Cal-Peculiarities: How California Employment Law is Different 2022 Edition

©2022 Seyfarth Shaw LLP  www.seyfarth.com 2022 Cal-Peculiarities | 337 25 Silguero v. Creteguard, Inc. , 187 Cal. App. 4th 60, 66 (2010) (the plaintiff—fired by a new employer because his employment breached a noncompetition agreement he had signed with his old employer—could pursue “a Tameny claim for wrongful termination in violation of the public policy in section 16600 prohibiting noncompetition agreements”). 26 Id. at 70. 27 Golden v. California Emergency Physicians Med. Grp. , 782 F.3d 1083, 1090 (9th Cir. 2015). 28 Id. at 1092-93. 29 Golden v. California Emergency Physicians Med. Grp. , 896 F.3d 1018 (9th Cir. 2018). 30 Id . at 1026 (“This interference with Dr. Golden’s ability to seek or maintain employment with third parties easily rises to the level of a substantial restraint, especially given the size of CEP’s business in California.”). 31 AB 749, 2019 bill adding Code Civ. Proc. § 1002.5. Subsection (c) offers these definitions: (1) an “aggrieved person” is someone who has filed a claim against the person’s employer in court, before an administrative agency, in an alternative dispute resolution forum, or through the employer’s internal complaint process; (2) “sexual assault” is conduct that would constitute a crime under various sections of the Penal Code, assault with intent to commit any of those crimes, or an attempt to commit any of those crimes; (3) “sexual harassment” is sexual harassment as defined in FEHA. 32 AB 2143, 2020 bill amending Code Civ. Proc. § 1002.5. Section 1002.5 now reads: (a) An agreement to settle an employment dispute shall not contain a provision prohibiting, preventing, or otherwise restricting a settling party that is an aggrieved person from obtaining future employment with the employer against which the aggrieved person has filed a claim, or any parent company, subsidiary, division, affiliate, or contractor of the employer. A provision in an agreement entered into on or after January 1, 2020, that violates this section is void as a matter of law and against public policy. (b) Nothing in subdivision (a) does any of the following: (1) Preclude the employer and aggrieved person from making an agreement to do either of the following: (A) End a current employment relationship. (B) Prohibit or otherwise restrict the settling aggrieved person from obtaining future employment with the settling employer, if the employer has made and documented a good faith determination, before the aggrieved person filed the claim that the aggrieved person engaged in sexual harassment, sexual assault, or any criminal conduct. (2) Require an employer to continue to employ or rehire a person if there is a legitimate non-discriminatory or non-retaliatory reason for terminating the employment relationship or refusing to rehire the person. (c) For purposes of this section: (1) “Aggrieved person” means a person who, in good faith, has filed a claim against the person’s employer in court, before an administrative agency, in an alternative dispute resolution forum, or through the employer’s internal complaint process. (2) “Sexual assault” means conduct that would constitute a crime under Section 243.3, 261, 262, 264.1, 286, 287, or 289 of the Penal Code, assault with the intent to commit any of those crimes, or an attempt to commit any of those crimes. (3) “Sexual harassment” has the same meaning as in subdivision (j) of Section 12940 of the Government Code. 33 Techo Lite, Inc. v. Emcod, LLC , 44 Cal. App. 5th 462 (2020). 34 Edwards v. Arthur Andersen LLP , 44 Cal. 4th 937 (2008) (invalidating provision in employer’s proposed separation agreement that would have prohibited former employee from performing services for certain clients, because that restraint—even though narrow and leaving a substantial portion of the market open to the former employee—exceeded statutory protections for trade secrets, and rejecting “narrow restraint” exception articulated by Ninth Circuit as a misreading of California law). 35 Bancroft-Whitney v. Glen , 64 Cal. 2d 327 (1966) (managers may not take steps to set up competing business); GAB Bus. Servs. v. Lindsey & Newsom Claim Servs. , 83 Cal. App. 4th 409 (2000) (company officer liable for breach of fiduciary duty for using inside knowledge of employee skills and salaries to recruit employees for employer’s competitor). 36 Loral v. Moyes , 174 Cal. App. 3d 268, 275, 279 (1985) (employer could not keep departing employee from competing, but could reasonably limit how he can compete; the contractual “restriction only slightly affects employees. They are not hampered from seeking employment with [the defendant’s new employer] nor from contacting [the defendant]. All they lose is the option of being contacted by him first.”). 37 Thomas Weisel Partners LLC v. BNP Paribas , 2010 WL 546497, at *8 (N.D. Cal. 2010). 38 AMN Healthcare, Inc. v. Aya Healthcare Servs., Inc. , 28 Cal. App. 5th 923 (2018) ( Loral ’s “use of a reasonableness standard to analyze a non-solicitation clause appears to conflict with Edwards ’s interpretation of Section 16600, which reads the plain language of the statute to prevent a former employer from restraining a former employee from engaging in the employee’s “lawful profession, trade, or business of any kind,” absent statutory exceptions not germane here). 39 Id. at 937-39 (unlike the former employee in Loral —an executive officer—the individual defendants in AMN Healthcare were nurse recruiters, so that the effect of the non-solicitation clause would not just restrict competition in a limited way but would restrain former employees from engaging in their chosen profession). 40 Readylink Healthcare v. Cotton , 126 Cal. App. 4th 1006, 1022 (2005) (“Misappropriation of trade secrets information constitutes an exception to section 16600.”).