Employment Law Blog

California’s Gig Economy 2020 Forecast: More Lawyers, More Rhetoric

Some things seem certain for gig economy companies like Uber in 2020:  they will continue to accrue legal fees and continue to claim they are just “mobile application platforms” and emphatically not service providers.   Let’s look at Uber as an example.   Even as it defends against multiple lawsuits brought by its drivers, Uber is now suing the State of California. Case No. 2:19-cv-10956.  The central issue in these lawsuits is whether Uber’s operations constitute a legitimate business model matching independent drivers to riders needing rides, or whether Uber is just a modern profit machine rebuilt from the age-old cogs and widgets of exploited workers.   In its suit, Uber claims that California’s Assembly Bill 5 (AB5) is unconstitutional.  Effective January 1, 2020, AB5 was drafted to require gig-economy companies like Uber, DoorDash, and Lyft to reclassify drivers as employees rather than independent contractors. AB5 requires Uber and other gig-economy dependent companies to meet all three prongs of the “ABC Test” to legally continue classifying gig workers as independent contractors.    The lawsuit states that the law is arbitrary and irrational because it includes “nonsensical” exemptions for many other categories of workers.  The complaint suggests the exemptions under AB5 are “so ill-defined or entirely undefined that it is impossible to discern what they include or exclude.” Thus, “there does not appear any reason why the California legislature would choose those carve-outs other than to respond to the demands of political constituents, [making] the law unconstitutional even under the minimal ‘rational basis’ standard of judicial review.”  Instead, the complaint asserts the intent of the law is driven by “irrational animus” on the part of the California Legislature against the “on-demand economy,” meant to deprive workers of freedom and flexibility.    Whether or not you think the legal basis for Uber’s lawsuit has any merit – and many will argue it does not – by filing this lawsuit before AB5’s effective date, Uber essentially gives itself an alibi against later suggestions that its failure to reclassify drivers on January 1 is a willful violation of California labor laws.  By claiming the law is unconstitutional, Uber is preemptively justifying its noncompliance.    It is also doing something else of significance.    Eventually, it will become critical for Uber, in fulfillment of the second prong of the ABC Test, to show that its drivers perform a type of work that is entirely outside Uber’s “usual course of business.”  Thus, Uber’s lawsuit could also be understood as part of a strategic volley to reframe public and judicial perception of its business model.     Joining Uber as a plaintiff is Postmates, another gig-economy platform reportedly on the verge of an IPO.  In addition, named plaintiffs include two drivers – or “app-based independent service providers” as they are termed in the complaint.   The complaint also rechristens the “gig economy” as the “on-demand economy,” declaring it “a free market system … with unprecedented independence and flexibility” for those “app-based independent service providers.”    Similarly, the complaint styles Uber as a “mobile application platform” rather than a ride-sharing service.    The first named plaintiff driver elects to drive for Uber because it allows her to be available to care for her husband who suffers from multiple sclerosis.  The second named plaintiff can now attend his son’s little league games while making nearly twice as much money.  Driving for Uber gives them the ability “to create their own financial stability.” In short, companies like Uber “empower” people to “work as much, or as little, as they want in order to accommodate family, social, professional, academic and other commitments.”    It would seem Uber is also setting the stage with this lawsuit to claim eventually that it meets all three parts of the ABC Test, including the second prong:  namely, its drivers are performing work “outside the usual course” of Uber’s business.  As framed in the complaint, the drivers are “independent providers” and Uber is just an app they use – one of many, in fact. 

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Employment Law Blog

California’s Gig Economy Law: 5 Things to Know

The new “Gig Economy Law” – also known as Assembly Bill 5 (AB5) – was signed into law on September 18, 2019.  How much the law will actually impact California companies, employees and independent contractors has been a hot topic ever since.   Here are five things you should know about AB5:  1.  The law’s intent is to guard against further “erosion of the middle class and the rise in income inequality,” and to protect workers from being exploited in the gig economy.  Experts estimate that it is up to 30% cheaper to hire independent contractors than employees because then companies aren’t required to pay for things like unemployment insurance, workers’ compensation premiums, payroll taxes or Social Security contributions.  2. The law codifies the California Supreme Court’s decision in Dynamex.  The Dynamex case, decided in spring 2018, established the “ABC Test” as the standard in California for determining whether or not a worker is properly classified as an employee or an independent contractor.  The ABC Test presumes an employment relationship unless the hiring entity can demonstrate three things – A, B and C.  More on Dynamex and the ABC Test.   In addition to codifying the Dynamex decision, the law extends the scope of the ABC Test beyond just wage and hour cases to also encompass workers’ compensation and unemployment insurance.    3.  Some parts of the law are retroactive.  Those provisions of the law that codify the Dynamex decision are meant to apply retroactively to existing claims and actions “to the maximum extent permitted by law.”     However, the parts of the law that serve to expand the scope of Dynamex to cover workers’ compensation and unemployment insurance will be effective on January 1, 2020.    4.  AB5 contains many exemptions from the ABC Test, but they’re either very specific or difficult to qualify for. The law specifies many categories of workers that may be considered exempt from application of the ABC Test.  Some exemptions, such as those for commercial fishermen and manicurists, come with expiration dates.  Exemptions also exist for insurance agents, health care professionals like doctors and dentists, lawyers, engineers, accountants, registered securities broker-dealers or investment advisers, direct sales salespersons, real estate licensees, workers providing licensed barber or cosmetology services, and subcontractors in the construction industry.    Freelance journalists are exempt for up to 35 submissions per year to a single outlet, but at 36 submissions, the law would require them to be treated as a part–time employee of the outlet.    There is a general exemption for providers of professional services that applies if the hiring entity can demonstrate that the person they hired:  maintains their own business location separate from the hiring entity (this could be the person’s home);   has a business license and any required professional license;  can set their own rates, completion dates and hours;  Can set their own rates, completion dates and hours; is customarily engaged in, or holds themselves out to other potential customers as available to perform, the same type of work as they are doing for the hiring entity; and  customarily and regularly exercises discretion and independent judgment.  There is also an exemption for “bona fide business to business” contracting relationships.  This exemption may be relied on when the business service provider is providing services directly to the contracting business rather than to customers of the contracting business. There are eleven other requirements that must be met for a bona fide business to business relationship to exist – including that the service provider in fact has other clientele for whom they perform similar services.  5.  Courts may determine factual contexts where the ABC Test “cannot be applied,” and may instead apply Borello in those cases.  Under Section 2 of the law, if “a court of law rules that the [ABC Test] cannot be applied to a particular context …, then the determination of employee or independent contractor status in that context shall instead be governed by [Borello].”  More on Borello. 

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Employment Law Blog

A Successful Exit with Financial Wins OR Transforming Taste for Vengeance into Financial and Career Gains

How we helped a NYC banking sales star transform her vengeful rage into a successful exit, in a case combining promotional pass-over, unvested stocks and non-compete I gave my all to the bank; that promotion was mine! I felt so violated!” Hell hath no fury like an employee scorned – and Rachel was livid. She was passed over to run her department at the bank where she’d been top earner in financing mid-market technology firms. Her driven, extroverted personality helped her forge many lucrative client relationships in New York City over the eight years she worked at the large bank. Rachel, in her early 30s, loved her job and knew she was good at it, quickly scaling the earnings ladder. Ambitious, she was excited when her older male boss announced his plan to retire. “I knew I was the right person to become department head,” she recalls. But the bank didn’t even interview her; they hired an outsider – another older man. Rachel was in shock; she’d burnt the midnight oil year after year to win clients. She felt lucky most evenings if she had time to take her bulldog for a walk around the block. Then salt was added to the wound when her new boss started on the job. “He talked down to me in front of coworkers,” says Rachel. “He called me a young girl who’s not ready to manage.” She’d long felt her age, gender and looks were a liability at work. Pretty and curvy, Rachel liked to wear form-fitting Saks Fifth Avenue dresses rather than conventional banking suits. Male coworkers and managers leering at, and remarking on, her body were part of the work culture she despised and tried to ignore. (The bank is run predominantly by men who started their careers in the ‘70s and ‘80s.) Rachel put up with all of it – until she didn’t get that promotion. Seething in her office, screaming in her car and condo, venting with friends at local water holes, she vowed to get back at the bank. (Ever see the movie, “Kill Bill”?) Golden Handcuffs But Rachel did not stage a dramatic exit or bloody rampage; she couldn’t afford to decry ‘take this job and shove it.” Afterall, upon quitting she was subject to a situation common in banking, facetiously referred to as “golden handcuffs.” Rachel earned yearly bonuses equal to or greater than her 400K salary, but they were not all paid upfront; they were “stock vested in time.” So a 400K bonus was parsed out in 100K in cash upfront, and the remaining 300K in stock spread equally over three years. Rachel’s had accrued a lot of unvested equity over eight years – all of which she would lose were she to leave the bank. (Even her bonus for 2017.) “Failure to Promote” Hard to Win But Rachel was getting out. As soon as possible. And she wasn’t going to make it easy for the bank. She decided to sue them. Rachel called Ottinger Law, on the warpath, and presented her case to us. “I was treated like dirt, I was betrayed,” she almost shouted into the phone. We invited her to our New York office and let her vent (for a bit), pacing the boardroom, fists clenched, face flushed. Then we dropped advice she definitely didn’t like. “’’Failure to promote’” cases are very difficult to win,” we told Rachel. “And the bank never said or did anything that proves age or gender discrimination.” (Any slights were subtle or hidden.) Furthermore, we said, if Rachel sued, her name would be out in public and other banks might see her as a troublemaker and avoid hiring her. Naturally, Rachel took that pretty seriously, and got all strategic with us. She wouldn’t sue, but she’d leave the bank – on her terms. We reached out to her employers to discuss alternatives to the unvested-stock loss. No way, was the bank’s response. If Rachel leaves, she gets no bonus, no stock; tough luck. Rage swept over Rachel again, this time coupled with fear and anxiety – so much that she took a week off work, using vacation days, and holed up at home. She didn’t want to see anyone or go anywhere. She was so upset sometimes she couldn’t discuss the case with us on the phone. Still she hung on – over the tense weeks as we negotiated her exit. We asked the bank, “how do you expect Rachel to take such a big loss?” They had no good answer for that. We kept asking the bank the same thing in different ways. “Can you do anything to make this easier?” we asked. Eventually, we convinced them to pay her the full 2017 bonus in cash (400K) and allow some of her unvested equity to vest. Rachel still lost money, but it was a good deal. She turned in her resignation. Non-Compete Broken Rachel also had a non-compete agreement that prevented her from working for other banks for a year after leaving. In our negotiations, we got the bank to agree to let her out of the non-compete. Rachel found a job with another bank right away. In the end, we helped Rachel minimize her loses as she cut loose from an employer she no longer respected or felt respected by. It was, no doubt, a tricky case – one we learned from as lawyers (which we love!). What started as an emotional pressure-cooker with much at risk – both in reputation as well as financially – ended with Rachel’s pride intact. Well, largely so… maybe a little bruised. *not her real name

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Employment Law Blog

Non-Compete Trends Favor Executive Mobility

An encouraging new trend we have seen lately is more states enacting laws or enhancing existing laws that limit the enforceability of non-compete clauses.  The specific laws that apply to non-compete clauses in employment contracts vary greatly from one state to another.  While some of the basic law around this area is outlined in court opinions — or “case law” — there are also legislatively enacted laws that affect what is and isn’t allowed in different states.  This year, Utah, Idaho, and Colorado joined recent moves by California and Illinois to strengthen laws covering an employee’s right to switch employers.  Meanwhile, case law around non-compete clauses also continues to develop. Non-compete clauses can take many forms.  Generally speaking, a non-compete clause is a provision that restricts an employee from directly competing with the employer while in the employment relationship, from accepting later employment with a competitor of the employer or from going into business against the employer after the employment relationship has ended.  A non-compete provision may cover only a short period after employment, or it may last many years.  Non-compete agreements may or may not include provisions against “poaching” one’s colleagues (known as “non-solicitation” clauses).  Geographically, they may be limited in scope to a particular neighborhood, town or city, or they may reach across an entire state or region.  They may only encompass the employer’s existing clientele, or they may broadly restrict employment by the employee within an entire industry.  Indeed, where these lines are drawn in a particular non-compete clause can determine whether or not the clause is considered legal and enforceable or null and void. Employers are, of course, fond of non-compete clauses because they perceive them as protecting competitive advantages and trade secrets while supporting workforce stability. For employees, though, non-compete clauses can have drastic and lasting effects on their ability to earn a living.  And, for society in general, the impacts of non-competition agreements can be significant.  Since they restrict people’s ability to switch jobs easily, taking their accumulated expertise and knowledge with them, they impact social and geographical mobility as well as wage and salary growth. It is conceivable that left entirely unfettered, they could hurt innovation across whole industries. Thus, like other restraints on free-trade and competition, there are limits to what various jurisdictions — and the courts — consider acceptable in a non-compete clause.   Here are some recent developments: This spring, Utah enacted a new law to limit the reach of non-compete agreements in the broadcasting industry. This law adds more strength to a bill they enacted two years ago.  The two-year-old law in Utah imposed, in general, a one-year post-employment time limit on non-compete agreements.  With this new law, employers in the broadcasting industry may not impose non-compete agreements on employees making a salary of less than $47,476 annually.  Nor may they enforce a non-compete provision against an employee who was not terminated for cause unless the employee breached their employment contract. Also this spring, Idaho moved to repeal a burdensome requirement it had enacted two years ago which required employees to prove that their change of employers did not irreparably harm their former employer. With Idaho’s repeal of Idaho Code Section 44-2704(6), the burden is once again on the former employer to show a likelihood of irreparable harm before a court may issue an injunction against the employee’s new employment. In Colorado, the legislature passed a law that allows physicians to continue treating patients with “rare disorders” even when that would otherwise constitute a violation of the physician’s non-compete agreement. This serves to clarify Colorado’s existing law which generally prohibited non-compete agreements except in certain specific cases, such as for protection of trade secrets. In addition to these statutory changes, we’ve also seen recent case law affecting non-compete agreements: In Wisconsin, non-compete clauses are governed by Wisconsin Statute 103.465. In  Wisconsin, to be enforceable, the statute requires that a non-compete covenant must be “reasonably necessary for the protection of the employer,” only cover a reasonable period, only cover a reasonable territory and not be an unreasonable restraint on employees.  In January this year, the Wisconsin Supreme Court held, in Manitowoc v. Lanning, that this statute, which generally refers to “covenants not to compete,” also applies to non-solicitation agreements that would prevent employees from soliciting, inducing or encouraging other employees to terminate employment with one employer to accept employment with a competitor.  The court found that the statute applies to all such covenants that are restraints of trade, regardless of whether they specifically include the term “compete” in their label. Last but not least, the South Dakota Supreme court decided a case in March of 2018 entitled Farm Bureau Life Insurance v. Dolly. In that case, the court declined to enforce a non-compete clause.  The clause would have prevented a former insurance salesman from selling insurance to any of Farm Bureau’s former customers, even though the former customers had approached him and he had not actually reached out to the customers or otherwise solicited them for their business.  The court held that “an agreement not to solicit — rather than not to sell to — an insurer’s existing customers [was] the only reasonable interpretation of [South Dakota Codified Laws 53-9-12].”    The court concluded by stating, “The general rule against contracts in restraint of a lawful profession, trade, or business is a legislative expression of public policy….”

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Employment Law Blog

The Janitor Rule Mops Up Another Non-Compete Agreement

The Janitor Rule is a tool used to invalidate non-compete agreements.  This rule, also known as the “janitor analogy,” applies to non-compete agreements that are so broad that they would bar employees from even working as a janitor at another company.  In other words, the non-compete agreement prohibits employment or affiliation with a competitor in any capacity. While non-compete agreements are permitted to protect employers’ interests, they cannot be unreasonably burdensome on employees or so overbroad as to prevent the employee from working in any job, even an unrelated job, with a competitor. Such an agreement would not be protecting the employer’s legitimate business interests. An Illinois federal district court recently relied upon the Janitor Rule to invalidate an overbroad non-compete agreement.   The court concluded that Medix Staffing Solutions, Inc.’s non-compete agreement with a former director was so broad that it was unreasonable on its face and unenforceable. Med Medix Staffing Solutions, Inc. v. Dumrauf, No. 17-C-6648 (N.D. Ill. Apr. 17, 2018).  The court dismissed the case noting it was an extreme case and the judge even refused to modify the agreement because the non-compete agreement was so overbroad. Background Daniel Dumrauf was a director at Medix responsible for sales and recruiting strategy in the pharmaceutical, biotechnology, and medical device industries. He entered into a non-compete agreement prohibiting him from gaining employment by any company that worked in the same field as Medix within 50 miles of the Medix office in Scottsdale, Arizona. The non-compete agreement also applied to companies that are not competitors of Medix.  In August 2017, Dumrauf resigned from his position at Medix and accepted a position with ProLink Staffing overseeing its Healthcare Division’s operations. While Dumrauf alleged that 90 percent of his activities with ProLink would take place in Ohio and Kentucky, he occasionally worked from ProLink’s office in Arizona, which would be a violation of his non-compete agreement with Medix. Medix filed suit alleging breach of contract claims.   Dumrauf filed a motion to dismiss the case arguing the non-compete agreement was so overbroad that it would prevent him from performing any services for a company that worked in the same field as Medix, even if it did not relate to his prior role at Medix. The Janitor Rule One argument raised by Dumrauf was that the non-compete agreement violated the “janitor rule.” In this case, the court concluded that while Dumrauf’s argument that he would be prevented from even working as a janitor at another company was “a bit far-fetched, the Court sees no language in the [non-compete agreement] that makes it an inaccurate statement of its prohibitions.” The court explained that the non-compete agreement would prevent him from not only taking plausible jobs at another company but any jobs for any company in the same business as Medix. The non-compete agreement was unenforceable, and the court refused to modify the agreement because “where it involves a covenant not to compete whose provisions are so broad as to be a ban on competition per se, courts should refuse to enforce or modify the agreement.” Takeaways The Janitor Rule can be a powerful tool for employees as a defense against overbroad non-compete agreements. Also, the rule can be useful for employers as a guide when drafting non-compete agreements. Employers should carefully examine their non-compete provisions to ensure they are not prohibiting former employees from working for a competitor, or any company in their field, in any capacity or manner. A one-size fits all agreement may not be appropriate for all situations. Non-compete agreements are disfavored, and many New York judges and the New York Attorney General recognize the importance of limiting non-compete agreements.  New York non-compete agreements must be narrowly tailored and reasonably limited in time and geographic scope, as well as justified by a company’s legitimate business interests. While there may be tactics to beat your non-compete agreement, non-compete agreements may be enforced and need to be taken seriously.   If you are contemplating a non-compete agreement or currently bound by one, you should get a non-compete Review & Consultation.  The Ottinger Firm will review your non-compete agreement and meet with you to go over it and discuss your options. We have litigated non-compete agreements in federal and state court and mediated, arbitrated and negotiated hundreds of non-compete disputes. For more information contact our non-compete attorneys at 347-492-1904.

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Employment Law Blog

Breakdown Triggered by Shaming at Work

Wrongful dismissal case was mediated for business owner-turned-employee struggling with mental illness George grips the metal rail of his hospital bed and tries to raise himself enough to glimpse the clock behind the floral arrangements of well-wishers. “How long have I been here?! My boss will be furious!” He feels the familiar panic rising in his throat, despite sedation. He can picture his boss polishing his collection of dress shoes, his cleaning kit methodically laid out on his huge oak desk next to his vintage desk-clock… Time! George’s eyes snap back to the hospital clock. Time to get back to the office! His wife, Sharon, gently but firmly pushes him back on the bed as he struggles to rise. “The doctor said more bed rest,” she quietly reminds him. Impossible! Shame floods George’s system; he swears he can feel hot shame coursing through his veins. His mind races back over the past year… Type A success Previously, George had never struggled with anything in his life. A golden boy from childhood in the Napa Valley, and a Stanford MBA graduate, his success with his first shot at starting a business felt as natural to him as everything the overachiever had ever done. Shortly before establishing his technology firm at age 26, George married his high school sweetheart. Over the next six years, he added employees as he created children: 80 staff; a daughter and a son. George felt well supported at home and at work. Life was great; super busy, but a good kind of stress. The kind where you’re humming with energy that drives you out of bed raring to greet each day. Still, entrepreneurs are always hungry, and George was no exception. He wanted more, always more. When the opportunity of starting a related, but untried, business came along, he couldn’t resist. He rushed the decision, and financed the second startup with venture capital. Too much too soon Within a year, he was overextended with debt, putting his original company in jeopardy. He had to lay off staff and kill a planned expansion. Another six months on, George was unable to stop the bleeding; he folded the side business, and sold his beloved first company to a multinational corporation hovering around his territory. Offered an executive position at that corporation, George reluctantly took it. He had a family to provide for, after all, and maybe he could help steer the ship he used to captain? He didn’t have any other options, anyway. Inside, though, George loathed himself for hurting his employees and his family, for letting his greed and ambition get in his own way. His wife and friends assured him all would be well, but George could only see the chipping away of his golden reputation. First breakdown The stress built up – only this time, it wasn’t the good, motivating kind of stress. George took up smoking cigarettes again, a habit he’d given up after college, hiding in the garage so his kids wouldn’t catch him. He started hitting the snooze button, repeatedly, every workday morning. Then George found himself having to call in sick to his new employers, paralyzed in bed with the curtains drawn. He hardly ate, complained that his limbs felt like a hundred pounds each. Sharon had never seen George in anything but hyper-speed since she met him at 17. She was alarmed but kicked into action – fast-tracking a psychiatrist referral and driving George to his appointments. An antidepressant prescription started to work, and he dusted off his briefcase. His old zip back, racing around between appointments, George brought his new bosses a new big idea each week. He was sure they would start reaping the benefits of his experience, his innovative thinking, and how he motivated and supported the other employees. George even persuaded his new employers to let him co-manage his pre-existing clients. He was promoted, got a raise. He was elated. Tough boss Then, The Colonel arrived at George’s workplace. The ex-Marine sales executive arrived with that nickname bestowed by previous underlings who’d born his iron leadership. His style was to yell at staff in front of their peers. Rarely did a meeting end without The Colonel tearing a strip off someone – often George. The Colonel didn’t hide his contempt; he shamed George publicly. The Colonel’s face, twisted in angry sneering and flushed from shouting, kept appearing in George’s dreams. “What kind of man messes up a perfectly good company that he started?…Once a loser, always a loser!” George would wake up with a heavy weight in his chest; workdays he was hitting the snooze button again, and a bottle of scotch too with growing frequency. The antidepressant pills didn’t help. He took the rest of his accrued sick days and holidays, and stayed in bed. He stopped eating again, stopped going to his psychiatrist appointments. Sharon called his doctor, and together they agreed to check George into the city hospital’s psychiatry ward for supervision and treatment. George was diagnosed with bipolar disorder (formerly known as manic-depressive) and prescribed new meds. He and Sharon hugged each other with relief, the first time in a long while they’d felt close. George called his employer to let them know he was being treated for a “serious medical condition.” His shame kept him from naming the disorder or disclosing that he was hospitalized. George begged the sympathetic president not give up on him. George’s bed rest was anything but restful. Released from the hospital, he cut in half the amount of time off his doctor had ordered. What would The Colonel think and say about him at the office? Sharon fought George unsuccessfully over the early return, in front of the kids, something they never did. Back at work, George redoubled his efforts and won deal after deal. He worked a punishing amount of hours – late evenings with clients, weekends at the office. He got sloppy taking his meds and starting into acute mania, making erratic decisions and risking […]

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Employment Law Blog

Fired at Will – You Can Lose Your Job for Any Reason

You might feel that you have cannot be fired without a good reason. Many people feel the same way. But the brutal truth is that you can be fired for any reason or no reason. This is due to the employment at will rule.  In order to understand this rule better, lets take a look at a real word example at America’s favorite company – Apple. An Apple iPhone engineer was fired because he allowed his daughter to vlog about the yet unreleased iPhone X.   The daughter, Brooke Peterson, visited her dad at Apple’s offices in Cupertino, California in September.   Her dad showed her a prototype of the new iPhone X over lunch at the Mac Cafe.   She filmed the phone and some of its features and then published the video on Youtube.   At the time, her Youtube channel had very few followers but the video went viral after it was discovered. Ms.  Peterson removed the video as soon as Apple asked, but it was too late.   It had spread across the internet.  Then she published another video on her personal Youtube channel explaining her screw up.   She was truly sorry, but her dad was unemployed. Apple expressly prohibits filming at their offices and is famously secret about releasing details of new products.   The video breached Apple’s confidentiality rules. Was the firing legal? Yes, Apple was free to fire the engineer because he allowed a family member to violate company rules.   The engineer was an employee at will which means Apple could fire him for any reason, or no reason.   But Apple had a good reason to fire him. The Employment at Will Rule This is a good example of the employment at will rule in action.  The employment at will rule provides that an employee can be fired at any time, for any reason.  Likewise, an employee is free to quit their job at any time, for any reason.  It’s a two way street.   Both employee and employer are free to end the employment relationship at will.   People often think that a company needs a good reason to fire an employee or that fairness is required.   The reality is that employees can be fired for any reason, or no reason at all.   Fairness is not required.  It might seem unfair to fire the Apple engineer over his daughter’s mistake, but it was perfectly legal.  Apple had every right to fire the engineer because he broke their rules. What should the engineer do now?   Call Samsung or Google to see if they are hiring phone engineers.  The engineer should be free to work for a competitor like Samsung because non-compete agreements are illegal in California. This story got a lot of attention in the press.  Here are few more posts on the topic. Engadget ReCode The Verge

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Employment Law Blog

Silicon Valley Sexual Harassment

Silicon Valley sexual harassment is getting a lot of attention lately.   Although it has been an issue for a long time, many women in the industry have recently shared their sexual harassment stories.  As a result, a growing number of executives accused of sexual harassment are stepping down from their positions. One cannot help but wonder, what prevented women in Silicon Valley from reporting sexual harassment at their companies before and what has influenced them to speak up now? Silicon Valley sexual harassment has been quietly endured for decades.  It has been supresed because the sexual laws are ineffective.  The laws and risks associated with sexual harassment issues have deterred women in the tech companies from speaking up. In Burlington Industries, Inc. v Ellerth, the US Supreme Court created a two-part affirmative defense for supervisor sexual harassment. Essentially, as long as there is a sexual harassment policy in the company, an employee must first report a sexual harassment claim to the company or the company’s human resources department. If the company does not address the issue after it is reported, the employee may have a viable sexual harassment claim. If the alleged victim does not report it to the company first before reporting it to anyone else, the employer can use the Ellerth defense and the employee will most likely not have a claim. A Fear of Retaliation for Reporting Sexual Harassment In practice, the Ellereth defense puts women in an uncomfortable position in the workplace. Many women do not feel comfortable reporting sexual harassment because of the risks associated with it. It is widely common for women to face retaliation from the employer once they complain about supervisor sexual harassment. Although federal law sets restrictions on employer retaliation, employers find creative ways to retaliate. For example, if an employee reports that she has been sexually harassed by a supervisor or someone with an executive role, and no corrective action is taken, an employer could retaliate by creating a hostile environment for the employee, denying any promotions, or finding a trivial reason to fire her.  Additionally, her career in general will be negatively impacted. If other employers hear of her sexual harassment complaints, they may avoid employing her.   Not everyone is ready to risk their career to report sexual harassment that will probably be ignored. Therefore, many women stay silent, whether they are a victim or a witness, to maintain their position at work. Silicon Valley sexual harassment victims have undergone the same dilemma that many harassment victims go through in the workplace. In this male-dominated industry, many Silicon Valley sexual harassment complaints get overlooked and then, in several cases, women who have issued complaints noticed there has been a negative shift in how they are treated in the workplace afterwards.  Before, they were afraid of reporting the harassment they experienced; however, many women in the tech industry are sharing their stories, despite the backlash they may face. They hope that the growing number of people sharing the experiences with the public will bring more attention to this toxic culture and eventually force a change in how sexual harassment is handled in the technology industry. Although there is more attention being brought to Silicon Valley sexual harassment, it will have very little effect on how harassment is handled in the industry. Recently, those that have been exposed for sexually harassing employees have stepped down from their positions, but the actual companies have not faced major repercussions from it. They are merely losing a couple of executives. Possibly, if they notice a massive monetary loss associated with Silicon Valley sexual harassment, the employers may be compelled to make a noticeable difference in how sexual harassment issues are handled to please their customers. Until then, they will continue to band aid the issue by firing those accused of sexual harassment by the victims who have shared their experiences with the public rather than altering how sexual harassment claims are handled. This article was researched and written with Devona Adjei-Baafuor who is working with The Ottinger Firm as an intern.

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Employment Law Blog

FMLA Retaliation Cases

FMLA retaliation cases are potent weapons that can flip the balance of power in favor of employees.   Employees can really stand up for themselves and recover good settlements.   This video explains why these cases are so powerful for employees and bad for employers. You can also read a transcript of the video below: Hi, I’m Robert Ottinger. I’m an employment lawyer with the Ottinger Firm and we represent executives and employees. Now I’m here today with my dog Lake to talk about one of my favorite kinds of employment cases and they’re called FMLA retaliation cases and these cases are dynamite for employees and nightmares for employers. Now, what exactly is an FMLA retaliation case, you may be wondering? Well, the FMLA, as you may know means Family Medical Leave Act. And this law’s there to give people the right to take a little bit of time off if they’re sick or if maybe one of their close relatives like your mom or dad or your spouse or your child is sick. It gives you the right to take some time off and deal with that. Some companies though, they don’t want to be bothered. If they have an employee who’s sick themselves or has a sick relative and they need time off, they just fire the person. It happens a lot. So that’s the core of FMLA retaliation. So, now why are these cases so great? Why are they one of my favorite kinds of cases? Well there’s a few reasons. First of all, the law creates a presumption of guilt for a company that fires an employee while out on FMLA leave or within 90 days of returning from FMLA leave. Now that’s incredible. That means if you’re fired while you’re on leave or soon after you return from leave, the law assumes the company fired you because you were out on FMLA leave. That’s incredible. The burden shifts at that point back to the company and they have to sort of come up with a good reason to explain why they really fired you. The second reason why they’re so strong, why they’re so great, is that unlike almost all other federal employment law cases out there, with an FMLA case you don’t have to file first with the Equal Employment Opportunity Commission. That’s a real hassle. It’s a, kind of a worthless, procedural hurdle that’s there for most all of their federal employment cases. But no so with the FMLA. You can file a lawsuit against your company immediately and this gives you a lot of power. You can actually pose a real threat to a company that fires you if you’re out for out on FMLA leave. Now with these two things, the fact that there’s a presumption of guilt and the power to file a case immediately, it puts the ball in your court. Because if those things happen to you, if you’re fired while out on leave or soon after you return, your case is so simple. All you have to prove is that you were fired while out on leave or soon after you returned. Once you prove those two things, and they’re not in dispute. There’s never a dispute about a person being on FMLA leave or not, or that they were fired. They’re uncontested. So right off the bat, the burden shifts to the company. Now they have to explain why they fired a person while they’re out sick or caring for sick relatives. And how does that make the company look? I mean why in the world would a company have to fire someone while their sick, or while their mom is sick, or while their dad is sick, or their child is sick? It’s a terrible thing for a company to do. And so they have to explain to a jury why they did this terrible thing. And they have to, they better have a really good reason for it. It better not be linked at all to your leave. Otherwise, they’re guilty. And finally with the FMLA, if you prove that this happened, the companies are required to pay you two times what you lost. That’s statutory required double damages. If you get fired and you lose $50,000, the company has to give you $100,000 and they have to pay all your legal fees. So these cases are nightmares for employers. So if this has happened to you, if you’ve been fired while you’re out on FMLA leave, or soon after you return, you might have a great case. And by the way, when you’re, if you go out on leave, you don’t have to ask for FMLA leave. You don’t have, no one’s required to say that. All you have to do is say, hey look. I’m sick or my mom’s sick. I want some time off. That’s it. You don’t have to even mention the words FMLA. So don’t be worried about that. So anyway, if you want to know a little bit more about who’s protected by the FMLA we have other videos that explain that. But that’s it in a nutshell, those cases are dynamite, and because they’re so strong, most people who are in that situation can settle their cases fast without ever going to court, because most companies don’t want to deal with that. They’d rather pay up early, put it behind them, and hopefully learn a lesson and not fire the next person that goes on FMLA leave. Until next time, I’m Robert Ottinger

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Employment Law Blog

Why Companies Steal Money from their Employees

More money is stolen each year through wage theft than all other crimes combined.   Approximately 135 $Billion.  Low wage workers are hit hardest as they on average lost about one-third of their earnings each year to wage theft.   Hi, I’m Robert Ottinger. I’m an employment lawyer with the Ottinger Firm, and we represent executives and employees. Every year, $15 billion is stolen through wage theft. Wage theft is the single biggest property crime in America. More is stolen through wage theft than other property crimes like robbery and burglary combined. Most of the victims of wage theft are low-income workers, and most low-income workers in America lose about one-third of the earnings every year through wage theft. This is a big problem in America, but it doesn’t get much coverage in the media. But yesterday, a reporter called me and wanted to know why, in my opinion, wage theft was such a big problem. Well, I told her the answer was simple. The system is rigged in favor the employer. Here’s how it’s rigged. Most property crimes like robbery and burglary are crimes. If you steal someone’s ring, if you steal their car, and you get caught, good chance you’re going to go to jail or be punished harshly. However, if a company steals a person’s wages, they’re not going to go to jail. When was the last time you ever heard of a person going to jail for wage theft? It never happens. So that’s the main reason, in my opinion, why wage theft remains such a huge problem because it’s theft. If you steal someone’s wages, it’s just like stealing money out of their pocket. There’s really no difference, but for some reason, it isn’t a crime in America, and that’s why companies continue to do it. The second reason is that the government agency that’s supposed to protect workers from wage theft is called the Department of Labor, but that department is really kind of a joke, and that’s because there aren’t enough people working there to protect the American workforce. In fact, the numbers are kind of startling. Did you know that 70 years ago the Department of Labor had 1,000 people out there trying to enforce the wage laws? And back then, 70 years ago, there were 22 million workers. But today, 70 years later, the workforce has grown to 135 million workers. But guess what? There’s still only 1,000 people working for the Department of Labor trying to protect workers. So that’s really the main reason. The Department of Labor is a joke. It doesn’t have anywhere near the amount of people it needs to help protect the American worker. Hopefully, someday soon, our country will realize this is a big problem and make the changes necessary to help the American workforce. I’m Robert Ottinger. If you have any comments, if you disagree with this, any suggestions, I’d love to hear your comments. Just let me know in the comments below or send me an email. Thank you.

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