Archives for Employment Law

October 20, 2009

By Nancy N. Lubrano

The California Court of Appeal recently ruled in Dowell v. Biosense that noncompete and nonsolicitation agreements that prohibited departing employees from rendering services to any competing organization and from soliciting or assisting others in soliciting employers’ customers for 18 months after departure were void as a matter of law and unenforceable.

Biosense’s departing employees took subsequent positions that, in Biosense’s view, violated the noncompete and nonsolicitation agreements executed by the employees. After receiving cease and desist letters, plaintiffs, and their new employers, sought injunctive relief to enjoin Biosense from enforcing the noncompete and nonsolicitation agreements.  Although plaintiffs were not entitled to injunctive relief because the 18-month period of restraint had expired, the Court of Appeal affirmed the lower court’s ruling that the agreements were void as a matter of law. 

California law protects the right of individuals to pursue any lawful employment of their choice.  Thus, contracts that restrain individuals from engaging in a lawful profession are facially void unless one of three narrow exceptions apply all of which relate to the dissolution of a business entity.  In Dowell, the Court of Appeal reasoned that none of the three exceptions applied to Biosense’s agreements. 

California courts recognize the strong public policy in favor of open competition and employee mobility.  Indeed, employee mobility is “paramount to the competitive business interests of employers.”  Based on the broad language of Biosense’s agreements, the lower court properly found that Biosense sought to restrain the employees from practicing their chosen profession.  The contractual provisions were not only void under section 16600 of the Business and Profession Code, but also ran afoul of California’s Unfair Competition Law.  Biosense argued, to no avail, that its agreements were valid based on a so-called trade secret exception.  The purported exception based on unsettled case law was unavailing because, the Court of Appeal reasoned, even if it does exist, Biosense’s agreements were not narrowly tailored or carefully limited to protect trade secrets. Rather, they were so broadly worded as to restrain competition.  Such clear contractual restraint is undeniably void under California law.

April 15, 2010

By Garrett Jensen

The United States District Court for the Central District of California recently issued an order denying Plaintiffs’ Motion for Class Certification in two companion cases,Spainhower v. U.S. Bank and Williams v. U.S. Bank.  Plaintiffs, in-store bank managers at U.S. Bank branches located in large grocery stores in California, sued in California state court alleging that they were misclassified as exempt employees. Defendant, after removal of the case to federal court on the basis of diversity jurisdiction, contended that in-store bank managers were exempt from California’s overtime pay and meal and rest requirements under the executive, administrative, and outside sales exemptions:

1.         The executive exemption generally applies to management employees who direct the work of two or more employees, exercise discretion and independent judgment, and have the authority to hire or fire other employees or whose suggestions and recommendation as to the hiring or firing of other employees will be given particular weight. 

2.         The administrative exemption includes employees whose duties and responsibilities involve the performance of office or non-manual work directly related to management policies or general business operations. However, courts have drawn distinctions between administrative employees and production employees, the latter defined as employees “whose primary duty is producing the commodity or commodities, whether goods or services, that the enterprise exists to produce.”  A 2001 California appellate court decision determined that insurance claims representatives were production employees because claims adjusting was the sole mission of the branch offices and the claims representatives were fully engaged in performing the day-to-day activities of that important component of the business.  

3.         The outside sales exemption applies to employees 18 years of age or older, who customarily and regularly work more than half the working time away from their employer’s place of business selling tangible or intangible items or obtaining orders or contracts for products, services, or use of facilities.

Plaintiffs, in seeking to certify a class of salaried in-store bank managers, contended the Court should look to Defendant’s staffing models to determine how an in-store branch manager was likely to have spent his or her day.  However, the Court found the staffing models were recommendations because Defendant treated the managers as owners of their individual branches with limitless discretion as to how to achieve the company’s goals.  Since there was the likelihood of substantial differences in how each member of the proposed class spent his or her day, the court denied to certify the class.

Despite the decision, employers should be mindful that classification of employees based solely on staffing models, rather than on duties performed, will leave employers open to individual and class action lawsuits.  In addition, employers should carefully review the classification of their employees to determine whether their employees are exempt from California’s overtime pay and meal and rest requirements.

Please contact Wesierski & Zurek’s employment attorneys if you have any questions about classification of your employees or other employment-related issues.

April 12, 2010

By Garrett Jensen

In the recent decision of Arenas v. El Torito Restaurants, California’s Second Appellate District affirmed the trial court’s denial of class certification of salaried managers at El Torito, El Torito Grill, and Guadalaharry’s restaurants.  Plaintiffs alleged that defendants, pursuant to corporate policy, automatically classified plaintiffs as exempt based on their job description alone.  As a result of spending more than half their time performing duties delegated to non-exempt employees, plaintiffs argued that defendants violated several Labor Code provisions, including failure to pay overtime wages and provide meal and rest breaks, and committed unfair business practices in an effort to increase profits at plaintiffs’ expense.

Plaintiffs; in seeking class certification of three subclasses of employees:  kitchen managers or chefs; department managers, and general managers; were required to show that questions of law or fact common to the class predominated over questions affecting the individual members, i.e. misclassification was the rule rather than the exception.  Plaintiffs presented evidence the putative class members had been misclassified in that they spent a majority of their workday doing non-exempt work, did not exercise discretion as to restaurant operations, and were required to follow company policy and procedure as to virtually every aspect of their jobs.  While Plaintiffs contended these conditions did not vary from one location to another, the trial court placed greater weight on defendants’ evidence that managers’ job duties and the time spent on particular tasks varied widely based on the location.  The trial court, in holding plaintiffs’ theory of recovery was not susceptible to common proof, concluded there was insufficient evidence of widespread misclassification, and the appellate court affirmed.

Despite the decision, employers need to be aware that classification of employees based solely on job description, rather than on duties performed, will leave employers open to individual and class action lawsuits.

Please contact Wesierski & Zurek’s employment attorneys if you have any questions about classification of your employees or other employment-related issues.

August 3, 2009

By: Nancy N. Lubrano

Employees have a reasonable expectation of privacy in the workplace.  Any intrusion on the privacy rights must be sufficiently offensive or serious to give rise to liability.
In Hernandez, et al. v. Hillsides, Inc., two plaintiffs sought recovery for invasion of privacy and emotional distress damages when they discovered that their employer had installed a hidden surveillance camera in their work space without notifying them.

Hillsides, Inc. operated a private nonprofit residential facility for neglected and abused children, including victims of sexual abuse. When Hillsides learned that an unknown person was accessing a computer in the work space late and night, after plaintiffs had left the premises, to view pornography, it installed the camera. The California Supreme Court held that, although the camera intruded on plaintiffs’ reasonable expectation of privacy, the intrusion was not sufficiently offensive or serious to warrant recovery because the surveillance was “drastically limited in nature and scope, exempting plaintiffs from its reach.” Particularly, the surveillance was never activated while plaintiffs were in their work space. Actionable invasions of privacy must be “highly offensive” to a reasonable person. Plaintiffs could not establish that the intrusion was actionable.

Despite this ruling, California employers must remain mindful that employees retain privacy rights in the workplace.  As such, surveillance in the workplace must be appropriately tailored and implemented to avoid actionable intrusions of privacy.

Wesierski & Zurek LLP regularly advises California employers regarding workplace policies and implementation within the parameters of applicable law.  We also specialize in defending employers against all types of employment-related claims.

February 19, 2010

By Nancy N. Lubrano

In McCarther v. Pacific Telesis Group, Inc., the California Supreme Court ruled in favor of employer Pacific Telesis in holding that Labor Code section 233 does not apply where the employer’s sick leave policy provides for an uncapped number of paid sick days. 

Labor Code section 233 provides that “[a]ny employer who provides sick leave for employees shall permit an employee to use in any calendar year the employee’s accrued and available sick leave entitlement, in an amount not less than the sick leave that would be accrued during six months at the employee’s then current rate of entitlement, to attend to an illness of a child, parent, spouse, or domestic partner of the employee.”  Section 233 is commonly referred to as the “kin care” statute.

Pacific Telesis’s sick leave policy did not “accrue” within the meaning of section 233 because it did not cap the amount of sick leave that could be taken by its employees.  Rather, the policy provided compensation for any missed work due to illness or injury for up to five consecutive days in any seven-day period.  There was no bank of accrued time or cap on how much sick leave an employee could take.  Therefore, the Court concluded, that section 233 did not apply.  Particularly, the Court reasoned that section 233 presumes that the amount of kin care leave available to an employee would be ascertainable, but that Under Pacific Telesis’s policy it was not ascertainable because it did not “accrue.”

Consequently, an employer who allows unlimited sick leave is not obligated to provide for kin care leave.  However, where employers do provide a set amount of sick leave per year – soon to be a mandated minimum of seven days per year under President Obama’s healthcare reform – employers are obligated to permit employees to use half of their yearly sick leave to care for ill family members.