Here are some quick takes, starting with today’s U.S. Supreme Court decision. Please note that although these are short, there are some important rulings by the California courts below.
- The U.S. Supreme Court decided in a unanimous (8-0) decision that the federal Age Discrimination in Employment Act covers public sector employers of any size. The statute covers private sector employers of 20 employees or more. However, the definition of employer also includes “a State or political subdivision of a State . . . .” As the Court wrote: “In the ADEA . . .. Congress did not repeat the “twenty or more employees”qualifier when referencing state and local government entities. In contrast, Title VII of the Civil Rights Act of 1964 contains different language applicable to public sector employers. This opinion is Mt. Lemmon Fire Dist. v. Guido, and the opinion is here.
- In a significant ruling for law firms and other partnerships, the California Court of Appeal decided that the agreement to arbitrate contained in the firm’s partnership agreement was unconscionable under the Armendariz line of cases that apply to employment arbitration. The court held that it was unnecessary to decide if the law firm’s “income partner” in fact was an employee. Rather, the court focused on two issues in deciding that Armendariz applied whether or not the parties were in an employment relationship: The lawyer and firm were in unequal bargaining positions, and the lawyer did not have an opportunity to negotiate the arbitration agreement. Applying Armendariz, the court found the agreement was unconscionable because (1) it limited remedies (2) its confidentiality clause was too broad (3) the agreement provided for cost sharing and each party responsible for her/its own attorney’s fees, and more. Of note, the panel held that the phrase “[a]ny dispute or controversy of a Partner or Partners arising under or related to this Agreement . . . or the Partnership” included the partner’s claims for wrongful termination, discrimination, and unequal pay violations. Unless this case is overturned by the California or U.S. Supreme Court, it requires review of partnership agreements. This case is Ramos v. Superior Court and the opinion is here.
- The Court of Appeal held that a non-solicitation provision, prohibiting ex-employees from soliciting current employees for a year, was an illegal agreement in violation of California Bus. and Prof. Code section 16600. (Note to those of you who argued otherwise, I am not going to say I told you so.). The case involved recruiters of “travel nurses,” who changed employers from a company called AMN to Aya. These recruiters signed AMN’s confidentiality agreements, which prohibited solicitation of AMN’s travel nurses for a period of 12 or 18 months from their termination.
during Employee’s employment with the Company and for a period of [one year or] eighteen months after the termination of the employment relationship with the Company, Employee shall not directly or indirectly solicit or induce, or cause others to solicit or induce, any employee of the Company or any Company Affiliate to leave the service of the Company or such Company Affiliate.
Some AMN recruiters moved from AMN to Aya over time, and solicited some AMN travel nurses for employment with Aya. AMN sued ex-recruiters for solicitation. The Court of Appeal held that the non-solicitation clause was a restraint on the recruiters’ ability to perform their professions, and violated section 16600, which prohibits “non-competition” agreements. Non-solicits are a form of non-competition agreement. The Court reiterated that
section 16600 precludes an employer from restraining an employee from engaging in his or her “profession, trade, or business,” even if such an employee uses information that is confidential but not a trade secret.
The Court also held that the information AMN sought to protect as a “trade secret” including the nurses’ contact information and identify were not secret. The Court additionally dismissed all of the claims against Aya, because its solicitation did not violate any law.
This case is AMN Healthcare Inc. v. Aya Healthcare Services, Inc. and the opinion is here.
- Finally, the Court of Appeal in Brown v. Ralph’s Grocery Company (here) shut down most of a PAGA claim because of defects in the PAGA notice letter and the statute of limitations. Employment lawyers should take note of this decision, which makes the PAGA letter a significant step in the litigation. Defective notices can result in waiver of PAGA claims. If enough time goes by, the statute of limitations (one year) can foreclose the action.