The recent economic lull has lead to increased layoffs across different industries. Employers may be required to give advance notice to affected employees and certain government entities. There are Federal and State laws which discuss the issue of notice owed to employees before large layoffs. The Federal law is known as the Worker Adjustment and Retraining Notification or ‘WARN’ Act. California’s version of the WARN act (AB 2957, the ‘baby’ WARN Act) contains additional provisions employers should be aware of. The baby WARN Act applies to “mass layoffs”, “terminations” and “relocations” at “covered” establishments. There are no regulations interpreting the California version which makes it difficult to understand.

Continue Reading California ‘Baby’ WARN Act may Surface During Recession

Quan v. Arch Wireless involved the use of employer-provided pagers in the Ontario Police Department in California. The official city policy stated that the department had the right to review messages officers sent using the pagers. The policy clearly stated that there was no privacy for any electronic messages at work, including email and text messages. Supervisors, however, told employees that if they paid overage charges themselves, the messages would not be audited. Quan, who is a member of the SWAT team, sent many sexually explicit text messages to his wife during work hours. He also neglected to pay the overage charges. The police department eventually read the text messages in connection with an audit for text message overage charges. The text messages ultimately lead to disciplinary action against Quan. Quan and other employees sued the department for violation of their constitutional right to privacy. At trial, the department relied upon its formal computer use policies and procedures, which Quan had signed a written acceptance, to justify its actions. Quan argued that his supervisor had implemented a different informal policy causing him to have a reasonable expectation that his text messages would not be reviewed. The Ninth Circuit held that this “operational reality” trumped the “formal written policies.” Thus, employer’s review of the employee’s text messages violated the employee’s privacy rights, and that of his wife.

Kevin Gagnon, doing business as “Mister Computer,” alleged that his former customer, Asset Marketing Systems (AMS), infringed his copyright in six computer programs that he wrote for AMS by continuing to use and modify them without his consent and that AMS misappropriated trade secrets contained in the programs’ source code. After AMS terminated its contract with Gagnon, it hired seven of Gagnon’s twelve employees to provide directly to AMS the same services they previously provided to AMS through Gagnon. The Ninth Circuit affirmed summary judgment in AMS’s favor, holding that the non-compete covenants contained in the employment contracts of Gagnon’s former employees were unenforceable under Cal. Bus. & Prof. Code §16600.

In Edwards v. Arthur Andersen, LLP, Case No. BC294853 (August 7, 2008) the California Supreme Court holds that non-solicitation of customer agreements are per se unenforceable unless they fall within the statutory or other exception permitted under the law. California law has long protected the rights of employees to lawfully pursue any trade or profession. For more than 100 years California law has invalidated any agreement between an employer and an employee which purports to limit or restrict an employee’s ability to work in their trade or profession following the employment. Many other states permit such “non-compete” agreements between employers and employees as long as the restraints on competition are reasonable. In the Arthur Andersen case, the California high court rejected arguments that more narrow agreements – those that limit a former employee’s ability to solicit the former employer’s customers for some specified period of time – did not run afoul of Business and Professions Code §16600 and thus, were valid.

California’s Business and Professions Code §16600 provides that “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void, except as provided in this Chapter [§§16600-16602.5].”
 

Continue Reading California Supreme Court Rejects Contracts Restricting Former Employee’s Ability To Solicit Customers: Edwards v. Arthur Andersen, LLP

Nineteen former employees who signed releases after being terminated in a RIF and who did not file EEOC charges may proceed in joining the class bringing ADA claims against their former employer. The plaintiffs alleged the waivers were invalid under the Older Workers Benefit Protection Act (“OWBPA”) because they misrepresented the number of employees selected for termination, failed to accurately list those selected for termination, were not written in a manner reasonably calculated to be understood by the average employee, and did not disclose the criterion used to select employees for termination. The plaintiffs also claimed they were not given the requisite 45 days to decide whether to sign. If the plaintiffs’ allegations were true, the waivers would be invalid; therefore the court denied the employer’s motion to dismiss based on valid waivers. The fact that nineteen employees did not file claims with the EEOC also was not a bar. Those employees may properly “piggyback” on the timely filed charges of two other plaintiffs who alleged classwide discrimination. Such charges gave sufficient notice to the employer of the classwide discrimination claims alleged in the complaint.