Non-Solicitation Agreements of Customers & Employees by Former Employees Are Unenforceable!

November 12, 2018

A California Court of Appeal concluded that what appeared to be a standard non-solicitation of employees provision was, in fact, an unenforceable non-compete that prevented its former employees from carrying out their chosen profession.  As you continue to read I want you to imagine your particular industry and apply it to the facts in the case below. Sales consultants, key employees who interact with customers, manufacturers, and medical staff who interact with patients are a few examples.

Keeping the above in mind, the Court of Appeal in AMN Healthcare, Inc. v. Aya Healthcare Services, Inc. upheld summary judgment in favor of former employees (Defendants) and their new employer defeating an 11 count complaint that asserted claims of breach of contract, misappropriation of trade secrets, interference with prospective economic advantage, aiding and abetting misappropriation of trade secrets, and unfair business practices after four of AMN’s recruiters were hired by Aya and recruited other of AMN’s employees to work for Aya.  In addition, the Court of Appeal upheld an injunction against the former employer from attempting to enforce such agreements in the future and awarded the defendants $190,000 in attorneys’ fees.  

Non-solicit Not Enforceable

AMN and Aya are competitors in the business of providing temporary healthcare professionals (travel nurses) to medical care facilities across the United States.  The employees, recruiters, earned their livelihood recruiting travel nurses so that their employer (first, AMN and, then, Aya) could place those travel nurses with their respective clients.  The AMN employees’ employment agreement provided that “during Employee’s employment with the Company and for a period of one year after the termination….Employee shall not directly or indirectly solicit or induce, or cause others to solicit or induce, any employee of the Company…to leave the service of the Company….” AMN sued four of its former recruiters after they were hired by Aya to recruit nurses.  While the Court focused on California’s broad public policy to allow persons to seek employment and questioned whether Loral Corp. v. Moyes’ enforcement of a similar non-solicit provision survived Edwards v. Anderson, it relied on the actual employment functions of the effected employees, recruiters, to conclude that the contract restrained the employees from engaging in their profession and therefore was void under 16600 to distinguish it from Loral Corp v. Moyes,  a case that upheld an injunction restraining a former executive from raiding his former employer’s employees based on a non-solicit agreement.

Employers Beware:  Not Everything is Trade Secret

AMN’s claimed that the recruiters violated California’s Uniform Trade Secrets Act by soliciting travel nurses that had been placed by AMN, claiming that the travel nurses names and contact information (same as customers) was its trade secret.  However, on summary judgment, the undisputed evidence showed that the recruited nurses had applied to work at Aya years before and had given Aya their contact information before being solicited to work for Aya by the former AMN recruiters.  And, the Court concluded that therefore there was nothing secret about the travel nurses contact information under CalUTSA.  The Court also pointed to a social media network, the Gypsy Nurse Group, a public social media group, as a public source of information from which the recruiters could prospect, even knowing the names of AMN’s travel nurses based on their work history for AMN.

Moreover, one of AMN’s former employees sent email to her personal email account shortly before accepting new employment, attaching a list of persons

Injunction and Attorneys’ Fees

In addition to defeating the Complaint, the Court of Appeal concluded that the injunction against AMN from attempting to enforce its agreement against other California employees was appropriate as it concluded that the provision was void and no other employees should be subject to claims or expenses associated with litigation.

And, while the trial court awarded attorneys’ fees to the defendants and due to the enforcement of an important right affecting the public interest under California Code of Civil Procedure section 1021.5, the Court of Appeal limited its decision to conclude that the fees were appropriate to a prevailing party on a matter of public importance.

Lessons Learned

Look, I get it, businesses do not want former employees taking the remaining staff with them and more importantly do not want them taking customers. The reality is, as noted above, it will be difficult to enforce these types of agreements. Do right by your employees and customers and “hope” they will remain loyal to you!

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How to be a Successful Manager or Supervisor!

November 5, 2018

Over the years of working with business owners, managers, supervisors and employees, I believe I have gained a multitude of knowledge of what it takes for managers and supervisors to be successful in their roles. Soft skills are essential for successful professional development. Plain and simple!

The benefits of having these key employees with strong soft skills include better customer service, improved communications and team interactions, stronger relationships, and increased efficiency.

Here are 8 crucial soft skills managers and supervisors should have in my opinion:

  1. Communication

Managers and supervisors with developed communication skills are able to use listening techniques and nonverbal strategies to improve conversations.

It is essential for a supervisor to be able to balance time constraints and a heavy workload while managing other employees and projects.

Having excellent communication skills allows managers and supervisors to speak with impact, whether it be off-the-cuff dialogue or brief updates to their team. It is essential to keep thoughts organized and to the point.

Giving and receiving feedback is another area that can be improved with developed communication skills. When using the right techniques, feedback can be used to reinforce or change behavior. Keep in mind positive feedback as opposed to only giving negative feedback when something went wrong.

  1. Conflict Resolution

Conflict is when change happens and stances differ. When a supervisor has the ability to manage conflict well, issues come to resolutions and successful relationships are developed.

A supervisor’s ability to define and identify conflict styles, causes, and methods for handling conflict can improve the department’s or organization’s productivity.

According to my research and experience, where training does exist, it adds value: over 95% of people receiving training as part of leadership development or on formal external courses say that it helped them in some way. A quarter (27%) say it made them more comfortable and confident in managing disputes and 58% of those who have been trained say they now look for win–win outcomes from conflict.”

  1. Leadership

Managers and supervisors with leadership skills help bring accountability to their teams by creating a supportive and motivating work environment.

Leaders are able to delegate and manage a wide variety of skillsets. It is important for supervisors to lead their teams in the most effective way by recognizing where the strengths are, where improvement is needed, and how to properly use the skillsets of each team member.

  1. Critical Thinking

Critical thinking is a crucial skill in understanding how to methodically, strategically, and collaboratively make decisions, solve problems, and foster innovation.

Keep in mind that the higher up the ladder a position is, the more essential critical thinking becomes.

A manager or supervisor with critical thinking skills has the ability to develop a step-by-step process from targeting the problem to developing a solution.

Critical thinking also helps in situations in which groups have different thinking styles and need a collaborative environment created to successfully work through issues.

  1. Interpersonal Skills

Different from communication skills, interpersonal skills are important for a manager and supervisor to identify and build a purposeful team culture within an organization.

Interpersonal skills enable an individual to develop highly effective teams that are built upon consensus, effective meetings, social style understanding and relationships.

  1. Time and Priority Management

Supervisors with time and priority management skills can boost productivity and efficiency.

Being able to balance a heavy workload and time constraints while managing and delegating other employees and projects is an essential skill.

It is ideal for supervisors to understand what is urgent and what is important.

The University of Georgia conducted a study that found people who practice good management techniques often find that they are more productive, feel less stressed, get more things done, have more energy, and feel better about themselves.

Managers and supervisors with time and priority management skills are able to understand the differences in employee’s time and priority management and adjust projects and workloads to ensure success.

  1. Diversity and Generational Differences in the Workplace

The University of Florida studied workplace diversity and found that “respecting individual differences will benefit the workplace by creating a competitive edge and increasing work productivity. Diversity management benefits associates by creating a fair and safe environment where everyone has access to opportunities and challenges.”

It is crucial for supervisors to have the ability to be aware of workplace diversity and understand the gaps and differences that exist as well as their impact.

Being aware of diversity issues helps managers and supervisors appreciate the different experiences and places value on the impact it has on the workplace.

  1. Problem Solving

Good problem solving skills are fundamentally important within the workplace and actually translates into enhanced productivity and increased profit.”

A valuable manager and supervisor is someone who not only knows how to take an issue and find the root of the real problem but also has a process for solving the problem in a structured manner. Managers and supervisors with excellent problem solving skills can greatly benefit any organization.

We are in the midst of rolling out a leadership conference that will encompass a number of the ideas presented here. Training managers and supervisors can help reduce potential liability from disgruntled current and former employees. Look for more information soon.


The Battle over LGBTQ Rights is Wrong! Wake up Congress!

October 29, 2018

There are “rumors” that the Federal Government is considering narrowly defining gender as a biological, immutable condition determined by genitalia at birth….

The Department of Health and Human Services … argued in a memo that key government agencies needed to adopt an explicit and uniform definition of gender as determined “on a biological basis that is clear, grounded in science, objective and administrable.” The agency’s proposed definition would define sex as either male or female, unchangeable, and determined by the genitals that a person is born with. Any dispute about one’s sex would have to be clarified using genetic testing. This is a ridiculous notion! Why should it matter if a person determines who they are for whatever reason? Many of the states have protections in place for sexual orientation because they recognize the LGBTQ community needs to be protected.

First and foremost, the courts can continue to define “sex” in Title VII and other civil rights laws to include LGBTQ rights. Most federal court that have examined the issue, have concluded that Title VII’s definition of sex covers LGBTQ discrimination.

Secondly, Congress needs to put this issue to rest and finally amend the civil rights laws and elevate LGBTQ rights alongside race, sex, and all of the other protected classes. Why not? We are spending more time debating about an issue that is NOT going away.

I understand that a portion of our society have not accepted the LGBTQ community for their own reasons. The work environment is different. Workplace protection are put in place to ensure that ALL employees can work in a healthy atmosphere once they walk through the front door of the business. Forget the laws that are in place or not in place. If we respect each other for who we are and what we bring to the table as an employee that is all that matters.

In place of LGBTQ, substitute “African-American”, or “women”. The end result is there were laws put in place to protect these two classes of employees because they were held out as different. Enough said!

 

 


Is In Vitro Fertilization a Protected Medical Condition?

October 22, 2018

I was recently asked by a client if they have to accommodate a female employee who is trying to get pregnant and is thinking about infertility treatments.  She’s considering time off for rest, and perhaps even for some in vitro fertilization (IVF) appointments. Apparently, even her doctor has said that the employee needs “light duty” work during on certain days.

The question posed was whether or not the employer under these circumstances are obligated to provide such an accommodation?

Well, the answer is not entirely clear.

Let’s go through some of the laws that may be implicated:

  • FMLA –The FMLA regulations do not “specifically address” IVF and thus it’s an open question whether the FMLA would apply. One court that addressed the issue made it clear the employee simply did not suffer from a “serious health condition.”

On another note:

  • The EECO has taken a much stronger approach. In doing so, it states that employers that fail to provide protective leave for IVF treatments will be viewed as committing gender discrimination (if no other factors are considered). Their rationale is basically: In doing so, the EEOC has cited to a Seventh Circuit case that reaches back to 2008 which found that the employer was liable for discrimination when it terminated employee for taking time off to undergo IVF. “Employment decisions related to infertility treatments implicate Title VII under limited circumstances. Because surgical impregnation is intrinsically tied to a woman’s childbearing capacity, an inference of unlawful sex discrimination may be raised if, for example, an employee is penalized for taking time off from work to undergo such a procedure.”
  • ADA – Infertility may be an impairment that may “substantially limit” the major life activity of reproduction. Why is this important? Because it may then qualify the employee under the ADA as having a “disability”.   So, in such an instance, employers should review the “reasonable accommodation” portion of the statute. And the employer may decide that a day off for IVF treatment in “reasonable” under the circumstances.

What about state laws?

  • State Laws – May vary. Employers should look very closely at the request and supporting facts and compare both to your particular state anti-discrimination laws.Employers that have employees undergoing treatment for infertility should tread carefully in this uncertain area of law.  Each set of facts should be looked at on a case-by-case basis and consider enlisting trusted legal counsel for advice. It’s a tricky area. Finally, and just to be clear, there are some courts that have found that a woman suffering from infertility does not have a medical condition related to pregnancy under Title VII and the Pregnancy discrimination Act because infertility is a condition that also affects many men as well.

Employers that have employees undergoing treatment for infertility should tread carefully in this uncertain area of law.  Each set of facts should be looked at on a case-by-case basis and consider enlisting trusted legal counsel for advice. It’s a tricky area.


Religious Accommodation: A Favorable Decision for Employers!

October 16, 2018

With the holidays quickly approaching I wanted to remind our readers regarding “reasonable accommodation” for those seeking to be off for Religious holidays. This can work throughout the year as well. Here is the perfect facts and case to use as an example.

Darrell Patterson had worked in Walgreens’ 24/7 call center for six years without incident. He claims Walgreens fired him for skipping an emergency training session held on a Saturday. He’s a Seventh-day Adventist, and it’s against his religion to work on the Sabbath (from sundown Friday through downs Saturday). Until his firing, they had worked cooperatively to schedule around this religious prohibitions, without incident.

Patterson’s religion and Walgreens’ scheduling came to a head when Walgreens asked Patterson to cover an emergency Saturday training session. When he missed the training class, Walgreens fired him.

In Patterson v. Walgreens, the 11th Circuit Court of Appeals upheld the dismissal of Patterson’s religious discrimination lawsuit.

Title VII requires an employer to reasonably accommodate an employee whose sincerely held religious belief, practice, or observance conflicts with a work requirement, unless doing so would pose an undue hardship. An accommodation poses an undue hardship if it causes more than de minimis cost on the operation of the employer’s business.

In Patterson, the 11th Circuit held in Walgreens’ favor because it had tried to reasonably accommodate Patterson’s religion.

Walgreens shifted the regular training schedule to Sunday through Thursday for Patterson. That minimized conflicts. For unusual training sessions that were conducted on his Sabbath, Walgreens allowed Patterson to find other employees to cover his shifts, and he did so on several occasions. Patterson conceded that his supervisor had never refused one of his requests to swap a Sabbath shift with a willing employee.

Regarding the Saturday, August 20, 2011, emergency training session that Patterson was assigned to conduct, besides his supervisor, he called only one employee, who advised him that she could not cover for him because of her childcare obligations. Although Patterson thought that several other employees could have covered the training session for him, he did not attempt to contact any of them.

Walgreens met its obligations under Title VII by allowing Patterson to arrange a schedule swap with other employees when they were willing to do so.
What is the lesson for employers? A documented history of accommodating an employee (whether it’s religion or disability) will go a long way to defeating that employee’s discrimination claim if you are compelled to deny an accommodation request.

This case scenario is a great example. Keep it in mind.

 


Banning Arbitration Agreements & New Background Check & FMLA Forms!

October 8, 2018

Banning Employment Arbitration Agreements

Governor Brown has been busy in the last year of his term signing and vetoing many employment related bills. Fortunately, he decided to veto California Assembly Bill 3080 (Ab3080). This Bill sought to amend the California Fair Employment and Housing Act (FEHA) and the California Labor Code making it an unlawful employment practice to require an applicant, employee, or independent contractor to agree in any contract entered into, modified, or extended on or after January 1, 2019 to arbitrate claims arising under FEHA or the Labor Code. AB 3080, if signed into law, would have prohibited, penalized, and criminalized (under Labor Code § 433) most employment arbitration agreements in California.

This Bill would have been bad for California employers, but also because it was unconstitutional. Brown got this one right! AB3080 was preempted by the Federal Arbitration Act (“FAA”) and therefore unconstitutional. In his veto message, Governor Brown cited his prior veto of a similar bill (AB 465 in 2015) when two supreme court cases then were pending, both of which subsequently came down in favor of preemption and one of them was authored by Justice Kagan, an Obama appointee.

The AB 3080 experiment is important for at least two critical reasons. First, if employers decide to use arbitration agreements in California, they need to ensure that they are drafted with care so as to be enforceable to the fullest extent permitted by law. And second, this is not the last time the concerns raised by AB 3080 will arise in California. The reality is one employers should expect a similar bill to be introduced as soon as next year, and one of California’s gubernatorial candidates very well could sign it, leaving it up to the courts to decide. Were that to happen, however, a constitutional challenge would be mounted to enjoin and challenge it. Stay tuned.

New Background Check Form

Employers who conduct background checks on their employees need to know that a new model Summary of Rights Under the Fair Credit Reporting Act (FCRA) form was issued last week, and employers must start using this form immediately!  Employers generally must provide a copy of this form at the time they provide notice to an applicant/employee that a background check will be conducted, and again if they plan to take adverse action against an applicant/employee based on the results of the report.  The updated form was issued in response to Congress’ passage of the Economic Growth, Regulatory Relief and Consumer Protection Act in May 2018, which provides some identity theft protections to consumers and allows them to request a “security freeze” on access to their credit report in certain circumstances.  The new model form, which incorporates the new security freeze right and makes some other changes. To get a sample go to the “Bureau of Consumer Financial Protection”.

New FMLA Form

On another note, employers with 50 or more employees who are covered by the federal Family and Medical Leave Act (FMLA) also should know that the Department of Labor recently issued new model FMLA forms.  These forms should replace old forms that technically expired May 31, 2018.  The new forms are not materially different than the old ones, but reflect a new expiration date of August 31, 2021.  Employers should begin using these new forms. They are available through the “United States Department of Labor.”

 


New Laws Effective January 2019 & Beyond!

October 1, 2018

Yesterday was the last day for Governor Brown to sign or veto bills this legislative session.  Below is the list of key employment-related bills that have been signed into law. All new laws take effect January 1, 2019 unless noted below.

Bills Signed Into Law

AB 3109 (Disclosure of Sexual Harassment):  This bill makes void and unenforceable any provision in a contract or settlement agreement that prevents a party to the contract from testifying about criminal conduct or sexual harassment in an administrative, legislative, or judicial proceeding.

SB 224 (Sexual Harassment):  This bill amends section 51.9 of the Civil Code to expand the types of relationships that can be subject to a claim for sexual harassment to include lobbyists, elected officials, directors, producers, and investors.  This statute generally applies to work relationships where one person holds himself out as being able to help someone establish a business or professional relationship directly or with a third party.

SB 820 (Settlement of Sexual Harassment Claims):  This new law prohibits provisions in settlement agreements entered into after January 1, 2019 that prevent disclosure of factual information pertaining to claims of sexual assault, sexual harassment, gender discrimination or related retaliation that have been filed in court or before an administrative agency.  The new law does not prohibit a provision that prevents the parties to the agreement from disclosing the amount of the settlement.  Additionally, at the claimant’ request, the settlement agreement may include a provision that limits the disclosure of the claimant’s identity or of facts that would lead to the discovery of the claimant’s identity.

SB 1300 (FEHA Amendments):  This bill amends FEHA in a number of respects, including (1) to add a provision making it an unlawful practice for an employer to require an employee to release a FEHA claim in exchange for a bonus, raise, or continued employment; (2) to make employers liable for any kind of unlawful harassment by non-employees (not just for sexual harassment as under existing law) where the employer knew or should have known of the harassment and failed to take appropriate remedial action; and (3) to add certain statements of legislative intent to make it harder for employers to prevail on harassment claims (e.g. a legislative declaration that harassment cases are rarely appropriate for resolution on summary judgment, and a declaration that a single act of harassment may suffice to support a finding of a hostile work environment).

SB 1343 (Sexual Harassment Training):  Existing law requires employers with 50 or more employees to provide supervisors with sexual harassment training.  This new law expands the training requirement to employers with 5 or more employees and requires that employers provide at least 2 hours of training to supervisory employees and at least one hour of training to non-supervisory employees by January 1, 2020 and once every two years thereafter.  It also requires the DFEH to develop and post training materials for employers to use for these purposes.

AB 1619 (Sexual Assault; Statute of Limitations):  This new law greatly enlarges the statute of limitations for filing a civil action for damages for sexual assault to 10 years after the alleged assault or 3 years after the plaintiff discovered or reasonably discovered injury as a result of the assault, whichever is later.

SB 826 (Gender Composition of Boards of Directors):  This new law provides for mandatory inclusion of women on corporate boards of directors.  Specifically, by the end of 2019, publicly held domestic or foreign corporations with principal executive offices in California must have a minimum of one female director on its board, and by the end of 2021, these corporations must comply with the following: (1) If its number of directors is six or more, the corporation shall have a minimum of three female directors; (2) If its number of directors is five, the corporation shall have a minimum of two female directors; (3) If its number of directors is four or fewer, the corporation shall have a minimum of one female director.  The new law also requires the Secretary of State to publish certain statistical information in this regard on its website.

SB 1976 (Lactation Accommodation):  This new law makes changes to existing lactation accommodation law.  The existing law requires employers to make reasonable efforts to provide a location other than a toilet stall to be used for lactation.  The new law specifies that the location should be something other than a bathroom and further specifies that it generally should be a permanent location but that it can be a temporary location if (1) the employer is unable to provide a permanent location due to operational, financial, or space limitations; (2) the temporary location is private and free from intrusion while being used for lactation purposes; and (3) the temporary location is not used for other purposes while being used for lactation.  The new law also provides that an agricultural employer may comply by allowing an employee to use the air-conditioned cab of a tractor or truck.  If an employer can prove that it is an undue hardship to comply with these requirements, the employer may be able to provide a location (including a bathroom) other than a toilet stall for the employee to use for lactation purposes.

AB 1654 (PAGA Relief for Unionized Construction Employers):  This new law provides that unionized workers in the construction industry are not covered by PAGA (i.e. they cannot bring PAGA claims), provided that the CBA (1) is entered into prior to January 1, 2025; (2) provides for the wages, hours of work, and working conditions of employees, premium wage rates for all overtime hours worked, and for the employee to receive a regular hourly pay rate of not less than 30 percent more than the state minimum wage rate; (3) prohibits all of the violations of the Labor Code that normally would be redressable under PAGA; (4) provides for a grievance and binding arbitration procedure to redress those violations and authorizes the arbitrator to award any and all remedies otherwise available under the Labor Code (except PAGA remedies); and (5) expressly waives PAGA rights.

SB 1402 (Port drayage workers):  This new law provides that customers who use the services of a port drayage motor carrier are jointly and severally liable with the motor carrier for nonpayment of wages, expenses, damages, and penalties.

SB 970 (Human Trafficking):  This new law amends FEHA to require hotel and motel employers, by January 1, 2020, to provide at least 20 minutes of training on human trafficking awareness to employees who are likely to come into contact with victims of human trafficking.  These employees include reception employees, housekeeping employees, bell desk employees, and other employees who regularly interact with customers.  The new law requires covered employers to provide such training to covered employees within 6 months of hire and once every two years thereafter.

SB 1123 (Paid Family Leave Uses):  California has a paid family leave program that provides partial wage replacement to employees who take leaves of absence for specified purposes.  This new law expands the program to provide paid family leave benefits beginning January 1, 2021 to employees who take time off for reasons associated with being called to active duty or a spouse, domestic partner, parent, or child being called to active duty.

SB 1252 (Copy of Payroll Records):  Existing law already requires that employees have a right to inspect or copy their payroll records and that they must be allowed to do so within 21 days of such a request.  This new law clarifies that if an employee requests a copy of the records, the employer must provide the copies (as opposed to requiring employees to copy the records themselves).

AB 1565 (Contractor Liability):  This new law took effect immediately as urgency legislation. It clarifies a new law enacted last year making certain direct contractors performing work in the state liable for unpaid wages by subcontractors.  The amendments to the law provide requirements that must be met in order for a direct contractor to withhold payments to a subcontractor for “disputed sums.”  In order to withhold payment, the contractor must specify in its contract with a subcontractor all items of information that will be requested of the subcontractor, such as payroll records and other information related to hours worked, etc.

SB 1412 (Criminal History Inquiries):  This bill amends Labor Code section 432.7, which limits employers’ ability to conduct criminal history inquiries and to use criminal history information in employment decisions.  Existing law makes an exception for employers who are required by federal or state law to inquire into an applicant’s or employee’s criminal history.  The amendment is intended to tighten the exception to apply only where an employer is required by law to inquire into a “particular conviction” or where an employer cannot by law hire someone with a “particular conviction.”  to make clear that employers may only consider “particular convictions” when assessing criminal history.  “Particular conviction” is defined only to mean “a conviction for specific criminal conduct or a category of criminal offenses prescribed by any federal law, federal regulation or state law that contains requirements, exclusions, or both, expressly based on that specific criminal conduct or category of criminal offenses.”

Well, there it is. More laws for employers to keep up with. We had anticipated that all of the above were going to be passed and have the sexual harassment training for employees and the new law regarding human trafficking for hotels.