must comply with the nondiscrimination rules under Internal Revenue Code section 129. Eligibility to participate and the contributions and benefits under the program must not discriminate in favor of highly compensated employees or their dependents. The IRS is seeking electronic or written comments on the proposed regulations. Comments must be received by September 25, 2026. A public hearing on the proposed regulations has been scheduled for October 15, 2026. Requests to speak and outlines of topics to be discussed at the hearing must be received by October 13, 2026. More information is in the proposed regulations.

County’s Life And AD&D Insurance Premium Contributions Do Not Increase The Regular Rate Of Pay And Overtime Compensation. A non-exempt hourly employee of the County of San Diego filed a lawsuit contending that life and accidental death and dismemberment (AD&D) insurance premiums irrevocably paid by the County to MetLife should have been included in her regular rate of pay, and thus, should have increased her overtime pay. The employee claimed the County’s practice constituted a willful violation of section 207 of the Fair Labor Standards Act (FLSA). The County moved for summary judgment. In analyzing this claim, the court first acknowledged that under FLSA section 207(e)(4), an employer should “include all remuneration for employment paid to, or on behalf of, the employee” in the employee’s regular rate. However, the court recognized that “contributions irrevocably made by an employer to a trustee or third person pursuant to a bona fide plan for providing oldage, retirement, life, accident, or health insurance or similar benefits for employees” are not included in the regular rate. The parties took opposing stances as to whether the group policy at issue constituted a “bona fide plan.” The employee contended that the court should follow guidance from a regulation issued by the Department of Labor, 29 C.F.R. section 778.215, which provides that a plan is not bona fide if it gives employees “the right to assign” benefits or the option to receive any part of the employer’s contributions in cash instead of benefits under the plan. Pursuant to that regulation, the employee asserted that the group policy did not constitute a “bona fide plan” because it had a term allowing gift transfers, viatical assignments for terminally or chronically ill employees, and an accelerated benefit option for employees with a terminal or chronic illness to receive a percentage of their life insurance before death. The County argued that the gift, viatical assignment, or accelerated benefit options did not show that the policy was designed to provide employees with disguised compensation and evade the FLSA's overtime rules. The court reasoned that group policy qualified as a bona fide plan because assignment provisions fell within a regulatory exception since the gift transfers did not provide employees with a payment and viatical assignments and the accelerated benefit option were

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The court granted summary judgment on the issue of whether the premiums were properly excluded from regular rate of pay under the FLSA.

September 2026

limited to specified circumstances (terminal/chronic illness) consistent with insurance purposes rather than disguised compensation. The Court found the Plaintiff failed to dispute these limitations or argue assignments constituted FLSA evasion.

Rossell v. County of San Diego, No. 24-cv-1872-L-DDL (S.D. Cal. Mar. 2, 2026).

Benefits Compliance Question Question: Can a City provide council members with contributions to their 457(b) deferred compensation plans without violating the compensation limits in Government Code section 36516?

Answer: Yes, a City is allowed to provide council members with contributions to their 457(b) deferred comp plans without violating the compensation limits in section 36516. Section 36516(d) provides an exception that any amount paid by a city for retirement benefits shall not be included in the council member’s salary. The California Attorney General has determined that a deferred compensation plan is a retirement-related plan organized under Internal Revenue Code section 457. (89 Ops.Cal.Atty.Gen. 107 (2006).) The City will need to ensure that the deferred comp benefit offered to council members is the same benefit available and paid by the City for its employees. (Gov. Code section 36516(d).)

LCW BENEFITS BEST PRACTICES TIMELINE Each month, LCW presents a monthly benefits timeline of best practices.

September: • Determine whether the IRS’s new affordability percentage of 10.22% for 2027 will affect whether your agency offers affordable minimum essential coverage.

• Review and prepare all documents for open enrollment. If you use a section 125 cafeteria plan, ensure employees are signing salary reduction agreements during open enrollment.

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