Employees Must be Compensated for Calling in to Confirm Shifts

Posted by on Mar 1, 2019 in Newsflash | 0 comments

For employees of Tilly’s, a clothing store, each work week consists of both scheduled shifts and what the company called “on call shifts.” For these on call shifts, employees are required to call their respective store two hours in advance of the on call shift, and during that call the employees are informed whether they are required to work the shift or not. In September of 2015, a Tilly’s employee filed suit against Tilly’s claiming these required call-ins for on call shifts were a violation of Wage Order 7. Wage Order 7 requires that any employee who reports to work and is not then put to work, or is only assigned to work half of the employee’s scheduled shift, be compensated for half of the scheduled shift. For example, if an employee is scheduled to work from 12 p.m. to 4 p.m., and reports to work but then is sent home without working at least two hours, the employee will be compensated for two hours. This Order was adopted in order to compensate employees for the “tremendous costs” of unpaid on-call shifts. The Court of Appeal found that, “in short, on-call shifts significantly limit employees’ ability to earn income, pursue an education, care for dependent family members, and enjoy recreation time.” The Tilly’s employee argued that by calling in to be told whether to report for the scheduled on call shift, the employee was “reporting” for work, which required the employee to be paid for at least half the scheduled time of the shifts for which the employee was ultimately told not to work. Tilly’s, on the other hand, argued that “reporting” for work meant physically presenting oneself for a shift, meaning that such an employee would actually need to physically show up at the store for his or her shift to be paid “reporting time” pay. Under Tilly’s definition of “reporting,” calling the store two hours before the on call shift would not be sufficient to trigger a duty to pay. The trial court agreed with Tilly’s and sustained Tilly’s demurrer to the employee’s complaint; however, the Court of Appeal disagreed with Tilly’s. The Court of Appeals found that while Wage Order 7 had been adopted in current form in 1979, long before the concept of an on call shift came to be, the situation this order originally intended to cure mirrored that which presented itself in this case. Originally, the order was enacted to achieve a two part goal: to properly compensate employees and to encourage proper notice and scheduling. The Court of Appeals found that by requiring its employees to call in two hours before the start of on call shifts, Tilly’s significantly hindered the employees’ activities not only during the on call shift itself, but also two hours before. Because of this significant hindrance, caused by Tilly’s ineffectively scheduling its employees’ shifts, the Court held Wage Order 7’s dual goals would be achieved. First, by requiring Tilly’s to pay reporting time for employees calling in to confirm on call shifts, Tilly’s would be required to internalize some of the costs of overscheduling. Second, by requiring this compensation, Tilly’s will be partially compensating employees “for the inconvenience and expense associated with making themselves available to work on call shifts.” Importantly, both Wage Order 7 and the...

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Subsidiaries Can Bind Parent Companies to Arbitration Clauses

Posted by on Mar 1, 2019 in Newsflash | 0 comments

A parent and subsidiary relationship exists when the parent company controls the subsidiary company, either through owning the majority of membership interests or stock. Regardless of this ownership, the parent and subsidiary are and remain two distinct entities, wholly separate from one another. While the two entities may share similar ownership and common interests, they do not share funds, bank accounts, corporate records, and so on. Based on their separate status, parents and subsidiaries usually cannot bind one another to contracts unilaterally. However, in a recent decision, a Court of Appeals held that a subsidiary can in fact bind its parent company to an arbitration provision, despite the parent company not signing the contract including the provision. In order for the subsidiary’s agreement to bind its parent entity, (1) the parent must control the subsidiary to such an extent that the subsidiary was a mere agent or instrumentality of the parent, and (2) the claims against the parent must have arisen from the agency relationship. In Cohen v. TNP 2008 Participating Notes Program, the parent company had created an LLC to raise funds for an endeavor. One of the investors who signed a subscription agreement required the agreement to include an arbitration provision, which was in fact included in the final agreement. When it came time to sign the agreement, an agent of the parent company signed the agreement on behalf of the subsidiary LLC. The agent’s title was noted as the LLC’s “managing member.” The Court of Appeal held the parent’s agent had acted on behalf of the LLC to the extent that the agent was also an agent of the LLC, because the agent signed the agreement as the LLC’s “managing member.” After the investments did not yield the promised returns, the investor initiated arbitration proceedings against the LLC and the parent company for breaching the subscription agreement. The parent company argued that because it was not a signatory to the agreement including the arbitration provision, it was not bound to arbitrate the investor’s claims. Because these claims arose directly from the breached subscription agreement, which the parent’s agent had entered into on behalf of the LLC, the Court of Appeal held the claims against the parent arose directly from the agency relationship between the parent and the LLC. The parent company, despite not having signed the agreement containing the arbitration provision, was compelled to arbitrate the investor’s claims. In order to avoid this type of accidental binding of parent or subsidiary companies to contractual provisions, parent and subsidiary companies should be mindful of the following: Carefully review contracts to ensure the correct entity is listed as a party to the contract. Ensure the signatory for each party is not an agent of another party, and is signing on behalf of the intended signatory. Allow the subsidiary to control its day-to-day operations. Conversely, limit the parent company’s control over the subsidiary to that of providing goals and direction. When persons have titles under both the parent and subsidiary, ensure they are acting on behalf of the correct entity when entering into contracts. If these types of parent-subsidiary issues may affect your business operations, call the attorneys at Navigato & Battin. We are available to review these relationships to help make sure one company is not inadvertently taking...

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Protecting Your Intellectual Property: Trade Secrets

Posted by on Feb 1, 2019 in Newsflash | 0 comments

This is the final installation of our four part discussion of intellectual property. Last month, we discussed patents and their protections.   When someone thinks of a trade secret, they may think of the Kentucky Fried Chicken recipe, or the Coca-Cola formula. But trade secrets can be more commonplace pieces of information such as a client list, business plan, and corporate minutes. California considers a trade secret to be any information which a company actively works to keep confidential, and which would lose value if it was widely known. This definition provides for a wide array of information to be considered trade secrets. Trade secret theft, or misappropriation, can be as simple as a former employee taking your client list and using it to contact potential clients on behalf of a new boss. In some cases, it can be so extreme as to be considered corporate espionage. One common trend in recent cases is that this type of theft is committed by employees. In order to be found liable for misappropriation of trade secrets, a company will have to prove an employee (1) acquired the information by improper means, and (2) used the information or disclosed it to a third party. An employee makes an improper acquisition if he acquires the information through theft, bribery, misrepresentation, or breach of a duty to maintain secrecy, to name a few ways. When a company is the victim of an employee who misappropriates trade secrets, the initial goal is to try and keep the disclosed information as secret as possible. The law provides a couple of ways to do this. For example, a company can file a temporary restraining order against the disclosing employee, asking a court to order the employee to destroy and/or unpublish any disseminations of the information, stop using the information, and to stop disseminating or using the information. A company may also file an application for a preliminary injunction (typically after the issuance of a temporary restraining order). Unfortunately, in some cases, by the time a company discovers its trade secrets have been misappropriated by an employee, it is simply too late to remove the information from the realm of public knowledge. In those cases, temporary restraining orders and preliminary injunctions will likely not be worth filing. Instead, these companies will seek to recover damages against the misappropriating employee. A company in this situation can recover the amount of money the company lost, including its loss of sales or goodwill, or the amount by which the misappropriating employee was enriched by using or disclosing the trade secret information. For example, if a former employee takes your client list and successfully steals away some of those clients, you may recover the amount of revenue you would have earned had you been able to serve those clients or the amount the former employee earned from those same clients.  In addition, if the misappropriation is found to be willful or malicious, you can recover punitive damages. A misappropriating employee’s new employer who uses or benefits from the misappropriated information may also be liable. While this award can end up being quite high, finding yourself litigating over this type of claim is not desirable. Instead, there are ways to protect your trade secret information to both deter would-be misappropriating employees and to...

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Another Reason to Ensure Your Company Pays Its Employees Correctly

Posted by on Feb 1, 2019 in Newsflash | 0 comments

Owners and officers of California companies have always been able to rest easy knowing that, absent extenuating circumstances, they would not be held personally liable for wage and hour law violations. Recently, though, a Court of Appeal issued a decision reversing this. Now, mistakes in calculating wages or underpayment of employees may end up costing not only employers large sums, but can end up being owed by the companies’ owners or officers. In Atempa v. Pedrazzani, two former restaurant employees brought claims against their former employer, Pama, Inc., and its owner, Pedrazzani. The employees’ claims included unpaid minimum wage and unpaid overtime. The employees also made a claim under the Private Attorney General Act (PAGA), which we have written numerous articles on before. The employees prevailed at trial, winning both their unpaid wages, a PAGA award, 75 percent of which is remitted to the State of California, and their attorney’s fees under PAGA. The trial court held Pama, Inc. and Pedrazzani jointly and severally liable for the award, even though Pedrazzani was not the employer of either employee. Shortly after the judgment was rendered, Pama, Inc. filed for bankruptcy, leaving Pedrazzani as the only party who would be on the hook to pay the award. Pedrazzani appealed. Pedrazzani did not challenge the judgment, but instead argued only that he should not be held personally liable for the award. Pedrazzani based his argument on the fact that he was not the employer of the two employees, nor was there any legal basis to find him liable for the company’s debts. In short, Pedrazzani sought to rely on the legal shield a corporation can provide. The Court of Appeal disagreed with Pedrazzani and found there was language within the statutes which allowed for some “other person” who “act[s] on behalf of the employer” to be liable for the civil penalties associated with the violations. In this case, that meant Pedrazzani, as the owner of Pama, Inc., was liable for the two employees’ unpaid wages and attorney’s fees. Because Pedrazzani had appealed, added to his bill were post-judgment interest and additional attorney’s fees incurred by the employees. This case adds to this list of reasons why employers must take steps to ensure they are in compliance with wage and hour laws. As illustrated here, company owners, officers, or other agents can be named personally in a lawsuit and held liable for these types of violations. As we discussed in last month’s article, minimum wage increased on January 1, 2019, in California. Companies who did not raise their employees’ wages as necessary are at risk and now their owners and officers may also be held personally liable for any unpaid wages. If your company has employees and you would like assistance in complying with California’s extensive wage and hour laws, call the attorneys at Navigato &...

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Labor Laws Effective on January 1, 2019

Posted by on Jan 3, 2019 in Newsflash | 0 comments

Each year, Navigato & Battin compiles a list of California’s newly enacted labor laws which will go into effect in the New Year. For 2019, following another year of the #metoo movement, there are a number of new laws going into effect regarding sexual harassment in the workplace. In addition, the statewide minimum wage has once again increased. Among other things, this means that the salaries of all exempt employees should be reviewed to confirm that such employees meet the minimum applicable salary thresholds to maintain their exempt status. Anti-Harassment Training Requirements Government Code § 12950. This new law requires that for any company having five or more employees, every employee and supervisor must undergo anti-harassment training every two years. This is an expansion from the old law, which only required supervisors at companies with more than 50 employees to undergo such training. The Department of Fair Employment and Housing has currently published its interpretation of this law and states all employees must undergo this type of training in 2019, regardless of whether the company provided adequate training in 2018. In 2020, this requirement will be further expanded to include temporary or seasonal employees who must also undergo this training within 30 days of hiring or 100 hours worked. Confidentiality in Sexual Harassment Claims Code of Civil Procedure § 1001. We published an article on the passing of this law in more depth previously. This new law will make void any provisions in a settlement agreement relating to sexual harassment claims which call for confidentiality of the claims made against a company or its employees. This will include any settlements arising from civil or administrative claims of sexual assault, sexual harassment, gender discrimination, or retaliation. Certain limited portions of the settlements, however, may remain confidential. Civil Code § 1670.11. In addition to eliminating the use of confidentiality provisions, settlement agreements may not include waivers of a party’s right to testify regarding criminal conduct or sexual harassment. This law was enacted in partial response to settlement agreements containing similar provisions which had been entered into between members of the U.S. Olympic Gymnastics team and the U.S. Gymnastics Association regarding Larry Nassar. Civil Code § 47. This new law aims to protect victims of sexual harassment who file claims against their abusers, and bars defamation suits from being filed against them. Specifically, this new law adds protections for an employee’s complaints of sexual harassment to an employer based on credible evidence, made without malice, and communications between an employer and interested persons regarding a sexual harassment complaint. This law also provides protections to employers speaking about employees’ history with sexual harassment. Pre-Employment Salary History Labor Code §§ 432.3, 1197.5. Last year, a law was enacted which barred employers from asking candidates for their salary history. However, the law was ambiguous with respect to internal hires. The law has been amended to provide clarification about the applicability of this law to internal hires- a company which hires internally does not have to comply with the law barring any inquiry into compensation history and may inquire and use an internal candidate’s salary history. Additionally, employers are now able to inquire about a candidate’s “salary expectation” for a particular position, although employers should tread very carefully and be wary of asking anything further. Private...

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BREAKING NEWS: NavBat Wins Federal Jury Trial

Posted by on Dec 11, 2018 in Newsflash | 0 comments

2018-12-11 Press Release - Zhong Verdict FINAL

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Protecting Your Intellectual Property: Patents

Posted by on Dec 4, 2018 in Newsflash | 0 comments

This is a continuation of our four part discussion of intellectual property. Last month, our newsletter discussed trademark protections for words, symbols, phrases, or other identifiers of a product or brand. Trademarks exist to protect the goodwill and brand recognition that are associated with a particular company or good, and are commonly affixed to a company’s goods and marketin The U.S. Patent and Trademark Office (USPTO) registers both trademarks and patents. Patents, unlike both copyrights and trademarks, are intended to protect inventions and discoveries.  In order to bring an invention or discovery to fruition, a person or company must generally invest a significant amount of time, energy, and resources into the research and development of the invention or discovery. Obtaining a patent for the invention or discovery helps to ensure that the person or company who put the time, energy, and resources into the creation of the invention or discovery is actually able to reap the rewards associated therewith.  A patent provides a person or company with the exclusive right to make, use, or sell the invention (at least for a certain amount of time) before others can make the same or similar products. There are three types of patents: utility patents, design patents, and plant patents.  First, and most common, is the utility patent.  This type of patent is available for new and useful processes, machines, manufacturing methods, compositions, or improvements. A design patent is available to protect a new design for a manufactured item.  Finally, as the name indicates, a plant patent is available to protect a newly invented or discovered type of plant. Obtaining a patent can be difficult, time consuming, and expensive, as the applicant must show the invention is new, useful, and nonobvious, and must comply with various statutory requirements.  To prove an invention is new or novel, the invention: (1) must not be similar to another product or process and the public must not have previously known of the invention; (2) cannot have been described in a publication more than one year before the filing date; and (3) must not have been used or publicly sold more than one year before the filing date.  These requirements impose a fairly strict one year deadline to file a patent application, starting at the time the invention is first disclosed to the public.  Next, the invention must have a useful purpose and be operable.  Finally, an invention must be nonobvious.  To be nonobvious, an invention which is an improvement must not have been obvious to a person who had ordinary skill with the technology used in the invention. Patents are a highly complex type of intellectual property which usually require a very specialized review.  Companies seeking patent protection are well-served to hire competent and experienced patent counsel to help navigate the process.  Although Navigato & Battin does not prosecute patents, it has a network of experienced patent counsel it can recommend.  If you have created a product you think may be eligible for patenting, call the attorneys at Navigato & Battin so that we can help determine if patent protection is something you should...

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California Court of Appeal Strikes Down Anti-Solicitation Clause

Posted by on Dec 3, 2018 in Newsflash | 0 comments

While many states authorize employers to use fairly broad non-compete and non-solicitation provisions in contracts with their employees, California has what are likely the most restrictive and employee-friendly laws regulating these issues in the country. Under California law, except in rare circumstances, these types of provisions are generally not enforceable. Employers are often left to rely solely on trade secret protections as their sole means of restricting an ex-employee’s use of confidential information for the benefit of a new employer. While this type of protection provides a modicum of protection to an employer by providing a remedy in the event an employee pilfers a company’s trade secret information and takes it down the road to a competitor, it certainly does not provide an employer with all of the protections that its counterparts in other states enjoy. A recent California case chips away at employers’ options even further. In November, the California Court of Appeal issued an opinion in AMN Healthcare, Inc. v. Aya Healthcare Services, Inc., et al., addressing the validity of non-solicitation clauses. AMN sued Aya and four former employees of AMN who had recently moved to Aya, claiming AMN and the former employees had violated a non-solicitation clause in the former employees’ contracts. This clause, according to AMN, operated to bar any former employees of AMN from soliciting AMN’s clients and employees for an amount of time between 12 and 18 months following the employee’s departure, depending on the client and employee. AMN and Aya are both traveling nurse agencies, which place traveling nurses and other medical professionals in hospitals and medical centers for short periods of time. While these nurses completed their assigned placements coordinated by AMN, the nurses were considered by AMN to be AMN employees. Defendants, former AMN employees who had worked as recruiters for AMN, did the same job for Aya. At the beginning of the former employees’ employment with AMN, AMN required an employment contract be signed which included a non-solicitation clause. When the former employees left AMN for Aya, AMN noticed a small number of traveling nurses also began taking assigned placements from Aya. AMN believed these traveling nurses had been solicited and ultimately poached by the former employees for the benefit of Aya, and AMN accordingly filed suit because it believed that these nurses were AMN “employees” who could not be solicited by Aya or its new, ex-AMN recruiters. The Superior Court decided, and the Court of Appeal affirmed, that AMN’s case was without merit. The Court of Appeal first found that, under the somewhat unique circumstances of the case, enforcing the non-solicitation clause was a direct violation of California’s strict rule invalidating any restriction on a person’s right to practice his or her profession. Because the former employees were recruiters by trade, AMN’s attempt to keep the former employees from recruiting traveling nurses who had ever worked for AMN on behalf of Aya amounted to a restriction on the former employees’ ability to practice their profession. However, the Court of Appeal left open the possibility that these clauses can be valid if the former employees are using trade secrets of their former employer. The most important trade secret in this case was the company’s pay structure. The Court of Appeal noted that if a competitor knows of a company’s...

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Protecting Your Intellectual Property: Trademarks

Posted by on Nov 1, 2018 in Newsflash | 0 comments

This is a continuance of our four part discussion of intellectual property. Last month featured a discussion of copyright law. Last month, our newsletter discussed copyright protections for works that are put into a tangible form, such as books, movies, songs, drawings, and photographs. Copyright is automatically granted to the creator of the work the moment the work is created. However, subsequent registration with the U.S. Copyright Office can be beneficial to put the public on notice of your rights in a work. This registration is also a requirement in order to recover statutorily prescribed damages and attorney’s fees and costs if you ever have to bring suit against an infringer. This month, we focus on trademarks, which are words, symbols, phrases, or other identifiers of a product or brand. Examples of trademarks are the Nike swoosh, Starbucks’ green mermaid, and the U.S. Marine Corps’ “Semper Fi.” Each of these conjures up in the mind of the consumer the corresponding company, and represents the company’s reputation, goodwill, and brand identity.  The purpose of trademarks is to distinguish your company and your products from those of another company, especially to consumers. Similar to the U.S. Copyright Office’s role in registering copyrights, the U.S. Patent and Trademark Office (USPTO) registers trademarks. In order to successfully register a trademark, the USPTO must find there is little to no likelihood of confusion with other, previously registered trademarks. But, if there is another trademark similar to yours which is already registered, all is not lost. The USPTO may still register your mark if the goods and services to which your trademark will relate are substantially different than those covered by the previously-registered trademark. For example, if the existing trademark is related to t-shirts and pants, and your trademark is related to hats and scarfs, the USPTO will probably find there is a likelihood of confusion between the two marks. However, if the existing trademark is for mortgage lending services, and your trademark is related to hats and scarfs, there will be no likelihood of confusion. There are four classes which your trademark may fall into: fanciful or arbitrary, suggestive, descriptive, or generic. The USPTO favors those trademarks that are fanciful or arbitrary the most, and those that are generic the least. As an example, while Apple’s logo may seem generic (because what is more common than an apple?), the Apple logo is entirely arbitrary to the goods it is related to: computers and electronics. Thus, Apple’s logo falls into the fanciful or arbitrary category, and is registered by the USPTO. To register your trademark with the USPTO, you should first check the USPTO’s electronic search system database to ensure there are no trademarks already registered that are similar to yours. Online searches for companies using unregistered marks similar to your proposed mark are also suggested, as pre-existing users have certain trademarks rights to a mark whether registered or not. Next, you can submit an application to register your trademark online, inputting your information along with the categories of goods and services to which the mark will relate, the date of the trademark’s first use in commerce, and whether there is a design component to the trademark. The cost of the filing of the application is between $225 and $325. Within about six months of...

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Ending Confidential Settlements of Sexual Harassment Claims

Posted by on Nov 1, 2018 in Newsflash | 0 comments

At the close of this legislative session, one of the laws signed by the Governor effectively prohibits any provision in settlement agreements preventing the disclosure of information regarding sexual harassment and sex discrimination. The law takes effect on January 1, 2019, and will retroactively apply to any previously entered settlements barring the disclosure of such information. The law will specifically ban any settlement agreement provision that prevents disclosure of facts regarding: acts of sexual assault, acts of sexual harassment, acts of workplace sexual harassment, acts of workplace sex discrimination, failure to prevent acts of workplace sexual harassment or sex discrimination, and retaliation against a person for reporting sexual harassment or sex discrimination. While seemingly all encompassing, the law does permit a provision which would shield the identity of the claimant and facts which could reveal this person’s identity from disclosure. But, this is only available upon the request of the claimant and in matters not involving a government agency or public official. This new law is aimed at ending the practice of “secret settlements” where the names and facts of sexually-based claims would be kept strictly confidential as a term of the settlement. This information will no longer be subject to these strict confidentiality provisions. One fact which can remain confidential, however, is the amount paid in settlement of a claim. Both public and private employers will be subject to this new law in both civil and administrative actions. Any violation of the new law can result in liability for civil damages. The new rule poses a serious risk to even the best-run companies, as allegations of sexual harassment, discrimination, and retaliation will no longer remain confidential. Instead, these allegations run the risk of seriously damaging a company’s reputation, regardless of whether they are true or not. While proponents of the new law believe this will assist victims of harassment in filing their complaints, critics believe it will deter companies from settling these types of claims because the allegations, whether true or false, can become public knowledge and hurt the company’s image and reputation. It goes without saying that the best way to avoid having to deal with allegations of sexual harassment in the workplace is to comply with training requirements, promote a transparent complaint system which can effectively resolve these types of issues, and observe your employees and outside contractors (whose acts of sexual harassment or discrimination against your employees may cause liability for you) to ensure they are not harassing or discriminating against anyone else, among other things. If you would like more information about the new developments in this area of law, if you think your policies regarding sexual harassment need to be reviewed, or if you need assistance in determining whether sexual harassment may be an issue within your company, contact the attorneys at Navigato &...

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