San Francisco Employment Law Firm Blog

March 23, 2019

How to Decide Whether to Sue Under FMLA or CFRA Or Both

If you are bringing a lawsuit against your employer for violating your medical leave rights, there are a number of possible important reasons why you should consider including only FMLA, only CFRA or both claims in your lawsuit, even if they appear to be in many ways similar:

Avoiding removal of your case to federal court. If you include the federal FMLA claim, in some cases you employer will have the right to remove your case from State to Federal Court. While this is not the end of the world, there are a number of important advantages to pursuing your case in State court, and if there is a way to prevent removal, you should consider suing the employer only under CFRA. If removal is not an issue, however, then including both FMLA and CFRA claim might be advantageous to maximizing your right to recover damages, as mentioned below.
Individual liability under FMLA. Interestingly, under FMLA (but not CFRA), individual managers may be held liable for violating your FMLA rights if you can show that a specific individual exercised control over your employment and the decision to terminate. Nardodetsky v Cardone Industries, Inc. (E.D. Pa. Feb. 24, 2010). However, no individual liability exists under CFRA and only the organization can be held liable. While you might not necessarily want to go after the personal pockets of the manager who terminated you, including individual defendants in the lawsuit can be strategically advantageous by applying additional pressure on the employer to spend more money on defending the case, providing access to broader discovery in the case, and therefore – “encouraging” the employer-defendant to consider settling the case sooner than later.

February 11, 2019

How To Make Your AWOL Termination Case Stronger

by Arkady Itkin

One of employers’ most common defense in AWOL termination cases is claiming that the employee was not fired but he “automatically resigned”. The video below talks about one strategy on how this defense can be effectively defeated:

January 26, 2019

Proving Retaliation Case For Reporting Tax Fraud in California

by Arkady Itkin

A accountant, auditor or any other finance professional needs to know a few critical things about proving retaliation case for reporting tax fraud. In those types of cases, you may want to obtain through discovery copies of the relevant tax returns to show fraud. However, the company can avoid producing these tax returns by claiming taxpayer privilege. This privilege precludes the forced disclosure of tax returns and of the information contained in those returns. (See
Schnabel v. Superior Court (1993) 5 Cal.4th 704, 719-721; Sav-On Drugs, Inc. v. Superior Court (1975) 15 Cal.3d 1, 6-7; Brown v. Superior Court (1977) 71 Cal.App.3d 141.) However this does not prevent a claimant from speaking up when he discovers that employer is filing incorrect or fraudulent returns. This privilege also doesn’t preclude a wrongful termination claim if the employee is discharged for this type of activity.

Proving this type of retaliation case doesn’t require that the employer be forced to produce such tax returns or their content. The reporting employee’s ability to prove his retaliation case only turns on whether he was discharged for communicating his reasonable belief that the employer was not properly reporting its tax obligation. Haney v. Aramark Uniform Services, Inc. (2004) 121 Cal.App.4th 623, 641.) The elements of the case can be proved without violating the implied taxpayer privilege. Although it would of course strengthen his case, the employee doesn’t have to present the contents of tax returns in order to prove this retaliation case. After all, the crux of this type of case is not in whether the tax impropriety took place, but whether the employee was retaliated or fired for reporting this issue in good faith.

January 16, 2019

Start-Ups: A Critical Issue In Investor Rights Agreements

by Arkady Itkin

One important issue that you should pay a particularly close attention to when entering into an investor rights agreement with the people who are looking to invest into your start-up is the section in that agreement that talks about the degree of involvement that investors will have the right to in the day to day operations of your company. Ideally, you want your investors to have as little control as possible over your operations, and to have their rights limited to reasonable access to your company’s financials. For instance you can agree that you will deliver your profit and loss statements, balance sheets and other common financial documents to the investors every fiscal quarter.

You should pay attention to any language in the agreement that in so many words suggests that your investors have the right to walk into your office and tell you how to do your job, who to hire, how to develop and market your product, how to design your website, etc. After all, no CEO enjoys this type of “oversight” that will likely stifle his ability to move his company in the desired direction as soon as possible.

Of course, if your investors are not simply passive third parties but your parent company, or a company that is in the same industry as you are, they will likely want to have significantly more involvement in the key aspects of your operations, such as product development, sales strategy, advertising, etc… In this case, the terms of this broader involvement should be carefully analyzed and negotiated to avoid future disputes over who is in charge of what and why. The more specifically you outline what your investors can and cannot do, the lower the chances will be of any dispute with them that can lead to all kinds of problems, including interruption in funding and lawsuits.

November 24, 2018

Three Common Misconceptions About Wrongful Termination Cases

by Arkady Itkin

It’s important to be aware of the following three typical misconceptions that many wrongful termination claimants have, so that you don’t have the same incorrect ideas about the process of pursuing your case:

1.”This is not about money, but about justice”. I hear this statement quite often. Clients really want to emphasize that they are not greedy and that they have a higher goal in pursuing their case. However, you must remember that whether you win your case, or lose, or settle out of court, your employer is most likely not going to admit that they made a mistake, and they are not going to apologize to you. They are also not going to be forced by court or anyone else to change their practices except for in very special circumstances. This is means that the only remedy you have for the violation committed by the employer is monetary compensation. In other words, it is about money now – it’s about you seeking monetary compensation for your job loss and any related losses. This is a perfectly legitimate goal, even if it doesn’t sound as noble as seeking “justice”.

The same applies to the idea of pursuing a case because you don’t want your employer to “get away with what they have done.” Your managers are not going to go to jail for terminating you and they are otherwise unlikely to be punished, since the employer usually believes that they are right and you are wrong, just as strongly as you believe that the opposite is true. And if they end up paying a settlement or a court verdict, their operations will continue as usual. Your case is not about punishing your former employer, but about seeking maximum reward and benefit for yourself. This is a good time to be selfish and worry about how you can benefit from your case, rather than how much you are going to make the other side lose.

November 2, 2018

Most Employee Non-Solicitation Agreements Are Not Enforceable In California

by Arkady Itkin

In the past, in many states, a restraint on the practice of a trade or occupation, even as applied to a former employee, was deemed to be valid if it was “reasonable”. However, California long ago rejected the so-called ‘rule of reasonableness’ when it enacted Civil Code sections 1673 through 1675, the predecessor sections to Business and Professions Code sections 16600 through 16602. These legislative enactments ‘settled public policy in favor of open competition, and rejected the common law rule of reasonableness, and today in California, covenants not to compete are void, subject to several exceptions. . . Edwards v. Arthur Andersen LLP (2008). Section 16600 provides, “Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” Thus, unless a contractual restraint falls into one of section 16600’s three statutory exceptions (§§ 16601 [sale of goodwill or interest in a business], 16602 [dissolution of a partnership], or 16602.5 [dissolution or sale of limited liability company]), it ostensibly is void. Dowell v. Biosense Webster, Inc. (2009). The Dowell case also noted that California does not follow the Ninth Circuit’s exception for “narrow restraints” on practicing a profession.

Section 16600 expresses California’s strong public policy of protecting the right of its citizens to pursue any lawful employment and enterprise of their choice. Advanced Bionics Corp. v. Medtronic, Inc. California courts have consistently affirmed that section 16600 evinces a settled legislative policy in favor of open competition and employee mobility. The interests of the employee in his own mobility and betterment are deemed paramount to the competitive business interests of the employers, where neither the employee nor his new employer has committed any illegal act accompanying the employment change. Diodes, Inc. v. Franzen (1968).

Thus, the typical language contained in employee non-solicitation agreements that states as shown in the example below is invalid: “for a period of at least one year after termination of employment with company x, the employee is prohibited from directly or indirectly solicitating, recruiting or causing others to solicit or induce any employee of company x to switch and work elsewhere…”

October 23, 2018

Employee / Contractor – Understanding The California “Dynamex” Decision

by Arkady Itkin

By now, the California Dynamex decision (Dynamex Opertions West Inc. v. Superior Court) has been thoroughly discussed and analyzed in many publications and legal seminars. However, here is the big picture that both workers and especially employers should keep in mind, as it will help them understand what’s behind this significant ruling, and avoid liability and significant expenses associated with employee misclassification.

Through the Dynamex decision, California’s highest court sought to address common abuses of workers’ rights that became pretty much an epidemic in this new “gig” economy, where employers would classify workers as contractors under the guise of outsourcing or telecommuting. Companies would argue that since a worker is free to perform him duties from anywhere and at the time of his choosing, he should be classified as a contractor. The California Supreme Court, however, made it clear that a worker should be classified as an employee even if he has flexibility in work hours and work location, contrary to what many employers have gotten used to believing. The Court has articulate a new “ABC” test for determining whether a worker can be classified as a contractor that has been the law since. This three-factor test states that in order to be properly classified as a contractor, all of the following criteria has to be met:

(A) that the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact; and

September 30, 2018

Legal Protection for Employee Inventions in California

by Arkady Itkin

June 23, 2018

New 2018 Law Regarding Criminal Background Checks in California

by Arkady Itkin

As of January 1, 2018, a new law in California adding Government Section 12952 to California Fair Employment and Housing Act went into effect. This new law states that it’s is unlawful for employers with five or more employees to include on any application for employment any question that seeks the disclosure of an applicant’s conviction history, inquire into or consider the conviction history of an applicant until that applicant has received a conditional offer. Employer also shall not consider, distribute, or disseminate information about any of the following while conducting a conviction history background check in connection with any application for employment: arrest not resulting in conviction, referral to or participation in pre-trial or post-trial diversion program, or convictions that have been sealed, dismissed, expunged, or legally eradicated pursuant to law.

This new law should help thousands of job applicants with prior criminal history get their foot in the door, as it prohibits any consideration of criminal history until after a conditional employment offer has been made. Further, once an offer has been made and a criminal background check is allowed, the employer cannot simply rescind the job offer because of that criminal history. The law imposes additional requirements on an employer to conduct an individualized assessment about whether a job applicant’s conviction history would negatively impact his ability to perform his job duties. AB 1008 requires that employer assess the following in making that decision: the nature and gravity of the offense, the time passed since the offense or conduct and completion of the sentence, and the nature of the job held or sought.

If the employer ultimately decides to deny employment to the candidate based on the above assessment, then it must provide the applicant with a written notification of the decision. That notification must include notice of the disqualifying conviction, a copy of the conviction history report, and an explanation of an applicant’s right to respond before the decision not to hire is final. If the job applicant decides to dispute the conviction history and notifies the employer in writing of the same, the employer must provide at least five additional days to the applicant to do so, and must consider any additional evidence provided by the applicant in making its final hiring decision.

May 2, 2018

California Broadens The “Employee” Definition in Employee / Independent Contractor Distinction

by Arkady Itkin

On April 30, 2018, the California Supreme Court issued its unanimous ruling in Dynamex Operations West, Inc., v Superior Court, making it even harder for companies to classify workers as independent contractors (rather than employees). The previous standard used for classifying workers as employees or independent contractors had been in place since 1989 and was based upon a multifactor test that considered, among other factors, the worker’s skill, the method of payment by the hirer, existence of contractor agreement between the parties, and the nature of the business to determine the level of control exercised over the worker and respectively – whether sufficient control took place for employee-employer relationship to exist. Thus, companies such as Dynamex had classified their delivery drivers as independent contractors, arguing that their drivers had significant control over their own working conditions by being able to set their own hours and drive for multiple companies.

The new standard adopted by the Supreme Court requires hirers to establish three factors in order to properly classify a worker as an independent contractor – and in the process greatly expands the definition of “employee” under California law:

A. The worker is free from the control and direction of the hirer in connection with the performance of the work, both under contract for the performance of such work and in fact; and