United States: "We’re Not In Kansas Anymore" California Employment Law for the Non-California Employer - Part 2

IV. Employment Discrimination.

A. Coverage Issues.

The California FEHA covers far more employers than Title VII of the Civil Rights Act of 1964. The FEHA covers all employers who "regularly employ" five or more persons. Government Code Section 12926(d) Part-time employees count for the five-employee minimum. Robinson v. Fair Employment and Housing Commission, 2 Cal. 4th 226 (1992) For harassment claims, the threshold is even lower – an employer is covered for purposes of harassment claims if it regularly employs one or more persons, including independent contractors. Government Code Section 12940(j)(4)(A)

In addition to covering smaller employers than are covered under Title VII, FEHA protects several classifications which are not protected under analogous federal law. The following are the classifications protected under FEHA at the present time: race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, marital status, sex, age or sexual orientation. In California, the protection for these classifications extends to situations where the employer perceives that an individual has one of the protected characteristics, even if he or she does not (i.e., if the employer mistakenly believes the person in question is of a particular race or national origin). Similarly, an employer may not take any adverse action based upon a person’s association with another person who has or is perceived to have one of the protected characteristics. Government Code Section 12926(m)

In California, individual employees or supervisors are not individually liable for personnel actions that may be alleged to be discriminatory. Reno v. Baird, 18 Cal. 4th 640 (1998) see discussion below, however, regarding individual liability for harassment or retaliation.

The FEHA also imposes liability on "aiders and abettors" who aid or abet unlawful discriminatory conduct. This statute applies to third-parties, as opposed to employees of the employer itself.

B. Special Rules re: Harassment.

California requires the employer to take "all reasonable steps necessary to prevent discrimination and harassment from occurring." Government Code Section 12940(k) California also requires that each employer post a specific poster regarding sexual harassment and distribute a written "information sheet" to all employees on the subject of harassment.¹¹

In California, an individual employee or supervisor who actually harasses another employer may be personally liable for harassment. Government Code Section 12940(j)(3)

Effective January 1, 2004, employers of 50 or more persons must provide at least two hours of mandatory sexual harassment training to all supervisory employees, on or before January 1, 2006. This new statute, Assembly Bill 1825 is summarized at Exhibit 3, attached hereto. The statute requires a minimum of two hours "classroom or effective interactive training" for supervisory personnel prior to January 1, 2006, unless the employer can show that it provided equivalent training after January 1, 2003. The definition of "supervisor" is found at Government Code Section 12926(r) and is generally similarly to the definition under the National Labor Relations Act.

C. Marital Status.

California’s marital status discrimination protection extends to employees or applicants who are married, single, widowed or divorced. However, FEHA does permit an employer to "reasonably regulate" the employment of spouses in the same department, division or facility, for reasons of "supervision, safety, security or morale."

D. Disability and Medical Condition.

California’s disability discrimination law is starkly different than corresponding federal law under the Americans With Disabilities Act. Effective January 1, 2001, the FEHA was amended by Assembly Bill 2222 to expand the scope of individuals protected as "disabled" in California, and to impose liability for an employer’s failure to engage in the interactive process toward a reasonable accommodation. Additionally, the amendments in Assembly Bill 2222 contain detailed regulations of pre- and post-employment medical inquiries or tests. The amendments of Assembly Bill 2222also expand the definition of "major life activity," and state that a person is disabled if he or she has an impairment or condition that limits a major life activity. The federal requirement that the impairment "substantially limit" the major life activity does not exist in California.¹²

To summarize, the California disability discrimination law is different than the ADA in the following respects:

• The definition of "disabled" individuals is broader. In California, in order to determine whether an individual is "disabled" he or she is considered without regard to mitigating measures such as eyeglasses, prosthetic devices, medication or self-accommodation methods.

• The definition of "disability" in California does not require a "substantial limitation" on a major life activity. A "limitation" is sufficient. In California an impairment or mental or physical condition limits a major life activity if "it makes the achievement of the major life activity difficult." California Government Code Section 12926(i) and (k)

• In California there is a statutory duty to engage in the interactive process. An employer may be liable for simply failing to engage in the interactive process if the employee is disabled.

• The major life activity of "working" in California applies to a particular job, rather than only to a broad class or range of jobs.

• Certain conditions in California are "per se" disabilities. These include HIV/AIDS, hepatitis, epilepsy, diabetes, clinical depression, bipolar disorder, multiple sclerosis and heart disease. See Government Code Section 12926.1

• There are statutory restrictions on pre-employment and post-employment medical, psychological or disability related inquiries and examinations. The California rules are slightly more restrictive than corresponding rules under the federal ADA.

Additionally, case law under the California FEHA has given an even broader interpretation to some aspects of the disability discrimination provisions. For example, one court held that the duty to accommodate an employee in California requires the employer to search for open positions within the company for which the disabled employee is qualified, and to offer those positions to the employee. Prilliman v. United Airlines Inc., 53 Cal. 4th 935 (1997)

In addition to protecting individuals with a "disability," California law also protects individuals who have a "medical condition." A "medical condition" means either (1) a health impairment related to or associated with a diagnosis of cancer or a record or history of cancer, or (2) "genetic characteristics." The statute defines "genetic characteristics" as including inherited characteristics that are known to be a cause of a disease or disorder; or a "scientifically or medically identifiable gene or chromosome, or a combination or alteration thereof, that is known to be a cause of a disease or disorder."

E. Age Discrimination.

California has adopted a specific statute which makes it presumptively unlawful for an employer to use salary levels of employees when selecting employees for layoff or restructuring. The same statute permits the use of the disparate impact theory of discrimination in age discrimination cases. See Government Code Section 12941

F. Sexual Orientation.

The FEHA prohibits discrimination on the basis of sexual orientation, which means "heterosexuality, homosexuality and bi-sexuality." Government Code Section 12926(q) and 12940(a) There is currently no corresponding federal protection based on sexual orientation. Note that the FEHA also prohibits discrimination based on perceived sexual orientation or the association of a person with another person of a specific sexual orientation. Government Code Section 12926(m).

G. Pregnancy.

The FEHA requires California employers to grant pregnant employees an unpaid leave of absence for pregnancy-related disabilities for a period of up to four months. The leave is unpaid although employees may use their paid leave. See Government Code Section 12945 for the pregnancy leave provisions of FEHA. Pregnancy disability leave is available to all employees employed by companies with five or more employees. In California, an employer must reasonably accommodate a pregnant employee in accordance with her physician’s directions, unless undue hardship would result. This can require a temporary transfer to a less strenuous position or a reduced work hours schedule. It does not require creating a different position or displacing another employee. Government Code Section 12945(c). Pregnancy disability leave is available to any pregnant employee who is employed by a "covered" employer (an employer who employs five or more employees). There is no exception for short-term or part-time employees. Theoretically, an employee may take pregnancy disability leave, if her request is supported by medical certification, beginning the day after her employment commences.

The employer may request and obtain medical support for a pregnancy disability leave, and can require reasonable advance notice of the beginning and ending dates for the leave. Pregnancy leave under FEHA may be taken intermittently or on a reduced leave schedule when medically necessary or advisable.

An employee who timely returns from a pregnancy disability leave is entitled to be reinstated to the same position, unless that position is no longer available for reasons unrelated to the employee’s pregnancy. The California Department of Fair Employment and Housing takes a dim view of an employer’s refusal to reinstate an employee who is timely returning from pregnancy disability leave. Some employers do not realize that the four month pregnancy leave is only for the period of disability (which in many cases does not last for four months). The employer has the right to require medical evidence that the employee continues to be disabled, if the leave has lasted for an extended period.

H. California Family Rights Act.

California has its own version of the Family and Medical Leave Act, known as the California Family Rights Act ("CFRA"). In general, this statute is very similar to the federal Family and Medical Leave Act ("FMLA"). The most significant difference involves California’s mandatory pregnancy disability leave, discussed above. California Family Rights Act ("CFRA") leave, like FMLA leave, is available only to "FMLA-eligible" employees. Those employees must (1) have been employed by the employer for at least 12 months (not necessarily consecutive months); (2) have worked at least 1250 hours in the past 12 calendar months; and (3) be employed by an employer with 50 or more employees and at a facility where there are at least 50 employees within a 75 mile radius.

FMLA-eligible female employees in California may take both the unpaid pregnancy disability leave of up to four months, and an additional unpaid CFRA leave of as much as 12 weeks. This leave must all be taken within the first 12 months of the birth of the child (or another qualifying reason, such as placement of the child for adoption). Employees entitled to CFRA leave are also entitled to continuation of company-paid health insurance for a period up to the 12-week maximum, as with FMLA leave in other states.

One additional difference between CFRA leave and FMLA leave is that the employer in California is entitled only to know whether there is or is not a "serious health condition" to support the leave. In California the employer is not entitled to know the specific diagnosis—only if a serious health condition exists. Under the CFRA, second and third medical opinions are permitted to verify the reason for the leave, but only where the purported serious health condition is that of the employee himself/herself. Second and third opinions are not permitted in California where the serious health condition is that of a family member.

I. Domestic Partners

Effective January 1, 2005, registered domestic partners, as defined in the California Family Code, are entitled to take CFRA leave on the same basis as spouses. This means that registered domestic partner may take CFRA leave, if otherwise eligible, for the serious health condition of his or her domestic partner. For purposes of this requirement, a "domestic partner" is one who has registered his/her domestic partnership with the California Secretary of State and met other minimum legal requirements. Some employers choose to provide similar benefits to domestic partners who have not registered with the Secretary of State, but there is no legal requirement at present to do so.

Effective January 1, 2005, domestic partners who have registered their domestic partnership with the California Secretary of State have the same legal rights and entitlements as spouses. Therefore, most employment law practitioners believe that marital status discrimination restrictions in California now apply equally to persons who have registered as domestic partners, on the same basis as if they were spouses. For instance, persons who are registered domestic partners cannot be terminated or discriminated against on that basis, except for the situations where there is an issue of safety, supervision, security or morale as described above with respect to spouses.

Yet another new California statute has the practical effect of making it difficult for employers to fail to provide domestic partner health benefits, where spousal health benefits are provided. This statute, Assembly Bill 2208 on its face applies only to insurance companies and health maintenance organizations. It requires any insurance company or HMO who offers spousal coverage to also offer identical domestic partner coverage. It is unlawful to write a policy of insurance in California, after January 1, 2005, which includes spousal coverage but does not include equivalent domestic partner coverage. While this statute does not on its face apply to employers, it in practice will limit the choices employers have with respect to spousal and domestic partner coverage. Most private sector employers provide health benefits through an insured plan. Almost all of those employers wish to provide spousal coverage. After January 1, 2005, employers who provide an insured health plan will have the choice of either providing no spousal coverage at all or of providing both spousal and domestic partner coverage. Employers, alternatively, can provide health benefits through self-insured plans, but those plans require greater financial risk and administrative costs.

J. Damage Issues/Remedies.

Claims under the FEHA are tried to juries (unless both parties waive a jury). Typically, in California, juries determine the amount of front pay, if any. The most significant difference between California and federal law in the area of remedies is that there is no cap or limitation on compensatory or punitive damage awards under FEHA. This is in contrast to Title VII of the Civil Rights Act of 1964, as amended in 1991, which currently contains such limitations. Punitive damages in California are subject to federal constitutional limits. See State Farm Mutual Automobile Insurance Company v. Campbell, 538 U.S. 408 (2003) Diamond Woodworks v. Argonaut Insurance Company, 109 Cal. App. 4th 1020 (2003) (non-employment case) a four-to-one ratio of punitive damages to compensatory damages is the outer constitutional limit on punitive damages "in a case in which the compensatory damages are neither exceptionally high nor low and the defendant’s conduct is neither exceptionally extreme nor trivial.")

V. California Paid Family Leave ("PFL")

Effective July 1, 2004, almost all California private sector employees became eligible to take "paid family leave" for a period of up to six weeks in a 12-month period. The PFL statute is administered by the California Economic Department ("EDD") and is operated in a manner similar to the California State Disability Insurance ("SDI") program. PFL is a wage-replacement program, not a leave entitlement program like CFRA/FMLA. There is no right of reinstatement for an employee returning from PFL—although many persons who take PFL will also be eligible for CFRA/FMLA leave and have a right of reinstatement under those statues.

The program is financed entirely by employee contributions, which average roughly $50 to $60 per year. The program provides eligible employee with up to six weeks of family care benefits over a 12-month period, at rates up to 55% of the employee’s wages. According to the EDD website, the maximum weekly payment under the PFL program for 2005 is $840 per week. The EDD’s website, www.edd.ca.gov, contains a great deal of useful information on the PFL program. Employers must post a PFL notice and must distribute PFL pamphlet to all employees who are absent beginning on or after July 1, 2004 for reasons that might qualify for PFL benefits.

The occurrences or illnesses which qualify for PFL are generally the same as would qualify for CFRA leave, except that an employee is not entitled to take PFL leave for his or her own serious health condition. The leave is generally available for the serious health condition of a child, parent, spouse or domestic partner.

An employer may require a one-week waiting period, during which no PFL benefits are payable. An employer may also require that the employee take up to two weeks of accrued but unused vacation prior to the employee’s additional receipt of PFL benefits. PFL leave will run concurrently with CFRA leave for those persons eligible for both. Receipt of other forms of paid benefits, including vacation pay, state disability insurance, workers compensation insurance or sick leave may delay or disqualify an employee from PFL benefits.

VI. "Kid Care" (Labor Code Section 233)

Labor Code Section 233 requires an employer to permit employees to use accrued paid sick leave to attend to the illness of a child, parent, spouse or domestic partner of the employee. This statute permits the employee to use the amount of sick leave that would accrue in six months at the employer’s then-current accrual policies, for the stated purposes. In other words, if the employer’s policy permits employees to accrue ten sick days per year, an employee could use up to five sick days to care for the illness of a child, parent, spouse or domestic partner. This statute applies without regard to whether the employee is eligible for CFRA/FMLA leave. The employer may place upon the use of "kid care" leave the same restrictions as it places upon the use of sick leave by the employee for the employee’s own illness. Section 233 does not extend the periods of maximum leave for CFRA or FMLA purposes. The statute does not define the term "illness." Most practitioners believe the term "illness" is broader than the term "serious health condition" for FMLA/CFRA purposes. In other words, "kid care" may be taken for short-term, episodic illnesses that would not qualify for FMLA/CFRA purposes. The statute also prohibits an employer from using absences protected by the statute for purposes of discipline.

VII. Whistle Blower Protections.

Like federal law California law contains numerous statutes which protect whistle blowers. However, California Labor Code Section 1102.5, as amended effective January 1, 2004, is a broad-based whistle blower protection statute. It provides that an employer:

Under this statute, if the employee proves that retaliation for whistle blowing was a "contributing factor" in the alleged adverse action, the burden of proof shifts to the employer to demonstrate "by clear and convincing evidence that the alleged action would have occurred for legitimate, independent reasons even if the employee had not engaged in the activities protected by Section 1102.5."

An employer must post a whistle blower notice. Additionally, the California Attorney General has established a whistle blower hotline to receive calls from whistle blowers. The notice to be posted must include the Attorney General’s hotline telephone number.

In addition to whistle blowing protections, the Labor Code also includes a somewhat cryptic protection for employees who have engaged in "lawful conduct occurring during nonworking hours away from the employer’s premises." See Labor Code Sections 96(k) and 98.6

The scope of the "lawful off-duty conduct" statutes is not clear. A recent court decision held that, to be protected, the "off-duty conduct" must itself be protected by the Labor Code. Grinzi v. San Diego Hospice Corp., 120 Cal. App. 4th 72 (2004) Under this interpretation, much lawful off-duty conduct by employees would not be protected, since the Labor Code does not contain most of the California privacy and other similar rules applying to off-duty behavior.

VIII. Non-Competition and Other Restrictive Agreements.

California has a strong public policy favoring freedom of mobility for employees. This policy finds its most direct expression in Business and Professions Code Section 16600

In California, it is unlawful for an employer to require or insist upon a "non-competition agreement," by which the employee agrees not to compete for a fixed period of time after termination. There are only a small number of limited exceptions to this rule, such as where an employee also owns a significant portion of the stock or equity of a business and sells his/her equity to the company at the time of termination. An employer may be sued for wrongful termination by an employee who is terminated for refusing to sign an unlawful non-competition agreement. D’Sa v. Playhut Inc., 85 Cal. App. 4th 927 (2000) Thompson v. Impaxx, Inc., 113 Cal. App. 4th 1425 (2003).

California law does permit a contractual restriction to protect the employer’s bona fide trade secrets. However, it is unlawful for an employer to require the employee to sign an agreement not to solicit customers for a fixed period of time after termination. Thompson, supra. No-solicitation provisions are valid only to the extent they protect actual trade secrets. In many cases the identity of an employer’s customers is not a trade secret. By contrast, a provision that prohibits an employee from "raiding" the employer’s other employees, post-termination, is permissible if limited to a reasonable time frame. Loral Corp. v. Moyes, 174 Cal. App. 3d 268 (1985)

California’s policy favoring competition is so strong that its courts will not enforce non-competition agreements entered into in another state even where the agreement would have been valid in the other state. Application Group Inc. v. Hunter Group Inc., 61 Cal. App. 4th 881 (1998)

California’s rule on non-competition agreements is among the most restrictive in the nation. Many other large, industrial states permit post-termination agreements by which the former employee is restricted from competing for a period of time or in a defined segment of business or a defined geographical area. Except in rare cases, these agreements are unlawful as applied to employees living in California. In the Application Group case, supra, the employees moved from Maryland to California and successfully challenged the restrictive agreement in California—even though it was lawful in Maryland when it was entered into.

A non-California employer must be careful when imposing on California-based employees any contractual restrictions developed in a different state. The employer can be sued for wrongful termination for terminating an employee who refuses to sign an invalid covenant not to compete. D’Sa, supra.

A recent California Supreme Court ruling indicates there are some limits to the California public policy favoring employee mobility. In Reeves v. Hanlon, 33 Cal. 4th 1140 (2004) two former law firm partners were held liable for starting a competing firm and unlawfully interfering with the at-will employment relationships between their former firm and other employees. The California Supreme Court held that "raiding" of at-will employees could give rise to a claim for unfair competition or interference with contractual relations, despite the fact that the at-will employees were not obligated to remain employed with the law firm and could have left for any reason or no reason. However, the California Supreme Court required the law firm to show independent "wrongful conduct," apart from simply offering employment to an at-will employee. In this case, the "wrongful conduct" included misuse of the firm’s computer system (before the defendants left the firm), making misleading statements to the firm’s clients, and refusal to cooperate with the former firm regarding client issues arising after resignation. In addition to the hiring of an at-will employee, the employer must show that the former employees engaged in acts "proscribed by some Constitutional, statutory, regulatory, common law or other determinable legal standard."

IX. California WARN Act.

California has its own version of the Workers Adjustment and Retraining Notification Act ("WARN Act"). Predictably, the California version covers more employers and more events than the federal version.

The California WARN Act is found in Labor Code Section 1400 et seq. The California statute covers any industrial or commercial facility that employs, or has employed within the preceding 12 months, 75 or more employees.¹³ The California statute is similar to the federal statute in that it requires 60 days advance written notice of a covered event. However, the covered events are defined differently.

In California, the 60 day written notice must be given in the case of any "mass layoff," "termination," or "relocation."

A mass layoff is defined as a layoff that results in an employment loss at a covered establishment during any 30 day period of at least 50 people. This provision requires advance notice if the 50-person threshold is met, even though the number of persons being laid off is not at least one-third of the full-time employees at a single location.

The definitions of "termination" and "relocation" substitute for the federal term "plant closing." However, the two California terms ("termination" and "relocation") do not mean exactly the same as the federal term.

A "termination" is a "cessation or substantial cessation of industrial or commercial operations in a covered establishment." A "relocation" is "the removal of all or substantially all of the industrial or commercial operations in a covered establishment" to a different location 100 miles or more away.

Most commentators believe that Cal-WARN requires the 60-days notice for any "relocation" or "termination," even though the relocation or termination does not result in 50 persons or more losing their jobs. This is different than the federal statute, which defines a "plant closing" as an event that results in at least 50 or more persons being terminated at a single site of employment. The content of the notice, and the persons to whom it must be given, are essentially the same under Cal-WARN as under the federal WARN Act. The remedies are also the same or substantially so. One significant difference is that the California statute does not include an "unforeseeable business circumstance" exception, as is present in the federal statute.

X. Arbitration Agreements.

Many employers in California have adopted arbitration provisions which are imposed as a condition of employment for new hires, or which current employees are asked to sign in consideration of receiving raises, promotions or other benefits. The California courts have become increasingly hostile to mandatory arbitration provisions, even though the leading California case, Armendariz v. Foundation Health Psychcare Services Inc., 24 Cal. 4th 83 (2000) states that arbitration agreements are enforceable if property drafted.

In Armendariz supra, the California Supreme Court affirmed the enforceability of mandatory arbitration agreement, but imposed a series of restrictions, using the common-law contract doctrine of "unconscionability." Armendariz held that arbitration clause, to be enforceable, must be mutual (i.e., both the employer and the employee must arbitrate claims). It must also meet "minimum standards" including the following:

• The arbitrator must be neutral.

• There must be adequate discovery sufficient to permit the employee to prove his/her claims.

• There must be a written decision that would permit limited judicial review.

• The clause must not limit or exclude any types of relief that would be available in court.

• The employer must pay any costs that are unique to arbitration (such as the arbitrator’s fee or the fees of the alternative dispute resolution provider).

If the arbitration clause is silent on any of these points, the court will imply the necessary element into it. However, many older arbitration clauses contain various offensive provisions, such as "carve outs" to exclude certain claims from arbitration, provisions which would bar punitive damage awards, or provisions that the employee must pay half the cost of arbitration.

The cases after Armendariz have generally been unfavorable to arbitration agreements and have tended to look for any reason to invalidate the agreement. Although the Armendariz decision stated that courts should "sever" or simply excise an offensive provision, several court of appeal decisions have refused to do so.

Some employment lawyers believe that the entire Armendariz structure is preempted by the Federal Arbitration Act, due to later United States Supreme Court decisions such as Circuit City Stores v. Adams, 532 U.S. 105 (2001) and Green Tree Financial Corp. v Randolph, 531 U.S. 79 (2000)

The author believes that the Armendariz decision may eventually be limited or overturned on the Federal Arbitration Act ground. However, in the meantime, employers should continue to use mandatory arbitration clauses if the company is willing to bear the expense of the arbitrator’s fees, and willing to forego the possibility of appellate review of the arbitration award. If the employer maintains an arbitration program, it should have experienced California labor counsel review the arbitration agreement in light of the many restrictions now imposed by Armendariz and its progeny.

XI. Mandatory Health Insurance.

In the waning days of the Davis Administration, the Legislature enacted and Governor Davis signed Senate Bill 2, which would have required larger employers, beginning in 2006 to provide mandatory health insurance to their employees or, alternatively, to pay into a state fund for purposes of providing insurance. This was the first such statute enacted in the nation. However, Senate Bill 2 was overturned by the California electorate in the 2004 elections, pursuant to Proposition 72. Many commentators believe there will be a subsequent effort to enact a more limited version of mandatory health insurance.

XII. Employment Cases Pending Before the California Supreme Court.

As of early January, 2005, the California Supreme Court is considering at least eight important employment cases. Several of these decisions are expected within the next few months, and most should be issued within the next 12 months. They are:

A potentially important case, which will decide whether, and under what circumstances, officers or directors of a corporate employer can be personally liable for allegedly unpaid wages on overtime pay. The question presented is the definition of "employer" in the Industrial Welfare Commission Orders. The Court of Appeal ruled that individual officers and directors are not liable under the facts of the case. This case could have significant implications for individual executives of struggling companies.

This case addresses whether a supervisor’s preferential treatment or favoritism of an employee with whom he was sexually involved constituted sex discrimination against employees who were not asked or requested to provide sexual favors.

The Court will be asked to define what constitutes an "adverse employment action" for purposes of a claim of discrimination or retaliation under the Fair Employment and Housing Act. There has been extensive litigation regarding this issue in both state and federal courts throughout the country.

This widely publicized case involved an employee on the Friends television show who claimed she was subjected to a hostile environment due to the pervasive discussion of sex and sexual matters in her workplace. The question before the Court is whether sexual coarse or vulgar language can constitute "harassment" and whether, under the circumstances, there is a First Amendment defense for media, entertainment or similar employers.

This potentially important case involves the employer’s duty to provide an employee with a workers’ compensation claim form, once the employer has knowledge of facts suggesting a work-related injury may have occurred, pursuant to Labor Code Section 5401. Under Labor Code Section 5402, if the employer fails to comply with the statutory duty to provide the claim form, the 90-day period in which the employer must either acknowledge or deny the claim, in order to avoid a presumption that the claim is compensable, may begin to run. This case will resolve whether the 90-day period to acknowledge or deny the claim begins to run at the time the claim form should have been provided or not until the employee actually returns the completed form.

The California Supreme Court will address whether the employer’s manner of calculating bonuses (deducting amounts for workers’ compensation expenses, cash and merchandise shortages, tort claims and other losses beyond the employee’s control) violates California Labor Code Section 221, and 3751.

Defendants were found liable for maliciously libeling the company and managers in an Internet chat room. The Supreme Court will analyze whether use of an Internet chat room changes the defamation analysis.

Marvell Semiconductor, Inc. and Jasmine Networks, Inc. were competitors in the business of designing and manufacturing telecommunications chips. Marvell offered to buy some of Jasmine’s technology, along with some of its engineers, and Jasmine accepted after negotiating a nondisclosure agreement preventing Marvell from obtaining Jasmine’s trade secrets or employees without paying for them. During the course of the parties’ negotiations, several of Marvell’s officers and lawyers inadvertently failed to hang up their speakerphone after leaving a message on Jasmine’s voicemail system – and proceeded to be recorded discussing their plan to steal Jasmine’s trade secrets and hire away its key employees. In response, Jasmine filed suit against Marvell, alleging misappropriation of its trade secrets. Marvell then filed a motion for a preliminary injunction, enjoining Jasmine from disclosing, disseminating or referring to the contents of the inadvertently record conversation on the grounds of attorney-client privilege. The Court of Appeal held that the conversation in which the corporation’s general counsel and the corporate officers openly discussed theft of another company’s trade secret and the potential consequence of jail for the conduct fell within crime/fraud exception to attorney-client privilege.

XIII. Conclusion.

This article highlights the most important differences between California employment law and corresponding federal law. It is by no means a comprehensive treatment of the subject. Employers from outside California should routinely consult California-based employment counsel, or at least experienced human resource consultants, when addressing workplace issues within the state.

Any employer with employees in California would do well to remember the words of the Eagles (a California-based band whose members emigrated from other states):

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.