Records Retention: What to Keep, How to Keep It

California employers face a myriad of state and federal requirements pertaining to the types documents they must retain and the length of retention. Carothers 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.

SB 1745 - Bill On Domestic Violence Discrimination Passes Legislature

SB 1745, authored by Shelia Kuehl, passed both the Assembly and Senate on September 7, 2006. As it left the Senate, the bill declared that it was the intent of the Legislature to develop legislation that protects victims of domestic violence, sexual assault, and stalking from housing and employment discrimination.

This bill provides that it is against public policy of the state to discriminate against a person in employment because he/she is a victim of domestic violence, sexual assault, or stalking as defined in the bill. Specifically, SB 1745 prohibits any person from discharging, refusing to hire or harass any individual, or otherwise discriminate or retaliate against any individual "because the individual is a victim of domestic violence, sexual assault or stalking." Supporters of the bill state that "the ability to gain and keep a job is vital to the independence and recovery of victims" of domestic violence, while opponents of the bill claimed it would add new employer liability over issues over which an employer has no control. No word on whether the Governor will sign the bill.

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."

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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