Unpaid Wages, Unpaid Bonuses, Unpaid Commissions

In an earlier blog post, we highlighted that under California statutory law, "wages" are broadly defined, and that case law has specifically included "bonuses" in the definition of wages.

Why it matters....
Pursuant to California Labor Code § 201 et. seq., if an employer discharges an employee, the wages earned and unpaid at the time of discharge are due and payable immediately. Simply put wages are due on the date of termination. If you are employer you should build that into your planning when conducting terminations or layoffs. If you are employee, you should make sure that you are paid all wages due on your date of termination, and certainly prior to signing any release. Failure to properly and timely pay wages can have consequences far in excess of the underlying amount due, including (1) waiting time penalties; (2) interest and (3) attorney's fees.

Waiting Time Penalties
California Labor Code § 203 “[i]f an employer willfully fails to pay, without abatement or reduction, in accordance with sections 201, 201.5, 202, and 205.5, any wages of an employee who is discharged or who quits, the wages of the employee shall continue as a penalty from the due date thereof at the same rate until paid or until an action therefore is commenced.”

Interest
California Labor Code § 218.6 further provides that “[i]n any action brought for the nonpayment of wages, the court shall award interest on all due and unpaid wages at [an annual rate of 10 per cent] as mandated by subdivision (b) of § 3289[1] of the California Civil Code, which shall accrue from the date that the wages were due and payable as provided in Part 1 (commencing with § 200) of Division 2. “

Attorney's Fees
“In any action brought for the nonpayment of wages, fringe benefits, or health and welfare or pension fund contributions, the court shall award reasonable attorney's fees and costs to the prevailing party…” Labor Code §218.5. With the cost to get to trial in high-stakes cases running well into six figures on the plaintiff's side, there is substantial exposure to a defendant company that fails to properly pay wages.

Note: The information contained is not legal advice and does not establish an attorney-client relationship. Our contact information is included and we always offer a free consultation. For more information about UNPAID WAGES, UNPAID BONUSES, UNPAID COMMISSIONS or other areas of EMPLOYMENT law, please visit http://www.adishianlaw.com/, contact us via email to askalg@adishianlaw.com or call us at 415.955.0888 or 310.726.0888. Copyright ALG 2009.

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Definition of Wages

What amounts are included in wages? We get variations on this question all the time including, is my bonus part of my wages?

The Law
Wages are defined under California Labor Code § 200 to include “all amounts for labor performed by employees of every description, whether the amount is fixed or ascertained by the standard of time, task, piece, commission basis, or other method of calculation.” This is a very broad definition that includes virtually any form of compensation used in the modern economy, so long as it is "fixed or ascertainable" by some "method of calculation."

Yes, under California law bonuses are wages. Ralphs Grocery Co. v. Sup. Ct. (Swanson) (2003) 112 Cal. 4th1090, 1103, 5 Cal. Rptr. 3d 687, 697.

Note: The information contained is not legal advice and does not establish an attorney-client relationship. Our contact information is included and we always offer a free consultation. For more information about WAGES, UNPAID WAGES, UNPAID BONUSES and/or other areas of EMPLOYMENT law, please visit www.AdishianLaw.com/, contact us via email to askalg@adishianlaw.com or call us at 415.955.0888 or 310.726.0888. Copyright 2009, ALG, P.C.

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I'm About To Be Fired (or I Just Got Fired)....What Should I Do?

Whether you see your own layoff on the horizon or think it could never happen to you, it is important to be prepared for a layoff in today's economic climate. Lawrence Mishel, president of the Economic Policy Institute in Washington, D.C. recently told the New York Times, that the state of our economy right now is “indistinguishable from a recession.” Families are “losing jobs, and they’re getting a double bite as wage growth slows down and inflation kicks up. People are losing out on both ends.” Part of any economic downturn includes layoffs, as companies often look to cutting their payroll as a first option for eliminating costs.

Treading lightly around the office or storming out is the wrong move and could adversely affect your chances of a severance package or preserving your rights. Losing your job can be, and often is a traumatic experience (it ranks up there with divorce, death or bankruptcy for many people). Being prepared for a layoff and knowing your legal rights can help to minimize the negative aspects, and even turn it into a positive event for you and your career growth. So, what should you do?

1. Stay Calm, Don't Take It Personally
The first reaction for most terminated employees is an emotional one. The pressures of financial and familial obligations can be overwhelming when you see your job and cash flow flash before your eyes. However, your last few hours in the workplace may be your best chance to get important information regarding your employment. If you can, obtain an electronic or hard copy of your personal files (including contact lists, photos), any performance reviews, customer/client commendations, or emails which you think may be important. [In California, you have the right to view your personnel file (California Labor Code §1198.5), which contains important information regarding your hiring, employment and possibly your termination. Ask human resources for a copy of your file before you leave on your last day.

2. Contact Our Firm
If you believe your termination was (or will be) wrongful, or if you simply are not sure please fill out our free wrongful termination submission form on our website Wrongful Termination Free Submission. You can also call us at 415.955.0888 or 310.726.0888. Many times these cases start with circumstantial evidence (i.e. it just seems like it was wrong, or something doesn't seem right). Use our free case submission to organize your facts and submit it to us.

The law favors those who act on their rights. Undue delays result in a violation of a statute of limitations, causing you to lose your rights. Acting quickly also increases the likelihood that evidence (witnesses, documents, etc.) will be available.

3. Don’t Sign Away Your Rights
Do not let company management or human resources intimidate or coerce you into signing anything which you have not fully read or do not understand. Ask questions, ask for time to consult your own attorney – this is a reasonable request that any company should grant. Yes, you may be losing your job, but you don’t want to lose any of your legal rights. Most companies have form separation and release agreements on file for such an occasion which release the company of any and all liability. Do not take the word of a co-worker or superior as to the contents of any document you sign. Ensure you know what the consequences of signing are and consult an attorney.

4. Keep Detailed and Thorough Notes of Any Meetings and Events
Many times, we meet with clients to hear their stories and collect important information about their employment. More often than not, clients call us two, three, even ten days later to say, “I just remembered, there was that one time when . . .” Details can often slip your mind when you are being ushered out your office door, or rumors of layoffs have your head spinning. After conversations or meetings regarding your termination or related events, write down the date, time, and details of each. Ideally, you will already have a record of key workplace related evets written down in a personal notebook or on your home computer (not at the office).

Reliving the details of your layoff may be the last thing you want to do. However, writing down the details in an orderly chronology [date, time, event] will help you recall events to the best of your ability and better assist any attorney who tries to assess your situation or make an argument on your behalf. The smallest details can make the biggest of differences, and many times you may not recognize what those important details are until after consulting with an attorney.

It is perfectly acceptable to ask a friend, or co-worker, to sit in on the meeting and take notes. Having a more objective listener’s perspective can add more details to your timeline, bring a sense of calm to the proceeding and of course serve as a witness.

5. Apply for Unemployment Benefits
Lastly, apply for unemployment benefits. You can apply via the web at https://eapply4ui.edd.ca.gov/htm/cpgInstructions.htm. It is important to do this as soon as possible after your termination. Some people, especially in the higher earning salary brackets (six figures and up) feel reluctant to apply for unemployment. Our position is: Apply for it. You pay into it while you are working, and it is another source (other than your personal savings) to help you bridge the gap economically until you land your next job.

If your employer has denied or threatened to contest your benefits you should contact our office immediately. For a more detailed discussion of denial of unemployment benefits, please see our blog article at http://alglaborlaw.blogspot.com/2005/01/no-job-no-paycheck-okbut-no.html.

Note: The information contained is not legal advice and does not establish an attorney-client relationship. Our contact information is included and we always offer a free consultation. For more information about this topic and/or other areas of EMPLOYMENT law, please visit www.AdishianLaw.com/, contact us via email to askalg@adishianlaw.com or call us at 415.955.0888 or 310.726.0888. ALG, P.C. staffer Breanne Vandermeer contributed to this article. Copyright 2008, ALG, P.C.

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Non-Competition Clauses In California: It's No Contest after Edwards

Long-term employment when companies quickly become aware the past for most American workers, especially in the technology forward California economy. Employers have benefited from these changes, by receiving the benefit of rapid flexibility in their employee base and hence cost structure. Employees have arguably benefited in some ways as well, by taking advantage of easy mobility within the workforce. Some employers have also gone one step further, by seeking to you protect themselves by adding "noncompetition clauses" to their employee's contracts.

What is a noncompetition clause?
Generally speaking, a noncompetition clause is any form of language in an employment contract that seeks to limit the employee's ability to "compete" against his/her former employer once he is no longer employed by that employer.

Governing statutory law
California Business and Professions Code Section 16600 clearly forbids noncompetition contracts and noncompetition clauses, providing "every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void." In spite of the plain language of Section 16600, companies have continued to require that their employees sign non-competition agreements, asserting that these agreements somehow comply with Section 16600.

California Supreme Court Decision
In Edwards v. Arthur Andersen LLC 2008 DJDAR 12286, the California Supreme Court unambiguously held that noncompetition agreements are void in California. In summary, this case arose out of the collapse of Arthur Andersen. Edwards had been an employee of Arthur Andersen, which was subsequently purchased by HSBC.

Before hiring any of Andersen’s employees, HSBC required them to execute a “Termination of Noncompete Agreement” (TONC) in order to obtain employment with HSBC. Among other things, the TONC required employees to, inter alia, (1) voluntarily resign from Andersen; (2) release Andersen from “any and all” claims, including “claims that in any way arise from or out of, are based upon or relate to Employee’s employment by, association with or compensation from” defendant; (3) continue indefinitely to preserve confidential information and trade secrets
except as otherwise required by a court or governmental agency; (4) refrain from disparaging Andersen or its related entities or partners; and (5) cooperate with Andersen in connection with any investigation of, or litigation against, Andersen. Edwards signed the HSBC offer letter, but he did not sign the TONC. In response, Andersen terminated Edwards’s employment and withheld severance benefits. HSBC withdrew its offer of employment to Edwards. Litigation ensued.

At trial, the court "specifically decided that (1) the noncompetition agreement did not violate section 16600 because it was narrowly tailored and did not deprive Edwards of his right to pursue his profession;....." Edwards appealed. The Court of Appeal held that the non-competition agreement was invalid under section 16600. The decision was appealed and the California Supreme Court granted review.

In reaching its decision, a unanimous Court wrote: "We hold that the noncompetition agreement here is invalid under section 16600, and we reject the narrow-restraint exception urged by Andersen. Noncompetition agreements are invalid under section 16600 in California even if
narrowly drawn, unless they fall within the applicable statutory exceptions of
sections 16601, 16602, or 16602.5." [J. Kennard and Werdeger concurred with respect to the non-competition issue, and dissented on a separate issue].

Lessons from Edwards
Clarity provided by this decision is significant especially in the California economy particularly Northern California, where high-tech job hopping is more common than not. This decision is also supported by some recent studies that concluded the constant shifting of resources and personal intellectual capital from one company to another was a major contributor to innovation and growth. See generally, The Legal Infrastructure of High Technology Industrial Districts: Silicon Vally, Route 128 and Covenants Not to Compete, 74 N.Y.U.L Rev. 575 (1999).

The lesson is that if a California employer asks you to sign a non-competition agreement it should be viewed as a cautionary sign. If you have already signed a non-competition agreement within California, you should feel comfortable that such an agreement is void, absent the agreement falling "within the applicable statutory exceptions of sections 16601, 16602, or 16602.5."

If you would like us to review your specific fact pattern or agreement, please visit www.AdishianLaw.com/wrongful_termination.html.

Note: The information contained is not legal advice and does not establish an attorney-client relationship. Our contact information is included and we always offer a free consultation. For more information about this topic and/or other areas of EMPLOYMENT law, please visit http://www.AdishianLaw.com/, contact us via email to askalg@adishianlaw.com or call us at 415.955.0888 or 310.726.0888. ALG, P.C. staffer Breanne Vandermeer contributed to this article. Copyright 2008, ALG, P.C.

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"Give Me A Break!"

Must an employer provide a rest break to a worker during the day?

The general rule is that a worker is entitled to a 10 minute rest break for every 4 hours work, and the employer must not prohibit the workers from taking such breaks. If the nature or circumstance of work prevent the employer from giving the break at the preferred time (i.e. in the middle of the 4 hour period), then the employee must still receive the 10 minute break at another time during the day.

But, an employee cannot unilaterally choose to take his 20 minute break any time that he or she wants. For example, an employee cannot pass on both breaks in an 8 hour day, in order to leave 20 minutes early. The employer can also require that the employee stay on the premises during his or her breaks.

If the employer does not allow a rest break, then the employee can file a wage claim against the employer and recover one hour of pay for each workday that a rest period was not provided. For large employers, the damages can spiral out of control very quickly.

If you believe that you have been improperly denied rest periods, please contact us for a free no obligation case review.

Note: The information contained is not legal advice and does not establish an attorney-client relationship. Our contact information is included and we always offer a free consultation. For more information about this topic and/or other areas of EMPLOYMENT law, please visit http://www.adishianlaw.com/, contact us via email to askalg@adishianlaw.com or call us at 415.955.0888 or 310.726.0888. Copyright 2007, ALG, P.C.

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Does Sexual Harassment Include Sex?

There are two recent decisions that we believe may be very significant for Plaintiffs in wrongful termination actions, particularly gender-based claims.

In Miller v. Department of Corrections, California Supreme Court, July 18, 2005, No. 114097, the court was faced with a fact pattern wherein a prison warden promoted women who were having sex with him, but did not promote women who were not having sex with him. On those facts, the court held that the women who were NOT having sex with the warden, and were being denied promotions, had standing to sue for sexual harassment.

In Christopher v. National Education Association, 05 C.D.O.S. 799, the 9th Circuit reversed a lower court's dismissal of an action wherein a manager was accused of "shouting, screaming foul language, invading employees personal space, and making threatening gestures", and held that the manager may be sued for gender discrimination under Title VII of the 1964 Civil Rights Act.

When we look at these cases, in conjunction with the widely acknowledged truism that "Since 2000, California employment law has diverged from federal law even more dramatically with California law being more favorable to employees…" (Rutter, Employment Law), it begins to look very difficult for a Defendant to obtain summary judgment on a gender-related claim in Federal court, and even more difficult in the California court system. It does not take much of a logical leap to apply this same rationale to other well-settled protected classes.

Note: The information contained is not legal advice and does not establish an attorney-client relationship. Our contact information is included and we always offer a free consultation. For more information about this topic and/or other areas of CORPORATE, REAL ESTATE OR EMPLOYMENT law, please visit http://www.adishianlaw.com/, contact us via email to askalg@adishianlaw.com or call us at 415.955.0888 or 310.726.0888. Copyright ALG 2007.

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Employment Law: At Will After Dore

On August 3, 2006, the California Supreme Court ruled reversed an appellate court ruling that had reversed a trial court summary judgment on behalf of the defendant employer. The Appellate Court ruling would have allowed Plaintiff Dore to bring specific causes of action against his fomer employer. However, the Supreme Court's decision, relying heavily on the express "at will" language in his employment contract, effectively denied any legal recourse to Dore.

Our view at the present time is that this case is not a material change to employment law in California. California is generally an "at will" state, meaning that an employer can fire an employee at any time, for any reason (i.e. no cause is required). However, that is not the end of the inquiry, as there are many causes of action that fall outside "at will" or trump "at will". Fraud would be an example of the former, and a discriminatory firing of a protected class member would be an example of the latter.

Some of our colleagues representing employers believe that the recent Dore decision has somehow made California a "super at will" state. We don't read it that way. Our view is that the Dore decision simply stated that absent a legal theory outside of the underlying at will employer-employee relationship, "at will" shields the employer. In Dore the Plaintiff either lacked such claims, failed to plead such claims or lacked sufficient evidence to support such claims. Regardless, nothing we read in Dore seems to abrogate long established employees' rights under California Public Policy, California Statute or Tort.

Dore's specific claims included variations on two contract theories, two variations of fraud and one other tort of intentional infliction of emotional distress. In reaching its decision, the Supreme Court noted that the express language of the employment contract, signed by Dore, included unambiguous "at will" language, thereby defeating any contract claims. No surprise there.

In looking at the fraud claims, the Court noted simply that the record did not contain the requisite elements, by Dore's own admission under deposition, to support his allegations under either fraud theory, and lacking such elements there presumably could be no intentional infliction of emotional distress (although the court did not address this point). We disagree with those who suggest that the Court held that "at will" now trumps fraud.

Based on the foregoing, we view Dore as an opportunity for the Court to refine the meaning of "clear and unambiguous" with respect to the admissibility of parole evidence to clarify and employment agreement with an express "at will" clause, and nothing more. Dore v. Arnold Worldwide, Inc. (2006), Cal.4th [No. S1224494, Aug. 3, 2006.] (7-0, 2 concurring opinions).

Note: The information contained is not legal advice and does not establish an attorney-client relationship. Our contact information is included and we always offer a free consultation. For more information about this topic and/or other areas of CORPORATE, REAL ESTATE OR EMPLOYMENT law, please visit http://www.adishianlaw.com/, contact us via email to askalg@adishianlaw.com or call us at 415.955.0888 or 310.726.0888. Copyright ALG 2007.

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Arbitration Clauses in Employment Agreements

Have you been fired from your job? Do you believe that your termination was wrongful? Would you like to file a wrongful termination complaint against your former employer? Does your employment agreement contain an arbitration clause? What is arbitration? Does an arbitration clause preclude you from filing your claim in court?

What is Arbitration?
Arbitration is the most traditional form of private dispute resolution in which a neutral third party (ie. the arbitrator – who is usually a retired judge or attorney) renders a decision after a hearing at which both parties have an opportunity to be heard. Arbitration is designed to avoid the formalities, delays, expenses, and vexation of ordinary litigation (Black’s Law Dictionary, 6th Ed.).

Arbitration Clauses in Employee Agreements
Many individuals who have endured an injustice at the workplace seek remedy through the courts. However, many employment agreements contain an arbitration clause. Arbitration clauses, in general, stipulate that if there is any dispute or disagreement related to the employment (eg. claims of discrimination, wrongful termination, claims of harassment, etc.) both the employer and employee agree to submit the dispute to binding arbitration pursuant to the California Arbitration Act (California Code of Civil Procedure §1280, et. seq.). The decision reached at the end of an arbitration hearing is final and binding

But the simple inclusion of an arbitration clause does not necessarily preclude access to the courts. If a court finds that the employment agreement is an “unconscionable contract,” the court can refuse to enforce the arbitration clause (California Civil Code §1670.5(a)).

Validity of Arbitration Clauses
So what constitutes an unconscionable contract? In brief, a contract is unconscionable if it is an “adhesion contract,” which is to say that there is no equal bargaining power, no real negotiation, and an absence of meaningful choice (Ellis v. McKinnon Broad, Co. (1993); American Software, Inc. v. Ali (1996); Circuit City Stores v. Adams (2001)). Under California law, unconscionability consists of two components: (1) procedural; and (2) substantive.

Firstly, the procedural element focuses on two factors: oppression and surprise. Secondly, the substantive element focuses on “overly harsh” or “one-sided” terms within the contract (A&M Produce Co. v. FMC Corp (1982)). Arbitration clauses must meet certain requirements to be lawful, including “provid[ing] for more than minimal discovery,” and “not requir[ing]] employees to pay either unreasonable costs or any arbitrator’s fees or expenses as a condition of access to the arbitration forum” (Armendariz v. Found Health Psychcare Servs. (2000)).

What to do First?
Both procedural and substantive unconscionability must be present before a court will refuse to enforce a contract and its arbitration clause. If you believe that both are present in your case, or simply would like legal analysis, we recommend that you consult an attorney, who should b able to advise you of your choices.

[Many thanks to our friends at the Judicial Arbitration and Mediation Services (JAMS) for source materials on this topic.]

[Case References: Ellis v. McKinnon Broad, Co. (1993) 18 Cal.App.4^th 1796, 1803; American Software, Inc. v. Ali (1996) 46 Cal.App.4^th 1386, 1390; Circuit City Stores v. Adams (2001) 532 U.S. 105, 119; A&M Produce Co. v. FMC Corp (1982) 135 Cal.App.3d 473, 486-87; Armendariz v. Found Health Psychcare Servs. (2000) 24 Cal.4^th 83, 114]

[CA Statute References: California Code of Civil Procedure §1280; California Civil Code §1670.5(a)]

Note: The information contained is not legal advice and does not establish an attorney-client relationship. Our contact information is included and we always offer a free consultation. For more information about this topic and/or other areas of CORPORATE, EMPLOYMENT, and WRONGFUL TERMINATION law, please visit http://www.AdishianLaw.com/, contact us via email to askalg@adishianlaw.com or call us at 415.955.0888 or 310.726.0888. ALG intern Jonathan Tam contributed to this article. Copyright ALG 2005.

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No Job, No Paycheck? Ok...But No Unemployment Benefits?!

Have you been fired from your job? Were you laid off? Did you file for unemployment? Did your employer contest your right to receive benefits? Have you been denied benefits? Are you entitled to benefits?

Sometimes companies fire an employee, and then contest the employee’s right to receive unemployment benefits. Companies are entitled to contest a terminated employees access to unemployment benefits in certain instances, but in some cases companies abuse this process by contesting unemployment benefits in bad faith, effectively adding insult to economic injury.

Under California law, an employee is disqualified from receiving benefits if and only if he has either:

(a) left his most recent work voluntarily without good cause; or

(b) has been fired for misconduct connected with his most recent work (Unemployment Insurance Code, §1256).

“Misconduct connected with recent work” is a substantial breach by the employee of an important duty or obligation owed to the employer, willful or wanton in character, and tending to injure the employer (Maywood Glass Co. v. Stewart (1959)).

Accordingly, mere inefficiency, unsatisfactory conduct, or poor performance as the result of inability or incapacity, isolated instances of ordinary negligence or inadvertence, or good faith errors in judgment or discretion do not constitute misconduct, and cannot legally serve as justifications for denial of benefits. For example, even a single instance of an offensive remark to an employer, attributable to hotheadedness rather than deliberation, is not misconduct (Silva v. Nelson (1973) 31 Cal.App.3d 136).

If you have been terminated by your employer and denied benefits, you should contact an attorney to discuss your rights. Denials are can be appealed but you must act quickly.

[Case References: Maywood Glass Co. v. Stewart (1959) 170 Cal.App.2d 719; Silva v. Nelson (1973) 31 Cal.App.3d 136]

[CA Statute Reference: Unemployment Insurance Code, §1256]

Note: The information contained is not legal advice and does not establish an attorney-client relationship. Our contact information is included and we always offer a free consultation. For more information about this topic and/or other areas of CORPORATE, and EMPLOYMENT law, please visit http://www.adishianlaw.com/, contact us via email to askalg@adishianlaw.com or call us at 415.955.0888 or 310.726.0888. ALG intern Jonathan Tam contributed to this article. Copyright ALG 2005.

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