Employment Law Alerts & Articles

Nov 16

AMN Healthcare v. Aya Healthcare

A recent California Court of Appeal decision may impact the use of non-solicitation of employee provisions in agreements you may provide your employees.

The Fourth Appellate District of the California Court of Appeals recently issued its decision in the case of AMN Healthcare v. Aya Healthcare, Case No. D071924 (November 1, 2018).  In the case, AMN Healthcare sought to enforce a provision contained in its Confidentiality and Non-Disclosure Agreement that prohibited employees who left AMN’s employ from soliciting AMN employees to switch employment for a period of one year.  In affirming the trial court’s granting of defendant’s Motion for Summary Judgment, the Court of Appeals held that the non-solicitation of employee provision AMN sought to enforce against its former employees was void as an improper restriction from a person engaging in a lawful profession, trade, or business in violation of California Business & Professions Code 16600.  As you may know, California Business & Professions Code Section 16600 is the prohibition against restrictive employment covenants in California corporate contracts.  In its decision, the court held that AMN’s one-year prohibition against former employees soliciting current AMN employees impermissibly restricted a person’s ability to perform work. The Court found that such a prohibition would have limited the former employee’s ability to recruit or even contact temporary nurses to work with their new staffing agency. The Court further found that AMN’s non-solicitation clause thus greatly restricted the ability of its former employees to earn a living.  In so holding, the court relied upon a strict reading of the statute prohibiting restrictive employment covenants, noting that California public policy advocated the free movement of employees and their ability to perform their profession with only very limited statutory exceptions.

Given this holding, we recommend our clients review and potentially revise any agreements your company may have entered into with employees to refine or remove the non-solicitation of employees’ language previously believed acceptable under the California Court of Appeals’ decision in Loral Corp. v. Moyes, 174 Cal. App.3d 268 (1985).  Given that we now have competing appellate decisions both upholding and denigrating non-solicitation agreements, your judgment whether to follow the earlier Loral precedent or the new and restrictive AMN Healthcare precedent boils down to an assessment of how much legal risk your company is willing to accept and how much importance your management team accords non-solicitation agreements.  Furthermore, we recommend clients review any non-solicitation of employee provisions you may have installed in severance agreements executed with former employees to identify the limits of the enforceability of those clauses.  While some companies doing business in California may attempt to factually distinguish the AMN Healthcare v. Aya Healthcare holding based on the unique nature of the staffing industry and the industry practice that temporary nurses often seek employment with more than one staffing agency at a time (which makes any non-solicitation of employee provision more restrictive than in a general context), this will be an uphill legal battle.  The AMN Healthcare court’s ruling anticipated such an argument and explicitly stated that the court did not believe the legal basis upon which non-solicitation of employee provisions had previously been found valid survived the California Supreme Court’s more recent ruling in Edwards v. Arthur Andersen LLP, 44 Cal.4th 937 (2008).  We also note a trend in the California Supreme Court in recent years to prefer to hand down definitive “black letter law” decisions in employment cases and to shy away increasing from laying down complex “lawyer tests” allowing for differing results from the application of employment statutes.  The AMN Healthcare case decision follows this model of laying down a strict “black” or “white” rule lacking discretion to vary it upon unique or differing facts.  Pending either an appeal of AMN Healthcare or another case in the future to make its way to the California Supreme Court to declare the definitive reach of Business & Professions Code Section 16600 as to non-solicitation clauses, there is every reason for companies covered by Section 16600 to be very cautious. This is because California courts have already ruled that compensatory and even very costly punitive damages are available for violations of B&P Section 16600.

Thus, potential revisions may include revising non-solicitation of employee provisions to allow solicitations but to emphasize prohibitions on trade secret use or disclosure after termination from your company. Feel free to contact us to discuss the appropriate corrective steps you should take to protect your rights as to employee raids by your competitors.

Jul 27

OFCCP Compliance: Fox & Chambers Just Talkin’ | Expert Compliance Tips for Recruiters

Candee: John, it looks like we may have opened up “Pandora’s Box” when you, Mike Bazinet and I led four discussions at DEAM16 about how and where recruiters may assist with OFCCP compliance duties. Members have been calling and writing with follow-up questions ever since and also asking for assistance as to the design of their recruitment systems. So, I have been keeping a log of the questions and thought we might share your and my thoughts more broadly with all of our Members about what we at DirectEmployers are calling Compliance Through Recruitment (CTR™) questions.

Read more.

THIS COLUMN IS MEANT TO ASSIST IN A GENERAL UNDERSTANDING OF THE CURRENT LAW AND PRACTICE RELATING TO OFCCP. IT IS NOT TO BE REGARDED AS LEGAL ADVICE. COMPANIES OR INDIVIDUALS WITH PARTICULAR QUESTIONS SHOULD SEEK ADVICE OF COUNSEL.

May 16

OFCCP Compliance: Competing Priorities Between the State of North Carolina and the U.S. Department of Justice Based on Gender Identity

It is a classic Administrative Law law-school Final Examination question requiring the weighing and balancing of important competing public policies, most likely destined for the U.S. Supreme Court. Here is how both parties framed the legal questions before the District Court in Complaints both parties filed in Raleigh on Monday May 9:

State of North Carolina (as taken from its Complaint seeking a declaration of rights (“Declaratory Judgment”) preemptively filed before the United States filed its Complaint):

The Governor of North Carolina (Patrick L. McCrory) and the Secretary of the North Carolina Department of Public Safety (Frank Perry) “seek declaratory and injunctive relief against the United States of America…Loretta Lynch, in her official capacity as United States Attorney General, and Vanita Gupta, in her official capacity as Principal Deputy Assistant Attorney General (for Civil Rights), for their radical reinterpretation of Title VII of the Civil Rights Act of 1964 which would prevent plaintiffs (State of North Carolina) from protecting the bodily privacy rights of state employees while accommodating the needs of transgendered state employees.”… Read more.

Apr 05

OFCCP Compliance: What Hillary and Donald Think About Affirmative Action and Non-Discrimination (Part 4 of 4)

This is the final blog post in a 4-part series (read part 1, 2 and 3) highlighting how Hillary Clinton and Donald Trump think about Affirmative Action and Non-Discrimination.

THE NEXT OFCCP DIRECTOR WILL HEAVILY INFLUENCE THE DIRECTION OF MARCH WITHIN THE NEXT OFCCP: The detail about what the next Administration specifically will do, or not do, or will emphasize/de-emphasize, will not come through generalized political party platform planks. Rather, the specifics will come through the OFCCP Director the next Secretary of Labor will appoint to serve him or her. The process to name a new OFCCP director starts the day after the Presidential election when something called the “Presidential Transition Team” (“PTT”) suddenly leaps up and springs immediately into action. The PTT is a specially selected team of agency-specific experts the incoming Presidential team has hand selected to help transition the new President into the federal Executive Branch of government and be ready to go at 12:01 pm on January 20th. The peaceful, orderly and routine transfer of power we have made famous throughout the world is amazing to observe. PTT members are unpaid volunteers and party faithful (and typically zealot) followers of the incoming President who have worked in his/her campaign. By tradition (not law, as yet another example of our country’s dedication to violence-free transitions of power), the outgoing lame-duck President allows the incoming President-Elect to insert immediately (the day after the election) the President-Elect’s PTT into each and every one of the federal agencies.

By tradition, the incoming PTT has access to all federal agency offices…  Read more.

THIS COLUMN IS MEANT TO ASSIST IN A GENERAL UNDERSTANDING OF THE CURRENT LAW AND PRACTICE RELATING TO OFCCP. IT IS NOT TO BE REGARDED AS LEGAL ADVICE. COMPANIES OR INDIVIDUALS WITH PARTICULAR QUESTIONS SHOULD SEEK ADVICE OF COUNSEL.

Mar 31

OFCCP Compliance: What Hillary and Donald Think About Affirmative Action and Non-Discrimination (Part 3 of 4)

This is the third blog post in a 4-part series (read part 1 and part 2) highlighting how Hillary Clinton and Donald Trump think about Affirmative Action and Non-Discrimination.

Business Leaders and Affirmative Action: While almost everyone I speak to about the issue is not only surprised, but very surprised, to hear that Donald Trump is a strong supporter of Affirmative Action and gay rights, I was not surprised. However, I was not sure until I undertook a more careful investigation. Nonetheless, my investigation bore out my gut hunch that he was a supporter of Affirmative Acton, and may well even favor outright preferences (as many senior business leaders do: I routinely hear CEOs tell me that they view HR staffing as just another business challenge. “John,” they say, “we have to produce X many widgets per day, so why can’t we have X% Black employees, and Y% Hispanics, and 43% of our customers are women so why can’t we have, let’s say 50% of the actors in our commercials be women, and if I can’t hire Mexican nationals to run our Mexico operations and hire Japanese nationals to run our holdings in Japan, how are we ever going to compete in those markets?”). My experience has been now for over 30 years that business leaders, especially those in consumer businesses, strongly support Affirmative Action. In 1986, in fact, the National Association of Manufactures (NAM) -one of the country’s two leading trade associations for business interests -reached out to me to file an Amicus Curiae brief in the SCOTUS when a case came along out of New York City which had confused “hard-on-the dock” employment “quotas” with employment “goals.” (An Amicus Curiae brief, or a “Friend of the Court” brief translated literally from Latin, is one filed by a NON-party to the case before a court. The Friend of the Court must request permission to be heard and seeks to advance the friend’s interests by allowing the court to hear its point of view as the court deliberates concerning a major issue which could have ramifications beyond the parties before the court and could affect the rights or interests of uninvolved third parties). The NAM wanted me to help the SCOTUS sort out the difference between OFCCP “goals” and court-ordered remedial quotas based on race. Thankfully, Justice Sandra Day O’Connor read the brief and realized the significance for federal contractors if the SCOTUS were to strike down as unlawful what the lower courts and the parties had called “goals” even though the so-called “goals” were in fact hiring “quotas” for Black sheet metal workers (an all-white union had kept out of the union). The NAM was much relieved that Justice O’Connor differentiated “goals” from unlawful “quotas” and probably saved the OFCCP “goals” program from extinction in the late1980s.

I recall, too, as though it were yesterday… Read more.

THIS COLUMN IS MEANT TO ASSIST IN A GENERAL UNDERSTANDING OF THE CURRENT LAW AND PRACTICE RELATING TO OFCCP. IT IS NOT TO BE REGARDED AS LEGAL ADVICE. COMPANIES OR INDIVIDUALS WITH PARTICULAR QUESTIONS SHOULD SEEK ADVICE OF COUNSEL.

Mar 29

OFCCP Compliance: What Hillary and Donald Think About Affirmative Action and Non-Discrimination (Part 2 of 4)

This is the second blog post in a 4-part series (read part 1 here) highlighting how Hillary Clinton and Donald Trump think about Affirmative Action and Non-Discrimination.

The Democratic and Republican Party Platforms: What the candidates say and believe about Affirmative Action and Non-Discrimination is not the end of the story. Rather, each political party will eventually formally adopt and unveil at their respective conventions (and usually just prior to their conventions), the candidate’s formal position on many issues of concern to the American People. Affirmative Action and Non-Discrimination, happily, are topics which almost always make the list of important issues of the day about which voters want to hear the candidates take a position.

The Republican Convention will go forward first from July 18-21, 2016 in Cleveland. It is not an accident that Republicans will be in the “Rust Belt” amid hundreds of thousands of laid off and under-employed blue-collar anti-free-trade Democrats.

The Democrats will convene their convention the next week in Philadelphia from July 25-28, 2016. Party platform “planks” (as the parties call them) emerge from the respective parties over a period of months, but are finalized and formally adopted at the Party Conventions. Fearless prediction: You can expect to read the full party planks as to Affirmative Action and Non-Discrimination, I suspect, by early summer and become informed about the initial (and likely final) positions of each candidate (again, subject to formal adoption of the party plank at the convention). Read more.

THIS COLUMN IS MEANT TO ASSIST IN A GENERAL UNDERSTANDING OF THE CURRENT LAW AND PRACTICE RELATING TO OFCCP. IT IS NOT TO BE REGARDED AS LEGAL ADVICE. COMPANIES OR INDIVIDUALS WITH PARTICULAR QUESTIONS SHOULD SEEK ADVICE OF COUNSEL.

Mar 24

OFCCP Compliance: What Hillary and Donald Think About Affirmative Action and Non-Discrimination (Part 1 of 4)

Surprise! They are both FOR Affirmative Action and oppose unlawful employment discrimination!

TRUMP ON AA: Mr. Trump even “called out” then sitting United States Supreme Court Justice Antonin Scalia for a controversial statement Justice Scalia made during oral argument before the Supreme Court of the United States (SCOTUS) in the Fisher v. University of Texas Affirmative Action preferences in admission case which questioned the utility of affirmative action. (Abigail Fisher is a White applicant to UT to whom UT denied admission. Ms. Fisher claims that UT admitted less qualified Black students who took “her seat” in the University due to a race-based admission process she claims is unconstitutional). In a December 13, 2015 interview on CNN’s “State of the Union”show, Mr. Trump said the following about Scalia’s statement in his own forceful, candid and irreverent style… Read more.

THIS COLUMN IS MEANT TO ASSIST IN A GENERAL UNDERSTANDING OF THE CURRENT LAW AND PRACTICE RELATING TO OFCCP. IT IS NOT TO BE REGARDED AS LEGAL ADVICE. COMPANIES OR INDIVIDUALS WITH PARTICULAR QUESTIONS SHOULD SEEK ADVICE OF COUNSEL.

Jan 26

OFCCP Compliance: What Lies Ahead for OFCCP and Federal Contractors in 2016 May Surprise You!

INTRODUCTION: It is going to be a very difficult year for OFCCP due to budget pressures, antagonistic Democratic and Republican Senators and Congressman, a lame-duck President, reduced agency productivity and efficiency, and falling morale within an agency already battered by low morale and relatively high employee turnover. OFCCP management is doing the best it can under these very difficult circumstances and amid falling contractor support for the agency. However, these are each individually very substantial challenges, but their simultaneous combination would make them extremely difficult for any management team to shoulder all at once. OFCCP’s regulatory agenda and audit activity are both going to be significantly affected, as noted below.

1) OFCCP’S  NEW REGULATIONS-BINGING IS OVER. Contrary to every Blog I have read for the last 6 months, 2015 was NOT an active Rulemaking (i.e. “regulation” making) year for OFCCP, let alone its most active regulatory period in history, as many erroneously believe. Rather, 2015 will be remembered as the year The Congress and OMB shut down OFCCP’s 2013-2014 regulatory blitzkrieg even though many contractors are still reeling from that short burst of intense regulatory activity (which was in fact, I believe, the most active regulatory period in any two years of OFCCP history (although OFCCP Directors Weldon Rougeau (Carter Administration) and Shirley Wilcher (Clinton Administration) were no slouches and also get honorable mention here. In fact, Shirley might win for substantive change…but that is another column). Read more.

THIS COLUMN IS MEANT TO ASSIST IN A GENERAL UNDERSTANDING OF THE CURRENT LAW AND PRACTICE RELATING TO OFCCP. IT IS NOT TO BE REGARDED AS LEGAL ADVICE. COMPANIES OR INDIVIDUALS WITH PARTICULAR QUESTIONS SHOULD SEEK ADVICE OF COUNSEL.

Jan 15

SB 588 – New DLSE Enforcement Procedures

Responding to recent public outcry over wage theft and the inability of state authorities to enforce judgments for unpaid wages, California has enacted a new law going into effect on January 1, 2016 that provides the Division of Labor Standards Enforcement (“DLSE”) three new tools to effectively collect pay owed to employees.

By creating and revising sections to the California Labor Code, SB 588 strengthens the ability of the DLSE to enforce meritorious wage claims that employers allegedly too often ignored.  For example, an analysis by the National Employment Law Project and the University of California, Los Angeles found that of all wage claims workers won before the DLSE between 2008 and 2011, 83% of the workers were never paid a dime in judgment by the employer.  To address this shortfall, the new statute authorizes several new measures for the Labor Commissioner to exercise to ensure enforcement of judgments for unpaid wages.

  1. Labor Commissioner Now Has Several New Powers to Enforce Satisfaction of a Judgment or Award for Unpaid Wages

• First, when issuing a warrant or notice of levy, the law provides the Labor Commissioner the ability to use any of the remedies available to a judgment creditor, including but not limited to enforcement of remedies through a Superior Court action.
• Furthermore, upon receipt of a writ of execution by a court, the Labor Commissioner may perform the duties of a levying officer when collecting an unsatisfied judgment or award. This includes the ability to place a levy on an employer’s property and serve a notice of levy upon any person that has in his or her possession or control any credits, money, or property belonging to the judgment debtor, including customers of the business that owe the employer payment.
• Most importantly, if a final judgment remains unsatisfied after a period of 30 days after the time to appeal has expired and no appeal is pending, the Labor Commissioner may issue a “stop order” prohibiting the employer from conducting any business in the state unless it obtains a bond from a surety company between $50,000 and $150,000 (depending upon the size of the unsatisfied portion of the judgment). This includes a prohibition against using the labor of another business, contractor, or subcontractor to conduct the employer’s business; in other words, the employer-debtor cannot “farm” out its production or services to another entity or close shop and re-start under a new business name if the work being performed is substantially similar to the prior business. Failure to comply with the “stop order” preventing the employer from conducting business can result in either civil monetary penalties ($2,500 for the first offense, and $100 for each calendar day the employer continues to do business in violation of the law up to $100,000) or imprisonment, or both. Additionally, the Labor Commissioner may create a lien on any personal property in California of an employer that conducts business in violation of the stop order.

  1. Definition of Who May Be Liable for an Unsatisfied Judgment Expanded to Include Individuals

Moreover, the law expands those who can be held liable for the unsatisfied judgment by expanding the term “employer or other person acting on behalf of an employer” to include a natural person who is an owner, director, officer, or managing agent of the employer.  In other words, the Labor Commissioner can seek redress from the individuals managing the employer’s business, as well as the business itself.

  1. Joint and Several Liability for Individuals or Entities Using Property or Long-Term Care Employers for Personal Services

Finally, in a nod to concerns about industries involving personal services, any individual or business entity that contracts for “property services” or “long-term care services” are jointly and severally liable for any unpaid wages owed by the property or long-term care employer.  This is to ensure that the Labor Commissioner has several avenues by which to collect judgment to avoid legal issues related to disputes involving co-employment or independent contracting relationships that are prevalent in these types of personal service industries.

  1. Recommended Actions for Employers

As a result of the draconian penalties that the DLSE may impose upon recalcitrant employers, employers are cautioned to implement procedures and practices that address the following:

• Compliance with California wage-hour laws;
• Designation of a “point person” to maintain and observe the status of pending wage-hour litigation, whether before the DLSE or in Superior Court;
• Identification of “managing agents” of the business to provide notice of potential liability so as to ensure their participation in enforcing compliance with wage-hour laws and review of time and pay issues;
• Timely appeal in correct procedural form of any wage decision against the employer; and
• Immediate involvement of employment counsel in the face of any pending wage-hour litigation or judgment.

Jan 14

Electronic Employee Signatures

In a recent decision, Ruiz v. Moss Brothers Auto Group, Inc., 2014 Cal. App. LEXIS 1176 (Cal. App. Ct. 4th Dist. Dec. 23, 2014), the California Court of Appeals affirmed an order denying an employer’s petition to compel an employee to arbitrate his wage and hour claims because the employer could not present evidence that established the employee, in fact, electronically signed the arbitration agreement.

Background

Plaintiff Ernesto Ruiz filed a putative class action complaint against his employer, Moss Brothers Auto Group, alleging Moss failed to pay Ruiz and other employees overtime wages, provide required meal and rest periods, provide accurate and complete wage statements, reimburse business expenses, and pay final wages in a timely manner.  Shortly after Ruiz filed his complaint, Moss Brothers petitioned for an order compelling arbitration of Ruiz’s individual claims, alleging that Ruiz had previously electronically signed an arbitration agreement.

Ruiz opposed Moss Brothers’ petition to compel arbitration.  Ruiz argued that he had no recollection of electronically signing the arbitration agreement, and further alleged that Moss Brothers could not prove that the electronic signature was an “act attributable” to Ruiz, as required by California Code of Civil Procedure section 1633.9(a).

Moss Brothers provided the court with a declaration from its Business Manager, Mary Main, who stated that all employees were presented with the arbitration agreement as part of a series of changes to the Employee Handbook.  The declaration further stated: “Each employee is required to log into the Company’s HR system – each with his or her unique login ID and password – to review and electronically execute the Employee Acknowledgement form, which includes the arbitration agreement.”  The declaration did not, however, explain how Moss Brothers determined that Ruiz, and not someone else, electronically signed the agreement.

The trial court denied Moss Brother’s petition to compel arbitration on the ground that Moss Brothers “failed to establish that an Arbitration Agreement in fact exists between Moss Bros. and Ruiz.”

Court of Appeals Ruling

On appeal, the court first noted that the petitioner bears the burden of establishing, by a preponderance of the evidence, that a valid agreement to arbitrate exists.  After a review of the evidence presented by both parties, the court concluded that Moss Brothers did not present sufficient evidence to support a finding that the electronic signature on the 2011 agreement in question was the act of Ruiz.  Although the court acknowledged that Civil Code section 1633.7 grants electronic signatures the same legal effect as handwritten signatures, the court went on to explain that all writings must be authenticated before the writing can be received into evidence.  The court held that Main’s declaration “summarily” asserting that Ruiz was the person who electronically signed the agreement was not sufficient to authenticate Ruiz’s signature.  The court’s opinion then suggests that Moss Brothers could have satisfied its evidentiary burden (which the court stated was not a difficult burden to meet) had Main stated 1) that an electronic signature in the name of “Ernesto Zamora Ruiz” could only have been placed on the agreement by a person using Ruiz’s “unique login ID and password”;  2) that the date and time printed next to the electronic signature indicated the date and time the electronic signature was made;  3) that all Moss Brothers employees were required to use their unique login ID and password when they logged into the HR system and signed electronic forms and agreements;  and 4) the electronic signature on the 2011 agreement was, therefore, apparently made by Ruiz on September 21, 2011, at 11:47 a.m.

Takeaway for Employers

The Ruiz decision should not serve to deter employers from using electronic employee signatures.  Rather, employers should ensure they have a means of authenticating an employee’s electronic signature.  The Ruiz holding suggests that providing employees with a unique login and password to use when electronically signing documents, is likely sufficient to authenticate the employee’s signature so long as the employer can explain in detail how the signature system operates and that the system is secure such that no one but the employee could have signed the document in question.  Once the employer is in receipt of an employee’s electronic signature, we also recommend that the employer send the employee an email acknowledging its receipt of the signed document.  By taking these steps, an employer likely will be able to make a satisfactory evidentiary showing in the event a dispute arises as to the authenticity of an employee’s electronic signature.