Employment Law Blog

Family and Medical Leave Act (FMLA) & California Family Rights Act (CFRA)

When can You Take FMLA? Under the federal Family and Medical Leave Act, or FMLA, you can take up to 12 weeks of leave within a 12–month period when: You are unable to work due to a serious health condition. You are caring for an immediate family member with a serious health condition. You have a newborn child or have a child placed with you for adoption or foster care. There are “qualifying exigencies” arising out of a family member’s active duty or call to active duty status as a member of the National Guard, Reserves or regular armed forces. The California Family Rights Act, or CFRA, also entitles employees in Los Angeles, San Francisco and throughout California to 12 weeks of leave within a 12–month period for bonding with a new child, for the employee’s own serious health condition or to care for a family member with a serious health condition. Leave under the CFRA runs concurrently with the FMLA. Generally, leave may be taken all at once or intermittently. However, under FMLA, intermittent leave for the purpose of bonding with a new child is subject to the employer’s prior approval. Under the CFRA, the employer may require you to take two-week minimum increments for bonding leave. The FMLA and CFRA laws cap out available leave for all qualifying events at 12 weeks total. Free FMLA Consultation Schedule your FMLA consultation here. How do I Know if I am Eligible for FMLA Leave? If your employer has at least 50 employees within a 75–mile radius it must comply with the FMLA and the California Family Rights Act. The CFRA and the FMLA have the same basic eligibility requirements: You must have worked for your employer for at least one year and you must have worked at least 1,250 hours during the 12 months just before the start of your leave. Paid time off, such as vacation or sick leave, cannot be counted toward the 1,250 hours. Who Counts as a Family Member Under the FMLA? Under FMLA, a spouse (including a same-sex spouse), child or parent is considered a family member, but a registered domestic partner is not. Under the California Family Rights Act, a registered domestic partner is treated the same as a spouse. What Counts as a Serious Health Condition? A serious health condition is any illness, injury, impairment, or physical or mental condition that causes or requires: Any period of incapacity or treatment in connection with or after inpatient care such as an overnight stay in a hospital Any period of incapacity of more than three consecutive days requiring absence from work, school or other regular daily activities with ongoing medical treatment Ongoing treatment by a health care provider for a chronic or long–term health condition that is incurable Restorative dental or plastic surgery after an injury A chronic serious health condition is one that requires “periodic visits” (at least twice a year) for treatment to a health care provider, that continues over an extended period, and that may cause episodic rather than continuing periods of incapacity. Voluntary cosmetic treatment is not a “serious health condition” unless it ends up requiring inpatient care due to complications. Routine preventative care is also not considered a serious health condition. Employers may request medical certification that there is a “serious health condition” but privacy laws limit the details they may require. An employer must allow you at least 15 calendar days to obtain the medical certification. Is Pregnancy a Serious Health Condition Under the FMLA? Under the FMLA, pregnancy is considered a serious health condition that would qualify for leave. Pregnancy also qualifies an employee for up to twelve weeks of Pregnancy Disability Leave provided the employer has at least five employees. Pregnancy Disability Leave may be taken in addition to CFRA leave and does not have to run concurrently. What About my Salary and Benefits While I am Taking FMLA or CFRA Leave? Your employer is not required to pay you under the FMLA or CFRA, but they are under the California Paid Family Leave (PFL) law. The PFL provides partial pay to employees need time off to care for a sick family member or to bond with a newborn. Click here for more info on the PDL. Your employer may require you to use accrued vacation time or other accumulated paid leave. Under the CFRA, your employer cannot require you to use sick leave unless the leave is for your own serious health condition. If you get health benefits under a group health plan, you will be entitled to continue your health insurance at the same cost as you would pay while you are working. Can You be Fired for Taking FMLA or CFRA Leave? No. After you take FMLA or CFRA leave, you are entitled to return to the same position unless it is no longer available. If it is not available (due to layoff or closure, for example), then you must be offered an alternative position that is comparable in shift, work schedule, pay, benefits, location, job duties, and promotional opportunities. If you are not given the same or a comparable position upon return from leave, the employer must prove that there was no such comparable position. FMLA Retaliation Companies often do not understand the FMLA and fire employees who inquire about taking leave or who take leave. This is called FMLA retaliation. Because retaliation is so common, the FMLA expressly forbids retaliation and provides an automatic doubling of damages. FMLA retaliation cases can be very strong and easy to resolve quickly. If you have been fired in connection with FMLA leave, contact us for a free consultation.

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Employment Law Blog

Employment Discrimination Under California Law

Employment discrimination is against the law. Employers are not allowed to treat you differently because of your – Pregnancy Age Race Ethnicity Religion Gender Disability These descriptions, among others, fall into classes that are protected by law. If you have a discrimination case, contact us for a free consultation. We have offices in San Francisco and New YorkLaws Enforced by Our Discrimination Lawyers Discrimination lawyers specialize in a number of different laws that protect employees against being treated differently. For example: On the federal level, discrimination is prohibited against all of the classes we named above. The Americans with Disabilities Act (ADA) prohibits discrimination on the basis of disability, and the Age Discrimination Act (ADEA) prohibits discrimination on the basis of age (over 40). The New York State Human Rights law and the California Fair Employment and Housing Act protect employees against discrimination because of their sexual orientation, status as a victim of domestic violence, or marital status. Specifically for employees in NYC and San Francisco, the New York City Human Rights law and FEHA extends its protection to those people who have been discriminated against because of- Sexual identity (such as transgender orientation) Arrest or conviction record Status as a victim of domestic violence (including stalking and sex offenses) Unemployment status The New York City Human Rights Law and FEHA are some of the most powerful anti-discrimination laws in the country. Discrimination lawyers in New York and San Francisco should be thoroughly familiar with this law.How to Protect Yourself from Discrimination If you are experiencing discrimination at work, you have a few options: Lodge a written complaint with your employer by following the procedure in their employee manual. File a complaint with an external agency, such as the Equal Employment Opportunity Commission (EEOC) or the New York State Division of Human Rights. Consult with discrimination lawyers with experience in the field who can guide you through the process and advocate for you in court. It is important to remember that the law protects you against any retaliation by your employer for filing complaints, either internally with your HR department or externally with a governmental body. The process of pursuing a case of discrimination against an employer can be complex and time-consuming, but our lawyers are here to help.Choose Ottinger Employment Lawyers to Handle Your Discrimination Case Our discrimination lawyers are here to help. If you feel that you have been subject to employment discrimination, it is essential that you find an experienced discrimination lawyer to pursue your case. When selecting a discrimination lawyer, it is important to find a firm with a proven track record of success, both in obtaining settlements and at trial. At the Ottinger Employment Lawyers, our discrimination lawyers have successfully represented hundreds of employees and recovered millions for them. We also have extensive experience litigating such claims through trial.

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Employment Law Blog

Right to Sue Letters from the EEOC

The Ultimate Guide to Right to Sue Letters This guide is for anyone who has received a right to sue letter or wants to know more about them. You will learn what you need to do when you get a right to sue letter and you will understand the big picture. This guide will also help you decide what steps to take next and help you find a good employment lawyer if you decide to file a lawsuit. Bottom line:  This guide will help anyone who recently received a right to sue letter. CHAPTER 1 What is a Right to Sue Letter? In this chapter, I’ll show you what a right to sue letter is and what to do after to you get one.  The key point here is that you only have 90 days to file an employment discrimination case after you get a right to sue letter. The Equal Employment Opportunity Commission (EEOC) issues “right to sue letters” when they are finished working on a case. When the EEOC issues a right to sue letter, they are saying “we have done all we can do, now you can file a lawsuit if you want to.” A right to sue letter gives you permission to file suit in federal court.  In fact, you need a right to sue letter in order to file most kinds of employment discrimination cases.   A right to sue letter is not needed to file an age discrimination or equal pay act case. Your Right to Sue Letter and Time Limits If you received a right to sue letter, the clock is now ticking.  You have 90 days to file your case.   If you don’t file it within 90 days, you could be forever barred from filing your employment discrimination case in federal court. Click here for helpful information from the EEOC about right to sue letters and filing discrimination lawsuits. What to Do After You get a Right to Sue Letter After you get a right to sue letter, you must decide if you want to file an employment discrimination lawsuit.  Remember, you only have 90 days. That’s not a lot of time to make this decision, find a lawyer and file suit. Note: To summarize, a right to sue letter means that you now have the right to sue your employer in federal court.  It also means that the EEOC is no longer working on your case and it’s up to you to pursue your case.   To do this, you will probably need a law firm and we get into that in chapter 4 below. CHAPTER 2 What Does the EEOC Do? The EEOC is the federal agency that investigates employment discrimination.  Employment discrimination occurs when someone is mistreated at work because of a personal trait.  As you might imagine, the EEOC gets a lot of complaints and they often don’t have enough staff to handle it all so things can move slowly. The EEOC The EEOC investigates employment discrimination. Employment discrimination occurs whenever an employee suffers an adverse employment action (such as getting fired or demoted) due to their race, disability, gender, religion, pregnancy, age or other traits. The EEOC also investigates sexual harassment cases. After you file an employment discrimination complaint with the EEOC, the investigation process starts.  The first step is the appointment of an EEOC investigator.  The investigator may interview witnesses, review employment documents such as personal files, visit the work site or engage in other efforts to find out what happened. EEOC Mediation After completing its investigation, the EEOC often tries to resolve disputes through mediation. Mediation is a non-binding process where a mediator tries to get everyone to agree upon a settlement.  At an EEOC mediation, the parties meet with a mediator to try to negotiate a resolution. It doesn’t always work because sometimes the parties are unable to reach an agreement. Dismissal or Determination If the EEOC is unable to resolve the case through mediation, they typically issue one of two letters:  (A) a Dismissal and Notice of Rights or (B) a Letter of Determination. A Dismissal and Notice of Rights is issued when the EEOC is unable to find any solid evidence of discrimination.  This does not mean that the case lacks merit.  It means that the EEOC, with its limited resources, is unable to find enough evidence to prove that discrimination occurred. A right to sue letter is included which gives you the right to pursue your case in court. A Letter of Determination is issued in those rare cases where the EEOC finds compelling evidence of discrimination. A right to sue letter is included. Note: A Dismissal and Notice of Rights letter does not mean that the case lacks merit. It means that the EEOC, with its limited resources, is unable to find enough evidence to prove that discrimination occurred. See If You Have An Employment Case Talk with one of our experienced attorneys to determine if you have a case or not. Contact Our Attorneys CHAPTER 3 Employment Discrimination Lawsuits Employment discrimination lawsuits are nasty, expensive, slow and often ineffective.  Most people do not enjoy the process.  So you might want to give careful consideration before filing a case. Here are a few things to consider. Do you have solid evidence to prove your case? For example, if you believe that you were fired due to your age, you will need to back this up with compelling proof. Do you have evidence such as emails, texts or videos showing that your age was the reason for your termination?  The burden of proof is on you so make sure you have it. Did something seriously bad happen to you?  Discrimination happens in the workplace every day. People all over the country are exposed daily to discriminatory comments, lost opportunities, and other setbacks and indignities. But its usually not worth suing over this kind of thing unless you are seriously harmed.   Typically, the only thing that will justify a lawsuit is getting fired from a good job due to discrimination. Note: A Right to Sue Letter Gives you the Right to Sue Your Employer.  Deciding if […]

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Employment Law Blog

Your Employment Rights: A Guide for Workers

If you are reading this, it’s probably because you’re facing a work-related problem.  Maybe you’re worried that you’ve been discriminated against in the hiring process because of your race, gender, sexual orientation, or disability.  Maybe there’s a problem with the way your company has been treating you, how much they’ve been paying you, or how many hours they ask you to work.  Maybe you’ve just lost your job, and the reason doesn’t seem fair.  This guide is designed to help you access the information you need to understand your employment rights and protections under the United States’ employment laws.   In our opinion, the best kind of legal advice addresses problems before they get out of hand, keeping people in their jobs and out of the courtroom.  We hope this guide will give you the legal know-how necessary to resolve your workplace problems without too much fuss.  That said, we understand that some work-related issues cannot be resolved without help from legal professionals.  If that’s your situation, we hope that this guide will help you understand how you can use the law to protect your rights and defend your interests.   Employment law sets mediates relationship between companies and their workers. There are many different aspects to this relationship and, unfortunately, many different ways it can go wrong.  Click on the links below to find about more about your rights and protections in each area of employment. Employment At Will and Why You Have No Right to Your Job Many employees believe that the law protects them from being fired without notice or without reason.  Unfortunately, most employees are employed “at-will” meaning that they do not have the benefits of such protections.  If you are employed at-will (and most employees are), your employer can terminate you without cause, without notice, and at any time.  On the other hand, you also have the right to quit at any time, without giving a reason.  Generally, unless your employer has specified that you are not at-will, the law presumes that you are.  At-will employment is the rule, not the exception to it.   This can be discouraging news for employees who have just been laid off without explanation or without notice.  The good news is that even at-will employers do not have the right to fire their employees for illegal reasons (such as due to discrimination, or in retaliation).  If you believe your employer may have illegally fired you, please contact an attorney to discuss your options.   At-Will Employment (New York) At-Will Employment (San Francisco) For more information on at-will employment, including how to determine if you are not an at-will employee, please see these articles, or watch the video linked below: Fired at Will – You Can Be Fired for any Reason Employment Rights – Pay and Hours We all work for at least one reason — to get paid.  However, a lot of us don’t understand the laws that regulate our wages and the hours we work.  So, where do these regulations come from? The Fair Labor Standards Act, or FLSA, is the backbone of your right to fair pay for the hours that you work. The FLSA is a federal law, so it applies nationwide. This law establishes: the 40 hour week, the rules for overtime pay, the minimum wage, restrictions on child labor, equal pay for equal work done by a man or woman, and the standards for pay for time off work. State and local laws may provide greater degrees of protection, but the FLSA sets the minimum standard across the country.  These protections have some restrictions — such as on who qualifies for overtime pay or who qualifies as an “employee” (versus an independent contractor) — and we have elaborated on those questions on our practice area pages (linked below).  As always, if you have specific or detailed concerns about your particular situation, please don’t hesitate to contact an attorney for a free consultation to discuss your options. Explore these articles to learn more: Minimum Wage in San Francisco Overtime in New York Employment Rights – Discrimination Federal law prohibits employers from discriminating against their employees on the basis of things like race, national origin, sex, disability, etc.  State laws frequently provide additional or more specific protections.  For example, in California and New York, state law stipulates that employers cannot discriminate against people for being married or unmarried, or on the basis of their involvement with the military.  Unfortunately, discrimination still happens despite the existence of these laws. So what is discrimination? It can manifest itself in a number of different ways, but, basically, it includes any action that adversely impacts an employee or a job candidate  — such as firing, denying a promotion, or refusing to hire someone — and is also prejudicial or biased in motivation.  Sometimes, discrimination is fairly obvious.  At other times, discrimination can be subtle and unintentional; your employer may not realize that you are being impacted.  Either way, you have the right to pursue legal options to address the discrimination. For more information on discrimination and your legal protections, please see this article: Workplace Discrimination in New York and San Francisco Employment Rights – Family and Medical Leave Life happens, and sometimes you need to take time away from work to deal with the ups and downs that life brings. The Family and Medical Leave Act (or FMLA) is federal legislation that provides you with the right to take time off work for the family health issues, births, and adoptions that shape the lives of workers. This section explains when you are entitled to a leave of absence, what protections you have while on leave, and what to do if your employer does not uphold your rights. What events entitle you to family or medical leave? There are two situations when you are eligible for leave under the FMLA: When welcoming a new member to the family through a birth, adoption, or foster placement; and When you or a family member are facing serious health problems. Medical leave […]

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Employment Law Blog

Constructive Discharge in California

Constructive discharge is a term used to describe a situation where an employer forces an employee to quit.   Rather than firing an employee for an illegal reason, some employers attempt to skirt liability by forcing the employee to resign. A constructive discharge occurs when an employee is coerced into resigning as a result of the employer imposing unusually intolerable working conditions on the employee with the intention of forcing the employee to quit.  In such cases, the employee’s resignation is legally deemed a firing rather than a voluntary resignation.     Establishing a claim of constructive discharge requires the employee to prove “that the employer either intentionally created or knowingly permitted working conditions that were so intolerable or aggravated at the time of the employee’s resignation that a reasonable employer would realize that a reasonable person in the employee’s position would be compelled to resign.”  Vasquez v. Franklin Real Estate Fund, Inc.  Employees may not just “quit and sue” based on a charge of constructive discharge.  The facts must show that the employee was coerced or forced into quitting rather than simply making a rational choice to quit. “The conditions giving rise to the resignation must be sufficiently extraordinary and egregious to overcome the normal motivation of a competent, diligent and reasonable employee to remain on the job to earn a livelihood and to serve his or her employer.”  Id.  The standard applied in determining whether or not there has been a constructive discharge is an objective one, and it is a question of fact – “whether a reasonable person faced with the allegedly intolerable employer actions or conditions would have no reasonable alternative except to quit.”  Id.  Examples  Courts have held that the following types of employer conduct are not, on their own, enough to amount to constructive discharge:  The mere existence of a legal violation in the workplace. Id.  An isolated instance of employment discrimination. Soules v. Cadam, Inc.  A poor performance rating accompanied by a demotion and reduction in pay. Vasquez.  Changing an instructor’s schedule from full-time to part-time. Scotch v. Art Institute of California.    Reducing an employee’s salary and changing his or her annual bonus.  King v. AC & R Advertising.  When it turns out that the job the employee accepts is more difficult than or otherwise different from what the employee expected. Rochlis v. Walt Disney Co.  Receiving criticism and being paid less than the employee believes he deserves.  Id.   However, courts have held that the following types of employer conduct could amount to constructive discharge:  An employee was subjected to a violation of the California Labor Code (failure to reimburse business expenses) so egregious that it resulted in the employee being paid less than minimum wage, forcing the employee to divert a substantial amount his salary to pay his employers expenses and leaving the employee unable to pay basic living expenses. Vasquez.  When an employee is subjected to a continuous pattern of discrimination by the employer on the basis of race, sex, age or national origin.  Watson v. Nationwide Insurance Co.  An employee was physically threatened on one occasion, harassed over a period of two weeks, and not given sufficient work instructions to perform his job.  Ford v. Alfaro.  An employee was subjected to three racial insults within a matter of hours and, upon quitting, was told, “You’d stay if you weren’t a sissy.  If you were a man, you’d stay.”  Watson (citing Bailey v. Binyon).  An employee who had previously received only excellent performance ratings was subjected to citations for rule violations that other similarly situated employees did not receive, to trumped–up charges of inadequate job performance, and to abusive treatment and harassment, including being told in a four–hour meeting that she was a poor and incompetent supervisor.  Watson. 

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Employment Law Blog

California Commission Disputes

Commission disputes are all too common in California.  The threshold question in most of these cases is do the commissions at issue constitute earned wages under the California Labor Code? What is a “Commission”?  In order to answer this question, let’s first look at what counts as a “commission” under California law. Section 204.1 of the California Labor Code states, “Commission wages are compensation paid to any person for services rendered in the sale of such employer’s property or services and based proportionately upon the amount or value thereof.” Section 2751 specifies that “commissions” do not include the following:  “(1) Short-term productivity bonuses such as are paid to retail clerks.  (2) Temporary, variable incentive payments that increase, but do not decrease, payment under the written contract.  (3) Bonus and profit-sharing plans, unless there has been an offer by the employer to pay a fixed percentage of sales or profits as compensation for work to be performed.” When is a Commission “Earned”?  Determining when a commission is earned is often critical for executives who have left their employer with outstanding commissions.   If the commission is deemed earned at the time they leave the company, they most likely have the legal right to the commission.  If the commission was not earned at the time of their departure then they will forfeit the payment. According to California law, classifying a commission as “earned” is a matter of contract between employer and employee. In Koehl v. Verio, the court held, “A commission is ‘earned’ when the employee has perfected the right to payment; that is, when all of the legal conditions precedent have been met. Such conditions precedent are a matter of contract between the employer and the employee…” Likewise, Sciborski v. Pacific Bell Directory states clearly that once the contractual obligations are fulfilled, the commission is considered a wage: “[O]nce the express contractual conditions are satisfied, the commission is considered a wage.”  The courts have traditionally deferred to the language of the contract in determining when a commission is “earned” – for example, courts have held that employers are legally allowed to require customers to submit payment before a salesperson “earns” the commission in question. Thus, once employees fulfill their contractual obligations, their commissions are typically deemed “earned.” And once commissions are “earned,” they are protected by the California Labor Code. In fact, California courts have held that section 221 of the Labor Code prohibits an employer “from collecting or receiving wages that have already been earned by performance of agreed-upon requirements.” Thus, once an employee fulfills all its contractual requirements, thereby earning the commission, an employer is required to pay the commission to the employee.    Retroactive Commission Changes  Some companies attempt to alter an employee’s commission after a deal has been closed.  This normally occurs after a commissioned sales employee closes an unusually large transaction.  Is it legal to lower the commission after the employee has done the work?   The answer is not always clear. While courts generally give deference to the language of the contract, courts have also refused to allow employers to apply changes to commission plans retroactively. In Mathews v. Orion Healthcorp Inc., the court for the northern district of California held that “Although the commission plans contained a clause reserving to Defendant the right to unilaterally change the plans, such a clause is contrary to California law if applied retroactively.” To come to its conclusion, Matthews cited a previous case that dealt with changes to a commission plan, Asmus v. Pacific Bell.  In Asmus, the court relied on contract theory, specifically the notion of a contract as “illusory,” to arrive at its ruling. The Asmus court held that “an unqualified right to modify or terminate the contract is not enforceable. But the fact that one party reserves the implied power to terminate or modify a unilateral contract is not fatal to its enforcement if the exercise of power is subject to limitations, such as fairness and reasonable notice.” Citing this section from Asmus, the Mathews court held that “Defendant’s reserved right to modify the commission plan could not extend to past earned commissions under California law, and there is no dispute of fact that Plaintiff satisfied the conditions precedent to qualify for the commissions due to be paid.”   The point here is that the terms of a commission plan will govern unless the agreement gives the company the unfettered right to make retroactive unilateral changes.     Pfeister and Vinson: Are Commissions Plans Enforceable Contracts?  As the rulings in Asmus and Mathews demonstrate, the courts have generally refused to allow employers to modify commissions plans retroactively. In order to deny employers this right, the courts started from the position that the incentive commission plans it dealt with were enforceable contracts. However, there has been a thread of subsequent cases pushing back on this conception of incentive plans. In such cases, courts have interpreted commission plans between employer and employee not as a matter of enforceable contract at all. Therefore, employers in these cases were not required to pay employees commissions according to the terms of the incentive plans.  In Pfeister v. Int’l Bus Machs. Corp, Plaintiff worked for IBM and had a dispute over Q4 commissions earnings. IBM originally set Plaintiff’s Q4 signings quota to approximately $2.8 million. IBM then increased this quota to $10 million in February of the following quarter. When applied to Plaintiff’s Q4 sales, this retroactive change had the effect of reducing his commissions by nearly $400,000. In this case, the court denied Plaintiff’s claim for breach of contract on the grounds that the incentive plan was not an enforceable contract. To reach this position, the court discussed two principles characterizing an enforceable contract: (1) Mutual assent or consent of the parties to enter into a contract; and (2) sufficiently definite terms. Regarding (1) mutual consent of the parties, the Pfeister court held that, because the incentive plan stated it “does not constitute an express or implied contract or a promise by IBM to make any distributions under it,” IBM did not consent to form a contract with Plaintiff.  Likewise, regarding (2) sufficiently definite terms, the court stated that, because the incentive plan granted IBM the right “in its sole discretion to change sales performance objectives…[and] the right of IBM in its sole discretion to adjust the incentive payment,” the incentive plan did not contain sufficiently definite terms. Because the incentive plan contained neither (1) mutual consent of the parties or (2) sufficiently definite terms, the court did not recognize the incentive plan as an enforceable contract.   In refusing to recognize Plaintiff’s incentive plan as an enforceable contract, the Pfeister court dismissed Pfeister’s breach of contract claim.  In Vinson v. Int’l Bus Machs. Corp, a 2019 commission dispute again involving IBM, the court similarly sided with IBM. Like Pfeister, the Vinson court again held that the incentive plan in place did not constitute an enforceable contract, because IBM reserved the right to change the plan’s features and modify or cancel the plan. Conclusion  As discussed previously, once a commission is considered “earned,” this triggers wage protections under California law. As cases like Koehl and Sciborski demonstrate, determining when a commission is “earned” is typically a matter of contract between employee and employer. While the courts generally defer to the language of the contract in deciding when a commission is earned, the Mathews court offered some protection to employees.  Mathews relied on contract law principles cited in Asmus to deny employers the unrestricted right to apply changes to commission plans retroactively.     But some commission plans, such […]

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Employment Law Blog

Non Compete Agreements in New York

Locked into a Non Compete in NY? Here are Five Ways Your Can Potentially Defeat Your New York Non Compete Agreement Are you bound by a New York non-compete agreement?   Are you trying to move from one employer to another in the same industry?   A non-compete agreement can ruin your plans.   This article provides a brief overview of tactics that can beat a non-compete agreement.  For a more in-depth discussion of this topic, see New York Non-Compete Agreements: The Ultimate Guide for Executives.  If a non-compete agreement is causing problems for you, it may be possible to invalidate it or reduce its impact.  We offer a non compete review & consultation to help you understand your options. First, a little background on New York non-compete agreements.  These agreements were once limited to high-level company executives who had access to company trade secrets or who developed unique skills while employed by the company.  Over the past decade, however, companies have started asking rank and file employees to sign non-compete agreements.   As a result, employees at all levels find themselves constrained by these agreements.  It’s estimated that one in five people today are bound by a non-compete clause.  The overuse and abuse of non-compete agreements are also creating a backlash against them.   Last year, New York Attorney General Eric Schneiderman prosecuted three companies for abusing non-compete agreements.    According to the Attorney General, “unless an individual has highly unique skills or access to trade secrets, non-compete clauses have no place in a worker’s employment contract.”  The tide has turned against non-compete agreements in New York.  Courts are now more likely than ever to void these agreements. New York Non Compete Issue? Get a consultation with Ottinger Employment Lawyers. What is a Non-Compete Agreement? A non-compete agreement is a clause typically inserted into an employment or separation agreement that prohibits a person from working for a competitor of their employer for a period of time.   A non-compete agreement can limit your ability to move around in your industry.  By signing one, you effectively agree that if you stop working for your employer, you will leave your industry and abandon your skills and experience for a period of time that typically ranges from six months to two years.  Here is a typical non-compete agreement: “Employee shall not, whether directly or indirectly, alone or as a partner, joint venturer, officer, director, employee, consultant, agent, independent contractor or stockholder of any company or business anywhere in the United States, except on behalf of the Company or with the company’s written consent: (a) engage in the Business of the Company or in any business that is in competition with the Business of the Company; (b) be employed by, consult for or provide any services to any person or entity that is engaged in the Business of the Company or is engaged in any business that is in competition with the Business of the Company; (c) solicit or accept the same or substantially related business of any customer or account of the Company or induce any customer or account of the Company to cease doing business with the Company or in any manner interfere with the goodwill and customer relationships of the Company.” The Legal Standard used to Evaluate New York Non-Compete Agreements In New York, courts disfavor non-compete agreements and enforce them only when necessary.  Here are the main factors courts consider: non competes are enforced only when necessary to protect legitimate business interests such as trade secrets or special skills acquired during employment non compete agreements must be reasonable in time and geographic reach the agreement cannot be harmful to the general public the agreement must not be unreasonably burdensome on the employee. Courts apply the same standard to non-solicitation agreements. 5 Ways to Defeat a New York Non-Compete 1. Report Your Employer to the Attorney General for Non-Compete Abuse As mentioned above, the New York Attorney General’s Office is now prosecuting employers who abuse non-compete agreements.  See this article in Fortune.  The only legitimate use of a non-compete agreement in New York is to protect trade secrets or highly unique skills acquired while employed.   If you don’t fall into that category, then you should not be bound by a non-compete agreement and your employer could be prosecuted for trying to restrict your ability to move to another employer.   A New York employer today risks prosecution from the Attorney General if it tries to enforce a non-compete agreement unless genuine trade secrets or highly unique skills are at issue.  New York employees now have more protection from abuse by overreaching employers. 2. Press Your Employer for a Copy of the Non-Compete Agreement Your employer cannot enforce a non compete agreement against you unless it has a fully executed agreement signed by you and a company representative.    Demand a copy from them.  If they do not have a copy, then they cannot do anything.    You would be surprised how often companies lose signed agreements or never bother to fully execute these agreements. 3. Unclean Hands Your employer cannot enforce an agreement that it breached itself.  Your non-compete is probably part of your employment agreement.   Has your employer violated any of its promises?  Have they changed your position?  Have they paid you everything they promised to pay such as bonuses, commissions, incentives, wages, etc….  Have they provided all benefits promised in the agreement?  Have they broken any employment laws?  Read your agreement closely and try to find a breach.   Judges do not like enforcing non-compete agreements and if your employer did anything wrong then they might have no chance of enforcing that agreement against you. 4. Fired Without Cause Courts usually won’t enforce a New York non-compete agreement against an employee who was fired without cause.   Courts only enforce non-compete agreements if necessary to protect legitimate business interests.   Your employer will have little chance of establishing a legitimate business interest if they fired you without cause.   Also, firing you and then enforcing a non-compete agreement will […]

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Employment Law Blog

California Wrongful Termination in Violation of Public Policy

California employment relationships are generally at-will, meaning either party may terminate the relationship with or without cause at any time and for any reason or no reason at all. However, there are exceptions, and an employer cannot terminate an employee for reasons that violate California public policy. What Does It Mean to Violate “Public Policy?” A wrongful termination that violates public policy occurs when an employer terminates an employee for exercising a legal right or obligation that affects the greater public. These cases generally fall into four categories whereby an employee is terminated for: (1) refusing to violate a statute; (2) performing a statutory obligation; (3) exercising a statutory right or privilege; or (4) reporting an alleged violation of a statute of public importance. For example, an employer cannot fire you for taking time off to serve on jury duty or for military service because these are statutory obligations (legal duties). Similarly, you cannot be terminated for refusing to commit fraud at the request of your employer (refusing to break the law), or for filing a wage complaint with the Labor Commissioner (exercising a statutory right). The public policy at issue must involve a matter that affects society at large rather than an interest personal to the employee or employer. It must also be set forth in California or federal law, and the policy must be fundamental, substantial, and well-established. The requirements for what qualifies as a violation of public policy are nuanced, so if you suspect you have been terminated for one of the above reasons, do not hesitate to contact an experienced California employment attorney. Examples of California Wrongful Termination in Violation of Public Policy Wrongful termination in violation of public policy can take many forms. If your employer terminated you for one of below reasons, you might have a claim for wrongful termination in violation of public policy: Reporting unsafe workplace practices or other OSHA violations. Reporting an employer’s refusal to pay wages on time, or refusal to pay minimum wage or overtime pay. Reporting employer violations of meal or rest break requirements. Engaging in political activities outside of work. Discrimination based on age, sexual orientation, or gender. Reporting or complaints of sexual harassment. Refusing to sign a covenant not to compete. Reporting employer violations of California or federal family or medical leave Refusing to engage in illegal conduct (e.g., fraud, embezzlement, forgery). Refusing to sign an agreement releasing an employer from liability for intentional acts. Retaliation for being a whistleblower (e.g., reporting securities fraud or fraud related to the use of public funds). Discussing wages with other employees. Retaliation for testifying in court as a witness. Keep in mind the alleged policy violation must affect the public-at-large, and an employee has two years from the time of termination to file a wrongful termination claim. Wrongful Termination Remedies In California, to successfully prove wrongful termination in violation of public policy, you must demonstrate: An employment relationship existed, which can include part-time or full-time employees but not independent contractors; The employer terminated the employee; employee resignation or nonrenewal of a contract is generally insufficient unless the employer forced the employee to resign; The employer’s reason for termination violated public policy and was a substantial motivating reason for the termination; and The employee suffered damages as a result of the termination. If an employee is successful in their wrongful termination suit, they may be entitled to compensatory damages (compensate for actual loses like lost wages, benefits, or emotional distress damages); punitive damages (meant to punish the wrongdoer rather than compensate the harmed party); or attorney fees and costs. If you believe you were fired in violation of public policy, contact us for a free consultation. The California wrongful termination attorneys of Ottinger Law have decades of experience providing personalized, zealous representation on behalf of their clients.

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Employment Law Blog

Another Uber Class-Action Lawsuit

Of the estimated 50,000 Uber drivers operating in California, thirty of them have started a class–action lawsuit against the company.  The complaint claims that Uber has been misclassifying all of its California drivers as independent contractors rather than employees ever since the Dynamex case was decided.      Dynamex, of course, is the California Supreme Court decision, published on April 30, 2018, that proclaimed that the “ABC Test” is the proper test for determining whether someone is an independent contractor or an employee. The decision was a significant departure from previous case law on worker classification.  Notably, the ABC Test presumes that someone is an employee unless the hiring entity can demonstrate all three parts of the ABC Test.  In this way, Dynamex almost completely shifted the burden of proof in misclassification cases from workers to hiring entities.    Nevertheless, Uber has asserted since Dynamex that it can and will continue to treat all of its California drivers as independent contractors.  Accordingly, in this new lawsuit, it will be Uber’s burden to prove all of the following:   that its drivers are “free from the control and direction” of Uber in their performance of work;   that its drivers are performing work that is “outside the usual course” of Uber’s business; and   that its drivers are “customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed” for Uber.     For the first part of the test, expect Uber to argue that the fact that its drivers can decide their own hours easily satisfies the first part of the test.  However, plaintiffs are likely to counter that the level of control exercised by Uber over things like terms of service, rates, and payment is still considerable – and non-negotiable for drivers.    The second part of the ABC Test will be especially difficult for Uber to establish.  It will require Uber to show that the work performed by Uber drivers – namely, transporting people from place to place, is not, in fact, what Uber’s business consists of.    Uber, for its part, has already begun reframing how it describes its business.  While it appears to still acknowledge that is part of the “ride–sharing industry,” it has reportedly stated that drivers aren’t “core” to its business.  Instead, Uber’s chief legal officer has stated that Uber’s business is “a technology platform for several different types of digital marketplaces.”  Uber has also started referring to itself as a “mobile application platform” in its legal filings.  (See Uber’s recently filed complaint against the State of California alleging that California Assembly Bill 5, codifying Dynamex, is unconstitutional).   On the other hand, Uber will have a hard time proving it has a viable business model without including drivers in the equation.  Drivers are vital to providing the services that result in the collection of revenue for its business.  It may be true that no single driver is essential to Uber, but, until its self-driving vehicles are in service, the company simply couldn’t remain in business without drivers.  For the third part of the ABC Test, Uber will likely argue that this test is satisfied since none of its drivers is obliged to drive for Uber exclusively.  But that is not the same thing as proving that each of its drivers is, in fact, “customarily engaged” in driving as an “independently established trade, occupation, or business.”  Indeed, Uber touts that drivers can work for Uber as a side gig to supplement income from other employment or businesses they may have.    Consider also the chronology of events.  How many Uber drivers had independently established ride-sharing services before Uber launched?  How many would continue to provide such services if Uber folded?  If the answer is not “all of them,” then all of Uber’s drivers are not engaged in an independently established business and they cannot all be classified as independent contractors.    

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Employment Law Blog

California’s Gig Law is Impacting Musicians, Actors and other Creatives in a Bad Way

Proper classification of independent contractors and employees has never been simple, and the passage of California’s new gig law Assembly Bill 5 (“AB5”) ensures this issue will continue to pose challenges for workers and businesses alike. AB5 took effect on January 1, 2020. While the full impact of this new legislation is yet to be seen, there are legitimate concerns about how this law will impact musicians and other independent artists. What is AB5? AB5 is the legislative result of the Dynamex decision, whereby the California Supreme Court employed a three-part test to determine employment status and ultimately concluded that Dynamex delivery drivers were employees and not independent contractors. Dynamex Operations W. v. Superior Court, 4 Cal.5th 903, 942 (2018). To support workers’ rights and expand on the Dynamex ruling, AB5 was signed into law in September 2019, effectively requiring companies to classify independent contractors as employees, with a few exceptions. Requirements Under AB5 AB5 adopted the three-part Dynamex test and requires the hiring entity to demonstrate the following to qualify a worker as an independent contractor: The worker is “free from the control and direction of the hiring entity in connection with the performance of the work”; The work performed is “outside the usual course of the hiring entity’s business”; and The worker “is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.” AB5 provides exceptions for more than 50 businesses and professions, including physicians, dentists, psychologists, lawyers, accountants, commercial fishermen, real estate agents, insurance agents, financial brokers, hairstylists, and travel agents. Freelance photographers and journalists are exempt if they do not contribute more than 35 pieces to a company per year. There is an exemption for “fine artists,” but that term has not been clearly defined. Practically speaking, AB5 will significantly increase costs for “hiring entities” that are now required to follow labor laws (e.g., meal and rest breaks); provide employment benefits like minimum wage, overtime pay, expense reimbursement, workers’ compensation coverage, and unemployment insurance; deduct taxes and issue a W-2. What Does This Mean for Gig Workers? Proponents of AB5 believe the law will lead to enhanced protections for workers, including wage protections and increased bargaining power. However, AB5 presents multiple concerns for gig workers and entire industries, especially the music industry and other creative arts. Small companies with limited resources will be unable to compete with larger organizations because their limited incomes will be insufficient to comply with AB5’s requirements. Some fear AB5 will ultimately stifle creativity and force the migration of talented artists and entire industries outside of California. Moreover, one significant upside of gig work is flexibility; if classified as an employee, workers may lose the ability to manage their schedules. Becoming a “hiring entity” poses other problems. For instance, imagine you are a musician hired to play at a private party; you contact other musicians and offer to pay them to play with you. Are you a “hiring entity?” Can this issue be avoided by having the party planner, host, or other middleman hire all the musicians independently? Independent contractors will undoubtedly be looking for ways to avoid being a “hiring entity” and should take great care to review all contracts to ensure you maintain your status as an independent contractor. Final Thoughts AB5 has yet to face judicial scrutiny. However, there is no question that AB5 will limit who qualifies as an independent contractor, and the law will be challenged in court. AB5’s language is ambiguous, and there is room to argue that it conflicts with federal law because it excessively burdens interstate commerce by impacting industries that cross state lines. The Ottinger Firm has extensive experience representing California gig workers. With offices in Los Angeles and San Francisco, our team of California employment attorneys is prepared to assist you with questions about your employment status and the effects of AB5. Contact us today for a free consultation.

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