||MCLE Article: Personnel Impact
||Technology companies facing layoffs must navigate through a complex set of state and federal laws protecting employees
By Jonathan M. Turner and Lawrence J. Song
Jonathan M. Turner and Lawrence J. Song are partners at the law firm Epstein Turner & Song in Century City. Turner specializes in employment defense, public entity defense, and general business litigation. Song specializes in employment law and labor relations law for management.
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For well over a year the new economy has been experiencing a severe shakeout. Since January 2000, at least 129,000 U.S. high-tech workers have lost their jobs due to failed or failing dot-com businesses.1 Over 50,000 of those jobs were lost in the first quarter of 2001 alone, and experts say the prospects for dot-coms will get worse before they get better.2 With the novelty, excitement, and optimism of dot-coms wearing off, venture capitalists have completely stopped or substantially cut back their funding of these operations. As a result, dot-com companies now are faced with the challenges of restructuring, finding stable partners to acquire them or with which to merge, or simply winding down.3 Under any scenario, these companies inevitably must make drastic management decisions adversely affecting the personnel who just a short time ago were recruited in droves to develop, market, and maintain the Internet products and services these companies had to offer.
As is commonly the case with many start-up companies, some of the dot-coms began operations with relatively inexperienced managers, virtually zero capital, and few liquid assets. To avoid huge cash outlays, well-meaning dot-com visionaries found creative ways to lure employees and compensate them for the 12-hour and more workday schedules that became the norm in the dot-com business environment. Although existing wage and hour laws at both the state and federal level have long required that employers pay their employees a minimum wage as well as premium pay for overtime hours worked, the promise of substantial overtime pay-even to employees who might be exempt from the overtime laws-often was not a sufficient incentive for persons who were being asked to work around the clock. As a result, many dot-com businesses offered generous deferred payment arrangements in the form of commissions, bonuses, stock ownership, and profit-sharing plans. The idea, of course, was to persuade employees that they were entering an exciting new industry on the ground floor with nowhere to go but up-and through the roof. Dot-com employees were certain to eventually achieve on the back end what the company was not able to deliver on the front end.
So often in the infancy of the dot-com explosion, the people who structured these compensation arrangements were themselves just learning to walk with respect to their business acumen. Many of the players in the dot-com start-up phenomenon were recent college graduates who were long on enthusiasm and ambition but short on practical corporate business experience. They had even less experience, if any, in personnel management, often obtaining their legal advice in this area from transactional and business lawyers who themselves had only limited exposure to labor and employment law.
This inexperience has come back to haunt dot-com companies, particularly in California. Lawyers for both labor and management agree that this state is second to none in promulgating and enforcing laws intended for the protection of workers. Federal laws also should give pause to dot-com executives as they make their decisions regarding the preservation of their businesses.
If layoffs are contemplated, an employer should evaluate whether it is subject to federal obligations to provide advance notice to employees. With or without advance notice, under California law employers must give employees their final paychecks at the time of termination-and any amounts that cannot be reasonably calculated at that time (for example, commissions or bonuses based on revenues yet to be realized) should be promptly forwarded to employees as soon as the amounts can be determined.
Employers implementing layoffs should brace themselves for the possibility of defending against fraud claims bought by disgruntled employees, particularly those who have watched their stock investments in the company plummet in value. Employers also should be mindful of ERISA and tax liabilities that survive the company's cessation of operations, including the potential personal liability of individual officers, directors, and managers for failure to fulfill their obligations. Health coverage issues for terminated employees must also be addressed.
Dot-com business executives and their counsel must be able to identify and navigate their way through the difficult employment and labor law issues facing dot-coms as they either reposition themselves in the market, dissolve, or wind down operations-and the start-up decisions will have an impact. Still, it is never too late for damage control.
The WARN Act
To most business managers, particularly those who work in intensely competitive environments like the high-tech sector, it seems counterintuitive to sound the workplace alarm too early in the face of possible layoffs. Nevertheless, a public warning is exactly what federal labor law requires of employers. Under the Workers Adjustment and Retraining Notification Act (the WARN Act),4 employers with 100 or more employees must give the affected employees 60 days' advance notice of an "employment loss" caused by a "mass layoff" or "plant closure." The notice obligation, which may be triggered even though the company does not intend to close its entire business, essentially is required whenever 50 or more employees at any single site or facility where the employer does business are going to be laid off or terminated.5
The WARN Act was passed years before the dot-com phenomenon materialized. However, despite the use of more traditional manufacturing terms such as "plant closure," the WARN Act applies to new technology companies as well as brick-and-mortar companies.6 Fortunately, the act recognizes a number of exceptions and defenses to the notice obligation. But dot-com executives should be aware that these exceptions for the most part are narrowly construed against employers. In all cases, employers have the evidentiary burden of substantiating the existence of each exception upon which they rely.7
One of the WARN Act's exceptions is the "faltering company" exception. Under this exception, the notice requirement may be reduced if a company can show that at the time the 60-day notice otherwise would have been triggered, the company was trying in good faith to stay in business by seeking new customers or additional capital or financing.8 The faltering company exception exists because Congress was willing to recognize, albeit in a limited way, that there can be situations in which an early announcement of a closure might jeopardize a company's ongoing efforts to stay in business.9 Even with this exception, strict evidentiary requirements are placed on employers, and the act mandates that employers nevertheless give as much notice as practicable. The notice should include a brief statement setting forth facts that explain why the shortened notice period was necessary.10
Another exception to the notice obligation under the WARN Act is the "unforeseeable business circumstances" exception. Under this exception, the notice time may be reduced if the events giving rise to the terminations or layoffs were not "reasonably foreseeable" 60 days prior to the terminations or layoffs.11 It is an employer's "reasonable business judgment," rather than hindsight, that determines whether and to what extent this exception applies.12 As with the faltering company exception, an employer must provide as much advance notice as is practicable under the circumstances and set forth a brief explanation for why longer notice could not have been given.13
The 60-day notice obligation may be excused altogether if an employer can show that a plant closure was the result of a restructuring or consolidation of its business, provided that the employer also offers to the affected employees a transfer-with no more than a six-month break in employment-to comparable positions within reasonable commuting distance for the employees.14 Similarly, the notice obligation may be excused when the plant closing is the result of a sale of the business and the purchaser has retained or rehired the workers without any break in employment.15
The remedy for failing to provide the 60-day notice under the WARN Act can be costly: back pay, plus benefits, for all affected employees, for each day of the violation.16 According to most circuits, including the Ninth Circuit, this means that an employer must pay to each affected employee a sum equivalent to daily wages and benefits for each workday within the 60-day period starting from when notice should have been given but was not and ending on the day notice actually was given.17 Benefits can include the costs incurred by an employee for securing alternative health coverage for any period covered by the violation.18
Final Wages and Other Benefits
While a significant number of dot-com companies may meet the test that triggers the WARN Act, employers in California with less than 100 employees are under no WARN Act obligation to provide advance notice to employees who will be affected by a mass layoff or plant closing.19 Even so, employers in California are subject to the state's laws regulating the payment of final wages and other benefits upon an employee's termination.
The general rule is that employees who are discharged or laid off must be paid on the last day of work for all wages earned through the end of their employment.20 If an employee resigns without being asked to do so, he or she must be paid within 72 hours of ceasing work, unless the employee gave 72 hours' advance notice, and then the employee must be paid at the time he or she ceases work.21 An employee who resigns with less than 72 hours' notice is entitled to have his or her final paycheck mailed if requested by the employee.22
As with most if not all states, there is no law in California requiring that an employer provide paid vacation days to its employees. However, if an employer has such a policy, and an employee is terminated, all unused, accrued vacation pay must be paid or cashed out in the form of wages at the employee's final rate of pay upon the employee's termination.23 "Use it or lose it" vacation policies, while common in other states, are not lawful in California; thus, at the time of termination, an employee must be paid his or her pro rata share of vacation time accrued through the year.24 To protect against the financial burden of vacation time accumulating and carrying over from year to year, California employers can establish limits regarding how much vacation time can accrue for any given time period.25
Employers must pay terminated employees in cash for all accrued time off, whether the time was accrued under a "paid time off" policy or by an agreement to receive compensatory time off in lieu of overtime hours worked.26
If an employer's failure to pay wages and benefits promptly to a terminated employee is determined to have been "willful," waiting-time penalties in the amount of one day's pay will accrue for each day that payment is not made up to a maximum of 30 days.27 "Willful" in this sense does not require evidence of malicious intent to harm the employee. All that need be shown is that the employer knew that payment was owed and nevertheless voluntarily failed to make it in a timely fashion.28
Employers often find out the hard way that California accords priority to the enforcement of an employer's obligations to pay all final wages earned by a terminated employee promptly. The California Labor Commissioner's office, on the employee's behalf and at public expense, typically pursues the enforcement of wages owed and penalties accrued.29 Moreover, the courts and the Labor Commissioner are statutorily mandated to give priority to converting adjudicated wage claims into money judgments and to the judicial enforcement of those judgments.30
Commissions and Bonuses
Presented with cash flow problems and less than optimistic prospects that business will improve anytime soon, dot-com companies that have decided to restructure and cut back face the challenge of determining whether and how to pay laid-off employees according to the various commission and bonus arrangements that were entered into with the employees. The problem is complicated by the fact that often the revenue from which these commissions or bonuses are to be paid has yet to be received by an employer at the time of an employee's termination-and may never be received.
While the California law requiring immediate payment of all compensation due upon an employee's termination makes no express exception for commissions or bonuses, employers may be able to forestall or avoid altogether at least some of these types of payments, as well as the waiting-time penalties attached to them, based on several considerations. First, an employer is obligated to make immediate payments only of the employee's earned compensation that can reasonably be calculated at the time of the employee's termination. Second, depending on how the commission or bonus arrangement with the employee was structured, the employer may have a contractual defense that no commission or bonus was owed at all at the time of the employee's termination.
As for the first consideration, even California wage and hour laws acknowledge that there is logic in the notion that employers can only pay what they are able to reasonably calculate as being owed to their employees.31 Certainly, all base compensation (such as hourly wages or prorated salary earned to date) must be paid at the time of termination, since that amount reasonably can be determined. Similarly, any part of an employee's commission or bonus compensation that can be determined at the time of termination also must be paid immediately. To avoid waiting-time penalties, employers should include a letter with employees' paychecks advising that any remaining unpaid compensation, whether in the form of commissions, bonuses, or other deferred payments, will be forwarded promptly to employees as soon as the amount can be calculated.
When making commission arrangements with employees, employers must be sensitive to certain business risks and uncertainty. What will be the impact on commissions of the sudden departure of an employee who does not complete a customer transaction? What happens when customers fail for one reason or another to make the necessary payment on a transaction? One method of preparing for these occurrences is to specify in writing the conditions that must occur before a commission is deemed to be earned. For example, the commission plan or agreement could provide that commissions are earned only at the time when the employee has obtained from the customer a binding subscription or purchase order, when the customer pays, or some other definable event. If the employee leaves before the agreed-upon event, he or she would not be entitled to commissions on revenues derived from the customer.
This type of provision is commonly used in the selling profession throughout all industries. Nevertheless, employers doing business in California must keep in mind that this state, perhaps more than any other, accords special protection to employees' wages.32 Moreover, in California commissions are deemed a form of earned wages.33 Consequently, the courts and the California Labor Commissioner will look with disfavor upon any provision that appears to divest an employee of a commission.
In at least one California case, Ellis v. McKinnon Broadcasting Company,34 a court examined a commissions clause providing that a commission would not be paid if at the time of the employee's termination the employer had yet to receive the revenue on which the commission was based. The court concluded that the provision was an "unconscionable forfeiture" of employee payments and was thus unenforceable.35 While Ellis has been criticized by other courts,36 it has yet to be overruled. Moreover, the California Labor Commissioner has been known to prosecute cases against employers who attempted to withhold commission payments by relying on an Ellis-type clause.37
Even when employers ultimately never realize the revenues on which commissions are based-a customer goes out of business, for example, or simply does not pay-employers may still find themselves in the position of having to pay the commissions. A number of California courts have held that an employer cannot shift its business losses to its employees by offsetting the losses against commissions otherwise payable to its employees.38 Although other courts have not applied this rule if the sales transaction upon which the commission is based involves a continuing relationship with a customer over a period of time during which ongoing services must be performed for the customer,39 employers must be careful when drafting provisions addressing circumstances that would lead to commission forfeitures and deductions.
Provisions that appear to be commission forfeitures will have a greater likelihood of withstanding legal challenge if the employer can show that the employee's commissions are intended to compensate not just for his or her past activities but for ongoing performance of services in the future. Thus, for example, if an employer presents evidence that a customer failed to pay an invoice or canceled its services in part because a former employee neglected to service the account-and servicing accounts was part of the employee's job duties-there is a greater likelihood that the employer's failure to pay a commission will not be deemed an unconscionable forfeiture.
As with commissions, bonuses are considered to be a form of wages40 and are therefore subject to California's antiforfeiture laws. Determining whether an unlawful forfeiture has occurred will turn primarily on whether the bonus is discretionary or nondiscretionary. If a bonus is considered discretionary, an employer's failure to pay it to employees who were not employed at the time of the bonus payout is not unlawful. A "discretionary bonus" is defined as a sum paid in recognition of services performed during a given period if 1) the decision to make the payment and the amount of the payment are determined at the sole discretion of the employer at or near the end of the period and not pursuant to any prior agreement, or 2) the payment is made pursuant to a bona fide profit-sharing plan or trust that meets the requirements of the administrative regulations of the U.S. Labor Department.41 Conversely, a bonus plan that prescribes a fixed or otherwise determinable amount that the employer warrants to pay, whether or not the employee is employed at the time of the payout, is not considered to be a discretionary bonus plan. The failure to pay the bonus in this latter circumstance is an unlawful failure to pay "earned wages."42
Stock and Tax Considerations
Another effective measure used by dot-com firms to attract employees without committing an employer's limited cash resources to fund substantial payroll expenses is the payment of stock in lieu of cash. Stock payments to employees can take various forms; however, they generally fall under two types of arrangements: 1) incentive stock options (ISOs)43 and 2) employee stock ownership plans (ESOPs). For labor law purposes, there are significant differences between the two that employers should be aware of if they are in the process of winding down. ESOPs are a type of "employee retirement benefit plan," which means that they are regulated and enforced exclusively by federal law under the Employee Retirement Income Security Act (ERISA).44 ISOs, on the other hand, are not subject to ERISA regulation; rather, their benefits can be enforced pursuant to state contract law.
To set up an ESOP, an employer creates a trust fund to which it contributes shares of stock or cash under a contribution formula prescribed in a written plan document. In accordance with the formula, the shares are allocated to accounts for each of the employees participating in the plan. The plan generally requires broad-based participation on a nondiscriminatory basis; that is, the employer cannot pick and choose individual employees to whom it wants to offer plan participation.
Setting up an ESOP can be prohibitively expensive; consequently, such plans are not commonly found in smaller start-up businesses. Nevertheless, the firms that have them must be mindful that the ERISA obligations attached to the administration of these plans do not evaporate simply because an employer ceases operations. The Labor Department, as the arm of the federal government charged with enforcing ERISA obligations, will continue its efforts to ensure compliance even if a company closes its doors. Because ERISA can impose personal liability on those responsible for the administration of the plan and the management of its assets,45 employers should consult counsel early before making closure decisions affecting the funding of an ESOP.
Although commonly confused with ESOPs, ISOs are not an employee benefit retirement plan; rather, ISOs are purely contractual arrangements that offer to employees the option to purchase the employer's stock at a set price, with the expectation that when that option is later exercised, the price will have risen. ISOs often have been used by start-up firms to attract employees with the expectation that the firm eventually will go public and then the value of the shares of stock will increase considerably. Today, dot-com companies and their employees are confronted with the stark fact that these expectations will not be realized anytime soon. From an ISO perspective, this means an employer contemplating layoffs should prepare for the possibility of lawsuits from employees who believe that their employer misrepresented the value and the future growth of the company to induce the employees to take less in salary and more in stock. Unfortunately, case law in California allows these claims to go forward under various business tort theories, including fraud and unfair business practices. Substantial exposure potentially could follow, particularly in class actions brought on behalf of similarly situated employees.46
Tax liability is another area of concern that employers cannot ignore when contemplating restructuring or other business decisions that involve cash flow issues. Too often employers, when evaluating their options for addressing these issues, yield to the temptation of ignoring or deferring the obligation to pay the U.S. government its due. Despite what employers may have been told by their tax lawyers or accountants, the simple rule is: Do not put other creditors or business expenses before federal obligations.
Federal tax laws require employers to deduct and withhold income and Social Security taxes from wages paid to their employees.47 Withheld taxes are deemed to be held by employers in a "special trust fund" for the "exclusive benefit" of the federal government; they cannot be used to pay the employers' business expenses.48
To protect against losses of tax revenue withheld by an employer but not paid to the government, the tax laws provide for the imposition of a 100 percent tax penalty on all "responsible persons" who willfully fail to pay the trust fund tax.49 A responsible person includes "any person required to collect, account for, or pay over taxes withheld from the [employer's] employees."50 Thus liability for the tax penalty is not limited to the corporate employer but can be imposed on individuals "who are so connected with the corporation as to have the responsibility and authority to avoid the default which constitutes a violation of the particular Internal Revenue Code section or sections involved…."51
Similar to state wage and hour laws concerning waiting-time penalties, the imposition of the federal tax penalty is not limited to persons whose conduct in withholding the tax payment is motivated by malicious intent. All that need be shown for a willful violation is "a voluntary, conscious and intentional decision to prefer other creditors over the government."52 Thus, it is not a defense that the person or persons responsible for paying the taxes withheld by an employer had other bills or expenses to pay to keep the company viable.53 The defenses available to employers and responsible persons in these cases are few and limited in scope. For example, even bankruptcy will not preclude the federal tax authorities from collecting the tax penalty.54
One often overlooked area of law applicable to employee layoffs is the employer's obligation to afford the opportunity for continuing health coverage to laid-off employees. As a general rule, neither federal nor state law requires an employer to provide medical coverage to its employees; however, when an employer does so pursuant to the terms of a benefit plan sponsored and administered by the employer, the plan will be subject to regulation under ERISA and must comply with ERISA requirements.55 In 1986 ERISA was amended by the Consolidated Omnibus Budget Reconciliation Act (COBRA), which provides "continuation coverage" rights to employees and their dependents who would lose eligibility for coverage under an employer's health benefit plan because of the occurrence of certain events.56 The termination of employment is an event that qualifies for COBRA coverage.57
Terminated employees faced with losing their eligibility for medical plan coverage have the option of electing to continue their coverage on a self-pay basis, provided that, in a timely manner, they elect to continue the coverage and pay the required premiums.58 Continuation coverage under COBRA normally is for a maximum of 18 months, although it can be extended as a result of certain qualifying events,59 including:
- The death of the covered employee.
- A legal separation or divorce.
- The attainment of the age of majority by the covered employee's dependent child.
In each of these cases the 18-month continuation coverage can be extended for the covered employee's spouse and/or dependents for up to 36 months. In addition, a determination by the Social Security Administration that the covered employee is disabled can result in extended coverage for up to 29 months.
In order for the employee to be able to timely elect coverage, COBRA requires an employer to notify its plan administrator that an employee termination has occurred and the termination is a qualifying event triggering continuation coverage. The notice must be given within 30 days of the termination. The plan administrator in turn is required to provide the employee with written notice of the right to elect continuation coverage within 14 days of the employer's notification to the plan administrator regarding the employee's termination.60
In addition to continuation coverage, COBRA provides that when a medical plan provides participants with the option to convert their coverage to an individual policy, that option also must be given to COBRA participants. The employer must offer this option to COBRA participants within 180 days prior to the expiration of continuation coverage.61
Although COBRA applies only to employers who employ more than 20 employees, California has a comparable statute, Cal-COBRA, that imposes similar obligations on employers who otherwise would not be covered under federal laws.62 Further, California insurance law requires that conversion options be contained in all group health insurance policies.63
The employment decisions that were made during the excitement of a promising dot-com start-up must be squarely addressed against the backdrop of the harsh reality that now engulfs the technology industry. Obviously, the larger the employer, the greater the risk that one or more of the employees affected by the actions of management will pursue claims. Nevertheless, while no one can prevent or predict all the potential bumps and potholes in the road that distressed dot-coms must take, just knowing the potential hazards can help dot-com executives in planning their route.
1 Reuters, Dot-Com Job Cuts Fall as More Firms Close, Los Angeles Times, Aug. 29, 2001, at C3.
3 Emily Barker, Cleaning Up from the Dot.Com Mess, INC Magazine, Mar. 1, 2001, available at http://www2.inc.com/search/22054.html.
4 The Workers Adjustment and Retraining Notification Act (WARN), 29 U.S.C. §§2101-2109.
5 29 U.S.C. §2101(a); see also Department of Labor Regulations, 29 C.F.R §639.3.
6 See Johnson v. Telespectrum Worldwide, Inc., 61 F. Supp. 2d 116 (D. Del. 1991).
7 Id. at 121-22; see also Teamsters Nat'l Freight Indus. Negotiating Comm. v. Churchill Truck Lines, Inc., 935 F. Supp. 1021, 1026 n.12 (W.D. Mo. 1996).
8 29 U.S.C. §2102(b)(1).
9 Alarcon v. Keller Indus., 27 F. 3d 386 (9th Cir. 1994).
10 29 U.S.C. §2102(b)(3); see also Grimmer v. Lord Day & Lord, 937 F. Supp. 255, 256-57 (S.D. N.Y. 1996).
11 29 U.S.C. §2102(b)(2)(A).
12 Loehrer v. McDonnell Douglas Corp., 98 F. 3d 1056, 1061 (8th Cir. 1996).
13 29 U.S.C. §2102 (b)(3); Grimmer, 937 F. Supp. 255.
14 Johnson v. Telespectrum Worldwide, Inc., 61 F. Supp. 2d 116, 122 (D. Del. 1991).
15 See International Alliance of Theatrical & Stage Employees v. Compact Video Serv., 50 F. 3d 1464 (9th Cir. 1995); see also Department of Labor Regulations, 29 C.F.R. §639.6.
16 29 U.S.C. §2104(a)(1)(B).
17 Burns v. Store Forest Indus., Inc., 147 F. 3d 1182 (9th Cir. 1998).
18 Jones v. Kayser-Roth Hosiery, Inc. (Jones II), 748 F. Supp. 1292, 1301 (E.D. Tenn. 1990), amended, 753 F. Supp. 2d 218 (E.D. Tenn. 1990).
19 Laws in other states may regulate more strictly the advance notice of plant closures and employee terminations. See 29 U.S.C. §2105: "The rights and remedies provided to employees [under the WARN Act] are in addition to, and not in lieu of any other contractual or statutory rights and remedies of the employees, and they are not intended to alter or affect such rights and remedies…." See also Aaron v. Brown Group, Inc., 80 F. 3d 1220, 1224-25 (8th Cir. 1996) (discussing Missouri wage and hour statute requiring employers to give employees 30 days' advance notice before wages can be reduced).
20 Lab. Code §201.
21 Lab. Code §202.
23 Lab. Code §227.3; Suastez v. Plastic Dress-Up Co., 31 Cal. 3d 774, 784 (1982).
24 See Boothby v. Atlas Mech., Inc., 6 Cal. App. 4th 1595 (1992); see also regulations promulgated by the California Labor Commissioner, 8 Cal. Code Regs. §13520.
25 Boothby, 6 Cal. App. 4th 1595.
26 Lab. Code §204.3.
27 Lab. Code §203; see also Mamika v. Barca, 68 Cal. App. 4th 487 (1998).
28 Brownhill v. Robert Saunders Co., 125 Cal. App. 3d 1 (1981).
29 See Lab. Code §§98.3, 98.4.
30 See Lab. Code §98.2.
31 Sayre v. Western Bowl, 76 Cal. App. 2d 793 (1946).
32 Brownhill, 125 Cal. App. 3d 1.
33 Lab. Code §200.
34 Ellis v. McKinnon Broad. Co., 18 Cal. App. 4th 1796 (1993).
36 See American Software, Inc. v. Ali, 46 Cal. App. 4th 1386, 1394 (1996).
37 In fact, Ellis involved an appeal from a decision by the California Labor Commissioner. Ellis, 18 Cal. App. 4th 1796.
38 Hudgens v. Neiman Marcus Group, Inc., 34 Cal. App. 4th 1109 (1995); Quillian v. Lyon Oil Co., 96 Cal. App. 3d 156 (1979).
39 See Hudgens, 34 Cal. App. 4th at 1121 n.6.
40 See Lucian v. All States Trucking Co., 116 Cal. App. 3d 972 (1981).
41 See Federal Fair Labor Standards Act, 29 U.S.C. §207(e)(3); see also Department of Labor Regulations, 29 C.F.R. §§778.208-215, 778.225.
42 See Lucian, 116 Cal. App. 3d 972; DLSE v. Transpacific Transp. Co., 69 Cal. App. 3d 268 (1977).
43 See Julia Caputo Stift, Stock in Trade, Los Angeles Lawyer, Oct. 2000, at 33.
44 29 U.S.C. §§1001 et seq.; Rummel v. Consolidated Freightways, Inc., 1992 WL 486913 (N.D. Cal. 1992); Schultz v. PLM Intern, Inc., 127 F. 3d 1139 (9th Cir. 1997).
45 See 29 U.S.C. §1109(a); see also NYSA-ILA Med. & Clinical Servs. Fund v. Catucci, 60 F. Supp. 2d 194 (S.D. N.Y. 1999).
46 Cortez v. Purolator Air Filtration Prods. Co., 23 Cal. 4th 163 (2000).
47 26 U.S.C. §§3102(a), 3402(a).
48 26 U.S.C. §§3102(b), 3403, 7501(a).
49 26 U.S.C. §6672; Dillard v. Patterson, 326 F. 2d 301 (5th Cir. 1963).
50 Thibodeau v. United States, 828 F. 2d 1499, 1503 (11th Cir. 1987).
51 Bolding v. United States, 565 F. 2d 663, 671 (Ct. Cl. 1977).
52 Denbo v. United States, 988 F. 2d 1029, 1033 n.3 (10th Cir. 1993).
53 In re Wiley, 238 B.R. 895, 904 (M.D. Fla. 1999)("While the Court appreciates Plaintiff's difficult situation, the desire to continue a business is simply not justification for violating the trust imposed by law to pay taxes.").
55 As a result of an express statutory exemption contained in ERISA, Hawaii is the only state with a law, the Hawaii Prepaid Health Care Act, that mandates that employers provide healthcare to their employees. See Standard Oil Co. of Cal. v. Agsalud, 633 F. 2d 769 (9th Cir. 1980); Counsel of Haw. Hotels v. Agsalud, 594 F. Supp. 449 (D. Ct. Haw. 1984).
56 See Rittenhouse v. Professional Microsystems, Inc., 1999 WL 33117263 (S.D. Ohio 1999).
58 29 U.S.C. §§1161-1163.
59 29 U.S.C. §§1162-1163.
60 29 U.S.C. §§1165-1166. For a detailed discussion concerning the notification rules under COBRA, see Carner v. MGS, 576 5th Avenue Inc., 992 F. Supp. 340, 354-55 (S.D. N.Y. 1998).
61 29 U.S.C. §1162(5); Anderson v. Illinois Bell Tel. Co., 961 F. Supp. 1208, 1213-14 (N.D. Ill. 1997).
62 Health & Safety Code §§1366.28 et seq.
63 Potter v. Arizona Coachlines, Inc., 202 Cal. App. 3d 126, 132-33 (1988).
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