Are you Protected by New Rules About Non-Compete Agreements?

Did you sign a non-compete agreement when you were hired? You should probably have an employment lawyer verify if it actually applies or not. Lots of people think that the protections given by California Labor Code section 925 apply to everyone. However, section 925 went into effect January 1, 2017. Section 925 forbids employers requiring that Californian employees agree to “foreign choice-of-forum” and “choice-of-law” agreements as a condition of unemployment. Your California labor attorney should be familiar with the case law on this subject.

Why Did We Need This?

California’s Business and Professions Code section 16600 says 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.” They enacted this to make sure you can work in your profession, even when you stop working with a particular company.

Historically, California has usually enforced section 16600 very strongly. Employers from other states usually couldn’t get around the rule. Sometimes however, they used “choice-of-law” portions in their non-compete contracts.

A good example of a choice-of-law provisions failing is Arkley v. Aon Risk Services Companies, Inc. Aon Risk Services Companies, Inc. is an Illinois based company, and they made employees sign non-compete agreements with that choice-of-law provision. In Illinois, non-compete agreements are enforceable. The Central District of California however, found that California law should apply over Illinois law in the state of California. The reason for this was California’s “materially greater interest” to protect California residents with their own laws.

How Can Employers Get Around Section 16600?

There have been a few recent cases that got around these protections. An employment lawyer can tell you about cases like the one with Synthes, a medical device company. Synthes tried to enforce the non-compete agreement against Peter Harrison, a former employee living in California. Harrison signed an agreement that had both choice-of-law and choice-of venue provisions. When Harrison went to work with a competitor, he filed a declaratory judgment action in the Eastern District of California. Synthes followed up by filing a breach of contract claim in Pennsylvania courts.

The California Court Dismissed Harrison’s action in favor of the action Synthes filed. After appeal and remand, Harrison got an injunction from the Pennsylvania Trial Court.

Another case, also involving Synthes, played out in April of 2017. Another California employee, Gregory Knapp, went to work with a competitor in California. Even though he filed a declaratory judgment action right after resigning, the Eastern District didn’t exercise jurisdiction, and let the case be held in the Eastern district of Pennsylvania. The case transferred to the Eastern District of California, but the Pennsylvania choice-of-law rules still apply.

Enter California Labor Code Section 925

Because of this unfair “loophole” California is taking measures to close it. Because section 295 forbids employers from requiring employees who primarily live and work in California to agree on foreign choice-of-forum and choice-of-law provisions, it deems these kinds of provisions voidable by the employee. Section 925 also provides for the fees of hiring an employment lawyer to enforce your rights under this statute.

So, Am I Safe?

Because section 925 only applies to contracts entered into or modified after January 1, 2017, you should talk to your employment lawyer. The Synthes opinions did not consider this new statute because they were not entered or modified after January 1st. It’s also important to note that there haven’t yet been any cases where a court invalidated the forum-selection clause under section 925.

As always, if you have any questions you should contact an employment lawyer to discuss your individual circumstances. The Law Offices of Cathe L. Caraway-Howard have been fighting for the little guy since 2009. Cathe makes sure average American’s rights are protected everyday. You can call (310) 488-9020, email cath@carawaylaw.com, or fill out our contact form to schedule a consultation.

Overtime Rules Might Change, Will They Affect You?

Chances are, you’re familiar with overtime pay – the mandated time-and-a-half compensation you earn for putting in long extra hours. Overtime rules are often the reason people look to labor law attorneys for employment dispute advice. Do you know the history behind overtime rules, and how they can affect you today?

 

Thank President Roosevelt for Your Overtime

President Roosevelt signed the Fair Labor Standards act into law in 1938. In addition to overtime rules, this law also sets the federal minimum wage and rules on child labor. However, members of our congress are ready to change the rules. First, you should understand a bit about the way the overtime rules work today. You might find you need employment dispute advice.

Overtime Pay is the Law Right Now

The law, which has been in place for over 79 years now, says that certain employees must be paid time-and-a-half for any hours worked over a standard 40-hour workweek. However, these rules don’t apply to workers that are considered managers or other “exempt” salaried employees. A manager is someone who normally directs two or more full-time employees. Additionally, they must be paid a salary of more than $455 a week, and they must get to give input on hiring and firing.

States Can Have Their Own Overtime Rules Too

Lots of states use their own overtime rules. When this happens, whichever rule pays the employee more is the one that matters. If the federal rules in the Fair Labor Standards pay more, then they’re setting the minimum.

Our own state of California makes a great example. You earn overtime pay not only if you work more than 40 hours in a week, but also when you work more than 8 hours in a day. If you’re working more than 8 hours in a day, but less than 40 hours in a week and not getting your overtime pay, you should look for employment law advice.

Some People want Changes

A bill called “The Working Families Flexibility Act” just passed the House recently. This bill would let employers offer paid time off (PTO) instead of overtime pay. If you accept, you’d be given an hour and a half of PTO for every hour of overtime you work.

Proponents of the bill argue that this bill would give employees more choices. If you want the comp time you can take it, and if you need the overtime pay you can still use that. Rep. Martha Roby of Alabama, who sponsored the bill said, “We can update our laws to allow more choice and fairness in how employees use their time.”

Opponents of the bill however, argue that employers will be able to find subtle ways to encourage employees to take comp time over extra pay. Additionally, these opponents say that because employers choose when you can use your comp time, they can defer paying for overtime until the end of the year.

Many similar bills have failed over the past two decades. Finally, a similar bill passed the House in 2013, then died in the Senate.

And Some People Want to Expand Overtime Rules

In May of 2016, President Obama asked the Department of Labor to update and modernize overtime rules. The Department of Labor raised the salary requirement for overtime pay to $47,476 a year, or $913 a week. This would be about double what the rule says right now.

The new rule was going to go into effect December 1, 2016, however in November, a federal judge gave an injunction after business groups as well as 21 different states sued, which puts the change off indefinitely. It does not look likely that the Department of Labor will continue to defend the new rules.

Do You Need Employment Dispute Advice?

The Law Offices of Cathe L. Caraway-Howard have experience with California Employment Laws since 1989. If you’re looking for employment dispute advice or representation, Cathe Caraway-Howard’s highly trained and experienced team will fight for you.