California Employee Rights Advocate : California Labor Attorney & Lawyer : Southern CA Employment Law : Los Angeles, Orange County : United Employees Law Group

A non-compete agreement is a contract between the employer and an employee whereby the employee agrees not to compete with his ex-employer when he leaves the employ of that company. In other words, the employee may not contact customers of his old employer and solicit their business. The purpose is to protect the employer from the employee using confidential knowledge acquired during his employment which the employee wants to use to compete against the old employer.

In most cases non-compete agreement are not enforceable in California. Business and Professions Code § 16600 provides that:

"every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void." Section 16600
invalidates agreements to preclude employment in a certain line of work. The section has also been construed by California courts as invalidating agreements that seek to prevent former employees from accepting work from any of the former employer's clients. (Morris v. Harris (1954) 127 Cal.App.2d 476.) A former employee may also solicit employees from his or her former employer if unlawful means or acts of unfair competition are not used. (Diodes, Inc. v. Franzen (1968) 260 Cal.App.2d 244.)

Even though non-compete agreements are generally not legal many companies require their employees to sign non-compete agreements to deter an employee from competing or using his/her knowledge after leaving. If you have been asked to sign a non-compete it most likely is non-enforceable or at least much more limited than it appears.

There are a few exceptions where non-compete agreement may be enforceable.

• Business ownership exception: It applies when a shareholder "sells" their stock to another for valuable consideration. (Hilb, Royal & Hamilton Ins. Services v. Robb (1995) 33 Cal.App.4th 1812, 1824-1825.)

• Partnership Exception: Business & Professions Code § 16602. However, not every agreement restricting competition between partners is valid. A "rule of reason" applies. (Howard v. Babcock (1993) 6 Cal.4th 409.) For example, a partnership agreement may validly restrict competition by precluding withdrawing partners from practicing in a limited geographic area. (Id.) Unlike business sales and section 16601, there is no requirement pursuant to section 16602 that compensation for goodwill in the partnership be transferred. South Bay Radiology Medical Associates v. Asher (1990) 220 Cal.App.3d1074, 1083.

Labor law is complex and if you have any questions regarding your employment it is recommended that you contact a California labor law attorney who can help you understand your rights and in many cases will review your situation without charge.

If you have any questions about this article or information on our blog, feel free to call us at:
 

Long Beach – (562) 256-1047
Los Angeles – (213) 261-0229
San Francisco – (415) 200-0012 or (415) 230-2755
San Diego – (619) 342-1242 or (619) 272-2193

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Wage Theft Prevention Act of 2011

According to Section 2810.5 of AB 469, at the time of hire all employer must now inform, in writing, employees of rate of pay and the of how wages will be calculated. In other words: hourly, daily, piece rate, salary, commission or by some other method. If applicable the employees must also be informed of their overtime rate, allowances, the regular pay date, the name of the business or any other names the business operates under as well as the physical mailing address for the business. AB 469 also requires that any changes made to this information be given to the employees in writing within 7 days of the change. Not only does the existing law require employers to pay penalties and back wages for violating minimum wages laws it now criminalizes certain wage violations by providing that any employer who willfully violates specified wage orders, willfully fails to pay wages due, if convicted is guilty of a misdemeanor. It important to note that, the statute of limitation for collecting penalties under the Division of Labor Standards Enforcement ("DLSE") has increased from one to three years.

Commission Contracts will be required by 2013

By January 1, 2013 AB1396 will amend the labor code to require employers to have written contracts with all employees who will receive wages from commissions. This contract must also define how these commissions will be calculated and when they will be paid. This does not include bonuses or short term incentives. This should alleviate the guess work and should allow the employees the ability to track and determine, in advance, what their commission pay will be. AB1396 will be particularly helpful to employees that are classified as inside sales or outside sales people.

Wage Garnishment : Medical Debts are now Exempt

Currently the law requires employers to garnish employee’s wages up to the portion of the earnings the debtor proves is necessary to support himself or his family, for things like Child support payments, back taxes, credit card debt, and other debts can all be subjected to wage garnishment. AB 1388 adds an exemption for debt that is incurred "for the common necessaries of life furnished to the judgment debtor" or his or her family, including, e.g., hospital services and other medical debts.

Even though most of these new laws will take effect January of 2012 it is recommended you speak with an experience California labor law attorney as soon as possible if you have any questions or concerns about your employment situation.

If you have any questions about this article or our blog, feel free to call us at:

Long Beach – (562) 256-1047
Los Angeles – (213) 261-0229
San Francisco – (415) 200-0012 or (415) 230-2755
San Diego – (619) 342-1242 or (619) 272-2193

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We have placed some of the most common concerns in an easy to follow question and answer format.

Question: How does an employee qualify for unemployment insurance?

Answer: The main criteria is you have to be unemployed. You are not allowed to claim unemployment insurance for the same period of time you are working. This is illegal and can land you in a lot of trouble.

Additionally, you have to have been laid off or fired (not for willful misconduct). If you simply quit in most instances you will not qualify for unemployment insurance. You should understand that even if you do initially qualify for unemployment benefits, your employer is able to appeal such ruling and that ruling could be reversed. Some employers do this for good reason and others because they are vindictive.

Question: Can I file my claim online or do I need to go the unemployment office of EDD?

Answer: Conveniently, you may now file for your unemployment benefits online. No more embarrassing visits to the unemployment office.

Question: Can I be disqualified for unemployment benefits if my employer fires me for being late to work or failing to meet my performance goals?

Answer: To be disqualified for benefits your conduct must rise to the level of willful misconduct as interpreted by EED or ultimately a judge. One example of this might be carrying weapon to work another may be driving a company vehicle while intoxicated.

It is not uncommon for an employer to attempt to challenge unemployment benefits if an employee has another labor case pending against the employer. The reason for this is they will have a chance to question and gather evidence at this hearing that may enable them to have an advantage in the other labor matter. For this reason, it is wise to have a California labor lawyer represent you in the unemployment hearing if you have another labor case pending against the employer in order to keep the questioning on point with the unemployment issues only.

If you have questions related to unemployment insurance and cannot resolve them through communications with EED it is important that you speak to a California labor lawyer?

This is especially necessary if you believe that you have other labor claims aside from unemployment insurance as a California California employment lawyer?

can advise you as to how to protect your interests prior to the hearing with EED?

If you have any questions about this article or our blog, feel free to call us at:

Long Beach – (562) 256-1047
Los Angeles – (213) 261-0229
San Francisco – (415) 200-0012 or (415) 230-2755
San Diego – (619) 342-1242 or (619) 272-2193

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California labor law attorneys have recently received an extended explanation of “commission wages” from the opinion given by the California Second Appellate District court. This explanation related directly to employees that are classified as exempt from overtime under the commissioned salesperson exemption. In the case Areso v. CarMax, Inc., it was decided that CarMax’s commission plan of a flat rate per sale would be considered commission wages.

Essentially the plaintiff Areso was unsuccessful in the class action in which he was claiming misclassification as exempt from overtime under the commissioned salesperson exemption and owed overtime. California labor law attorneys for Areso argued that overtime was owed because CarMax’s commission plan did not meet the requirements as “commission wages” under Labor Code Section 204.1, which necessitates commissions to be “based proportionately on the amount or value” of the sale of the employer’s property or services.

California labor law attorneys for CarMax were pleased to hear the court found CarMax’s commission structure is a “performance-based incentive system and thus fairly understood to be a commission structure” due to the language that commissions can be founded on the “amount” rather than “value” of cars sold, interpreting “amount” to mean the number of cars sold. Furthermore, the court agreed with labor law attorneys for CarMax’s argument that prior decisions necessitate commissions to be base on “a percentage of the price of the product or service” (as first articulated in Keyes Motors, Inc. v. DLSE, 197 Cal.App.3d 557, 563 (1987)) as dicta as it related only to the part of the statutory language in Labor Code § 204.1 interpreting the “value” of the product or service.

In order for someone to be considered exempt under the commissioned salesperson exemption, Labor Code Section 204.1, the employee:
• must be involved principally in selling a product or service (not making a product or rendering a service)
• The amount of their compensation must be based proportionately on the amount or value of the product or service.

The Court opinion also interpret the word “amount” in the statute, and found that a flat payment for each car sold satisfies the statutory stipulation because the commissions are compensated based on the “amount” or number of cars sold. Further, paying a flat amount for each car is “proportionate” because it is a one-to-one proportion where the “compensation will rise and fall in direct proportion to the number of vehicles sold.”

Flat fees and proportionate percentages can be a little confusing if you are unsure whether or not you are classified as exempt correctly you should contact a California labor law attorney to examine your exemption status and determine if you are entitled to any back pay for overtime you may have worked.
 

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