Non-compete clauses are those that attempt to restrict a former employee from entering the same trade or profession after departing from a company. Non-compete clauses have become increasingly prevalent in modern labor market as companies seek to keep their employees from using the experience and information they gain in one position from turning into a liability when those employees find jobs elsewhere. Although other states allow such clauses, generally, non-compete clauses are illegal in California. The same is true of non-competition and non-solicitation clauses in employment contracts.
California has consistently upheld a public policy against any provision that seeks to restrain competition in the context of employment agreements. In perhaps the most notable case on the topic Edwards v. Arthur Andersen LLP
, 44 Cal.4th 937, the California Supreme Court, unanimously held that Business & Professions Code Section 16600 invalidated a provision in Edwards' employment agreement that restricted him from servicing customers and competing with Arthur Andersen following the termination of his employment. Notwithstanding the general premise that non-competition agreements are invalid, specific Sections of the B&P Code provide certain exceptions to California's policy against enforcing non-competition covenants which apply in limited circumstances.
There are two notable exceptions: Sale of Goodwill of a Business, and Dissolution of a Partnership or Limited Liability Company.
When a person who sells the “goodwill of a business” or otherwise disposes of his/her ownership interest in the business entity. This person may agree with the buyer to refrain from carrying on a similar business within a specified geographic area in which the business is sold. When the goodwill of a business is sold, non-competition covenants are generally enforceable because it would be "unfair" for the seller to engage in competition which diminishes the value of the assets he sold.
Other exceptions concern the dissolution of either a partnership or limited liability company. Again, in these circumstances, the person who is leaving the existing entity agrees that he or she will not carry on a similar business within a specified geographic area where the existing partnership or limited liability company is located.
Attempts to avoid California's policy against non-competition covenants by making contracts subject to the laws of a jurisdiction outside of California often fail. Typically, California courts will enforce a contractual choice of law provision if the chosen state has a substantial relationship to the parties or their transaction, or if there exists any other reasonable basis for the parties' choice of law, unless, the chosen state's law is contrary to the fundamental public policy of California.
If you are uncertain whether a clause in an employment agreement is enforceable in California, contact our office
for a free evaluation of your specific situation.
Every state has its own time limits in which you are able to take legal action to redress a wrong. These time limits are called statutes of limitations, and they vary according to the type of claim you wish to pursue. The law is inflexible, and these time limits are generally inflexible, meaning if you do not file a lawsuit with the specified time you will be unable to recover for your injuries or damages. Below you’ll find California’s statutes of limitations for many common types of lawsuits. You should consult with an attorney to fully evaluate your potential claim, and determine which limitations period applies.
- Medical malpractice actions: Three years from the date of injury or one year from the date of discovery of the injury, whichever occurs first. (There are exceptions for minors.)
- Breach of an oral contract: Two years.
- Breach of a written contract: Four years.
- Personal injury claims (for example: dog bites, auto collisions, slip and falls, premises liability, motorcycle accident, wrongful death, etc.) : Two years.
- Employment Discrimination, Harassment or Retaliation: Under California’s Fair Employment and Housing Act (age, race, sex, disability, national origin, etc.) – Claims must be initially filed with the Department of Fair Employment and Housing within one year of the discrimination/harassment/retaliation. Once the DFEH issues a Right to Sue Notice, the claimant has one year to file a case in court. However, under federal rules, specifically under Title VII, ADEA and ADA, claims in California must be initially filed with the Equal Employment Opportunity Commission within three hundred days. Once the EEOC issues a Right to Sue Notice, the claimant has ninety days to file a case in federal court.
One common question in wage and hour complaints is “When should I receive my final paycheck?” The rules on payment of final wages vary depending on the circumstances of the employee’s departure.
If you were fired: If your employer fires you, the wages earned and unpaid at the time of discharge are due and payable immediately at the place of discharge. (Labor Code §§201(a); 208.) As with any good rule, there is an exception for employees in “seasonal employment in the curing, canning, or drying of any variety of perishable fruit, fish or vegetables,” who may be paid within 72 hours of termination. (Labor Code §201.)
If you were laid off: Under the opinions from the California Labor Commissioner, an employee who is laid off without a specific return date within the normal pay period has been effectively terminated and must immediately be paid all wages due and payable. If you are laid off with a return date within the pay period, the wages may be paid at the next regular pay day. (2002 Division of Labor Standards Enforcement Policies and Interpretations Manual §3.2.2 (rev 2009).)
If the business was sold (and closed): Under the opinions from the California Labor Commissioner, the sale of a business effectively terminates the company’s employees, all of whom must be paid any earned wages, along with any accrued vacation. (DLSE Manual §22.214.171.124.)
If you quit: If the employee doesn’t have a written employment contract for a definite period of time (e.g., a contract for 1 year of employment) and voluntarily quits his or her job, the payment of final wages depends on the timing of the resignation (Lab Code §202):
An employee who quits with less than 72 hours’ notice must physically return to the office or agency of the employer in the county in which the work was performed to recover his or her final wages unless the employee requested payment by mail and provided a mailing address for his or her final paycheck. (DLSE Manual §3.7. Labor Code §208.)
- If the employee gave at least 72 hours’ prior notice of his or her intention to quit, the employee must be paid his or final wages on the final day of employment.
- If the employee gave less than 72 hours’ prior notice of his or her intention to quit, the final wages are due 72 hours after notice of the resignation was provided.
If you are an employer: The best way to ensure that you don’t run into a complaint for payment of final wages is to incorporate the above rules into your policies and ensure your HR department is following them.
As an example a sound policy addressing the payment of final wages may contain the following four statements:
- An employee who is terminated involuntarily will be provided with a final paycheck at the time of termination.
- An employee who provides at least 72 hours’ notice of his or her resignation will be provided with a final paycheck on the last day of work.
- The final paycheck of an employee who resigns with less than 72 hours’ notice will be made available at the employee’s regular workplace within 72 hours of the employee’s last day of work, unless the employee requests in writing that the paycheck be mailed.
- Final paychecks will include payment for wages owed, including any accrued but unused vacation time, minus any authorized or required deductions.
Is there a minimum that I should be paid?
The minimum wage in California is $8 per hour until July 1, 2014, when it will increase to $9 an hour. On January 1, 2016, the minimum wage will increase again, to $10 an hour.
Is the minimum wage different in California for tipped employees?Although the FLSA and the laws of some states allow employers to pay tipped employees a lower minimum wage, California law does not. In California, tipped employees are entitled to the full minimum wage for every hour worked.Am I entitled to a lunch or rest break in California?
Yes. Employees in California are entitled to a meal break of 30 minutes, unpaid, after five hours, except when the workday will be completed in six hours or less and the employer and employee consent to waive the meal break. The employee cannot work more than ten hours a day without a second 30-minute break, except if the workday is no more than 12 hours. The second meal break may be waived if the first meal break was not waived. An on-duty paid meal period is permitted when the nature of work prevents relief from all duties and the parties agree in writing. Employees are also entitled to a paid ten-minute rest period for each four hours worked or major fraction thereof, as practicable, in the middle of the work period. This is not required for California employees whose total daily work time is less than three-and-a-half hours.Am I entitled to overtime pay?
In California, eligible employees must receive overtime if they work more than eight hours in a day or 40 hours in a week. After working 12 hours in a day, California employees must receive double time. If an employee works on a seventh day, that employee is entitled to time and a half for the first eight hours of work and double time for additional hours. Not every type of job is eligible for overtime. My Employer says I am "exempt." What does that mean?
Exempt employees are those that meet certain criteria that are not entitled to overtime pay. Some of the most significant lawsuits have been the result of an employer's misclassification of employees as nonexempt employees as though they were exempt from California overtime.
Job titles alone do not determine if a California employee is exempt or nonexempt. An employee with an impressive job title may not qualify as an exempt employee if his/her actual duties do not meet the requirements for one of the exemptions. To determine whether the California employee is primarily engaged in exempt work, the court will examine the work performed by the employee during the workweek. Also, exempt employees generally must earn a minimum monthly salary of no less than two times the state minimum wage for full-time employment. Paying an employee a salary does not make them exempt, nor does it change any requirements for compliance with wage and hour laws. Most California employees who are classified as exempt customarily and regularly exercise discretion and independent judgment in their jobs.
If you believe that your employer is not following the rules for California's Wage and Hour Laws, contact our office for a FREE case evaluation.
In California, most employment is “at-will” meaning that an employer or employee may terminate the employment at any time for almost any reason. There are of course exceptions to this general rule. Those exceptions include any action taken by the employer based on or done because of a protected characteristic. Protected characteristics include race, religion, sexual orientation, mental or physical disability, gender, gender identity, pregnancy, national origin, etc. It is also illegal to fire an employee because the employee complained of or reported illegal acts by the employer. Firing an employee for complaining about labor law violations, such as unpaid overtime or failure to provide meal and rest breaks, is another common basis for a wrongful termination claim.
California courts have also held that an employer’s general right to terminate an “at-will” employee is ‘subject to limits imposed by public policy, since otherwise the threat of discharge could be used to coerce employees into committing crimes, concealing wrongdoing, or taking other action harmful to the public.
However, if the employer provides oral assurances of continued employment, the “at will” relationship may found to have been modified, which may require the employer to establish “good cause” prior to terminating the employee. In the legal sense of the phrase as used under California state law, “good cause” means “fair and honest reasons, regulated by good faith on the part of the employer, that are not trivial, arbitrary, or capricious, unrelated to business needs or goals, or pretextual.
If you have lost your job and are unsure whether it was wrongful termination, you should have you situation reviewed by an attorney to ensure that you are protecting your rights.