Last week I was happy to create a different kind of video. This one is all about employee inventions, patents, trade secrets, and non-compete agreements.
Who owns employee inventions? What if you want to leave your company and start your own? What documents, information, and processes can you take with you? What is a “trade secret” and needs to be left alone?
When it comes to patents, I brought in a registered patent attorney, Karima Gulick. She examines this question from the IP perspective as I don’t practice intellectual property and I’m not a patent attorney. She does a great job explaining patents when the employee gets one while employed.
If you are thinking of starting your own company, I highly recommend that you watch this video!
Many people are aware that when they sign an arbitration agreement, they’re signing away some of their power. Arbitration contracts are used in any number of situations, and are often signed by new employees when they start a job. While some legal experts drone on about the benefits of arbitration to more efficiently settle employment disputes, and provide relief to an overburdened legal system, employees who’ve had legitimate legal claims blocked by arbitration know the process favors powerful employers and corporations.
By signing an arbitration contract, employees agree to settle any potential lawsuits against their employer outside of a court room in a special hearing presided over by a professional arbitrator. Employers typically hire the arbitrator (often a retired judge) who will consider the facts of the case and issue a ruling. In addition to the obvious conflict of interest of an arbitrator working on the company’s dime, the ruling is often final, and the employee doesn’t have the opportunity to appeal the decision. Most employment lawyers who represent workers agree that arbitration favors the company, not the employee.
So, if an employee signs an arbitration agreement, is he or she automatically backed into a corner when a discrimination, harassment, or wage issue arises? As a case decided by the Court of Appeal of the State of California, Second District demonstrates, the answer is not necessarily. Put simply, your signature on an arbitration agreement isn’t always the final word on the matter.
This article was written to generally discuss the issue of employment arbitration, as well a case in which a car wash employee was allowed to continue with his lawsuit in a court of law despite signing an arbitration agreement. We’ve written about recent arbitration rulings before (this one involving an arbitration decision by the U.S. Supreme Court).
If you have questions about an arbitration agreement you signed for your employer, or some other employment law question, contact our officefor answers.
Wage Theft Claim Throws Arbitration Agreement into Question, Court Sides with Worker
Carlos Juarez worked for the Wash Depot beginning in July 2012. His job duties included washing, drying and detailing cars. In December 2016, he filed suit against the company alleging failure to pay earned wages, minimum wages, and overtimecompensation, among other violations.
Wash Depot attempted to compel arbitration based on the company’s employee handbook, which Juarez acknowledged receiving. The handbook featured an agreement that required disputes to be settled in an arbitration setting. The handbook also included a waiver of employee rights under the state’s Private Attorney General Act (PAGA), which stated that Juarez would have no right or authority for any dispute to be heard as a private attorney general action. However, significant differences in the wording of this waiver existed between the English and Spanish versions of the employee manual.
After Juarez filed suit against Wash Depot, the company attempted to have the case removed to arbitration, per the handbook agreement. Juarez resisted, and the court denied the company’s motion. In its ruling, the court stated that the differences between the Spanish and English versions of the handbook were “profound.” The court further relied on a section of California’s Civil Code regarding contracts, which states:
“In cases of uncertainty not removed by the preceding rules, the language of the contract should be interpreted most strongly against the party who caused the uncertainty to exist.”
Wash Depot appealed the ruling to the California Court of Appeals for the Second District, but the higher court also denied the company’s request to compel arbitration. Referring to the differences in Wash Co.’s English and Spanish manuals, the court wrote:
“At best the difference in the severability clauses in the English-language and Spanish-language versions of the handbook is negligent; at worse, it is deceptive.”
You might have signed an arbitration agreement with an employer years ago, or may be faced with signing one now. As the previous section of this article hopefully makes clear, even employers, with their fancy lawyers, can make mistakes.
If you feel your employer has acted unlawfully and is attempting to compel you to settle your claim via arbitration, be sure you discuss your case with a good employment lawyer. If the company made a mistake in drafting its arbitration agreement, this could benefit you.
Arbitration in the Media
In 2015, the New York Timeswrote a series of articles on the ever-increasing number of companies using arbitration to ban class action lawsuits. Entitled, “Beware the Fine Print,” one of the articles mentioned several specific class actions blocked from the courts. These included an executive at Godman Sachs who attempted to sue on behalf of bankers claiming sexual discrimination, as well as African American employees at Taco Bell restaurants who claimed they were denied promotions, and subject to offensive comments. The article further noted:
“By banning class actions, companies have essentially disabled consumer challenges to practices like predatory lending, wage theft and discrimination, court records show.”
Some Contracts Are Unconscionable
Sometimes a court won’t honor an arbitration agreement or other employment contract because the terms of the contract are unconscionable. In legal terms, unconscionability is defined as something that is overly harsh, unduly oppressive or unfairly one-sided in favor of the person with superior bargaining power. The law generally views the concept of unconscionable contracts through two filters: the first, is known as procedural unconscionability, and the second is substantive unconscionability. The term procedural generally refers to the process under which the contract is negotiated, and substantive refers to the actual terms of the contract.
Regarding contract unconscionability, California Civil Code §1670.5 states the following:
“If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.”
If you believe an arbitration contract you signed might be unconscionable, now might be the time to contact a qualified employment lawyer to discuss your situation.
Before You Sign, Have A Lawyer Review (if possible)
If an employer hands you a contract to sign, it might be in your best interest to have an employment attorney look the contract over to make sure everything is on the level. If you’re just starting a new job, you might want to know if your future employer is trying to corner you with unconscionable terms.
Likewise, if you work for a company where you’ve already signed an arbitration agreement, and your company is engaged in unlawful behavior such as wage or overtime violations, a good employment lawyer might be able to find any errors in the contract and help you fight for a better settlement in a court of law.
If you have questions about anything discussed on this page or some other area of employment law, schedule a consultation with the office of Branigan Robertson to find out how we can help.
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You don’t have to be a legal expert to know that non-compete clauses are largely unenforceable in California. The law nullifying this type of clause, in which an employer tries to prevent terminated employees from working for competing businesses, has been on the books for years. And if you’re an advocate of employee rights, the law is a bright spot in California’s Business and Professions Code.
Over the years, California employers have tried to test the strength of California’s non-compete law, with little success. However, in July of 2018, an employee turned the tables and sought to test the law’s strength in a case that didn’t specifically involve a non-compete clause.
The United States Court of Appeals for the Ninth District ruled on the case, which involved a doctor whose former employer wanted him to sign a non-rehire agreement. The federal court looked to California’s non-compete law to rule in favor of the doctor. Continue reading to learn more about the court’s decision, non-compete clauses and related areas of employment law.
If you have questions about your own employment situation, don’t hesitate to contact our officeto learn how we can help.
“Every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.”
Golden vs. California Emergency Physicians Medical Group
Physician Donald Golden was an emergency room surgeon employed by California Emergency Physicians Medical Group (CEP) at its Seton Coastside Medical Facility. He was fired in May 2008, and filed a discrimination suit against the company.
The case ended up in Federal District Court in 2010, but before the trial had a chance to begin, CEP offered to settle the case. In return for a large settlement, the company wanted Golden to waive any rights to future employment with the company.
This meant that Dr. Golden wouldn’t be rehired at any facility owned by the company, as well as any facility CEP might own in the future. Dr. Golden refused to sign the printed agreement. The court ruled that Dr. Golden should be compelled to sign the agreement, but the doctor appealed the decision, and the case moved to the appellate court.
During his appeal, Dr. Golden argued that the non-rehire provision of the settlement violated California’s law against non-compete clauses.
In its ruling, the Federal Court noted that California’s no compete law has been broadly interpreted over the years. The court further argued that the lower court had abused its discretion in narrowly interpreting the law.
The appellate court argued that the simple question at hand was whether or not the settlement agreement in Dr. Golden’s case restrained anyone from engaging in a lawful profession, trade, or business of any kind.
“We have no reason to believe that the State has drawn section 16600 simply to prohibit ‘covenants not to compete’ and not also other contractual restraints on professional practice,’” the court wrote in its decision.
Accordingly, the appellate court reversed the lower court’s judgment and remanded the case “for further proceedings not inconsistent with this opinion.”
What This Means for California Workers
This case once again reinforces the strength of California’s non-compete law and actually demonstrates that the law goes beyond non-compete clauses in protecting an employee’s right to earn a living.
To be clear, this doesn’t mean every employee who’s been unlawfully compelled to signed a non-compete clause has a shot at a million-dollar judgment. But it does mean that non-compete clauses, with few exceptions, are unenforceable.
Unfortunately, this doesn’t stop employers from asking workers to sign these agreements. In 2016, the Office of Economic Policy, a division of the US Treasury Department issued a report on the prevalence of non-compete contracts. According to the report, California workers were found to have signed these agreements at 19 percent higher than the national average. Acknowledging that such agreements are largely unenforceable in court, the report noted that the trend suggests “firms may be relying on a lack of worker knowledge.”
Employers and employees often sign non-compete clauses that include trade secret language. Employers are very much allowed to prohibit the theft/taking of valid trade secrets, and employers frequently sue former employees who steal customer lists or valuable and secretive manufacturing plans. When you have a mixed clause like this, contact a lawyer especially if you think your employer may try to enforce the provision.
When an Employee Blows the Whistle on Non-Compete Contracts
If an employee realizes that a company he or she works for is violating the law by requiring other workers to sign non-compete contracts, and that employee notifies the authorities (a state agency, the District Attorney, the police), it’s possible the company will retaliate against that employee (fire, demote, harass, etc.). It’s important to note that the employee in this situation is a whistleblower, and whistleblowing activities are protected by law. A worker who experiences retaliation as the result of whistleblowing activities could be entitled to monetary damages. For more information on whistleblowing, contact our office or visit our whistleblowing page.
When to Contact an Employment Attorney
If you work in California, and have been asked to sign a non-compete clause, chances are good your employer has violated state law. It could be worth your time and effort to discuss your situation with an employment attorney. Additionally, if you’ve received notice of legal action from a former employer stating you have violated the company’s non-compete clause, you’ll want to contact an attorney right away.
If you have questions about anything discussed in this article, or another employment law related question, contract the office of Branigan Robertson to learn more about your rights under the law.
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The career landscape continues to evolve. As workers increasingly take freelance jobs and other gigs, questions swirl about the future of worker rights. In many cases, companies have found that it’s easier to classify hard workers as independent contractors, rather than employees, in order to increase their bottom line. In many cases, the independent contractor will work as hard, if not harder, than an employee.
Worker classification affects how a company pays a person overtime and offers rest breaks. When one thinks of independent contract work, often the first companies to come to mind include ride sharing giants Uber and Lyft. However, other companies using contract workers include restaurant delivery services, and other app-based services.
A recent CA State Supreme Court case considered the issue of independent contractors and employee misclassification and issued a ruling that came down in favor of workers. Continue reading to learn a little more about this case, the issues explored by the State Supreme Court, and how this ruling might affect workers in the gig economy. If you feel your employer has improperly classified you as a contract worker, or hasn’t paid you proper wages, contact our office to learn how we can help.
Charles Lee Vs. Dynamex
The court case in questioninvolves a nationwide package delivery company called Dynamex, which operates multiple business centers in California. The company classifies its drivers as independent contractors rather than employees. This means that while the drivers are free to set their own schedules, they also pay for their own delivery vehicles, gas, and insurance. They also aren’t subject to state and federal laws regarding overtime and rest breaks.
Dynamex negotiates the rate paid to these drivers on an individual basis. Some workers receive a flat amount per delivery, some receive a percentage of the delivery fee. Prior to 2004, Dynamex classified its drivers as employees, but decided that there was significant savings to be had in classifying drivers as independent contractors.
In 2005, a driver named Charles Lee filed suit against Dynamex arguing that the independent contractors were essentially doing the same work as they did when classified as employees.
In his lawsuit, Lee argued that Dynamex violated the labor code, misclassified employees, and failed to pay overtime.
The case began in Los Angeles Superior Court, which considered many of the subtle nuances of state law. Other drivers joined the suit, and the trial court ultimately certified a class action suit against Dynamex. The company appealed the case to the State Supreme Court hoping to reverse the lower court’s decision to certify the class action against the company. Unfortunately for Dynamex, the court sided with the drivers allowing them to proceed with their class action.
The California Supreme Court’s Ruling
In its 85-page decision, the State Supreme Court considered a number of historic employment cases examining the employee/employer relationship. At the core of the Supreme Court’s analysis were questions about how much control a company exercises over workers, as well as the definition of the words “employ” and “employer.”
In terms of company control, the court looked at a landmark case from 1989, in which an agricultural company called Borello classified its cucumber harvesters as independent “sharefarmers.” The sharefarmers would work long hours to share in some of the profits (as well as potential losses) during the harvest season. The workers felt they were improperly classified given the amount of work they did for the company. In that case, the court ruled that the company exercised a significant amount of control over the cucumber harvesters, and as such, improperly classified them as independent.
Continuing with its analysis, the Supreme Court examined the definitions of the terms ‘employ’ and ‘employer,’ which are found in the state’s work orders. The court accepted a definition of the term employ as meaning “suffer to work.” This phrase means that when a company permits a person to work, the worker is on the clock whether the workflow is heavy or light. This means that even if an employee is sitting at his or her desk waiting for an assignment, he or she is considered to be working.
The Supreme Court accepted a definition of the term ‘employer’ as someone who “employs or exercises control over the wages, hours, or working conditions of any person.”
Dynamex had hoped that the Supreme Court wouldn’t adopt the definitions of these terms, which had been accepted by a lower court. But the Supreme Court did accept these terms, and as a result, ruled in favor of the drivers. The court ruled that under these definitions, the drivers have a common interest in proceeding with their class action suit against Dynamex.
“We conclude that under a proper understanding of the suffer or permit to work standard there is, as a matter of law, a sufficient commonality of interest within the certified class to permit the question whether such drivers are employees or independent contractors for purposes of the wage order to be litigated on a class basis.
What this Means For Workers
In the simplest of terms, California’s recent Supreme Court ruling against Dynamex means that workers in that case can proceed with their class action suit. However, there are some in the legal profession that feel the ruling could have more immediate effects for California companies. A recent Los Angeles Timesarticle suggested that California employers could start questioning their employee classifications right away, even changing some classifications to avoid stiff fines. The Timesposed the question to Michael Chasalow, a professor at USC Gould School of Law.
“A huge number of businesses will be calling their lawyer saying ‘What should I do,’” Chasalow told the Times.
Are You a Worker Who’s Been Misclassified?
It’s important to note that the California Supreme Court did refer to some professions as properly classified independent contractors. The court specifically mentioned such workers as plumbing contractors and electricians. However, there are many workers out there who feel they aren’t getting the compensation they deserve because of their independent contractor status. Ride sharing companies are one area where this discussion has been heavily focused. Other app-based services might also raise some serious questions about worker classification.
If you believe you’ve been misclassified as an independent contractor, contact our office for a consultation. Many cases are taken on a contingency basis, which means the client doesn’t pay any up-front costs.
If you have questions about anything discussed on this page, or some other employment law issue, give us a call to learn how we can help you.
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In May 2018, the United States Supreme Court ruled on a case involving arbitration clauses that heavily favors employers. The 5-4 decision delivered yet another blow to the rights of workers who are increasingly pinched between stale wages and ever-increasing living expenses.
While the case was damaging to worker’s rights, it doesn’t mean there isn’t hope if you’ve been mistreated by an employer wielding an arbitration contract. The Supreme Court might be unwilling to protect your rights as a worker, but a good employment attorney can still determine if you have a case, and fight on your behalf.
Continue reading to learn a little about the Supreme Court’s ruling on the Federal Arbitration Act, and what it means for workers forced to sign these agreements. If you feel you’ve been the victim of an employer’s unlawful behavior, contact our office to find out how we can help.
Epic Systems Corp. v. Lewis
The US Supreme Court considered this case, in which several workers argued their employers had underpaid them. As a condition of their employment, the workers had signed arbitration agreements, which allow companies to settle employee grievances in a private setting as opposed to a court of law.
The employees maintainedthat their right to file a class action suit was protected by the National Labor Relations Act (NLRA). They specifically cited a section of the Act, which guarantees employees:
“The right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection…”
The phrase “other concerted activities” is the passage that divided the court in this case.
Trump appointee Justice Neal Gorsuch, who wrote the decision for the majority, took a very narrow view of the text of the law and argued that the wording of the Act, which does protect union activity, does not specifically give workers the right to file class action lawsuits. Gorsuch also repeatedly referred to the Federal Arbitration Act (FAA), which was passed 10 years before the NLRA, and allows companies to divert court claims to an arbitration setting.
Justice Ruth Bader Ginsburg, who wrote the dissenting argument (and actually read it from the bench), suggested that the FAA is unlawful, and reminiscent of “yellow dog contracts” in which employers were once allowed to compel employees to sign agreements promising they wouldn’t join a union. She further argued that the FAA was not designed to settle disagreements between workers and companies, but rather was made to settle disputes between companies. Ginsburg eloquently argued that the NLRA was designed to protect workers who have little bargaining power when dealing with employers. She added that this protection extends to employees who wish to band together and collectively sue an employer (strength in numbers).
Alas, the court handed down its decision, which means that for now, employees who sign arbitration clauses as a condition of their employment, have little option but to abide by terms of the agreement.
What Exactly is an Arbitration Clause?
Oftentimes, when an employee is hired at a new job, he or she is handed a packet of documents, many of which require signatures. These packets frequently include a document in which the employee agrees to have any potential claim against the company heard in an arbitration proceeding.
Such a proceeding is heard by a “neutral” third party, known as an arbitrator. These folks are often retired judges and attorneys, who are paid by the company to render a decision on the claim. Unlike a court proceeding, there is no jury, and the hearing is not public. Employees may be able to request fewer evidentiary documents when making their case against the employer than they would in a court setting
Arbitration does provide certain benefits in that the costs of the proceeding are covered by the employer, and the case is often decided in a much speedier fashion than would happen in a court setting. However, there is generally no appeal process, and the final decision is legally binding.
Arbitration is on the Rise
In 2015, the New York Timeswrote an article on the recent increase in arbitration cases nationwide, which stem from a series of Supreme Court decisions. While the article focused on arbitration clauses in cell phone and other product-related contracts, it noted that employee arbitration is also on the rise. In many cases, these contracts effectively ban class action law suits against already wealthy and powerful companies.
“Some state judges have called the class-action bans a ‘get out of jail free’ card,” the Timeswrote. “Because it is nearly impossible for one individual to take on a corporation with vast resources.
Can You Refuse to Sign an Arbitration Agreement?
Of course. However, in an at-will state like California, an employer can fire you or rescind the job offer if you refuse to sign. When deciding whether to refuse to sign an arbitration agreement, you must carefully consider your value to the company. Is the employer likely to cut ties with you and find another employee who will sign without question? Or are you irreplaceable?
Are Arbitration Agreements Bullet Proof?
Not always. It’s important to remember that every case is different. If you suspect that the agreement you signed wasn’t on the level, it might be worth your time to have the document reviewed by a qualified employment attorney. There are certain factors that can render an arbitration contract void. Was the contract signed under duress? Was it signed fraudulently? Were the agreement terms unconscionable? These things could affect the validity of an arbitration agreement.
Have Questions? Contact an Employment Lawyer
If you have questions about arbitration agreements or other employment issues, contact our office for more information. If our attorneys determine you have a case, and are able to proceed with a lawsuit, you might be able to pay our attorneys on a contingency basis. This means you don’t pay out-of-pocket legal fees.
If you successfully win a claim against an employer, you could be eligible for lost wages, pain and suffering, and back pay. Give our office a call to find out how we can help.
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This page is about fraudulent hiring. It details California’s employment laws on when employers tell prospective employees false promises in the hiring process – to induce them (trick them) into quitting their current job for a new one. These types of intentional misrepresentations (fraudulent inducement) are extremely common. But so are negligent misrepresentations – where an employer is reckless with the truth to the prospective employee’s detriment.
You are sitting around after work when you receive a phone call. It is the HR hiring manager for a business in San Francisco and they are looking for someone just like you. You love San Francisco and they are offering you 10% above your current salary, and you will be their new Vice-President of Operations. So you sell your LA home and move to SF. Upon arrival, you are handed a mop, a bucket and told you will be making minimum wage. Surely this cannot be legal? This is an extreme example, but it happens. People move for a job and it is not what they were sold on.
The below video and the rest of this article presents the legal basics of fraudulent inducement. Make sure you read the rest of this page after watching the video!
Fraudulent Inducement Attorney
First and foremost, there are two ways that fraudulent inducement can occur: intentionally and negligently. The difference between the two is as simple as the job offeror knowing that he or she is lying to you versus recklessly ignoring the truth of the information he or she is giving to you. If in the scenario above the HR manager knew that they were going to pay you minimum wage and have you mopping floors despite providing a description resembling a VP of Operations position, it is intentional. If the HR Manager honestly believed that you would be the VP of Operations, but should have known that was not going to be the case, then it may be negligently induced.
What do the Courts Look at in False Promise Cases
To figure out if you were induced into taking the job, the court is going to look at several things:
Did the defendant tell you that an important fact was true (i.e. “You’ll be paid 10% above what you are currently make.”)?
Was this information false?
Did the defendant know it was false information and say it anyways, or did they honestly believe it was true despite having no reason to know?
Did the defendant intend for you to rely on that information in making your decision?
Did you rely on that information in making your decision and was it a big factor?
People have very different ideas of what is an “important fact,” and rightfully so, so California Labor Code § 970 has cleared this up for us. Important facts recognized include the kind, character, or existence of work; the length of employment, compensation, the sanitary or housing conditions surrounding the work, and any labor disputes that are represented (or not for that matter!).
Did you Move? CA Labor Code § 970 is Powerful
It becomes especially egregious when an employee moves from one location to another to take a job based on false promises. LC § 970-972 directly address this problem. If an employer induces someone to move based on false promises, that employer may be liable for double damages and guilty of committing a misdemeanor.
Though fraudulent inducement is not as common as discrimination, harassment, or a variety of other claims, it is still a huge hassle for someone who comes across it. People have uprooted their entire lives, changed their kids’ school, and usually have left a job, because they trusted their new employer. If you feel as though you have been given misrepresentations about a job you recently changed locations for, you should to contact a good employment lawyer as soon as possible.
Occasionally, potential clients call our office telling us they have recorded a conversation with their supervisor. In other situations folks ask us if it is okay to record a conversation they are going to have with their boss. Because this comes up quite a bit in the employment world I figure it would be a good idea to address this issue. Employment lawyers across California will all tell you the same thing – don’t secretly record anyone at work.
I made the below whiteboard video to help explain this area of law without any legal jargon. After you watch the entire video, make sure that you read the rest of this page. It is critically important!
An Employee Cannot Secretly Record A Conversation At Work
First of all, its a bloody crime. California Penal Code § 632(a). Secondly, you probably won’t be allowed to use it as a part of your case anyway. California Penal Code § 632(d).
In a majority of states, an employee can record a conversation in the workplace if that employee is taking part in the conversation. However, California does not follow the majority rule. In California and a handful of other states, an employee generally cannot record a conversation in the workplace unless everyone involved in that conversation consents or knows that the conversation will be recorded. This is because under the California Penal Code, recording a conversation is punishable by fine or prison time. While penalty is rarely enforced, you should still avoid recording your boss because you don’t want him/her to threaten you when they find out about the recording.
More importantly, even if it was legal to record your boss, in a civil case, you would not be able to use a secret recording as evidence in court. The law prohibits it except in extremely rare circumstances. Therefore, even if you get your boss to admit on tape that he broke the law, you would probably be prohibited from admitting it as evidence to show the jury.
Before you continue reading, sign up for our free monthly employment law newsletter! We will email you useful employment information that helps employees protect themselves from workplace abuse.
Are There Exceptions to the Recording Law?
There are exceptions to this general rule. If the employee who is doing the recording is having a conversation in a public setting, such as a lobby with people in it, stairwell, or the breakroom where there is people then recordings these conversations in public settings is usually legal. This is because there is no expectation of privacy in a public setting. It can be expected that the conversation in the public setting can be overheard because there is a lot of people surrounding the conversation.
If you think your employer is doing something illegal or discriminating against you or another co-worker, rather than recording a secret conversation to use as evidence, contact an employment lawyer immediately to discuss your options in the workplace.
Employment rights must be addressed immediately. The window for legal action may close if you don't act. Call or contact Mr. Robertson for a free consultation.
