Category Archives: Layoffs

California Continues to Reject Non-Compete Clauses

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.

California’s Non-Compete Law

The Golden State’s non-compete law is found in Business and Professions Code §16600. It states:

“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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Filed under Employment Contract, Layoffs, Wrongful Termination

How to Get More Severance – Negotiate for More Without a Lawyer

This whiteboard video is how people can increase their leverage and negotiate for more severance money after a termination.

Let me first say that you should absolutely have a lawyer review your severance agreement. My office does severance reviews all the time for people. But when the severance package is extremely small, or you’re 99.9% sure the company hasn’t broken any laws, you can try to negotiate your own agreement.

Second, you should watch the above video before you read the rest of this page. The video provides an excellent backdrop and the rest of this post will make a lot more sense if you learn the fundamentals.

There was more I wanted to include in the video (but I had to get back to work). So, I’ve added some information in this blog post to further flush out the bargaining chips. Employees can use these bargaining chips to negotiate for more money with their employer.

Offered Severance? Beware!

While it’s practically a taboo subject in our modern, work-driven world to admit to being fired by an employer, there’s something to be said about knowing the right way to be fired. This is particularly true if there’s a severance package being offered as part of the termination. What you do at the moment a severance check is slid across the desk toward you along with legal documents to sign could turn calamity into financial opportunity — depending on how you play your cards.

That said, there are those of us in the employment law business who probably wouldn’t object to schools teaching a class on how to get fired correctly. But barring that, the video attached to this post might just be the next best thing.

The truth of the matter is, whether we’re talking about sports, personal relationships or career, there are going to be days when we win, and days when we  lose. What matters most when we lose is how we handle the situation. If it all possible, the goal should be to turn a negative into a positive.

While an employer might offer a severance package as a means of  buying cooperation from a difficult employee, if you’re that employee the goal shouldn’t be to act like a big jerk in the hopes of getting a bigger severance.

The following is a list of things an employee should consider before signing a termination agreement.

More Severance Negotiation Tips

Remember, You Don’t Have to Sign

When an employee is terminated and they are given legal documents to sign, the company is looking to cover its rear and avoid a lawsuit. There could be any number of reasons an employee is fired. In an “at-will” state like California, it could be for no reason at all.

But employers know that lawsuits, even if they can be won, are expensive. So they often ask terminated employees to sign legal documents giving up their right to sue before leaving the premises. This can seem demeaning and dehumanizing. The good news is, you are not legally required to sign. You can refuse if you want.

But as mentioned earlier, the termination process should be seen as an opportunity to turn a negative into a positive. If you don’t sign, you’re basically closing the door on any severance pay – but you can pursue legal action. So if you plan to sign, be prepared to negotiate.

Don’t Rush It

There are times when companies will tell an employee he or she is fired, and place a severance check in front of them and pressure them to sign the termination contract immediately. If at all possible, tell them you’d like to take a day or two, or even a week to consider the terms. If necessary, if you find something fishy with your firing, you should take this time to discuss the terms with friends and family and have the severance agreement reviewed by a lawyer.

Non Disparagement 

Those who follow silicon valley news might remember in 2011 when Yahoo fired  then CEO Carol Bartz. She was granted a large severance package—around $14 million. Not surprisingly, there was a non-disparagement clause in Bart’z termination contract.

But in an interview with Fortune Magazine following her termination, Bartz publically referred to Yahoo’s board as “doofuses” with some other expletives sprinkled in for good measure.

Now, this was an incredibly risky move on Bartz’s part. and, the company was probably within its rights to withhold her severance. It doesn’t look like that happened, but with that kind of money on the line, was it really worth it to risk the loss just to take a couple parting shots at the company?

Outplacement Services

Another thing you might consider negotiating for is outplacement services. Outplacement companies, which are located all over, help employees with career transitions.  These companies often help employees who have had a difficult time at a previous employer articulate the reason for their departure so that they can find more success when interviewing with the next company. They also provide resume and other coaching services. If your former employer can help you move on with your life, why not take advantage of that.

Before you continue reading, sign up for our free monthly employment law newsletter! We will email you useful employment information that will help you protect yourself from workplace abuse.

Cell Phones and Laptops

Often times terminated employees don’t see the company laptop or cell phone as something to be bargained for. But as anyone who’s purchased these items knows, they can be expensive. Companies will often let these gadgets go with the terminated employee. Depending on your specific situation, it could be something worth taking a look at.

Employer Reference

If your employer does agree to give you a glowing reference, you’ll definitely want to get that in writing in some form. Whether the employer agrees to offer a positive reference as part of the severance contract, or just provides you with a signed letter of recommendation.  Whatever the case, it’s important to get it in writing. A reference is the kind of thing that can be agreed to in a casual conversation, but when the time comes to actually provide that reference, days weeks, months down the road, it’s easy for an employer to brush it aside.

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August 16, 2017 · 7:10 am

The WARN Act and Mass Layoff Class Actions in California

What is the law regarding mass layoffs? The federal Worker Adjustment and Retraining Notification Act (WARN Act) requires most employers planning a plant closing or a mass layoff to provide affected employees and certain state and local government officials at least 60 days’ written notice. California has an equivalent law that can be found in the Labor Code § 1401(a). If this law is not followed employment lawyers and attorneys may file a class action to recoup lost wages for the employees.

The purpose of these laws is threefold:

  • To assure the most rapid possible readjustment and retraining of displaced workers and to ease the personal and financial difficulties for workers who must make these transitions.
  • To provide workers and their families some transition time to adjust to the prospective loss of employment, to seek and obtain alternative jobs and, if necessary, to enter skill training or retraining that will allow these workers to successfully compete in the job market.
  • to provide a wage worker’s equivalent of business interruption insurance (that) protects a worker from being told on payday that the plant is closing that afternoon and his stream of income is shut off.

Aggrieved employees or their “representative” may also sue on behalf of other persons similarly situated. WARN claims are “particularly amenable to class litigation.” Finnan v. L.F. Rothschild & Co., Inc. (SD NY 1989) 726 F.Supp. 460, 465.

The California statute applies to any person or business entity that owns and operates a covered establishment, which is any industrial or commercial facility that employs at least 75 persons. Labor Code § 1400(a),(b).

An employer who fails to give the requisite notice before ordering a mass layoff, relocation or termination is liable to each affected employee for:

  • Back pay at the average regular rate of compensation received by the employee during the last three years of his or her employment, or the employee’s final rate of pay, whichever is higher.
  • The value of the cost of any benefits to which the employee would have been entitled had his or her employment continued. This includes any medical expenses incurred by the employee that would have been covered under an employee benefit plan.

The court may award reasonable attorney fees as part of costs to any plaintiff who prevails in such an action. Labor Code. § 1404. An employer who fails to give the requisite notice is also subject to a civil penalty (payable to the state) of not more than $500 for each day of the violation (no matter how many employees are involved).

 

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