California Supreme Court Grants Review in Case Addressing Validity of Non-Compete Provisions

On October 17, 2007, the California Supreme Court granted review of Alliance Payment Systems, Inc. v. Walczer, a California appellate court decision. This case involved a business dispute between two former partners which they subsequently resolved by way of a settlement agreement. In the settlement agreement, the former partners agreed not to solicit each others' customers for five years. They further agreed that if either received money from the others' customers (even without solicitation) the money would be turned over to the partner who originally had the customer.

In the ensuing dispute between the partners, the appellate court held that both of these provisions violated California Business and Professions Code section 16600's prohibition against contracts in restraint of trade because they were not tied to the protection of trade secrets. However, the court held that the non-solicitation of customers provision was enforceable under the dissolution of partnership exception to Section 16600. Notably, though, the court held that the provision requiring the turning over of monies was not enforceable under any exception to Section 16600. The California Supreme Court subsequently granted review.

The California Supreme Court's grant of review in the Walczer case appears to signal an interest on its part in providing further guidance on non-compete issues under Section 16600. This is further bolstered by the fact that another case addressing these issues -- Edwards v. Arthur Andersen -- is also still pending review before the Court. Please contact us directly to discuss any questions you have regarding the effect the grant of review may have on your workplace.

Appellate Court Potentially Affirms Favorable Interpretation of Employers’ Obligation to “Provide” B

There have been few decisions dealing with the question of whether employers are merely obligated to "provide" meal breaks to employees simplyby making such breaks available or -- as many plaintiffs have argued -- whether the obligation to "provide" meal breaks in factcarries with it an obligation for employers to forcefully ensure that employees are actuallytaking such breaks, e.g., to actively police employees to ensure meal breaks are bothoffered and taken. The answer to thisquestionwill clearly havea significant impact on whether such claims are amenable to class treatment in class actions.

Appearing to address this issue favorably for employers,a California Court of Appeal in Brinker Restaurant Corp. v. Superior Court, 2007 WL 2965604 (Oct. 12, 2007) -- a recent but as yet unpublished decision -- reversed a trial court's class certification order (which included meal and rest break claims), stating that the trial court's order relied on improper criteria and incorrect assumptions, including its failurein deciding the issue of what it means to "provide" meal breaks. The Brinker courtheld that the class certification order was erroneous and had to be vacated because, among other reasons, "the class certification order rests on an incorrect assumption with respect to the meal period claims to the extent those claims are based on the theory that [the employer] had a duty to ensure that its hourly employees took the meal periodsit provided to them, and thus the court abused its discretion in finding that these claims are amenableto class treatment."

Specifically, in Brinker, a group of restaurant employees sued their employer for alleged failure to provide certain rest breaks and meal breaks, or compensation in lieu of such breaks, and also claimed that the restaurant required them to perform "work off the clock" during meal periods. The decision contains substantially positive analysis concerningtheseclaims as well as their amenability to class treatment, including a discussion of whenbreaks must be provided in terms of timing during the workday andthatrest periods may be waived. However,a mostnotable feature of the opinion is that it apparently, although not expressly, endorses the interpretation that an employer's obligation to "provide" employees with a meal break merely means to "offer" meal breaks or to make such breaks available. The Brinker Court cited White v. Starbucks Corp., 497 F.Supp.2d 1080 (N.D. 2007), a positive publishedfederal decisionwhich held that "provide" requires only that employers "offer" meal breaks.Unfortunately, the Brinker decision avoids a completely clear ruling on this question, instead pointing to the trial court's error in simply failing to decide on the issue of the meaning of "provide," but thecite to Whitemay be indicative of the trendin such cases. Hopefully, the Brinkerdecision will ultimatelybe published andsubsequent cases, especially class action cases,willbenefit from havinga clearer answer to the question of how to"provide" meal breaks once and for all.

California Court of Appeal Allows Age Discrimination Case to Proceed Against Google

ACalifornia court of appeal recently gave another stark reminder to employers that certain terminology may be seen by courts as covert ageism and open the door to claims of age discrimination.In Reid v. Google, Inc.,____ Cal. App. 4th ____ (2007),a California court of appeal reversed a superior court's grant of summary judgment on the plaintiff's age discrimination claims.The plaintiff was over 50 years old and worked for Google, Inc.He offered statistical evidence of age discrimination at Google, purporting to show that there was a relationship between age of Google employees and their performance ratings and bonuses received.In addition, he also offered as evidence the alleged ageist remarks of a supervisor, who the plaintiff claimed had stated that the plaintiff did not fit into "the culture" of Google.The plaintiff also alleged that he wascalled "fuzzy," "sluggish," and "lethargic" and that he was told that his ideas were "obsolete" and "too old to matter." Finally,the plaintiff argued that the reasons given to him for his termination when he wasterminated differed from the reasons presented to the court byGoogle in its motionfor summary judgment.

Based upon these facts, the appellate court reversed the superior court's grant of summary judgment on the plaintiff's age discrimination claims, finding that, when combined with the statistical evidence, the allegedcomments from the plaintiff's supervisorwere not, as a matterof law,"stray remarks." Thus, the court found thatthe plaintiff had presented enough evidence to create a triable issue of fact concerning his claims of age discrimination againstGoogle, and sent the case back to the SuperiorCourt to allow it to proceed. Reid v. Google should serve as a reminder to employers to avoid terms that may double as ageist remarks, even if they do so indirectly. For the full text of the court's decision, click here.

California Supreme Court to Review Decision that Could Subject Employers to More Suits Under California’s “Sue Your Boss” Law

Most California employers are aware of California's Private Attorneys General Act ("PAGA") (also known as the "Sue Your Boss" or "Bounty Hunter" law), which allows plaintiffs to bring representative claims on behalf of themselves and other employees for alleged Labor Code violations. Successful plaintiffs can recover up to $100 per employee for an initial violation, and $200 per employee per pay period for subsequent violations. Recently, the California Supreme Court granted a petition for review in Arias v. Superior Court of San Joaquin County (Angelo Dairy), a case that has the potential to greatly increase the number of suits brought against employers under PAGA.

In Arias, plaintiff sued his former employer, alleging PAGA claims for various Labor Code violations, including claims for unpaid overtime and denial of meal periods and rest breaks. The appellate court determined, among other things, that a PAGA-plaintiff may bring an action on behalf of himself and other employees without satisfying the requirements for a class action, which is what the employer had argued should be required. This decision raises the possibility that PAGA may provide a new avenue for the kind of representative actions that Proposition 64 (requiring that actions brought under the state's Unfair Competition Law comport with class requirements) sought to curtail. Specifically, if plaintiffs do not have to face the many hurdles presented by the class certification process, it will be far easier for them to bring representative claims again their employers for alleged violations of the Labor Code.

The California Supreme Court's decision in this matter is one that may well determine whether California employers face a new wave of representative claims under PAGA. Please contact us directly to discuss any questions you have regarding the effect the grant of review may have on your workplace.

Mark S. Spring to Speak at Sacramento Area Human Resources Management Association Seminar Regarding Recent Developments in California Employment Law

On December 10, 2007, Mark S. Spring, the firm's managing partner, will conduct a seminar for the Sacramento Area Human Resource Association andreview material developments that occurred in the world of California employment law in 2007; Mr. Spring will also be providing general advice on policy changes that should be considered to help ensure compliance and minimize risk. Some of the topics that will be reviewed include exempt/non-exempt classification, mandatory arbitration agreements, regulations governing mandatory sexual harassment training requirements, and new guidelines affecting meal and rest break regulations. Click here to view the flyer and register to attend this important event.

Governor Schwarzenegger Vetoes Numerous Employment-Related Bills

Governor Schwarzenegger has vetoed a number of employment-related bills, many of which would have imposed additional financial burdens on California employers. Among the most significant are Assembly Bill 8 (which, among other things, would have requireaffected employers to either make certain minimum health care expenditures or contribute to a statewide pool for health care coverage benefits); Assembly Bill 504 (which would have forced employers convicted of fraud, misrepresentation or misconduct related to a lock-out to make restitution to affected employees for lost wages and benefits); and Senate Bill 622 (which would have penalized employers for the "willful misclassification" of independent contractors).

Please contact us directly to discuss any questions relating to the effect the Governor's actions may have on your workplace.

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New State Law Requires Employers to Grant Time Off to Soldiers’ Spouses

Recent legislation signed by Governor Schwarzenegger creates new rights for the spouses of deployed soldiers. Specifically, Assembly Bill 392 requires employers of 25 or more employees to grant up to 10 days of unpaid leave to qualified employees (meaning those who work an average of 20 or more hours per week for the employer and who are married to members of the U.S. armed forces deployed during a period of military conflict to an area designated as a combat theater or zone, or members of the National Guard or reserves deployed during a period of military conflict). Employees are eligible to take this time off only during "qualified leave periods," defined as periods during which the soldier-spouses are on leave from deployment. Employers may not retaliate againstemployees for requesting or taking the leave provided by this new statute, which goes into effect immediately.

Please contact us directly to discuss any questions relating to the effect this new law may have on your workplace.

FedEx Drivers are not Independent Contractors

For the purposes of reimbursement of work-related expenses, drivers working for FedEx were employees and not independent contractors, a California Court of Appeal recently affirmed.

FedEx hired the plaintiff class members as drivers.Upon being accepted for employment, the drivers executed agreements identifying each of them as an "independent contractor, and not as an employee ...; for any purpose."FedEx required the drivers to provide their own trucks meeting FedEx specifications, to mark the truck with the FedEx logo, to pay for all costs of operating and maintaining the truck, to wear a FedEx uniform, and to lease a scanner from FedEx.

The court disregarded FedEx'scontractual designation of the drivers as independent contractors, stating that the employer's label will be "ignored if their actual conduct establishes a different relationship."As has previously been the case, the court focused on the extent that the employer had the right to control the means by which the worker accomplished the work.In finding that the drivers were employees, as opposed to independent contractors, the court noted that FedEx exercised control "over every exquisite detail of the drivers' performance, including the color or their socks and the style of their hair."The court also found that the terminal managers were the drivers' immediate supervisors and were able to reconfigure drivers' routes without regard to any loss of income by the drivers.Finally, the court rejected FedEx's argument that an entrepreneurial opportunity existed for the drivers.

The court's ruling is yet another reminder of the difficulty businesses face in classifying workers as independent contractors and the consequences that can follow if the wrong classification is chosen. Please contact us directly to discuss any questions relating to the effect this ruling may have on your workplace.

Federal Judge Blocks “No Match” Rule

U.S. District Court Judge Charles M. Breyer granted a preliminary injunction against the so-called "no match" program that would require employers to verify Social Security numbers andterminate workers whose numbers did not match official records.In a ruling issued on October 10, 2007, Judge Breyer granted the preliminary injunction after extending a restraining order blocking the Department of Homeland Security from implementing the rule until the lawsuit brought in August by a coalition of immigration and labor groups (including the American Civil Liberties Union, the AFL-CIO, and the United States Chamber of Commerce) is heard at trial.

Please contact us directly to discuss any questions relating to the effect this ruling may have on your workplace.

Governor Considers Bill to Expand Employee Rights to Protected Leave Under CFRA

Governor Schwarzenegger is currently reviewing AB 537, a bill that would substantially expand the class of employees eligible to take leave under the California Family Rights Act ("CFRA").

CFRA requires employers with 50 or more employees to provide covered employees with up to 12 weeks of protected unpaid leave during any 12-month period 1) to bond with a child born to, adopted by, or placed for foster care with the employee, 2) to attend to the employee's own serious health condition, or 3) to care for the employee's parent, spouse or child who has a serious health condition. At the conclusion of such a leave of absence, CFRA requires that an employer provide the employee a guarantee of employment in the same or comparable position.

If enacted, AB 537 would expand CFRA in two significant ways. First, CFRA would no longer be limited to employees caring for children under the age of 18 or adult children who are dependents. Under the new law, caring for an adult child with a serious health condition would constitute a valid reason for requesting CFRA leave. Second, the list of family members on whose behalf an employee may use CFRA leave would also be expanded. Specifically, under the new legislation, employees would be entitled to also take leave to care for a grandparent, sibling, grandchild, parent-in-law or domestic partner with a serious health condition.

These amendments to CFRA have the potential to significantly increase costs for California employers by expanding the class of employees eligible to take protected leave. Governor Schwarzenegger has until October 14th to decide whether to sign AB 537; however, there are both strong supporters and opponents of the bill, so it is uncertain at this time whether the Governor will sign the legislation into law. In the interim, please contact us directly to discuss any specific concerns regarding the impact of AB 537 on your business.