• Release of Claims Does Not Encompass Non-Waivable Claims and Narrow-Restraint Exception to Non-Compete Agreements is Rejected

    The California Supreme Court issued a decision today wherein it held that a general release of claims does not encompass non-waivable statutory protections under Labor Code Section 2802.

    Raymond Edwards II was hired as a tax manager by Arthur Andersen LLP. After some problems with the government, Andersen started selling off its practice groups to various entities. Edwards’ group was scheduled to be purchased by HSBC USA, Inc.

    In order to accept employment with the new company, Edwards was asked to execute a Termination of Non-Compete Agreement (“TONC”). The TONC contained a fairly typical clause releasing Anderson from any liability related to Edwards’ employment. Edwards refused to sign the release. As a result, Andersen terminated Edwards.

    Edwards filed suit claiming the original non-compete agreement violated Business and Professions Code Section 16600. Edwards also claimed that the TONC’s release of “any and all” claims violated Labor Code Sections 2802 and 2804. Labor Code Section 2802 requires an employer to indemnify its employees for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer. Labor Code Section 2804 voids any agreement to waive the protections of Labor Code Section 2802 as against public policy.

    Although the release did not specifically mention Edwards’ rights to indemnification under Labor Code Section 2802, the lower appellate court found that the broad general release unlawfully release claims under Labor Code section 2802. The Supreme Court reverse that portion of the appellate court’s decision because (1) the release did not expressly reference indemnity rights and courts should not read language into a contract that does not exist; and (2) a contract provision “releasing ‘any and all’ claims . . . does not encompass nonwaivable statutory protections, such as thje employee indemnity protection of section [sic] Labor Code 2802.”

    The Supreme Court also held that Andersen’s original non-compete agreement was invalid. The original non-compete agreement prohibited Edwards from “performing professional services of the type he had provided while at Andersen, for any client on whose account he had worked during 18 months prior to his termination.” The non-compete agreement also prohibited Edwards from providing professional services to any client of Andersen’s Los Angeles office. The Supreme Court found that the non-compete agreement “restricted Edwards from performing work for Andersen’s Los Angeles clients and therefore restricted his ability to practice his accounting profession,” and was therefore invalid.

    In doing so, the Supreme Court refused to adopt a “narrow-restraint exception” to Business and Professions Code Section 16600. Several Ninth Circuit cases adopted a narrow-restraint exception to uphold non-compete agreements that barred one party from courting a specific named customer or a limited number of customers. Today’s Supreme Court decision rejected any such exception, finding the language of Business and Professions Code 16600 unambiguous.

    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.

  • Common Statutes of Limitation

    A “statute of limitation” is the time within which a lawsuit or claim must be filed. “Civil actions, without exception, can only be commenced within the periods prescribed in this title, after the cause of action shall have accrued, unless where, in special cases, a different limitation is prescribed by statute.”  California Code of Civil Procedure Section 312. While there may be instances wherein the statute of limitations is tolled, missing a statute of limitations can have dire consequences. If a claim or lawsuit is not timely filed, the plaintiff may be barred from pursuing his or her claims.

    One reader asked for a list of common statutes of limitation in employment litigation.  So, here goes my list (Beware – Statutes of Limitation may differ from state to state.  The Statutes of Limitation listed below apply in California):

    Discrimination/Harassment/Retaliation under California’s Fair Employment and Housing Act (age, race, sex, disability, national origin, etc.) – Claims must be initially filed with the Department of Fair Employment and Housing within one year of the discrimination/harassment/retaliation.  Once the DFEH issues a Right to Sue Notice, the claimant has one year to file a case in court.

    Discrimination/Harassment/Retaliation under Title VII, ADEA and ADA (age, race, sex, disability, national origin, etc.) – In California, claims must be initially filed with the Equal Employment Opportunity Commission within three hundred days (other jurisdictions it may be as little as one hundred-eighty days).  Once the EEOC issues a Right to Sue Notice, the claimant has ninety days to file a case in federal court.

    Breach of Contract – If the contract is written, the lawsuit must be filed within four years of when the
    breach occurred.  If the contract is oral or implied-in-fact, it must be filed within two years of the breach.

    Unpaid Overtime, Minimum Wage, Meal and Rest Breaks – Claims must be filed with the Labor Commissioner or in court within three years of when the wages were earned.  This means, if the employee has worked more than three years, the employee may lose a portion of the claims he or she could have brought earlier.  In court, many plaintiff’s counsel include a cause of action under Business and Professions Code Section 17200 to extend the statute of limitations by an additional year.  Effectively, this gives employees up to four years to file a wage claim in court (not with the Labor Commissioner, though).

    Wage Claims Based on Breach of Contract – Must be filed within either four years or two years, depending on whether the contract is written or oral or implied-in-fact.

    Vacation Pay – There is currently a split in authority as to when the statute of limitations on vacation pay claims begins to run.  In Sequeira v. Rincon-Vitova Insectaries, Inc. (1995) 32 Cal.App.4th 632, the court held that the statute of limitations begins to run when the vacation pay is earned. Therefore an employee who had accrued 12 years of vacation pay under a written employment agreement could recover only the portion accrued during the 4 years preceding termination.  Later, in Church v. Jamison (2000) 143 Cal.App.4th 1568, the court held that the statute of limitations does not begin to run until the employee is terminatedbecause Labor Code Section 227.3 says, “all vested vacation shall be paid … as wages” to a terminated employee.

    Waiting Time Penalties Under Labor Code Section 203 – A claim for just the penalty must be filed within one year of the termination.  A claim seeking both the penalty and the underlying wage must be filed within the time frame to bring a suit based on the underlying wage.  There is some discussion that recent interpretations regarding the statute of limitations for meal and rest breaks claims would extend the statute of limitations to three years even if the penalty alone is sought.  To my knowledge this specific issue has not been address since Murphy v. Kenneth Cole.

    Termination in Violation of Public Policy (aka Tameny Claim) – Claims must be filed in court within two years of the wrongful termination

    California Government Tort Claims – Some claims against the State of California or other public agencies must be presented to the government agency in a particular format before filing the claim in court.  Such claims usually must be presented to the government agency within six months.

    Defamation (libel/slander) – Lawsuits must be filed within one year from when it was determined that the defamatory statements were made.

    Fraud – The lawsuit must be filed within three years of when the aggrieved party discovers the facts constituting the fraud or mistake.

    Family Medical Leave Act – Any action  must be filed within 2 years after the violation, or within 3 years if the violation was willful.

    California Equal Pay Act – Court actions for wage discrimination claims (i.e., the opposite sex is paid a higher wage based on gender) within two years for most actions, and three years if the violation was willful.  While there is no administrative exhaustion requirement, claims may alternatively file a claim with the State Labor Commissioner within 6 months of the violation.

    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.