Our litigation department defends employers against employee claims and lawsuits, including but not limited to, claims for alleged wrongful termination, discrimination, retaliation, derivative tort, unfair competition, and violation of wage and hour laws. We practice in both federal and state courts and defend both single party cases as well as class actions. We also represent employers in arbitration.
Although employment contracts are generally terminable at will, California courts recognize a narrow exception to this rule: “[A]n employer’s traditional broad authority to discharge an at-will employee may be limited by statute … or by considerations of public policy.” While an at-will employee may be terminated for no reason, or for an arbitrary or irrational reason, there is no right to terminate for an unlawful reason or a purpose that contravenes fundamental public policy. The employee’s remedy in such cases is not merely an action for breach of the employment contract but also a common law tort action for wrongful discharge. The employer’s obligation to refrain from discharging an employee in violation of public policy does not depend upon any express or implied promises set forth in the employment contract. Rather, it reflects a duty imposed by law upon all employers. To establish a claim for wrongful discharge in violation of public policy, a person must prove each of the following:
- An employer-employee relationship;
- Employer terminated plaintiff’s employment (or took other adverse employment action);
- Termination of plaintiff’s employment was a violation of public policy;
- The termination was a legal cause of plaintiff’s damage; and
- The nature and the extent of plaintiff’s damage.
Federal and state laws protect equal opportunity in the workplace. These laws include Title VII of the Civil Rights Act of 1964 (“Title VII”) and California’s Fair Employment and Housing Act (FEHA, Gov.C. § 12900 et seq.). Plaintiffs claiming employment discrimination usually have the choice of suing under either Title VII or the FEHA, and suing in either federal court or state court. Despite the statutes’ similarities, however, there are significant differences.
Both federal and state antidiscrimination statutes make it unlawful for an employer to retaliate against an employee who reports or otherwise opposes prohibited discrimination or harassment. The enforcement schemes, defenses and remedies that apply to such retaliation claims are the same as those applicable to other types of discrimination claims under those statutes.
Derivative Tort Claims
Various tort claims can arise from the employer-employee relationship including claims of: (1) Intentional Infliction of Emotional Distress, (2) Negligent Infliction of Emotional Distress, (3) Defamation, (4) Intentional Interference with Contract or Prospective Economic Advantage, (5) Fraud, (6) Negligent Misrepresentation, (7) Negligence, (8) Assault and Batter, (9) False Imprisonment, (10) Invasion of Privacy, (11) Conspiracy, and (12) Other Statutory Claims.
Wage and Hour Claims
Interaction of Federal and State Law
A complex scheme of overlapping statutes, regulations, interpretations and precedent governs the compensation of employees in California. Federal law is codified in the Fair Labor Standards Act (FLSA) and regulations interpreting the Act. California law is codified in various provisions of the Labor Code and in Wage Orders the Industrial Welfare Commission promulgates. A significant overlap in coverage exists between the federal and state standards, but there are also some significant differences. Although state law standards are generally more protective of employees than federal standards, California employers must comply with whichever standard provides greater protection to employees.
Fair Labor Standards Act (FLSA)
The FLSA applies to employees in industries engaged in, or producing goods for, interstate commerce, unless the employer can claim an “exemption” from coverage. The U.S. Supreme Court has consistently construed the FLSA “liberally to apply to the furthest reaches consistent with congressional direction,” recognizing that “broad coverage is essential to accomplish the goal of outlawing from interstate commerce goods produced under conditions that fall below minimum standards of decency.” The most commonly litigated issues under the FLSA have historically been whether employees designated as exempt are being paid on a salaried basis and whether they fall within a statutory exemption from overtime and minimum wage laws. These cases usually arise where lower-level managers or administrative employees are designated as salaried employees (e.g., in operations such as retail stores, restaurants, insurance companies, etc.). Other frequently litigated issues include:
- Whether employees are entitled to pay for before-and-after-shift activities and for travel time between job sites;
- Whether employees have been misclassified as independent contractors;
- Whether docking an employee’s pay for disciplinary reasons destroys salaried status; and
- Whether an employer may offer compensatory time off instead of overtime.
California Wage and Hour Laws
The Labor Code and Wage Orders of the Industrial Welfare Commission set forth California law governing wages and hours. The California Industrial Welfare Commission (IWC) is the state agency empowered to formulate regulations (known as “Wage Orders”) governing minimum wages, maximum hours and overtime pay in California. Although substantially patterned after federal regulations, the IWC Wage Orders provide greater protection in certain respects than federal law provides. The IWC Wage Orders appear in Title 8 of the California Code of Regulations (8 CCR § 11000 et seq.), and can also be accessed at www.dir.ca.gov/DLSE.
An employer has the right to the undivided loyalty of its employees. The duty of loyalty is breached and may give rise to a tort cause of action on behalf of the employer when the employee takes action inimical to the employer’s best interests. The duty of loyalty arises not from the employment contract but from the employer-employee (principal-agent) relationship. The duty of loyalty embraces several subsidiary obligations, including the duty “to refrain from competing with the principal and from taking action on behalf of or otherwise assisting the principal’s competitors …” Under California law, everything that an employee acquires by virtue of his or her employment (other than compensation for services) belongs to the employer “whether acquired lawfully or unlawfully, or during or after the expiration of the term of his employment.” [Lab.C. § 2860] This clearly includes the employer’s trade secrets; and misappropriation of the employer’s trade secrets is an intentional tort under both the common law and statute. The Uniform Trade Secrets Act (UTSA), adopted in California in 1984, seeks to harmonize the law of trade secrets throughout the states that have enacted it. The UTSA authorizes certain remedies for misappropriation of trade secrets, as defined therein, including injunctive relief, damages, unjust enrichment, a reasonable royalty and, in certain cases, exemplary damages and attorney fees.