California Labor & Employment Law Blog

By Dan Forman

Last week a California court expanded the reach of California’s public policy against non-compete agreements by holding that an employer may be held liable for terminating an employee based on a desire to honor the employee’s illegal non-compete agreement with a former employer.  Thus, even though the new employer did not draft the non-compete agreement and was not a party to the non-compete agreement, the new employer could still be held liable to the employee on a wrongful termination claim simply because it honored the agreement.

In the case at issue, Silguero v. Creteguard, Inc., the plaintiff, a salesperson, signed a confidentiality agreement with her then employer, FST, that precluded her from working in sales for eighteen months following termination from FST.  Shortly thereafter she was terminated and found employment with Creteguard.  FST contacted Creteguard and asked it to honor the confidentiality agreement.  Creteguard terminated Plaintiff’s employment in a writing that stated “Although we believe that non-compete clauses are not legally enforceable here in California, [Creteguard] would like to keep the same respect and understanding with colleagues in the same industry.”

The plaintiff sued Creteguard for wrongful termination in violation of California’s public policy against non-compete agreements.  Creteguard tried to get the case dismissed, arguing that it could not be held liable for another company’s illegal non-compete agreement.  The trial court agreed with Creteguard and dismissed the case.  However, the plaintiff appealed and the appellate court agreed with the plaintiff.  The court reasoned that even though Creteguard was not a party to the illegal non-compete agreement itself, Creteguard’s honoring of the agreement (while knowing it was illegal) was tantamount to a no-hire policy or agreement whereby Creteguard agreed not to hire FST’s employees.  The court explained that such an agreement unfairly limits the mobility of employees and would be void and unenforceable under California law even if standing alone.

Employers should proceed with caution when faced with requests from an employee’s former employer to honor the terms of a non-compete or similar agreement containing restrictions on the employee’s work-related activities.  Assuming the Silguero case is not further appealed and remains good law, this opens to the door to potential litigation and liability against companies who refuse to hire a prospective employee (or who terminate a current employee) based on the employee’s non-compete agreement with a prior employer.
 

By Robin E. Weideman

AB 482, which would restrict the use of credit reports for employment purposes, is pending before the California Legislature this session.  If enacted in its current form, AB 482 would prohibit employers, with the exception of certain financial institutions, from obtaining a consumer credit report for employment purposes unless the information is (1) substantially
job-related, meaning that the position of the person for whom the report is sought has access to money, other assets, or confidential information; and (2) the position of the person for whom the report is sought is a position in the state Department of Justice, a managerial position, that
of a sworn peace officer or other law enforcement position, or a position for which the information contained in the report is required to be disclosed by law or to be obtained by the employer.  This legislation would significantly curtail the ability of employers to obtain or use credit reports in the hiring and background check process.  A hearing on the proposed legislation is scheduled for June 29 in the Senate Judiciary Committee.  We will continue to monitor this legislation and post developments here.
 

By Ryan McCoy and Catherine Ngo

Several pieces of employment-related legislation are pending before the California Legislature this 2009-2010 term.  Some of the more noteworthy items are listed and described as follows:

AB 569 (Emmerson) - This bill would specifically exempt construction employees, commercial transportation drivers, and employees in the security services industry from the meal period provisions of Labor Code section 512 provided that the employees are covered by a collective bargaining agreement meeting certain conditions.  Thus, assuming a valid collective bargaining agreement, an employer in the above industries would not be required to provide a meal period to an employee who works more than five hours in a given work day.  The bill was passed by the Assembly 72-2, and currently the bill awaits hearing in the Senate Committee on Labor and Industrial Relations.

This bill is supported by the likes of the United Parcel Service ("UPS"), who has argued that the bill would allow unionized transportation companies to negotiate flexible terms for the timing of meal periods because current law significantly restricts the freedom of drivers to decide for themselves when they can take their meal periods.  Additionally, the Associated General Contractors argued in support of the bill that although many construction companies and their employees operate under a collective bargaining agreement, recent case law has rendered their agreements inoperative because the meal break statutes supersede any such private agreements.  The opposition appears to come primarily from those who believe that the statute should be applied to all industries, instead of just those provided for in the statute.  Of course, it is obvious that more clarity is needed with respect to meal and rest break provisions, and it is hoped that the California Supreme Court provides clarification on this issue in its pending decision in Brinker Restaurant Corp. v. Superior Court of San Diego County (Hohnbaum).

AB 2727 (Bradford) - This bill would prohibit an employer from denying an application for employment for the reason that the applicant has previously been convicted of a criminal offense unless the employer determines that a) there is a direct relationship between the prior conviction and the employment sought or b) the granting of employment would involve an unreasonable risk to property or persons.  This is an expansion from current legal prohibitions on consideration of criminal history.  Currently, the bill sits in the Assembly Appropriations Committee awaiting a re-hearing after initially passing the Committee on strict party lines.

According to the author, this bill is intended to codify existing federal EEOC policy into state law. However, this bill is strongly opposed by several groups representing private employers, including the California Chamber of Commerce, all of whom argue the bill goes beyond current EEOC policy.  The Chamber specifically argues that it "increases potential liability exposure for hiring decisions by restricting the ability of employers to make their decision based on a job applicant's criminal conviction."   Furthermore, the bill places yet another unreasonable burden on employers, which must take into account such factors as protection of the public, other employees, and property when making hiring decisions.

AB 2772 (Committee on Labor and Employment) - This bill clarifies that an employer wishing to appeal a Labor Commissioner decision with the superior court must first post a bond in the amount of the judgment rendered in the administrative hearing.  This bill is intended to supersede a California appellate ruling, Progressive Concrete Inc., v. Parker, 136 Cal.App.4th 540, 548 (2006), which held that the bond requirement of Labor Code section 98.2(b) is merely "directory," instead of "mandatory and jurisdictional."  This bill states that the bond is indeed mandatory, and the employer would thus be required to first post a bond with the reviewing court in the full amount of the Decision of Award issued by the Labor Commissioner.  There is no opposition to the bill currently on file.  The bill unanimously passed the Assembly Committee on Labor and Employment, and awaits hearing on the Assembly floor.

AB 2773 (Swanson) - This bill would eliminate current judicial discretion to deny attorneys' fees in a case other than a limited civil case, if the prevailing party recovers a judgment that could have been rendered in a limited civil case.  Thus, this bill would overrule the California Supreme Court in Chavez v. City of Los Angeles, 47 Cal.4th 970 (2010), which held that a trial court has discretion in a FEHA case to deny a successful plaintiff his attorneys' fees when the plaintiff chooses to proceed in an unlimited civil jurisdiction, but recovers less than the jurisdictional minimum.   After passing the Assembly Judiciary Committee on strict party lines, the bill now awaits hearing on the Assembly floor.

While its supporters contend that this bill will make the system more fair and equitable, groups such as the Civil Justice Association of California oppose the bill, arguing that it would "undo a judicial deterrent to filing frivolous lawsuits."  The California Chamber of Commerce has also commented that this bill "unreasonably increases business litigation costs by removing judicial discretion to reduce or eliminate exorbitant legal fees in fair employment and housing cases."

AB 2340 (Monning) - This bill gives California employees the right to take three days of unpaid leave in the event of the death of certain relatives.  More specifically, the bill prohibits an employer discharging, disciplining, or discriminating against an employee for requesting or taking up to three days of bereavement leave upon the death of a spouse, child, parent, sibling, grandparent, grandchild, or domestic partner.  The bereavement leave can be taken up to thirteen months following the death, and need not be on consecutive days.  Last week, this bill was passed by the Assembly Appropriations Committee on a 11-5 margin and will now make its way to the Assembly floor.  Notably, similar legislation was vetoed in 2007 by the Governor Schwarzenegger after passing both the Assembly and Senate.

SB 908 (Wyland) - This bill would exempt employers in the armored car industry from the requirement to provide a meal period to their employees.  The bill's author maintains that employees driving armored cars need specific statutory treatment due to both public safety and environmental concerns.  As such, this bill represents another attempt to exempt a specific class of employees from general meal break provisions.  As detailed in previous blog posts, the development of meal and rest break provisions is otherwise in somewhat of a holding pattern due to the looming California Supreme Court decision, Brinker Restaurant Corp. v. Superior Court of San Diego County (Hohnbaum).  Currently, this bill awaits hearing in the Senate Committee on Labor and Industrial Relations.

SB 990 (Dutton) - This bill also seeks to clarify meal break laws by making clear that the requirement to "provide" a meal break means "to make the break available."  The bill would also clarify circumstances under which an employee could waive a meal period or agree to an on-duty meal period.  This bill still awaits hearing in the Senate Committee on Labor and Industrial Relations.

SB 1304 (DeSaulnier) - This bill requires private employers to permit employees to take up to 30 days of paid leave for an organ donation and up to five days of paid leave for a bone marrow donation.  The bill also prohibits retaliation against employees who take this leave, and would authorize an employee to bring a civil action to enforce the provisions of this bill.  Though this bill is certainly well-intentioned and designed to encourage organ and bone marrow donations, many groups, including the California Chamber of Commerce, oppose the bill because a new private sector mandate is not the correct policy to advance an otherwise laudable goal.  As small business bankruptcies are at an all-time high in this state, many argue that increasing the cost of doing business in an already costly environment is not a good idea to pursue at this time.  After passing the Senate Judiciary Committee, this bill has been forwarded to the Senate Appropriations Committee.
 

SB 1370 (Ducheny) - This bill requires that employees who are paid by commission are provided with a written contract on the terms and conditions of employment.  Under existing law, contracts must be in writing if 1) the employer has no permanent and fixed place of business in California, 2) the employer is entering into a contract of employment with an employee for services to be rendered within California, and 3) the contemplated method of payment involves commissions. Under this legislation, any and all employment contracts that envision commissions as a form of payment must be in writing, regardless of where the employer is located and/or where the employee's services are to be performed.  This bill was passed by the Senate Committee on Labor and Industrial Relations, and awaits referral to the full Senate.
 

Employers potentially impacted by the foregoing pending legislation may wish to lodge support or opposition through appropriate channels. 

 

By Alison Tsao

Employers frequently use third-party vendors to conduct background checks and screening services before hiring prospective employees.  In Mendoza v. ADP Screening and Selection Services, Inc., a California court held that an employment screening service has a constitutional free speech right to republish to employers information contained in a “Megan’s Law” website (“MLW”) with respect to sex offenders notwithstanding the statutory prohibitions on the use of such information in the employment context.

Mendoza filed a complaint against ADP Screening and Selection Services, Inc. (“SASS”) alleging that a prospective employer denied him a job because the employer had received a pre-employment background check conducted by SASS that identified Mendoza as a registered sex offender on a MLW.  The statute governing the MLW prohibits the “use of any information that is disclosed [on the MLW] . . . for purposes relating to . . . [e]mployment.”  Cal. Pen. Code § 290.46(1)(2)(E), (4)(A).  SASS filed a special motion to strike Mendoza’s complaint pursuant to the anti-SLAPP statute, which provides that “[a] cause of action against a person arising from any act of that person in furtherance of the person’s right of . . . free speech under the United States or California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim.”  Cal. Code Civ. Proc. § 425.16(b)(1).  The Court of Appeal upheld the trial court’s ruling granting SASS’ anti-SLAPP motion because providing employment screening reports is a “protected activity” notwithstanding the fact that the activity was undertaken for profit.  The Court found that SASS had engaged in constitutionally protected speech on a subject of public interest because of the public’s strong interest in the dissemination of information regarding registered sex offenders to preserve safety in the workplace and to prevent liability to employers who fail to properly investigate prospective employees.  While the California Supreme Court previously ruled in another case that a defendant may not use the anti-SLAPP statute to strike a complaint where the defendant’s underlying conduct at issue was illegal, the Mendoza court interpreted “illegal” to mean violation of a criminal statute, not action which would subject the defendant to civil remedies.  Finally, the Mendoza court held that SASS was entitled to strike Mendoza’s complaint because Mendoza could not, as a matter of law, prevail in a claim against SASS under the MLW statute at issue because SASS, in simply accessing and republishing information it found to the prospective employer, did not “use” that information in making an employment decision.  Mendoza’s claim against SASS for violation of the California Investigative Consumer Reporting Agencies Act (“ICRAA,” Civil Code § 1786.2) also fails because registered sex offenders are not a protected class for purposes of federal or state equal employment opportunity laws.  Of significant note, however, the Court stated that Mendoza could potentially allege a violation of Penal Code § 290.46 against the prospective employer.

While the Mendoza decision is good news for companies in the business of conducting pre-employment background checks, employers must proceed with caution in requesting and using information with respect to registered sex offenders contained on a MLW.  If you have any questions about the proper use of background checks in the pre-hiring process, please contact us.
 

We have received a  number of inquiries regarding the legal authority requiring written notice to an employee of termination or similar change in status, in response to our blog entry on this subject earlier today.  For those who are interested, this is required under 22 Cal. Code Regs. section 1089-1 (d)(2) and Cal. Unemployment Ins. Code section 1089.

By Jeremy T. Naftel

Whenever an employer discharges, lays off, or places an employee on leave of absence, the employer must give the employee a written notice regarding the change in status.  The notice must contain, at a minimum, the employer’s name, the employee’s name, the employee’s social security number, the date of the action, and whether the action was a discharge, a layoff, a leave of absence, or a change in status from employee to independent contractor.  Significantly, the notice need not address the reason for the change in status.  Thus, if you are terminating an employee for theft, you are not required to commit that to writing.

Employers should be very careful when providing a reason for a termination decision.  It can be tempting to blame the decision on factors outside the employee’s control, such as a slow-down in business, when the real reason is poor performance.  If litigation follows, the employer will want to rely on the poor performance as the true reason.  However, at that point it will look like the employer either lied in the termination notice, or is now lying regarding the misconduct.  Either way, the employer will have lost all credibility and will be at a significant disadvantage in the litigation.  Therefore, the employer should either (1) give the true reason at the time of discharge, (2) give no reason at the time of discharge; or (3) give a reason that is sufficiently broad and vague that the employee is satisfied, but that will not preclude a more precise explanation later.
 

By Mark S. Spring

A growing number of organizations are using some type of pre-employment personality assessment test to assist in the hiring process.  A number of these organizations have publicly stated that such tests provide them with a better pool of candidates to choose from, by weeding out those that are not suited for the job.

However, personality tests are expensive to implement.  They also pose legal risks to employers. These risks have been increased by relatively recent state and federal legislation that prohibits discrimination based on genetic characteristics, as well as the recent trend by plaintiffs' attorneys to consider class action claims instead of just challenging employment practices on behalf of their own individual clients.  Because personality is at least partially, if not largely, formed by genetics, an employer who is unable to tie the personality test to the essential functions of the job now faces increased risks when implementing such tests.

This blog certainly does not have the answer as to whether the benefits of such testing outweigh the legal risks and costs, but the Wall Street Journal published an interesting article yesterday discussing this issue.  This article also explains how answer keys with optimum answers for the most common personality tests are now widely available on the internet and many applicants are using these keys to ensure that they do not get weeded out in the testing process.

If you use personality tests to screen job applicants or are considering using these tests (or perhaps if you are about to apply for a job and take one of these tests in the hiring process), we encourage you to review this very interesting article.

By Jeremy T. Naftel

One unfortunate consequence of the recent economic woes is that employers are more frequently faced with the necessity of terminating employees.  A question that often arises is whether to seek a release from the terminated employee.  A release is a document, signed by an employee, in which the employee releases all claims against the employer and promises not to sue the employer.  In order to support a release, there must be “consideration.”  The release is valid only if the employee receives something MORE than that to which he/she is already entitled.  In order to fulfill this requirement, the employer gives the employee some benefit (usually cash).

If you intend to provide the employee anything more than is legally required (final paycheck and accrued vacation), you should consider having the employee sign a release.  If a written release is not obtained, the severance or other benefit given by you (e.g., the right to remain in the office with secretarial support for 60 days while looking for a new job) is a free gift.  The employee can take that free gift and still sue you later for wrongful discharge, discrimination, etc.

The use of releases may be counterproductive where the discharge is for misconduct or serious dereliction of duty.  You do not want to reward an employee who was caught with his/her “hand in the till.”  In addition, you do not want to send a message to remaining employees that misconduct pays.  However, when faced with such issues as reductions in force or sticky terminations when you are unsure that you handled the situation as well as you might have, the use of a release may be appropriate.

It is important to note that releases are not “one size fits all” documents.  A release must be tailored to the particular employee and individual circumstances in which it will be used.  For example, if the worker is 40 years old or older, you will also have to comply with the Older Workers Benefit Protection Act (OWBPA), which provides that an employee may not waive any right to claim under the Age Discrimination and Employment Act of 1967(ADEA) unless the waiver is “ knowing and voluntary.”  Under the OWBPA a release is not “knowing and voluntary” unless the employee is advised in writing to seek the advice of an attorney, given a specified period (21 or 45 days depending on the type of release) to consider the offer, and seven days to rescind the agreement.  If these requirements are not satisfied, the release will be invalid, and you will have paid money in exchange for an ineffective release.

Asking the employee to release certain types of claims can also have more serious consequences.  For example, the Labor Code makes it a misdemeanor and authorizes a penalty for employers who seek to have employees release certain types of wage claims.  For these reasons, employment law counsel should be consulted to the assist in the preparation of any release.
 

Posted by Maria O. Gutierrez

Most employers are already aware that they must verify that their employees are eligible to work in the United States, and that they may be fined if they knowingly hire illegal immigrants.  Currently, those fines vary from $250 to $11,000, depending on the offense.  The United States Attorney General and Homeland Security Secretary recently announced that these fines will be increased by twenty-five percent, the first such increase in nearly ten years.  The government also announced that it is working on a plan to increase criminal penalties for the most egregious of employer-offenders.

Please contact us directly to discuss any questions you may have relating to your obligations regarding verification of employee-eligibility to work in the U.S. or any related issues.

As we start moving into 2008, many employers are beginning to grapple with the need to prepare annual evaluations for their employees.  Without question, performance reviews are important to employees and employers alike.  For that reason, employers may wish to peruse an article published earlier today by Investor's Business Daily that sets out some basic guidelines to help employers make the process as painless and productive as possible (click here to access the article). 

If you have any questions regarding the preparation of employee evaluations, please contact us directly.

Posted by Robin E. Weideman

Earlier today the California Supreme Court issued its long-awaited decision in Ross v. RagingWire Telecommunications, Inc. and held that an employee who was fired for failing a drug test due to medical marijuana use does not have a valid claim for disability discrimination or wrongful termination against the employer. 

The plaintiff in that case applied for and was offered a position as a systems administrator with RagingWire.  In connection with his hiring, he was required to take a drug test, and three days later started work for RagingWire.  Later the same week, RagingWire received plaintiff's drug test results, which were positive for marijuana, and suspended plaintiff.  Plaintiff provided RagingWire with a doctor's note explaining that he was medically prescribed marijuana to treat chronic back pain.  Notwithstanding the doctor's note, RagingWire terminated plaintiff's employment.

Plaintiff subsequently sued RagingWire for disability discrimination and failure to accommodate a disability under the California Fair Employment and Housing Act.  He also alleged a claim for wrongful termination in violation of public policy, arguing that RagingWire's termination of his employment contravened the public policy behind California's Compassionate Use Act (the California statute exempting users of medically prescribed marijuana from criminal liability under certain state laws). 

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In a somewhat disappointing ruling for employers, the Ninth Circuit recently held in NLRB v. Friendly Cab Company that taxicab drivers were improperly classified as independent contractors rather than employees.  In reaching its decision, the court focused on the control the employer exercised over the drivers and its restriction on the drivers' entrepreneurial activities. 

As background, the National Labor Relations Act ("NLRA") provides employees the right to engage in collective bargaining, but does not extend this right to independent contractors.  Friendly Cab Company ("Friendly") contended that its taxicab drivers were independent contractors and therefore not entitled to collective bargaining rights under the NLRA.  The National Labor Relations Board ("NLRB") concluded that the drivers were indeed employees, rather than independent contractors.  Friendly appealed the decision to the Ninth Circuit, and the Ninth Circuit affirmed.

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Posted by Connor J. Moyle

A recent appellate court decision has confirmed that an agreement providing for 1) written notice of termination and 2) a termination review procedure does not alter the at-will nature of the employment relationship.  Specifically, in Bernard v. State Farm Mutual Automobile Insurance Co. the court held that a plaintiff could not pursue his contract-based cause of action for wrongful termination because he had an at-will employment relationship with his employer that was terminable at any time.

In that case, the parties had entered into an agreement that contained the following language:

     III.A. You or [employer] have the right to terminate this Agreement by written notice delivered to the other or mailed to the other’s last know address.

     III.B. In the event we [employer] terminate this Agreement, you are entitled upon request to review in accordance with the termination review procedures approved by the Board of Directors of the Companies, as amended from time to time.

The former employee argued that extrinsic evidence of the contract’s meaning should be admitted because the language was ambiguous.  However, the court held that the plain language of the agreement was not reasonably susceptible to an interpretation requiring good cause for termination, and instead interpreted the agreement as having created an at-will employment relationship.  The court also held that the termination review procedure referenced in the agreement did not substantively alter the at-will nature of the relationship.

The Bernard decision esssentially confirms that employers may include carefully-drafted provisions for termination notice and review procedures in employment agreements without sacrificing the at-will nature of an employment relationship.  If you have any questions about the implications of the Bernard decision for your business, please contact us directly.

Posted by Nancy G. Berner

The Department of Homeland Security ("DHS") recently responded to Judge Charles M. Breyer’s preliminary injunction halting implementation of the “no match” program.  As discussed in prior blog entries, this proposed program would require employers to verify employee Social Security numbers and fire workers whose numbers do not match official records.

DHS has decided to take a multi-pronged approach.  Sometime in early 2008, DHS intends to issue a supplemental rule, presumably addressing Judge Breyer’s concern that DHS’s current rule fails to analyze the economic impact on employers.  Additionally, last week DHS filed an appeal asking the Ninth Circuit to review and overturn the District Court’s injunction.  DHS has also filed a motion with the District Court, asking Judge Breyer to delay his final ruling on a permanent injunction on the no-match rules until March 24, 2008; that motion will be heard on Dec. 14^th.

Clearly, this is a rapidly changing area of law, and one of considerable interest to employers.  Additional information will be posted as it becomes available.  In the interim, please contact us directly to discuss any questions relating to the effect these developments may have on your workplace.

The U.S. Citizenship and Immigration Services has announced that it will begin imposing penalties against employers who are not using the newly approved and issued I-9 forms as of December 26, 2007. 

The U.S. Citizenship and Immigration Services announced earlier this week that an updated Employment Eligibility Verification Form (commonly known as the "I-9") is available for use by employers.  The form is similar in appearance to earlier versions, but has some significant changes:

· Five documents previously acceptable for proof of identify and employment eligibility have been removed from List A of the List of Acceptable Documents on the form: Certificate of U.S. Citizenship (Form N-560 or N-561); Certificate of Naturalization (Form N-550 or N-570); Alien Registration Receipt Card (Form I-151); the unexpired Reentry Permit (Form I-327); and the unexpired Refugee Travel Document (I-571).

· The most recent version of the unexpired Employment Authorization Document (Form I-766) has been added to List A of the List of Acceptable Documents on the newly updated I-9, which also includes a U.S. passport (expired or unexpired), a Permanent Resident Card (Form I-551), an unexpired foreign passport with a temporary I-551 stamp, an unexpired Employment Authorization Document that contains a photograph (Form I-766, I-688, I-688A or I-688B), and an unexpired foreign passport with an unexpired Arrival-Departure Record (Form I-94) for non-immigrant aliens authorized to work for a specific employer.

· Employees are not obligated to provide their social security numbers in Section 1 of the revised Form I-9 unless employed by an employer that participates in E-Verify.  Additionally, employers may now sign and retain I-9 Forms electronically.

The new I-9 Form is available in English and Spanish.  Although employers in the 50 states may use the Spanish version as a translation guide for Spanish-speaking employees, the English version must be completed; only employers in Puerto Rico may actually have their employees complete the Spanish version for their records. 

Even though the updated I-9 Form does not become officially effective until notice is published in the Federal Register (which should occur in the very near future), the government is encouraging employers to start using the revised form immediately; failure to use the updated version after the effective date may result in fines and penalties.  On a going-forward basis, employers may rely only on those documents currently set forth on the List of Acceptable Documents for new employees, as well as those for whom reverification is necessary.

For years, the Social Security Administration (“SSA”) has been sending “No-Match Letters” to employers who had a significant number of employees whose social security numbers (“SSN”) did not match their personal information.  The SSA, however, provided unclear guidance for responding to the letters, and little consequence appeared to befall those employers who ignored them. 

Last year, the U.S. Immigration Customs Enforcement, a legacy of the disbanded INS, changed all that.  It announced the use of no-match letters to target employers in high-profile immigration raids, including the April 2006 raid of IFCO Systems that led to the arrests of thousands of undocumented workers and numerous current and former IFCO Executives.  In June 2006, the Department of Homeland Security followed-up the IFCO raids with proposed regulations regarding responding to no-match letters.  The final version of those regulations was announced on August 10, 2007 and published on August 15th.  In sum, employers who do not comply with the regulations will be considered to have “constructive notice” of the status of those unauthorized workers who were subjects of no-match letters and whose employment eligibility the employer failed to re-verify.  Click here to review the regulations in their entirety.

In addition to announcing the final regulations, the Department of Homeland Security also announced that it would increase civil penalties by approximately 25% and expand criminal investigations of those employers who knowingly hire unauthorized workers.  Employers therefore now face the potential of significant civil penalties and criminal sanctions for ignoring no-match letters. 

What should employers do?  Following is a brief summary of the steps employers should take after receiving a no-match letter:

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Guest Post by Joe Jotkowitz

How many of us have had employees that could have been described as “having an attitude problem?” How many of us work with people with an attitude problem? Heck, how many of us have an attitude? However, to coach someone on her attitude is usually ineffective and increases the level of confrontation, hostility, and defensiveness.

Is attitude coachable? No, however the behaviors that lead to the perception of an attitude problem are coachable.

Too many times on performance reviews or evaluations, I’ve seen the phrases:

•  “has an attitude problem”
• “not a team player”
• “just not a fit for this environment”
• “doesn’t possess the right personality for this position”

These phrases have the potential to get you in trouble with the law because they can be interpreted in a so many different ways, and they usually don’t produce the change in behavior you are seeking. To discuss someone’s attitude or personality as feedback tends to spark an emotional response. People take these terms personally. They feel as if you’re attacking their personhood as opposed to giving them feedback on their performance. So, that’s the strategy to use, focus on performance.

If you perceive some to have an “attitude” as it where, ask yourself, “What is he doing to come across that way?” In other words, “What are the behaviors?” Perhaps he’s interrupting people… or rolling his eyes… or using negative language such as “no” and “never” when you ask for his opinion… or perhaps he just doesn’t execute tasks that are a part of his job description. These are coachable items. These are behaviors.

One of the techniques you can use to think through someone’s “attitude” or “not a team player” feedback, is to ask yourself, “What did I observe.” In other words, it has to be something an employee did or did not do. These answers will fall into one of four categories:

1. Look: How did he look? (e.g., rolling his eyes)
2. Sound: How did he sound? (e.g., he interrupted people)
3. Say: What did he say? (e.g., using “no” and “never” when requests are made)
4. Did: What did he do? (e.g., not performing the duties outlined in the job description)

When giving feedback for performance reviews, be sure to focus on the performance not the person. This diffuses the potential for conflict and achieves a much more productive result. It’s all about behaviors.

Joe founded The Executive Advisory, a communications consulting firm, and currently serves as Managing Director.

Posted by Nancy G. Berner

Federal legislation aimed at identity thieves has created new concerns for employers. All employers, from Wal-Mart to Mom & Pop, Inc. are subject to the Fair and Accurate Credit Transaction Act (or FACTA), imposing strict requirements on the disposal of employee records. The legislation seeks to cut down on the incidence of “dumpster diving” where enterprising thieves search for sensitive discarded information enabling theft of an employee’s identity. The results are not yet clear, but the potential impact on employers is being felt.

What is the Disposal Rule?
FACTA was developed by the Federal Trade Commission, in part to amend the Fair Credit Reporting Act. Parts of the law are quite familiar; this is the same law that allows consumers yearly free access to their credit reports. Other parts, however, are new and considerably more ominous to employers. On June 1, 2005, the “Disposal Rule” section of FACTA, became law. The Disposal Rule requires any person who maintains employee information for a business purpose to properly dispose of the information, or face civil liability, potential class action lawsuits, and state and federal enforcement actions as well as fines if sensitive information makes its way into the wrong hands.

Who Must Comply with the FACTA Disposal Rule?
If you employ someone, then the Disposal Rule applies to you. Every employer in the United States is required to properly and effectively destroy all documents and materials that contain sensitive employee information. Unlike earlier laws protecting security, such as HIPPA or Sarbanes-Oxley, the Disposal Rule applies to all industries, and even to households employing only a nanny, tutor or gardener.

What Does the Disposal Rule Require of Employers?
The Disposal Rule requires practices that are “reasonable and appropriate” to prevent theft of employees’ identities. The Federal Trade Commission considers burning, shredding or pulverizing paper, and destroying or erasing electronic files to be both “reasonable” and “appropriate.” It may be simpler and more cost effective to conduct due diligence on a disposal company, and hire a reputable document destruction contractor, a practice that is also acceptable to the FTC. It is likely that such contractors will proliferate to fill this need. Already personal shredders have become so ubiquitous that they are offered by such diverse retailers as Williams-Sonoma and Target.

Conclusion
Sensitive employee information, for any and all employees, must be made inaccessible outside of the organization, whether it exists on old fashioned paper, or the latest hard drive. Regardless of the identity of the employer, the identity of those employed is now protected under FACTA.

California employers face a myriad of state and federal requirements pertaining to the types documents they must retain and the length of retention. Carlton DiSante & Freudenberger LLP’s HR Roundtable that took place on September 19, 2006, provided an overview of the general retention requirements for California employers. The handout (“Record Retention Guidelines”) provided to attendees can be downloaded here.

On a similar note, the next free HR Roundtable is scheduled for October 17, 2006. The topic will cover immigration issues for California employers. The HR Roundtable will again take place in Irvine, San Francisco, Sacramento, San Diego, and Los Angeles. We will post more information about the topic and times in the next few days, but if you would like to be informed about the details in advance, click here.

The California Supreme Court’s ruling last week in Dore vs. Arnold Worldwide, Inc. strengthens employers’ ability to terminate employees without cause. The Court ruled that an employee’s offer letter stating that his employment was “at will” and that his employment could be terminated “at any time,” means what it says.

Dore, who was living in Colorado, began negotiations with AWI for a job based in Los Angeles. He claimed that during negotiations AWI had told him that it had a new account that someone was required to manage on a long-term basis, that he would “play a critical role in growing the agency,” that AWI was looking for “a long-term fix, not a Band-Aid,” and that AWI employees were treated like family.

After the negotiations, AWI sent Dore a confirming letter stating:

Brook, please know that as with all of our company employees, your employment with Arnold Communications, Inc. is at will. This simply means that Arnold Communications has the right to terminate your employment at any time just as you have the right to terminate your employment with Arnold Communications, Inc. at any time.

When Dore was later terminated without cause, he attempted to argue that the language in the offer letter was ambiguous because it failed to specifically mention whether his termination could be with or without cause. Furthermore, he argued that there was an implied-in-fact contract that arose out of the comments made to him about the stability of his job, leading him to believe that he could only be terminated for cause.

The Court dispensed with Dore’s argument that the letter was ambiguous:

We disagree with Dore that the verbal formulation “at any time” in the termination clause of an employment contract is per se ambiguous merely because it does not expressly speak to whether cause is required. As a matter of simple logic, rather, such a formulation ordinarily entails the notion of “with or without cause.

The Court continued to explain: 

   An at-will employment may be ended by either party ‘at any time without cause,’ for any or no reason, and subject to no procedure except the statutory requirement of notice.” (Guz v. Bechtel National, Inc., supra, 24 Cal.4th at p. 335.) For the parties to specify—indeed to emphasize—that Dore’s employment was at will (explaining that it could be terminated at any time) would make no sense if their true meaning was that his employment could be terminated only for cause. Thus, even though AWI’s letter defined “at will” as meaning “at any time,” without specifying it also meant without cause or for any or no reason, the letter’s meaning was clear.

The majority’s ruling is very helpful for employers who have clear “at-will” language in either their new hire packages and/or employee handbooks. However, Justice Moreno also notes in a concurring opinion that language authorizing termination “upon notice,” or after a specified notice period could leave the door open for an implied-contract argument.

The employer in Dore used seemingly clear language in its offer letter yet it had to go all the way to the California Supreme Court to have this language enforced. This ruling should be a reminder to employers in California to review the language contained in the offer letters, employee handbooks, and other documentation setting forth the status of employment to ensure that there is no room for doubt concerning the at will status of their employees.

Diane Pfadenhauer, over at Strategic HR Lawyer, has a great post reminding employers to think twice about deducting business costs from an employee’s pay check. In her post, she refers employers to review the U.S. Department of Labor’s opinion letter regarding these types of deductions. Click here to read her post.

In California, state courts have clearly held that employers cannot legally deduct costs that result from simple employee negligence, such as shortages and other losses occurring without the fault on the part of the employee. Business must simply write these losses off as business expenses. However, businesses may deduct an employee’s wages for losses that resulted from a dishonest or willful act or through the gross negligence of the employee. The California Division of Labor Standards and Enforcement’s (DLSE) explanation of what types of deductions are permissible under California law can be found here.

In defending against wrongful termination lawsuits based on poor employee performance, employers need to have the employee’s performance well documented. Joe Jotkowitz at the Executive Advisory provides some great advice for employers on how to manage employees’ performance through performance reviews.  Joe recently developed great materials (found here) that will help managers give employees useful feedback on their performance.  He notes the following about performance reviews:

 Are these conversations easy?  Absolutely not.  However, the risk we run by not having them is even more critical.  When we avoid difficult conversations, we risk three possible employee reactions:

• Fight: Employees are more likely to become defensive and argue with us.
• Flight: Employees are more likely to become upset and leave the organization.
• Fright: Employees are more likely to be stunned and paralyzed and not know what to do.

So, minimize your risk and talk to your directs today... and more regularly.  These types of conversations are great to have within 24 hours of specific events where feedback is necessitated or on a frequent basis (e.g., monthly, quarterly, or bi-yearly).  As a matter of fact, right now is the perfect time for a mid-year check-up.

Joe’s advice is excellent for employers, and the tools he provides helps managers have these tough, but necessary conversations with employees.  While increasing employee performance and morale through good management principles by providing clear feedback with concrete examples about what an employee needs to improve will also help a company avoid litigation or to defend itself if litigation ensues.  The performance reviews also need to be well documented and maintained in the employee's personnel file.

Yesterday, 60 Minutes re-aired a piece on employers' right to terminate employees for conduct that occurs on the employee's private time away from work. One of the employers featured in the story informed its employees that they have 15 months to quit smoking, or else they are fired. The company's president, Howard Weyers said the rationale for this policy was to lower the company's rising health care costs. "I pay the bills around here. So, I'm going to set the expectations," says Weyers. "What's important? This job? And this is a very nice place to work. Or the use of tobacco? Make a decision."

The text of the story can be found here.

In light of the publicity generated by this broadcast, which originally aired in October 2005, any California employer with a similar policy may be at special risk of a lawsuit.

Employment in California is generally at-will, and smoking is not a protected activity. However, it is unclear when an employer's reliance on legal outside activities as a grounds for termination may be challenged as a violation of privacy. The Labor Code also specifies certain limitations of employers' influence and control over employees' private activities. For example, Labor code sections 1101 through 1105 prohibit employers from coercing or influencing employees' political activities. Employers may not "through or by means of threat of discharge or loss of employment" require employees "to adopt or follow or refrain from adopting or following any particular course or line of political action or political activity." Labor Code 1102.

Posted by Mark Spring and David Osborne

1. What is the May 1, 2006 strike that I have heard about and should I be concerned?
May 1 is known as the International Day of the Worker in Mexico. Opponents of recent immigration legislation are using this day to call for "The First American Strike" or "Great American Boycott," a worker strike and boycott to protest recent congressional attempts to crack down on illegal immigration. The strike is meant to underscore the value of Latino workers to the nation's economy and rally against the recently introduced federal legislation. All employers should be concerned about this strike as it is expected to garner unprecedented support from the immigrant workforce and those that support their causes.

2. How can I prepare for and respond to this strike in a manner that allows me to continue operating my business but limits my legal exposure?
A. Employers Can Enforce Their Attendance Policies.
You can certainly enforce your existing attendance policies in responding to employees who do not show up for work on May 1. However, you should refrain from aggressively enforcing their attendance/absenteeism policies beyond normal enforcement. Employers who deviate from their normal attendance/absenteeism policies to severely discipline their employees for being absent on May 1, 2006 may be liable for improperly interfering with their employees' political activities.
B. Do Not Demean The Strike Or Threaten/Demean Employees Who Support Or Want to Participate In the Strike.
Being exasperated by the strike is understandable, but employers need to be careful to ensure that their reaction cannot be interpreted as demeaning the strike or the individuals who voice support for the strike. In addition to potential liability for interfering with their employees' political activities, employers' conduct that could be construed as demeaning or threatening to their employees may be used as evidence of discriminatory animus for disparate treatment claims.
C. Communicate With Your Employees About the Strike Up Front.
Talk to your employees, so you can determine the impact of the May 1, 2006 strike on your operations. If you are in the retail industry, restaurant industry or another service industry that serves the general public, then the impact may not be as severe because May 1 is a Monday. Mondays are generally light days for many service industries, and you may have staff members who normally do not work on Mondays. You can determine who wants to take off May 1 and who is not interested in taking off May 1. Some employees who generally do not work on Mondays may be willing to "pick up an extra shift."
If Monday is not a light day for your industry, you should still communicate with your employees to determine who wants to come to work. You may need to have your operations open on Sunday, have some employees work overtime on Monday, or make other operational adjustments, but if you communicate with your employees beforehand, you will at least have the opportunity to plan for the day rather than simply responding to the situation on May 1.
D. Remind Employees About Your Attendance Policy.
Remind employees about your absenteeism/attendance policy, your policy for requesting days off, your no show/no call policy, and your policy on falsifying the reason for being absent. Consistent enforcement of such policies are not considered to be discriminatory or improper.
E. Provide May 1, 2006 Off To As Many Employees As Your Operations Allow.
Provide May 1, 2006 off to those employees who follow the procedure for requesting the day off to the fullest extent your operations allow. If you revise your schedule to allow employees to have the day off - Document it! If you provide the day off to a large number of employees who properly requested it off - Document it! You want to demonstrate that you provided the day off to as many people as your operations would allow if you get sued by those employees who did not get it off. Use objective criteria such as seniority to decide which employees get the day off if you have more employees requesting the day off than you can accommodate.
F. Be Creative in Your Staffing For May 1, 2006.
Look at your staffing needs on May 1, 2006 and find creative ways to solve them. Can you have your operations open on Sunday and provide Monday off to everyone? Can you pull employees from other departments? Do you have departments that can go dark on Monday? Can you provide those department's employees some training that will allow them to perform the essential duties that must be completed on May 1, 2006?
For example, if you are a manufacturer and expect most of your workforce to be absent on Monday, can you have your employees work on Sunday? If you are in the restaurant industry and most of the workers that you expect to be absent on May 1, 2006 are kitchen employees, can you do food preparation on Sunday? Will one of your food servers volunteer to be a dishwasher on Monday?
G. Explain Why You Cannot Provide The Day Off To Those Employees Whose Requests You Cannot Honor Because Of Your Operational Needs.
After looking at creative ways to schedule and staff your gaps, you may still not be able to accommodate everyone's request to have the day off. For those employees whose requests you cannot accommodate, explain that you cannot honor their requests because of your operational needs. Also remind them that you expect them to be at work on May 1, 2006. Provide them copies of your absenteeism/attendance policy, your no show/no call policy, and your policy on falsifying the reason for being absent.
H. Enforce Your Absenteeism/Attendance Policy In The Same Manner As You Have In the Past.
If you have been lax or inconsistent with enforcing your attendance policies, May 1, 2006 is not the day to get tough. If you do decide to discipline employees for missing May 1, look at other factors in determining the appropriate discipline: How frequently has the absent employee been absent in the past; what is that employee's past disciplinary record and performance; how long has the employee been employed by you; how effectively have you communicated your attendance policy to your employees; and what progressive discipline or other corrective actions have you used for past violations. Make sure the discipline you impose for the May 1, 2006 absence is equivalent to the disciplinary measures you normally impose for such violations.
I. If Your Business Is At Risk of Not Having Enough Workers, Consider Incentive Pay or Other Incentives to All Workers that Work on May 1.
If you have credible information that leads you to believe that you are not likely to have a sufficient number of workers to operate your business, consider offering incentives. For example, employers can offer incentive pay such as double time or bonuses to all workers who work on May 1. If you are supporting the strike but need your workers to come to work, you can offer to make a donation to the primary political group organizing the strike, the Immigration Solidarity Network, for each worker that comes to work on May 1 as an incentive to encourage your workforce to come to work (click here for a link to the Immigration Solidarity Network). The two keys to lawfully implementing such incentives are to (1) make sure that you really have a legitimate risk of not having enough workers to operate your business efficiently before implementing any incentive program, and (2) make sure that you offer the incentives to every single employee that works on May 1 - do not limit the incentive only to those employees whom you believe will not come to work. Such limitation could be prima facie evidence of discrimination.
J. Remember To Properly Review Your I-9 Forms
May 1, 2006 may not be the day to review your I-9 Forms, but the immigration debate has also put pressure on U.S. Citizenship and Immigration Services ("USCIS") to more aggressively enforce the immigration laws that are currently on the books. As a result, employers face the heightened risk of aggressive government enforcement, the material disruption to their operations a raid may cause and criminal liability for their corporate officers. On the other hand, employers who overreact to such risks and who improperly target employees when performing an I-9 audit may face claims of discrimination under the Immigration Reform and Control Act of 1986. Employers interested in such audits are therefore advised to retain legal counsel.

3.Where can I get more information about this strike?
You can get more information about the strike at either of the following websites (which are run by the strike organizers): www.immigrantsolidarity.org or www.actionla.org. If you have any legal questions about how to respond to the strike, you should contact your employment law attorney. At Carlton, DiSante, & Freudenberger, you should contact the following individuals:
San Diego - David Osborne - dosborne@cdflaborlaw.com
Irvine - Chris Carlton - ccarlton@cdflaborlaw.com
Los Angeles - Brian Van Vleck - bvanvleck@cdflaborlaw.com
San Francisco - Heather Sager - hsager@cdflaborlaw.com
Sacramento - Mark S. Spring - mspring@cdflaborlaw.com

Susan M. Heathfield, who writes the blog "About Human Resources" at about.com, has this interesting post on how to develop and implement a policy.

New Spotlight Article: When I call our employment law attorney with a question, the first question he asks me is, "Do you have a policy?" The second question is whether the policy is in the employee handbook. If the answer is no, and even when the answer is yes, he asks, "What has been your practice?" Then, he asks, assuming we had a policy, "Did the employee sign off on the policy and is the signoff sheet in the employee's file?"

Actually, I've heard these questions so many times that I ask myself the same questions daily as I interpret and fairly apply our policies. You want to have the necessary policies and procedures to ensure a safe, organized, convivial, empowering, nondiscriminatory work place. Yet, you do not want to write a policy for every exception to accepted and expected behavior. Find out how to develop a policy.

You can read her post here.

This post is appropriate this year as blogs are drastically increasing. Our firm has been asked by numerous clients about whether they need to implement a "blogging policy." Generally, a company's already existing policies should already cover acceptable and unacceptable employee behavior during company time, and this will apply to employee blogging. However, given a specific company's industry or support for employee's use of blogs, the company may need a detailed policy to address what is proper for employees to write about concerning the company.

Yesterday, the California Supreme Court granted review of the ruling of the Third District Court of Appeal in Ross v. Ragingwire Telecommunications, Inc. that held an employer did not violate California law for terminating an employee who used marijuana for medical purposes.

The lower court held that "[b]ecause the possession and use of marijuana is illegal under federal law, a court has no legitimate authority to require an employer to accommodate an employee's use of marijuana, even if it is for medicinal purposes and thus legal under California law." The court continued, "If FEHA is to be extended to compel such an accommodation, that is a public policy decision that must be made by the Legislature, or by the electorate via initiative, and not by the courts."

Cal Labor Law will provide updates on the status of the appeal.

California employers are subject to a myriad of federal and state requirements for the retention of employment records. Here is a brief list of important records employers should maintain and the time periods they should be retained in order to avoid civil penalties and to protect against litigation. This is a general list that pertains to most employers in California. Employers should consult with an employment attorney to ensure that they are in compliance with all applicable document retention laws. Download file

The United States Customs and Immigrations Service (USCIS) has recently published the new Form I-9, Employment Eligibility Verification. Employers can download the new form at the USCIS website. Employers are required to complete a Form I-9 within three business days of hiring a new employee and are required to retain the forms for three years post-hire or one year after termination of employment, whichever is longer. Employers are required to use this new form by January 2006, but can begin using it before that time.

The Social Security office now offers employers the ability to verify employees' social security numbers online (click here for the website).
The site also provides information to employers about their reporting requirements and what to do if the social security number provided by the employee does not match. Registration is required to use the service, but it appears to be a valuable resource for employers.

Question: May I require my employees to wear a particular uniform?

Answer: California law allows employers to require employees to wear particular types of clothing or uniforms to work. If an employer requires non-exempt employees to wear a uniform, the employer must pay for and maintain it for the employee. What constitutes a "uniform" is not always clear.

According to the California Labor Commissioner, the term "uniform" includes any apparel and/or accessories of distinctive design or color. An employer may prescribe the weight, color, quality, texture, style, form, and make of a "uniform" required to be worn by employees. When an employer simply requires employees to wear "basic wardrobe items which are usual and generally usable in the occupation," the clothing is not a uniform. For example, specifying that employees wear white shirts, dark pants, and black shoes and belts, all of unspecified design, does not constitute a "uniform." The employer is not required to pay for that clothing or its maintenance. If the required clothing can double as street clothes, it is probably not a "uniform."

Some safety equipment or protective apparel must be worn by employees as a matter of law. Proper safety equipment such as goggles, gloves or other accessories or apparel must always be provided by the employer if they are required by a regulation of the Occupational Safety and Health Standards Board.

How is maintenance of a uniform handled?

In addition to the cost of the uniform, the employer must provide non-exempt employees with reasonable maintenance of the uniforms. The employee can either maintain the uniform itself, or pay the employee a weekly maintenance allowance of an hour's pay at minimum wage, provided that an hour's pay is a reasonable estimate of the time necessary to maintain uniform properly. It is reasonable to require employees to maintain uniforms requiring minimal care, such as washing and tumble drying, without reimbursement; however, special care, such as ironing, dry cleaning or separate laundering because of heavy soiling or special color, must be reimbursed to non-exempt employees. An employer may never impose a financial burden on employees, with respect to purchasing or maintaining clothing, which would reduce the employees' wage rate below the minimum wage.

Question: I am considering requiring all new employees to sign an arbitration agreement. What do I need to know to prepare an enforceable agreement?

Answer: Many employers view arbitration agreements as a cost-effective and time-saving method for resolving disputes with their employees. In recent years, the Courts have issued differing opinions on whether such agreements are enforceable. Generally speaking, the courts closely scrutinize arbitration agreements because the employee lacks equal bargaining power, particularly where an agreement to arbitrate is a condition of employment. The courts examine both procedural unconscionability (i.e., oppression or surprise to one side that arises from unequal bargaining power) and substantive unconscionability (i.e., whether the terms of the agreement are unduly harsh or one-sided). The California Supreme Court has held that an agreement to arbitrate is unenforceable only if both the procedural and substantive elements are satisfied, but that these types of unconscionability are viewed on a sliding scale. Armendariz v. Foundation Health Psychare Services, Inc., 24 Cal.4th 83 (2000). In other words, the more substantively oppressive the terms of the arbitration agreement, the less evidence of procedural unconscionability is required.

In Armendariz, the California Supreme Court set forth the minimum requirements for an enforceable arbitration agreement: (1) a modicum of mutuality; (2) a neutral arbitrator; (3) all costs beyond those normally incurred in litigation to be borne by the employer; (4) some discovery; (5) a written decision with some reasons for the award; (6) the same relief available as in litigation. 24 Cal.4th at 103-13. Subsequent decisions by the California courts and the Ninth Circuit Court of Appeal have found unconscionable provisions that restrict an employee's appeal rights to a second arbitrator and to awards exceeding $50,000, require payment of a deposit and fees for each arbitration session by the employee, and limit an employee to a one-year statute of limitations. Fittante v. Palm Springs Motors, Inc., 105 Cal.App.4th 708 (2003); McManus v. CIBC Word Markets Corp., 109 Cal.App.4th 76 (2003); Circuit City Stores, Inc. v. Mantor, 335 F.3d 1101 (9th Cir. 2003).

Employers should keep in mind the risk of invalidation if their agreement is improperly drafted. While the courts have enforced arbitration agreements where only one term is unconscionable and can be severed, they have denied enforcement where the entire agreement was permeated with objectionable provisions or the purpose of the agreement appears to be to obstruct the employee's claims. Compare, Little v. Auto Stiegler Inc., 29 Cal.4th 1064 (2003) (severing provision and enforcing agreement), with Ingle v. Circuit City Stores, Inc., 328 F.3d 1165 (9th Cir. 2003) (refusing to sever or enforce).

Given the complicated issues in this area, employers should consult with experienced employment counsel before drafting or implementing an arbitration agreement. The focus in drafting these agreements should be on changing the forum for resolution of the dispute, rather than seeking to gain a substantive advantage over the employee. Some general "DO's" and "DON'Ts" are worth noting:

* DO consider allowing the employee an opportunity to opt-out of arbitration within 30 days after being notified of the program.
* DO provide a procedure for the selection of a neutral arbitrator.
* DO specify the types of claims that are subject to the agreement.
* DO provide for some mutuality, rather than just requiring arbitration by the employee.
* DO allow for more than minimal discovery.
* DO require a written decision by the arbitrator setting forth the basis for the award.
* DO allow for some judicial review of the decision.
* DO include a severability clause in the event any provision is found unenforceable.
* DON'T bury the agreement to arbitrate in pre-printed complex forms that the employee is unlikely to read.
* DON'T limit the statute of limitations for any claims.
* DON'T limit the employee's ability to pursue class or group claims.
* DON'T require the employee to share the cost of the arbitration fees or to incur other costs that they would not bear in ordinary litigation.
* DON'T limit the recoverable damages.
* DON'T provide for one-sided amendments or changes to the agreement by the employer.