Dimitry Tsimberg, Esq.

Recent developments in California employment law

Unlawful Employment "Separation" Agreements

It is common these days for employers to require their employees to sign some sort of a "non-compete" agreement. Increasingly, these types of agreements are being used in connection with an employee's separation (leaving the job), and prohibit solicitation of the former employer's customers. A new case recently came out of the California Second District Court of Appeal, holding that such separation agreements may be void.

In Thompson v. Impaxx, Inc. (2003) 113 Cal.App.4th 1425, the Second District held that covenants not to solicit a former employer's customers may be void as an unlawful covenant not to compete, unless this is necessary to protect a trade secret. Citing D'sa v. Playhut, Inc. (2001) 85 Cal.App.4th 927, the court added that terminating an employee for refusing to sign a void covenant not to compete after separating from employment is a wrongful termination in violation of public policy.

As such, if you are leaving a job and asked to sign a non-compete or non-solicit agreement, you may have a legal right to sue for wrongful discharge, if you refuse to sign and are fired as a result.

An employer cannot lawfully make the signing of an employment agreement that contains illegal provisions a condition of employment. Firing an employee for refusing to sign such an agreement contravenes fundamental public policy, even if the employment is at will, and gives rise to a tort cause of action. [D'Sa v. Playhut, Inc. (2000) 85 Cal.App.4th 927, 931, 102 Cal.Rptr.2d 495, 498--agreement contained unenforceable covenant not to compete (Bus. & Prof. Code § 16600)]

It is immaterial that the employment agreement contained a severability provision (balance of agreement enforceable despite invalidity of any provision), or choice of law provision (calling for application of a different state's laws). That does not make it lawful for the employer to require the employee to sign the agreement. [D'Sa v. Playhut, Inc., supra, 85 Cal.App.4th at 934, 102 Cal.Rptr.2d at 500]

"Whistleblowers" cannot be fired

"Whistleblowing" (disclosing employer's illegal acts to governmental authorities) or filing or assisting a false claims action against the employer. [Ca Govt § 12653(b); Ca Labor § 1102.5]

Jie v. Liang Tai Knitwear Co. (2001) 89 Cal.App.4th 654, 660-661[if an employee is fired for reporting to authorities a statutory violation by the employer, the employment termination may also be a violation of public policy.]

Reporting misappropriation of public funds: Public policy clearly forbids retaliatory action against an employee who discloses to a government agency the employer's misappropriation of public funds. [Garcia v. Rockwell Int'l Corp. (1986) 187 Cal.App.3d 1556, 1561, 232 Cal.Rptr. 490, 493--employee allegedly suspended without pay and demoted for reporting his employer's mischarging of time on government contracts; Holmes v. General Dynamics Corp. (1993) 17 Cal.App.4th 1418, 1429, 22 Cal.Rptr.2d 172, 179--employee allegedly discharged for reporting his employer's billing practices on government contract violated False Statements Act (18 USCA § 1001)]

Reporting allegedly "illegal, unethical or unsafe" practices: "Public" policy may be violated by retaliating against an employee for internal disclosure of "illegal, unethical or unsafe practices" which affect the public at large, not merely the employer. [Green v. Ralee Eng. Co. (1998) 19 Cal.4th 66, 85, 78 Cal.Rptr.2d 16, 27--complaining internally that company was shipping defective parts to airplane assemblers which endangered airline passenger safety; Collier v. Sup.Ct. (MCA, Inc.) (1991) 228 Cal.App.3d 1117, 1123, 279 Cal.Rptr. 453, 455--reporting to management that company executives shipping promotional records at no charge were violating laws prohibiting bribery, kickbacks, embezzlement and tax evasion, affecting third parties (artists, retailers) as well as tax authorities]

US Supreme Court rules reverse age discrimination legal

In a bizarre twist, the U.S. Supreme Court ruled last week that the Age Discrimination in Employment Act of 1967 (ADEA) does not prohibit employers from benefiting older workers over younger ones - the so-called reverse age discrimination.

In General Dynamics Land Systems, Inc. v. Cline, the plaintiffs (current and former employees of the defendant) sued for age discrimination based on changes to their collective bargaining agreement that favored older employees. The new agreement provided for continued retirement health benefits for employees then over 50 years of age, but eliminated that benefit for all other employees. The plaintiffs were between the ages of 40 and 50 and, therefore, protected by the ADEA. They were denied the benefits available only to workers over the age of 50, and they sued under the ADEA and state law, claiming reverse age discrimination. The District Court in Ohio dismissed the reverse age discrimination claim, finding that the ADEA does not prohibit discrimination against younger employees. The U.S. Court of Appeals for the Sixth Circuit reversed, relying on the "plain meaning" of the statute and the Equal Employment Opportunity Commission’s (EEOC) interpretative regulation on the issue.

The Supreme Court’s 6-3 decision clearly states that the ADEA does not recognize such reverse discrimination claims (i.e., where a worker over 40 claims disparate treatment as compared with a coworker older than him/herself). The majority rested its decision on its "understanding that the text, structure, and history point to the ADEA as a remedy for unfair preference based on relative youth, leaving complaints of the relatively young outside the statutory concern." In so doing, the majority rejected the plaintiffs’ arguments regarding the plain meaning of the word "age," the coverage of the statute as interpreted by one of its sponsors in the U.S. Congress and deference to the EEOC’s interpretation of the statute. The Court discounted comments by one of the act’s sponsors indicating his intention that the ADEA encompass this type of reverse discrimination claim - "[e]ven from a sponsor, a single outlying statement cannot stand against a tide of context and history, not to mention 30 years of judicial interpretation producing no apparent legislative qualms." Finally, the Court refused to defer to the authority of the EEOC where it found that agency’s interpretation to be "clearly wrong."

Thus, a preference for older workers seems to be legal, even if it discriminates against the "younger" employees.

Cop selling sex videos on ebay is a matter of "public concern"

A San Diego police officer who sold videos on the Internet of himself masturbating was engaging in protected speech, and his wrongful termination lawsuit should not have been dismissed, an appeals court ruled yesterday.

At issue was the June 2001 firing of the officer, who was identified only under the fictitious name of John Roe in the lawsuit. The seven-year veteran who had received good evaluations was fired after his supervisor discovered the videos on eBay. The video showed the officer removing a police uniform and masturbating. The tapes were among several items the officer was selling in the adults-only portion of the site. He was recognized by his supervisor (whose name is Sergeant Dare ironically) from a picture posted on his ebay listings.

The SD Police Department confronted Roe, who readily admitted making and selling the videos, and eventually fired him. Roe sued the Department, the City of San Diego and his supervisors in federal district court under 42 U.S.C. § 1983, alleging that his off-duty, non-work-related activities were protected by the First Amendment and could not be grounds for terminating his employment. The district court dismissed Roe's claim, concluding that the videos did not address a matter of "public concern," and thus the Department did not violate Roe's constitutional rights by firing him.

The 9th Circuit Court of Appeals reversed, stating that the videos were protected speech. Thus, when an employee's speech is not about his government employer or employment, is directed to a segment of the general public and occurs outside the workplace, that speech satisfies the public concern test. Roe v. City of San Diego

California Supreme Court creates new ''defense'' in sexual harassment cases

In November 2003, the California Supreme Court delivered a near unanimous decision confirming strict liability of employers for the existence of hostile environments in their workplaces, i.e., harassment by supervisors, but creating a potential bar to the recovery of damages that could have been avoided by prompt notice of the harassment to the employer. The only exception is if plaintiff proves that the damages could not have been avoided with "reasonable effort and without undue risk, expense or humiliation."

In the case of State Department of Health Services v. Superior Court, 31 Cal. 4th 1026 (2003), the California Supreme Court said that plaintiffs in sexual harassment cases may not receive damages if they failed to avoid harm when: (1) the employer had taken reasonable steps to prevent and correct harassment, (2) the employee failed to use the provided procedures, and (3) use of the procedures would have prevented at least some of the harm.

This post is for educational and information purposes only. It is not legal advice on any particular case, and merely a general opinion of one California lawyer. You should not rely on it without consulting a competent attorney in your area about your specific case and facts. It is not intended to, and shall not, create an attorney-client relationship. So, be happy you got some free info and use your grey matter!

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