Employee Arbitration Agreements No Longer OK Under New Law?
Updated 1/3/20: A federal court issued a temporary restraining order stopping the implementation of AB51. That law makes it illegal for employers to make it mandatory for employees to enter into arbitration agreements. A new law in California attacks employee arbitration agreements and prohibits anyone from requiring an applicant for employment or any employee to waive their right to sue for a violation of any provision of the Fair Employment and Housing Act “FEHA” (California’s anti-discrimination laws) as a condition of employment, continued employment, or receipt of any employment-related benefit. These waivers usually exist in an arbitration agreement. Employers also can not retaliate, discriminate against, or terminate someone’s employment for refusing to sign an arbitration agreement. The new law applies to contracts signed after January 1, 2020. However, it specifically does not apply to arbitration agreements that are valid under the Federal Arbitration Act, negotiated severance agreements, or post-dispute settlement agreements. Practical Tip: There will be plenty of litigation on this new law, but until we have the courts’ interpretations of the new prohibitions, what should employers do? 1) If you don’t have an arbitration agreement, or aren’t quite sure what one is, you should still have one. 2) If you have an arbitration agreement, have it reviewed by counsel before you … Continue reading
New California Employment Laws 2019
This is the time of year that Californians, especially California businesses, learn of the slew of new laws that will go into effect in the coming year. This year is not any different and the new laws are reflective of the social discussions around sexual harassment over the course of the last couple of years. California employers now have a number of laws that will require changes in your documents, training requirements, and how you do business, to name a few. Below is a list of new laws that I thought were the most interesting and relevant by category, although there is inevitably some overlap. Contracts 1. Employers will be prohibited, with certain exceptions, from requiring an employee to execute a release of a claim or right under the Fair Employment and Housing Act (FEHA) or to sign a nondisparagement agreement or other document that purports to deny the employee the right to disclose information about unlawful acts in the workplace, including, but not limited to, sexual harassment. This is applicable when the release is provided in exchange for a raise … Continue reading
Three Ways to Transfer the Family Business
I’ve had clients who have had to deal with business succession issues and so I invite John L. Wong to provide some insight into what business succession planning is and why business owners should think about it. As an Orange County Estate Planning Attorney, many of my clients own some form of small business. One of the first questions I ask is: “What’s going to happen to your business when you retire or pass away?” There are two very common responses: I’m going to transfer the business to my children; or I’m going to sell the business. I could certainly go through a bunch of hypotheticals to poke holes in these two responses, but often times, if the question was phrased differently, the issue becomes much clearer. “What would happen to your business if you died today?” After some reflection, common responses are: The business would fail; The business would be taken over by an employee. So how do ensure your business is transferred under the first set of scenarios instead of the second set? How do you ensure … Continue reading
Non-Compete Agreements in California
Non-compete agreements are void in California except in certain limited circumstances. More specifically, California’s Business & Professions Code § 16600 states: “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.” This means that non-competition clauses in employment agreements that purport to prohibit an employee from working for a competitor or starting a competing business after the employee leaves are void. This is true in California, even if the prohibition is limited to a certain geographic area or for a limited period of time. This is because California fiercely protects a person’s right to work and to engage in the profession of his or her choice, including working for a competitor or starting a competing business. Under what circumstances are non-compete agreements valid in California? Although the general rule is that agreements that prohibits someone from competing or engaging in a lawful profession, trade, or business is void, there are specific circumstances where a court will uphold a non-compete agreement. … Continue reading
Severance Pay – 3 Things to Know
I’ve been on both sides of the negotiation table when it comes to severance pay. I have drafted and negotiated them on behalf of companies as well as reviewed and negotiated them on behalf of departing employees. This experience allowed me to understand the value of providing an employee with severance pay from both perspectives. Below are the top 3 things you should understand about severance pay. This information is applicable to both an employer who may want to offer severance pay to an employee at termination as well as an employee who was offered severance pay along with a multi-page agreement to sign, The law does not require payment of severance unless there is a contractual obligation. At the time of employment, employers sometimes promise to give an executive level or other key employee severance pay should the employment relationship end, usually without cause, and under certain circumstances. These circumstances may be the business’s closing or change in ownership, reductions in force, etc. The promise of severance pay is usually offered as an extra incentive to entice top talent. … Continue reading
Emoji and Deciphering Intent in the Digital Age
[Originally published as Emoji and Deciphering Intent in the Digitial Age, by Tanya Kiatkulpiboone and Andrea W. Paris, in Orange County Lawyer Magazine, June 2017, Vol. 59 No.6 on page 42.] An emoji known as “Face with Tears of Joy” was named the Oxford Dictionaries’ 2015 Word of the Year. See Figure 1. Caspar Grathwohl, President of Oxford Dictionaries, explained that “Emoji are becoming an increasingly rich form of communication, one that transcends linguistic borders[.]” Katie Steinmetz, Oxford’s 2015 Word of the Year Is This Emoji, Time (Nov. 16, 2015, 2:08 PM), http://time.com/4114886/oxford-word-of-the-year-2015-emoji/. Nevertheless, Oxford Dictionaries have yet to add any emoji to the dictionary, not even their Word of the Year, thereby acknowledging their expressive abilities without defining them. What Are Emoji? Emoji are small images or icons used to express emotion, ideas, or things in electronic communications. They were created in Japan in the 1990s by Shigetaka Kurita, who worked for one of Japan’s largest mobile phone operators. The name originates from the Japanese terms for picture (“e”) and written character (“moji”). Frequently Asked Questions: Emoji and Pictographs, … Continue reading
3 Strategies to Increase Your Business Profits
Many businesses recently reviewed their profit and loss statements and took a closer look at the business’s profitability. This analysis usually prompts the question “how to increase my business profits?” Although this question could only be answered after becoming familiar with your particular business, below are 3 areas where small changes, if done right, could increase your profitability. Decreasing Bad Debt If your business model does not require customers to pay for products or services in advance, collecting on unpaid invoices is likely something you are all too familiar with. However, collection itself comes at a cost to your business. Not being able to recoup that collection cost limits most businesses’ incentive to pursue collection, rightfully seeing it as throwing good money after bad. You can tip the collection scale in your favor. The default rule that each party bears their own attorney’s fees may be modified by statute or by contract. That means that where the law does not provide for recovery of attorney’s fees, you and your customers could mutually agree that if you and your customer find … Continue reading
What to Do: Employee Leaves With Trade Secrets
Losing an employee, especially a key employee, is difficult for any business. You’ve invested time, know-how, and resources in your employees and they in turn are the lifeblood of your business. Unfortunately, people leave and when they leave, it is usually to work for a competitor or even to start a competing business. If that employee had access to your company’s confidential information such as customer lists, customer preferences, pricing formulas, and any other information that gives you a competitive edge, you want to make sure that the employee can’t take that valuable information to a competitor. How do you protect trade secrets from a competitor when an employee leaves? I have good news and bad news for you. The bad news: If the first time you think about protecting your company’s confidential information is after a key employee leaves, it may be too late. One of the fundamental requirements under California and Federal laws that protect trade secrets is the requirement that you made reasonable efforts to keep that information a secret. Thus, if you haven’t thought about how … Continue reading
Do I Need a Written Contract?
You may have been in the situation where you had an agreement with someone else to do something. It may have been a family member, a friend, a customer, or a service provider. You or the other person didn’t want to go through the formal process of putting it in writing because you have a close relationship, don’t want to offend the other person, or don’t want them to think you don’t trust them. Then something goes wrong. You discuss it with the other person and now there’s a dispute as to what you both actually agreed to, or you never talked about what you two would do if x, y, z happens. Do you have a breach of contract claim? Maybe. In this scenario, your first and most difficult hurdle in prevailing in a breach of contract lawsuit is the lack of a written contract. There are multiple reasons why you would want a written contract. Here are a few: It gives clarity regarding each person’s rights and duties. The process of creating a contract forces the parties to … Continue reading
Arbitration Agreement: Do I Want It?
You probably signed an arbitration agreement at your last doctor’s visit, when you signed up for your gym or yoga studio membership, or when you signed a listing agreement with your realtor. The ubiquity of these agreements makes it especially important for us to understand them as consumers, business owners, employers, and employees. What is an arbitration agreement? Arbitration is one of the alternative means of resolving disputes (alternative to filing a lawsuit that is). Thus, an arbitration agreement is an agreement to take disputes out of the court system to be decided by a private arbitrator (or a panel of arbitrators) usually following a different set of procedural rules than the court. People and companies choose to arbitrate for various reasons. The process is generally more streamlined and allows for a quicker resolution of disputes. It is often times cheaper than litigating in court, and the proceedings are typically not part of the public record. Lastly, the conventional wisdom is that you reduce the risk of a run-away-jury. Do you want to arbitrate? Whether agreeing to arbitrate potential disputes … Continue reading