San Francisco Employment Law Firm Blog

April 9, 2015

Non-Compete Agreements and Limitations on Future Employment in California

Section 16600 of the California Business and Professions Code provides that “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind of to that extent void”. The law is not limited to employment contracts and does not mention competition. Rather, this section voids “every contract”.

There are a few narrow exceptions to the above rule. Section 16601 permits a business owner selling hits interest in the company, under certain circumstances, to “agree with the buyer to refrain from carrying on a similar business within a specific geographic area.” Thus, if an owner of a neighborhood hair salon sells his business, the buyer will likely be able to have a valid agreement with the seller, prohibiting the seller from opening a new salon for a period of time within a certain area in that neighborhood. Likewise, section 16602 allows for an agreement among partners, upon disassociation or dissolution of a business partnership, “not to carry on a similar business within a specific geographic area”.

The California Supreme Court has explained long ago what constitutes a void contract under section 16600. In Chamberlain v Augustine (1916), the Court invalided a provision in a contract that required one of the parties to pay liquidated damages to the other party if he takes up employment within a certain geographic area. The court rejected the argument that the contract was valid because it didn’t “restrict” employment but rather imposed a sort of penalty. The Court concluded that imposing monetary liability is tantamount to restraint from engaging in lawful business and therefore makes the contract void. In Edwards v Arthur Anderson LLP (2008), the Cal. Supreme Court explained yet again that section 16600 evidences a settled legislative policy in favor of open competition and employee’s mobility. Most recent California decisions, including the recent 9th Circuit holding in Golden v Cal. Emergency Physicians (2015), make it clear that most non-compete agreements that not only prohibit employment but in any way limit it or discourage it with monetary penalties will be likely held unenforceable.

March 27, 2015

Waiting Time Penalties Rules Due in California

by Arkady Itkin

Under California Labor Code section 203, an employer must pay a waiting time penalty on wages owed when the employer willfully fails to pay wages due under section 201 ore 202. A waiting time penalty is equal to one day’s pay fore each day that a full payment of final wages is late, up to a maximum of 30 days. So, if for instance you are terminated from a full-time job that pays $160/day (or $20/hour), and your final wages are due immediately at termination, but your employer only issues you your final paycheck 10 days later, you are due additional $1,600 in penalties.

As noted above, the penalties only run up to 30 days, so if in the above example you had to wait for your final paycheck for two, three or more months, the maximum penalty that can be imposed under section 203 is $4,800 ($160 x 30).

If an employer leaves the employee’s final check in the employer’s office and asks the employee to pick it up in person shortly after the employment separation, the employe cannot “create” waiting time penalties by not picking that check up on purpose and just sitting and waiting for the extra days to accrue in order to demand waiting time penalties later.

February 1, 2015

Oral Complaints About Labor Law Violations Are Protected

by Arkady Itkin

Some employees assume that unless they have proof of complaining about a particular labor law violation, the protections of anti-retaliation laws do not apply to them. However, as the US Supreme Court recently held in Kasten v Saint-Gobain Performance Plastics Corporation (2001), complains that are made orally are also protected. In that case, Mr. Kasten was employed as a plant worker. He claimed that he was fired in retaliation for complaining about the location of time clocks which prevented him and other employees from getting paid for the time it took to get from the area where they put on and took off their uniforms to the area where they worked. Shortly after orally complaining about this to his management, he was disciplined and fired. Mr. Kasten filed a retaliation lawsuit under FLSA section 213(a), which forbids employers from terminating any employee for “… filing any complaint”. Interestingly, the court found “filing” to include oral complaints, if they are sufficiently clear.

Of course, in the vast majority of cases when the only evidence of complaining you have is your own word, the employer will deny hearing any such complaints from you 9 times out of 10. Therefore, if you didn’t memorialize your complaints in writing, it would really help to have some corroborating evidence of having that conversation, such as a witness-coworker, who was present during that conversation.

January 29, 2015

How Being Rude to Your Boss Can Ruin Your Wrongful Termination Case

by Arkady Itkin

Suppose your boss engages in what’s clear to be a discriminatory conduct toward you because of your age, race, gender, or because the employer is really unhappy that you filed a workers comp claim or harassment complaint. You are not terminated yet, but you know that it’s only a matter of time before you are being fired for some bogus reason. In frustration, you decide to leave an angry voicemail or send an angry, rude e-mail to your boss, calling him names and telling him how much you hate him and your job. Then, as you expected – you are terminated. The reason for termination, among other things, is your rude communication.

At this point, if you bring a discrimination or wrongful termination case in court, your task will be no just showing evidence of discriminatory actions by your manager against you, but you will also have to show that the real reason for your termination is not your rude communication with the employer but all the other illegal reasons that you claim were involved. This is a much harder task, and it’s often impossible. Unless you can point at one or more other employees who weren’t disciplined by the same manager who terminated you, even though they were just as rude as you were, your chances of proving your case will be low.

You may think that your rude communication is justified because your employer has been so unfair to you and they have been treating you so badly for such a long period of time, and you might be right. However, this argument is completely irrelevant, and it is not going to help you in court. It is therefore critical that you never, ever leave any track of any kind of rude communication toward your employer, no matter what happens, and even if the employer is being rude to you. This will give your employer and their attorney less weapons to fight your wrongful termination case, which will translate into higher chance of successful settlement or resolution of your case, once the time comes for that.

January 18, 2015

How to Find The Right Wrongful Termination Attorney for Your Case

by Arkady Itkin

January 15, 2015

Partners Are Protected from Retaliation for Reporting Harassment / Discrimination

by Arkady Itkin

In Fitzemons v California Emergency Physicans Med. Group 205 Cal.App. 4th 1423 (2012), the Appellate Court held that the anti-retaliation provisions of FEHA (Fair Employment and Housing Act) protect not only employees but also partners in a business partnership. In that case, the plaintiff was an emergency physician and a member of a partnership. At one point the plaintiff was promoted to the regional director position. She was terminated and removed from partnership shortly after she reported to her supervisors that certain officers and agents of the partnership were sexually harassing some of the female employees.

The Defendants attempted to dismiss the case by arguing that only employees and not partners are protected from retaliation. The Appellate Court disagreed, noting that FEHA makes it unlawful to retaliate against “any person” for opposing unlawful workplace harassment. This anti-retaliation protections extends to partners as well as employees, unlike many other labor law protections which only apply to employees.

This decision is a powerful holding, as it arguably extends the anti-retaliation protections of FEHA anti-retaliation provisions to contractors and temporary workers as well, if the courts continue to interpret the “any person” language of the FEHA statute literally and broadly.

January 10, 2015

Workplace Mental Disabilities Rights and Bipolar Disorder

by Arkady Itkin

Recently, the Fourth District Court has published its decision in Wills v. Superior Court – a very important opinion on workplace mental disabilities rights at workplace. That case addressed a not uncommon situation, where an employee who has been diagnosed with mental disorder, such as bi-polar disorder, has been found to make threats of violence to his co-workers and management. After being fired for making those threats, that employee sued the employer for wrongful termination and disability discrimination.

The court’s analysis and holding was very practical and made a lot of sense. First, the court recognized the 9th Circuit cases that held that “conduct resulting from a disability is considered to be part of the disability, rather than a separate basis for termination” Gambini v. Total Renal Cares, Inc. (2007). Although the above cases considered disability-related misconduct, such as performance issues, tardiness or absenteeism, none of the above cases considered how to deal with disability-caused misconduct involving threats of violence against coworkers. The court concluded that neither ADA nor other laws require employers to retain employees who threatens or commits acts of violence against coworkers, even if the employee’s disability caused that kind of misconduct.

The court further interpreted FEHA (Fair Employment and Housing act) as authorizing an employer to distinguish between disability-caused misconduct and the disability itself in the narrow context of threats of violence against coworkers. The court noted that if the employers are not permitted to do that, they are caught in a serious and unreasonable dilemma. On one hand they may not discriminated against disabled workers. On the other hand they are obligated to to provide all employees with a safe work environment, free from threats of violence (Cal. Lab. Code 6300). Certainly, disability rights have to yield to the workplace safety.

January 7, 2015

New San Francisco Minimum Wage Effective January 1, 2015

by Arkady Itkin

Starting from January 1, 2015, the San Francisco minimum wage increased to $11.05 / hour. This increase reflects the recognition by the authorities of a significantly higher cost of living in the city, driven up by the tech boom, the shortage of housing and the soaring prices for studios and one bedroom apartments.

Today, it would not be unusual to see a studio in one of the luxury high rises downtown to rent for $3,000/month and above, and for one-bedroom units to go for $3,500 and above. Because there is sufficient number of high earners in the area who can afford paying this much in rent in order to enjoy the convenience of living downtown and being able to walk to their office, these prices are not expected to go down, in the absence of some kind of unforeseen event, such as unexpected economic slowdown.

$11.05/hour is certainly not high enough compensation to be able to afford decent housing of any size in any part of San Francisco, but it’s a step in the right direction. Employer have an obligation to have the posting on the image above prominently displayed in the office (typically in the kitchen/rest area) along with other labor / employment posters required to be displayed by law.

January 2, 2015

Definition of Misconduct and Unemployment Benefits

by Arkady Itkin

Under California Unemployment Insurance Code, “misconduct” associated with employment termination is defined as substantial, willful violation of a known employer rule or policy. This definition of misconduct is generally favorable to employees-claimant as it requires the violation to be serious and intentional or at least grossly negligent. The employer has a burden to prove misconduct in order to have the employee disqualified from receiving unemployment benefits. Ordinary mistakes, negligence, substandard performance, and lacking in qualifications are not considered misconduct and are therefore not grounds for denying unemployment benefits.

There are a two important things worth noting about misconduct:

The employer might argue but the employer does not determine whether the reasons for your termination qualify as misconduct. They can only provide the facts about the reasons for your termination. EDD or CUIAB make their own independent determination of whether misconduct took place.

December 11, 2014

Important Information about Retaliation Claims in California

by Arkady Itkin

Retaliation claims are some of the most common employment law cases filed in California, and usually in conjunction with a wrongful termination claim. It is important for any potential plaintiff in a wrongful termination case to consider whether he can also include a retaliation claim because retaliation is often easier to establish or prove than discrimination and other types of violations. This is because under certain circumstances, a retaliation claim may be brought by an employee who has engaged in a protected activity of complaining or opposing unlawful discrimination or harassment, even when a court or jury subsequently determines that the conduct was actually not unlawful (Flait v North American Watch Corp). Under the law, an employee is protected against retaliation if the employee reasonably and in good faith believed that he whatever he was opposing constituted unlawful employer conduct.

For instance, the court in Drinkwater v Union Carbide Corp. held that even though the employee was not able to establish a hostile work environment claim based on a few isolated incidents, she was able to make a retaliation claim, because she reasonably and in good faith believed that the harassers highly offensive sexual remarks constituted harassment when she made a protected complaint about the same to her higher management.

This is actually a very common workplace scenario. Imagine that you complain to your human resources department about feeling harassed or discriminated by your immediate supervisor. Your hr office conducts an investigation and they determine that not discrimination or harassment took place. Subsequently, your supervisor-harasser retaliated against you by writing you up and firing you. You bring several claims in court for 1. wrongful termination; 2. discrimination; 3. retaliation.