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Ninth Circuit Decision Challenges Enforceability of "No Future Employment" Provisions in Employment Separation and Settlement Agreements

To resolve employment disputes, whether in litigation or at a separation, typically, the parties wish to go in separate directions and not cross paths in the future. Consequently, separation or settlement agreements provide compensation and employees often agree not to seek future employment with their former employer and agree that should they unexpectedly come to work for their former employer due to an acquisition, merger or other incident that cause will exist to terminate that employee. The viability of such "no future employment" provisions has been called into question by the Ninth Circuit’s decision earlier this week in Golden v. California Emergency Physicians. In Golden, the Ninth Circuit overturned a District Court’s order finding a "no future employment" provision enforceable. The Ninth Circuit extended the reach of Edwards v. Arthur Andersen LLP, 44 Cal.4th 937 (2008), and Cal. Bus. & Prof. Code § 16600, to settlement agreements in a case of first impression by a 2-1 decision over Judge Kozinski’s dissent. The Ninth Circuit was not moved by the fact that the plaintiff was being paid a large sum of money, in part, to move on and give up his right to work for or seek employment with his former employer. Nor was it convinced by Judge Kozinski’s dissenting conclusion that the California Supreme Court would uphold such an agreement. The Court directed the lower court to re-examine the agreement to make a determination as to whether the provision constitutes a substantial restraint on the plaintiff’s trade, in order to determine whether the provision was enforceable. California employers should continue to monitor this case on remand before the district court and consider the impact of this decision in conjunction with preparing separation and settlement agreements arising out of employment to make every effort to ensure enforceability of any "no future employment" provision.

PROPOSED AMENDMENTS TO CFRA FINALIZED

2014, the Fair Employment and Housing Council (FEHC) proposed amendments to the California Family Rights Act (CFRA) regulations. The Office of Administrative Law recently approved the new regulations, which incorporate recent changes to the federal Family and Medical Leave Act (FMLA) regulations and relevant court decisions. The new regulations become effective on July 1, 2015.

FIRING EMPLOYEES FOR MISCONDUCT DURING LEAVE

Many employers have struggled with the issue of disciplining an employee for misconduct while he or she is on a leave of absence under the California Family Rights Act (“CFRA”) and federal Family Medical Leave Act (“FMLA”). Employers legitimately fear that the employee will claim that the discipline was taken because of the legally protected leave. In Richey v. AutoNation, the California Supreme Court provided some reassurance to employers who terminate employees on leave based on well-documented evidence of policy violations.

Court of Appeal: Exhaust Administrative Remedies Before Filing Suit Under Former Labor Code Section 1102.5

Labor Code Section 1102.5 is California's general "whistle blower" law. Here is the current version, in pertinent part.

Answering The Call

California leads the nation in vigilantly regulating the conditions which constitute “hours worked.” Definitions are established, modified, and expanded by the California Labor Code, its Wage Orders, and decisions by appellate courts. The California Supreme Court recently made clear that California’s standard defining “hours worked” is more protective of employees than the rules set forth under the federal Fair Labor Standards Act (FLSA).

California Legislature: First out of the Starting Gate

California's State Legislature is now producing the labor and employment bills that will be the subject of its attention this year.

New California Family Rights Act Regulations Become Effective July 1

Amendments to the California Family Rights Act (“CFRA”) regulations, going into effect on July 1, 2015, are meant to clarify a number of uncertainties, align the CFRA regulations more closely with the federal Family and Medical Leave Act (“FMLA”) regulations (where the laws are consistent), and ensure employers and employees have a clear understanding of their rights and duties under the CFRA.

PAYING FOR ON-CALL AND SLEEP TIME

When non-exempt employees are performing their “regular” duties, employers typically understand their responsibility to pay for the time. But in some circumstances, it is unclear whether an employee’s time is compensable. Recently, in Mendiola v. CPS Security Solutions, Inc., the California Supreme Court addressed two such situations: on-call time and sleep time.

New FLSA Overtime Exemption Regulations Still Under Consideration By Department of Labor

Earlier this week, Secretary of Labor Perez announced that her agency is still working hard on revising the regulations governing the existing white collar overtime exemptions. These regulations were originally expected to be published in early 2015. However, that did not happen. Secretary Perez now expects that the regulations will be finalized and published this spring.

The Interactive Process Dance, Part Two: What Happens When the Music Stops?

Part one of this two-part series covered the details of the interactive process in California and discussed a scenario in which the employee fails to respond to the employer’s attempts to communicate on an accommodation to his disability. Part two covers two additional scenarios and provides key take-aways to be drawn from recent California court rulings on the interactive process.