• Broad Non-Solicitation Clause is Unenforceable

    The California Appellate Court decision in VL Systems, Inc. v. Unisen applied Business and Professions Code 16600 to invalidate a non-solicitation clause. B&P section 16600 states: “Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” Courts often use this statute to invalidate non-compete agreements, but it has rarely been applied to non-solicitation agreements.

    Non-compete agreements prevent employees from working for competitors and are generally unenforceable in California. Non-solicitation agreements prevent customers and/or competitors from hiring personnel. “California courts have consistently declared this provision an expression of public policy to ensure that every citizen shall retain the right to pursue any lawful employment and enterprise of their choice. Section 16600 has specifically been held to invalidate employment contracts which prohibit an employee from working for a competitor when the employment has terminated, unless necessary to protect the employer’s trade secrets. The corollary to this proposition is that [a competitor] may solicit another’s employees if they do not use unlawful means or engage in acts of unfair competition.” (Metro Traffic Control, Inc. v. Shadow Traffic Network (1994) 22 Cal.App.4th 853, 859.)

    VL Systems, Inc. (VLS) and Unisen entered into a short-term computer consulting contract. The contract provided that Unisen would not hire any VLS employee for 12 months after the contract’s termination, subject to a liquidated damages provision. Within that period, Unisen hired a VLS employee who had not performed any work for Unisen, and indeed, had not been employed by VLS at the time the Unisen contract was performed. VLS sued for breach of contract, and the court awarded it part of the amount it sought under liquidated damages provision. Unisen appealed, arguing the no-hire provision was unenforceable and that the liquidated damages award was improper. The Appellate Court agreed that as written, the no-hire provision was unenforceable as a matter of law and reversed the judgment.

    The court warned “against any inference that all such clauses are unenforceable. Perhaps a more narrowly drawn clause limited to soliciting employees who had actually performed work for the client might pass muster.”

    In invalidating the non-solicitation clause in this case, the court pointed out that, “[f]reedom of contract is an important principle, and courts should not blithely apply public policy reasons to void contract provisions. (Dunkin v. Boskey (2000) 82 Cal.App.4th 171, 183-184.) This type of contractual provision, however, may seriously impact the rights of a broad range of third parties. In this case, those third parties not only included the VLS employees who actually performed work for [Unisen] under the contract, but all of those who did not, including [the particular employee involved], who was not even employed by VLS at the time.”

    Yous should have your non-competition and non-solicitation clauses reviewed by competent counsel to ensure their enforceability.

    The Law Office of Phillip J. Griego
    95 South Market Street, Suite 520
    San Jose, CA 95113
    Tel. 408-293-6341
     
    Original article by Robert E. Nuddleman, former associate of The Law Office of Phillip J. Griego.
     

    Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.

    Your use of this blog does not create an attorney-client relationship between you and the Law Office of Phillip J. Griego. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and the Law Office of Phillip J. Griego cannot guarantee the confidentiality of anything posted to this blog.

    Phillip J. Griego represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

  • Alternative Workweeks: A Primer

    Many employees want to work a schedule other than the normal five days per week, eight hours per day. Employers are oftentimes more than willing to accommodate such requests, but the neglect to follow the requisite protocols and can end up owing a hefty sum in overtime compensation. Employers must pay most non-exempt employees one and one-half times the employee’s regular rate of pay for all hours worked in excess of eight hours per day. An exception to that rule is the alternative workweek. The most common example of an alternative workweek is four, ten-hour days, but other alternatives are available.

    The alternative workweek allows employees to choose to work something other than the standard workweek. Before considering whether to offer an alternative workweek, employers should familiarize themselves with the rules and procedures. Failure to follow the rules and procedures will result in the alternative workweek being held invalid, which will then require the employer to pay overtime based on the standard workweek.

    Attached is a summary of the rules and procedures applicable to most industries, as well as some of the things an employer will want to consider before offering an alternative workweek. You should always check your applicable IWC order to ensure compliance and seek the advice of a knowledgeable attorney or HR representative before implementing an alternative workweek.

    Alternative Workweeks Primer

    The Law Office of Phillip J. Griego
    95 South Market Street, Suite 520
    San Jose, CA 95113
    Tel. 408-293-6341
     
    Original article by Robert E. Nuddleman, former associate of The Law Office of Phillip J. Griego.
     

    Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.

    Your use of this blog does not create an attorney-client relationship between you and the Law Office of Phillip J. Griego. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and the Law Office of Phillip J. Griego cannot guarantee the confidentiality of anything posted to this blog.

    Phillip J. Griego represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

  • Paid v. Unpaid Holidays

    JH asks: “If a company offers no benefits, what about national holidays, are the employees (salaried or hourly) made to work, or do they just have the day off with no pay, or have the choice of the day off or not?

    Employers are not required to provide paid holidays to non-exempt employees. Unless an employer agrees to pay non-exempt employees for holidays, the employer is not required to pay for the holiday. An employer can require employees to work holidays without providing additional compensation.

    This may not be true with respect to exempt salaried workers. To meet the exemption requirements under State and Federal law, most exempt workers must receive a “salary.” This means the employee will receive the pay regardless of the number of hours the employee works. There are limited instances when an employer can reduce an exempt employee’s weekly salary. See my April 2nd post regarding “Do I Have To Pay My Exempt Employees If They Are Sick?”

    If the employer shuts down the office for less than a full week and the employee is ready, willing and able to work, deductions may not be made for the time when work is not available. If, on the other hand, the employer remains open on the holiday and the employee chooses not to perform work on that day, the employee will have absented himself or herself for personal reasons and the employer may be able to reduce the employee’s salary in proportion to the amount of time the employee is absent.

    Many employers find that in order to attract quality talent they must provide some benefits, and paid holidays or increased rates for holiday work is a common benefit.

    Whatever the policy is, the employer should ensure the policy is clearly stated in writing and provided to the employee. The employee handbook is the most common vehicle for disclosing company policies, but I have seen holiday policies in offer letters, employment contracts, or as separately posted and/or delivered policies.

    The Law Office of Phillip J. Griego
    95 South Market Street, Suite 520
    San Jose, CA 95113
    Tel. 408-293-6341
     
    Original article by Robert E. Nuddleman, former associate of The Law Office of Phillip J. Griego.
     

    Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.

    Your use of this blog does not create an attorney-client relationship between you and the Law Office of Phillip J. Griego. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and the Law Office of Phillip J. Griego cannot guarantee the confidentiality of anything posted to this blog.

    Phillip J. Griego represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.