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Under California Business and Professions Code section 16600, any agreement entered into with the purpose of limiting trade or business of any kind is to that extent void and unenforceable. California courts have consistently declared this provision an expression of public policy to ensure that citizens shall retain the right to purpose any lawful employment and enterprise of their choice. The interest of employees in their own mobility and economic prosperity are deemed paramount to the competitive business interests of employers as our society is built on and strongly encourages competition in trade and business.

This means that despite having agreed not to compete, a former employee has the right to enter into competition with his former employer, even for the business of those who had formerly been customers of the former employer. It makes no difference that the covenant not to compete is reasonably limited in time and geographic scope.

In one case, an employment agreement provided in part: “Employee will not render services, directly or indirectly, for a period of one year after separation of employment with Employer to any person or entity in connection with any “competing product.” This agreement was held to violate Bus. & Prof. C. section 16600 and was therefore found void and unenforceable.

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The California Fair Employment and Housing Act (FEHA) protects individuals who are at least age 40 from discrimination based on age in hiring, firing, compensation, and the terms, conditions, and privileges of employment. Because the legislature has included age among the specific categories protected by FEHA, employers are prohibited from discriminating against employees on the basis of age in the terms of employment as well as in the hiring or firing of employees.

FEHA also prohibits mandatory retirement for employees who are capable of performing their jobs adequately, with a few limited exceptions:

* Tenured faculty members at institutions of higher education, if the institution permits reemploying such individual on year-to-year basis.

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An employer may not deduct from employee’s wages moneys lost due to ordinary losses, such as cash shortages, breakage or loss of equipment, etc.) in the absence of showing of dishonesty, willful acts or gross negligence. As the court noted, the law prevents the employer from using wages to shirt business losses to employees, or to make employees insurers of such losses. (Prachasaisoradej v. Ralphs Grocery Co., Inc.)

An employer who resorts to “self-help” in deducting wages of his employees for ordinary losses does so at his own risk. If the employee is found not to have engaged in a dishonest, willful or grossly negligent act, the employee will be entitled to recover the amount of wages withheld, plus any waiting time penalties due.

The above rule applies seems to apply to non-exempt employees only. There is no prohibition on deductions from the earnings of exempt (management level) employees, many of whom work on incentive plans entitling them to a share of profits. Their incentive plan computation of profits properly includes a full range of revenue and expense items, including cash and inventory shortages.

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The executive exemption that relieves employers from the obligation to pay overtime compensation applies to any employee:

* Whose duties and responsibilities involve the management of the enterprise in which he is employed or of a customarily recognized department of subdivision of that enterprise;

* Who customarily and regularly directs the work of two or more other employees in that enterprise;

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Many employees give in the temptation of accepting a lump sum severance upon termination, even when the lawfulness of that termination is questionable. If you find yourself with an offer of severance, I highly recommend that you take your time to consider the severance offer before you accept it.

One of the common reasons that an employer may offer severance to the employee who is about to be terminated is because the circumstances of the termination are questionable and might give rise to legal action by employee. An employer usually requires an employee to sign General Release of All Claims in exchange for severance compensation. By signing that release, the terminated employee waives any and all rights to pursue legal action against the employer. Often, by accepting the severance package, the employee, gives up on his ability to pursue legal claims that might be ground for a much greater compensation / damages. But even if the employer conduct is not tainted with unlawful practice and termination, your severance offer might be highly negotiable.

Regardless of of the terms or your employment and severance payment, you have the right to consult an attorney when executing the severance agreement (most severance agreements remind the employee that he has the right to be represented by an attorney in accepting the severance contract).

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It is not unlikely for employees to have their words and/or conduct to be misinterpreted by their co-workers and have their colleague accuse them of sexual harassment without sufficient reason. An employer has a duty to investigation all sexual harassment allegations. Failure to do so may subject the employer to liability for both sexual harassment and failure to prevent sexual harassment. However, employee accused of harassing often feel helpless and without remedy to prove their innocence.

An employee who is falsely accused of sexual harassment is not without remedy however. That employee is also entitled to a prompt, thorough investigation of the facts and evidence of any alleged harassment. If the employer fails to conduct thorough investigation and instead summarily terminates a worker, he / she may have a defamation claim against the employer. Generally, false complaints of harassment and discrimination are conditionally privileged and do not constitute defamation, unless those accusation are made with malice. To show malice on the part of the accuser, the accused may be able to show whether the accuser had a history personal issues/hostility toward the accused, a pattern of unfounded complaints against co-workers, or any other ulterior, personal motive against the accused. If malice is shown, the liability for defamation of character may be attached to both the employer and employee personally.

If you believe that you have been a victim of defamation at workplace, contact Arkady Itkin – San Francisco employment lawyer to discuss your claims.

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In the ever increasing occurrence of mergers, dissolutions and restructuring of businesses it is not uncommon for an employee to face a situation where he/she is owed wages for work performed, but these wages are unpaid because the entity that purchases the original employer is not willing to pay the wages due or is unable to pay compensation because of dissolution, bankruptcy and/or claims of creditors who argue that they have priority in repayment over other claimants.

Under the circumstances where the assets of a company are sold or transferred, employees may have a priority lien over other creditors for the proceeds of the sale or transfer of assets of a company under California Civil Code section 1205. Under that section all wages earned during the 90 days prior to corporate dissolution or other “not ordinary” business event have priority over virtually all other claims and must be paid first from the proceeds of the sale and transfer. One court noted that wage earners will prevail over other statutory lien holders, including secured creditors such as mortgage lien holders (Myzer v. Emark Corporation (1996)).

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Under California Fair Employment and Housing Act (“FEHA”), an employer must make “reasonable accommodation” for individuals with known disabilities unless it can demonstrate that doing so would be an undue hardship on the business. Failure to make a reasonable accommodation is itself an unlawful practice than can give rise to a civil suit and damages under FEHA.

Under the law, the employer must engage in a timely, good faith, interactive process to determine effective reasonable accommodation. Reasonable accommodation may, but does not necessarily include the following: making existing facilities readily accessible to and usual by individuals with disabilities, such as wheelchair users; restructuring job schedules and responsibilities to allow an employee to attend medical appointments or reduce work load; acquiring or modifying equipment or devices, such as ergonomic chairs and keyboards, etc. Further, the employer has affirmative duty to inform a disabled employee of other job opportunities and lean whether the employee is interested in and qualified for them.

It is important to remember that an employer is not obligated to choose the best accommodation or the one sought by the employee. Rather, the employer has the ultimate discretion to choose among effective accommodations.

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severance-pay-unemployment-benefitsMany employee who are about to be laid off are concerned about accepting the offered severance package, as they fear that accepting a significant lump sum severance from their employer will disqualify them from unemployment benefits.

However, the good news for employees is that under California law, severance pay is not grounds for disqualification for unemployment insurance benefits. One court held that dismissal and severance pay received by employees from employer upon termination of employment was not “wages” for unemployment compensation purposes within provision of § 1265 that payments under plan established by employer for purpose of supplementing unemployment compensation benefit shall not be construed to be “wages”, and benefits shall not be denied because of receipt of payments under such plans. Powell v. California Dept. of Employment (1965) 45 Cal.Rptr. 136.

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The California Fair Employment and Housing Act specifically prohibits harassment based on “race, religious creed, color, and national origin.” Hostile work environment claims based on racial harassment are reviewed under the same standard as those based on sexual harassment. Thus, allegations of a racially hostile workplace must be assessed from the perspective of a reasonable person belonging to the same racial or ethnic group as plaintiff.

Harassment Standard under California Law

To constitute racial harassment, the conduct must be sufficiently “severe” or “pervasive” to later the conditions of the victim’s employment. The victim of the racial harassment must show a concerted partner of harassment of a repeated, routine or a generalized nature” and that the conduct constituted an “unreasonably abusive or offensive work-related environment or adversely affected the reasonable employee’s ability to do his or her job.”

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