Monthly Sexual Harassment Prevention Training Sessions Offered At All Five Locations Throughout California

Who Should Attend?
Supervisors that did not receive training by December 31, 2005
Newly hired supervisors
Newly promoted supervisors

Training Sessions That Comply With California Law:
Experienced attorneys at Carothers DiSante & Freudenberger LLP have created an interactive training curriculum that is engaging, cost-effective, and fully complies with the requirements of California Government Code Section 12950.1 (AB 1825). This law requires all California employers with 50 or more employees to provide at least two hours of sexual harassment prevention training to all supervisors every two years. Supervisors employed as of July 1, 2005, must receive this training on or before January 1, 2006.

To assist employers in complying with the on-going requirements of this law, we will be offering monthly training sessions at all five of our locations in California from May through December 2006. The training sessions will be conducted on the third Friday of each month.

Training Locations:
Irvine Los Angeles
San Diego Sacramento
San Francisco

Training Times:
The times for each training session will be:
7:30 a.m. to 7:50 a.m. - Continental Breakfast
7:50 a.m. to 10:00 a.m. - Training Session

Remaining Training Dates for 2006:
October 20, 2006
November 17, 2006
December 15, 2006

Each Two-Hour Training Session Includes:
Continental Breakfast
Informative Materials About Preventing Sexual Harassment and Conducting Investigations
Interactive Discussion of Practical Situations
Certificate of Completion

Cost:
$70 per person (or $60 per person if two or more individuals from the same company attend)

On-Site Training:
Carothers DiSante & Freudenberger LLP can conduct this training at an employer's facility. We typically charge a flat fee to provide this type of on-site training. For employers with a large number of supervisors, this may be a more affordable, efficient way to meet the requirements of this law.

For additional information about on-site training or future training dates at one of our offices, email us by clicking here.

For a downloadable version of our brochure please click here.

New Liability for Non-Compete Agreements

Question: Are there any risks to having an employee sign a covenant not to compete, as long as it is narrowly written?

Answer: Yes. Covenants not to compete are attractive to an employer because they limit an employee's potential to compete with his or her employer after termination of his or her employment. However, California Courts have ruled that such covenants are not enforceable except under limited circumstances surrounding the sale of a business or where necessary to protect trade secrets.

In addition, the most common exception, known as the "narrow restraint" exception, permits non-compete agreements if the covenant is narrowly crafted so that an employee who leaves a company still can work in his or her profession. However, on August 30, 2006, the narrow restraint exception was explicitly rejected by the California Court of Appeal. (See Raymond Edwards II v. Arthur Andersen.) The Court of Appeal's decision makes clear that non-compete agreements between an employer and employee are invalid in California even if narrowly drawn, unless they fall within the statutory or trade secret exceptions. The Court stated that such agreements violate California's public policy in favor of protecting employee mobility. Public policy ensures that every citizen retains the right to pursue any lawful employment and enterprise of his or her choice. The Court specifically held that covenants not to compete are prohibited between employers and employees even where the restriction is narrowly drawn and leaves a substantial portion of the market available for the employee.

Importantly, prior cases have held that requiring execution of a non-competition agreement violates public policy and constitutes an independent wrongful act. An employer's termination of an employee who refuses to sign an agreement that includes an invalid covenant not to compete constitutes a wrongful termination in violation of public policy. Now, with the elimination of the narrow restraint exception, many employers will find that agreements they have used for years have become invalid. Further those newly invalid agreements may actually result in liability for the employer.
Because requiring an employee to execute an invalid non-competition clause as a condition of an employee's hire is an independent wrongful act, an employer must be cautious of requiring employees to sign such covenants. For example, requiring a prospective employee to sign an illegal agreement as a condition of employment will satisfy a necessary element of a tort cause of action for intentional interference with prospective economic advantage.

Accordingly, employers should review any agreements they use that contain covenants not to compete to ascertain whether they fall within one of the exceptions before requiring an employee to sign such a contract. Reviewing the employment agreements before requiring execution of an illegal contract may save the time and money involved in defending a lawsuit.

Governor Signs Minimum Wage Bill

Yesterday, September 12, 2006, Governor Schwarzenegger signed the bill that raises California's minimum wage, currently $6.75 per hour, to $7.50 per hour on January 1, 2007. On January 1, 2008, California's minimum wage will increase to $8 per hour.

The increase will also affect some of California's exempt executive, administrative and professional employees who must meet minimum salary requirements (in addition to a duties test) that are tied to the state minimum wage. Exempt employees must earn a monthly salary equivalent to no less than two times the state minimum wage for full-time employment. With the current minimum wage of $6.75 per hour, exempt employees must earn a monthly salary of at least $2,340 ($2,340 = $28,080 ÷ 12), which is an annual salary of at least $28,080 per year ($28,080 = 2 x $6.75 x 40 hours x 52 weeks). On January 1, 2007, the minimum salary requirement to qualify as an exempt employee will increase to $2,600 per month, or $31,200 per year. On January 1, 2008, the amount exempt employees must earn will increase to $2,773.33 per month, or $33,280 per year.

Marie DiSante Participated In A Roundtable Discussion On Recent Employment Cases & Their Impact On The Law - Article Appeared In The August 2006 Issue Of California Lawyer

Marie D. DiSante, founding partner of Carothers DiSante & Freudenberger LLP, recently participated in a roundtable discussion on several employment cases and their impact on the law. This roundtable appeared in the August 2006 issue of the California Lawyer.

Roundtable discussion focuses on two recent disability accommodation decisions Raine v. City of Burbank; a case of first impression Gelfo v. Lockheed [click here for related article]; two sexual harassment decisions Lyle v. Warner Brothers Television [click here for related article], a California Supreme Court case, and EEOC v. National Education Association of Alaska, a Ninth Circuit Court decision; and the closely followed meal and rest break case Murphy v. Kenneth Cole Prod. [click here for related articles] pending before the state supreme court.

Further Revisions To California’s Required Sexual Harassment Training

Today, the Fair Employment & Housing Commission posted on its website the revised sexual harassment training and education regulations that it adopted in its August 29, 2006 meeting.

On August 29, 2006, the Commission adopted modified proposed regulations on Harassment Training and Education, interpreting Government Code section 12950.1 [A.B. 1825], which requires harassment training for supervisors of employers with 50 or more employees. The August 29, 2006, regulations modify earlier June 20, 2006 regulations, which this blog commented about here. The August revisions can be viewed at the Commission's website here.

The August revisions clarify the issues about who is qualified to design and teach the sexual harassment training, the frequency of training required for supervisors, and whether the sexual harassment training requirement applies to supervisors outside of California. The major revision made in the August proposed regulations clarify that supervisors who are located outside of California and supervise employees within California are not covered by the regulations. Therefore, supervisors located outside of California are not subject to the sexual harassment training requirements under the proposed regulations.

The other clarification made in June 2006 regarding which employees are counted within a company in order to determine whether a company has 50 employees remained unchanged. The proposed regulations state that for the purposes of counting the 50 employees, employees both inside and outside California should be counted.

Additionally, the language added in June that harassment training for an employee does not create an inference that that employee is a supervisor also remained in the proposed regulations. Furthermore, at the August 29th meeting, the Commission added language that a contractor who attends sexual harassment training will also not be inferred to be an "employee or a supervisor" for the employer providing the training. The Commission previously stated that it "does not want to discourage employers from offering two hours of harassment training to a variety of non-supervisory employees for fear that these employees might be construed to be supervisors on the sole basis that they had received harassment training."

On October 2, 2006,the Commission will decide whether to adopt the August 29, 2006, modified regulations or make further changes to its proposed regulations. Anyone interested may submit their comments about the proposed regulations by 5 p.m. on September 15, 2006. Comments can be submitted to:

Ann M. Noel
Executive and Legal Affairs Secretary
Fair Employment and Housing Commission
455 Golden Gate Avenue, Suite 10600
San Francisco, CA 94102
email: regs@fehc.ca.gov

Carothers DiSante & Freudenberger LLP offers training conducted by its attorneys that fully complies with the requirements of California Government Code Section 12950.1 (AB 1825) and is actively monitoring the proposed regulations discussed above to ensure compliance. For more information about CDF's training classes, click here.

Free Seminar On Document Retention Policies - September 19th

The paperless office remains a dream for many companies. Records accumulate in drawers, file cabinets, and computers.

On September 19, 2006, CDF attorneys will conduct an informative Roundtable discussion about what documents employers are required to keep, how long they must keep them, and why it is important.

Attendees will receive valuable information on both state and federal requirements, and a summary chart to guide them through the paper maze.

There is no charge for attendance. Click here to register, and provide your name, your company's name, and the location of the HR Roundable you would like to attend.

Locations & Times:

Los Angeles
11:30 a.m. to 1:00 p.m. Lunch provided.
707 Wilshire Blvd., Suite 5150
Los Angeles, CA 90017
(213) 612-6300

Orange County
7:30 a.m. to 9:00 a.m. Continental breakfast provided.
2600 Michelson Drive, Suite 800
Irvine, CA 92612
(949) 622-1661

San Diego
7:30 a.m. to 9:00 a.m. Continental breakfast provided.
4510 Executive Drive, Suite 300
San Diego, CA 92121
(858) 646-0007

San Francisco
7:30 a.m. to 9:00 a.m. Continental breakfast provided.
260 California Street, Suite 500
San Francisco, CA 94111
(415) 981-3233

California Likely to Increase Minimum Wage To Highest In Country

As chronicled on this blog (here, here, and here), Governor Schwarzenegger and the state legislature have been in an embroiled dispute over increasing California's minimum wage for over one year. The major area of disagreement between the Governor and the legislature was whether the state's minimum wage would be indexed for inflation so that the minimum wage would automatically increase each year. Last year the Governor vetoed a bill requiring this automatic increase each year.

It appears that there has been an agreement reached. Initial reports are that the agreement between the state legislature and the Governor calls for an increase the state's minimum wage by $1.25 over the next year and a half to $8 per hour. The agreement specifies that the minimum wage will increase by 75 cents per hour next January, increase again by 50 cents per hour the following January, and there will be no automatic increases each year due to inflation. Currently, the California minimum wage is $6.75 per hour.

Amended Standing Provisions of Proposition 64 Relate To Pending Cases

Californians for Disability Rights v. Mervyn's, 2006 DJDAR 9607 (Cal. July 24, 2006)

The California Supreme Court held that the amended standing provisions of Business and Professions Code section 17200 that were approved by Proposition 64 apply to cases already pending when Proposition 64 took effect.

Californians for Disability Rights (CDR), a nonprofit corporation, filed a lawsuit against Mervyn's alleging that Mervyn's failed to provide adequate pathway space for persons with mobility disabilities. CDR did not claim to have suffered any harm as a result of Mervyn's conduct but instead purported to sue on behalf of the general public. A trial court entered a judgment in favor of Mervyn's on February 2, 2004. CDR appealed. While the appeal was pending, Californian voters passed Proposition 64 on November 2, 2004, which limited private enforcement of unfair business competition laws to people who have suffered an injury and who have lost money or property. Mervyn's moved to dismiss CDR's appeal, arguing that Proposition 64 eliminated CDR's standing to prosecute the action. The court of appeal denied the motion, holding that the standing provisions did not apply to cases pending when Proposition 64 took effect.

The California Supreme Court reversed and remanded. Before Proposition 64, anybody acting in the interest of itself, its members, or the general public could bring suit under California's unfair competition laws. Proposition 64 changed the standing requirements, thereby limiting private enforcement actions. In deciding whether a law is prospective or retroactive, function is examined, not form. The law's effect on a party's rights and liabilities is considered. Proposition 64 did not change the substantive rules governing business and competitive conduct, nor did it eliminate any right to recover. Rather, it only limited standing to those persons who have suffered injury. To apply Proposition 64's standing provisions to this case and other pending cases is not to apply them "retroactively" as the Court has defined that term "because the measure does not change the legal consequences of past conduct by imposing new or different liabilities based on such conduct."

Amended Standing Provisions of Proposition 64, Applying to Pending Cases, Do Not Expressly Or Implicitly Forbid Amendment Of Complaints To Substitute New Plaintiffs

Branick v. Downey Savings and Loan Association, 2006 DJDAR 9612 (Cal. July 24, 2006)

The California Supreme Court held that Proposition 64 does not affect the ordinary rules governing the amendment of complaints and their relation back and that courts could permit a plaintiff to amend a complaint to satisfy Proposition 64's standing requirements. However, whether Plaintiffs in this case can amend cannot be determined because they have not yet filed a motion for leave to amend, identified any person who might be named as a plaintiff, or described the claims such a person might assert.

Plaintiffs sued Downey Savings and Loan Association, alleging violations of Business and Professions Code sections 17200 and 17500. They brought the action on behalf of the general public. The trial court entered judgment against plaintiffs, finding the claims were pre-empted by the federal Home Owners' Loan Act. After an appeal was filed, Proposition 64 passed, which amended the statutes to give standing only to those plaintiffs who have suffered injury in fact and lost money or property. The court of appeal found Proposition 64 applied to this case and remanded to the lower court to determine whether this case warranted granting leave to amend.

The California Supreme Court affirmed. The companion case of Californians for Disability Rights v. Mervyn's (for related article click here) confirms that the amended standing provisions of Proposition 64 apply to cases pending when the proposition took effect. The proposition does not expressly or implicitly forbid the amendment of complaints to substitute new plaintiffs. A rule barring amendments to comply with Proposition 64 would not rationally further any goal articulated by the voters. Whether Plaintiffs in this case may amend cannot be determined yet, as they have not filed a motion for leave to amend, identified a substitute plaintiff or described the claims a new plaintiff may assert. If a motion to amend is filed, the trial court should decide the motion by applying established rules governing leave to amend and the relation back of amended complaints.

Dave Carothers of CDF Presents Ethics Training To Over 250 Cubic Corporation Employees

More than 250 San Diego-based defense, transportation and corporate employees attended training meetings this summer as part of the annual Ethics Training that Cubic Corp. has offered for more than 20 years.

The key message of the training was that employees must avoid even the appearance of impropriety in their business practices, because even if they have committed no crime, it could still cost Cubic hundreds of thousands of dollars to explain that in court.

Employees attending the Aug. 3 ethics session were joined by four members of the Cubic Corporation Board of Directors, who attended to show their commitment to Cubic's standards of ethical business conduct. The session was videotaped for eventual distribution to other Cubic sites.

"What we hope to do in these sessions is to sensitize you to the gray areas," said Dan Jacobsen, vice president and chief compliance officer for Cubic Corporation. "We assume that the employees know right from wrong, or we wouldn't have hired them. We want to instill in them a desire to call and ask for help."

Presenting the Aug. 3 seminar were two trial lawyers: Carolyn Oliver, a former Assistant U.S. Attorney who now heads The Alliance, a legal practice that handles business contracts, negotiations and complex federal criminal defense cases; and Dave Carothers, managing partner of Carothers DiSante & Freudenberger LLP, whose areas of practice include labor and contractual litigation.

Carothers, who has a military background as well as extensive legal experience, outlined some of the ethics problems that most concern government regulators: antitrust violations, price-fixing, bribes to foreign nationals, insider trading and conflicts of interest. He said companies that break these laws can pay fines from $5,000 to $75 million, depending on size of the company and the nature of the violation.

If Cubic was only a U.S. corporation, complying with these laws alone would be a challenge. However, as Jacobsen stated, "the sun never sets on Cubic." The company must also comply with the national laws of all the countries where it does business.

General guidelines for all employees worldwide are described in the Ethics, Standards of Conduct and Compliance section of Cubic's Employee Handbook, which along with other ethics information is also posted on the Corporate Intranet. Jacobsen emphasized that even though not all employees worldwide are covered by U.S. laws, they must still adhere to Cubic's employee policies.

Carothers observed that while many companies have ethics policies, those policies don't hold much weight in a court of law unless the companies take "affirmative, proactive steps" to make sure employees are aware of and adhere to them. "They have to be used, they have to be part of your cultural blood. They have to be reinforced ...; revamped, revised and debated within a company," Carothers said. "You can't just put policies on the shelf and bring them out when a lawsuit's filed. They've got to be a regular part of your work life."

If an employee believes that an ethical principle or law is being violated, they should first raise the issue with their manager. If the manager does not address the issue, or if the employee is not comfortable discussing the issue with their manager, or is not satisfied with the manager's response, they should contact Legal, Human Resources, Jacobsen or use the anonymous Ethics Hotline.

In addition to the annual ethics training, Jacobsen and the Corporate Legal Department are planning future workshops on international antitrust issues and the U.S. Foreign Corrupt Practices Act and similar laws of foreign countries.

Here are a few examples that highlight some of the "gray" ethical dilemmas Cubic employees may face:

Situation: You are a Cubic employee whose brother is the program manager for a prime contractor which has just awarded a subcontract to Cubic. The prime contractor is sometimes also a competitor to Cubic. While you have limited interaction with the subcontract in your job at Cubic, you do have some insight into the program. You attend a birthday party for your brother's son and present him with the latest Buzz Lightyear action figure toy. While at the birthday party, your brother asks you if you have heard anything new about his program, and if you can explain why Cubic raised its price on a particular product used in the program.

Potential issue: Conflict of interest; giving a gift to a customer, or in this case, his family; discussing company-sensitive information with a competitor.

Situation: You are at a bar with two other engineers who are your friends. All three of you work for separate companies that design widgets. The widgets are different designs, but somewhat similar. During the course of the evening, the three of you discuss the different widget designs and devise a business plan to design and manufacture fidgets, a smaller but integral component of the larger widgets, at a substantially lower costs than the current vendors that you know of.

Potential issue: Conflict of interest; discussing company-sensitive information with competitors; violating Cubic's secrecy and invention agreement.

Situation: You do business with General Gibson through your employment at Cubic. You also live near him and occasionally see him at neighborhood parties. The general's teenage daughter sometimes baby-sits your children. One day, your brother-in-law offers you four free tickets to a baseball game. General Gibson is a baseball fan. Do you invite him to the game?

Potential issue: The general is an Executive Branch employee, governed by dollar limits on the value of gifts that he can receive from a single source. Even if the value of the tickets does not exceed the $20 U.S. limit, giving them to the general may place him in a compromising position.

Situation: You have a good friend and golf buddy who works for a competitor. You and your friend are both privy to confidential pricing information in your jobs. You and your friend regularly exchange emails not only at work, but in home email accounts. One day your friend sends a file to your personal account named "Prices_06.doc."

Potential issue: Pricing is company-proprietary information, and sharing it with a competitor is a violation of the employee's duty of confidentiality and a possible violation of U.S. trade secret laws.

Editor
Cal Labor Law

Robin E. Largent is a Partner in CDF’s Sacramento office and may be reached at 916.361.0991 or rlargent@cdflaborlaw.com BIO »

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