settlement agreements

New California Employment Laws for 2020

2020 is upon us, and with it, a slew of new employment laws that are now in effect. Read on for a description of 13 key employment laws every employer operating in California should know about going into 2020. For more information on these laws and advice regarding best practices, check out our California Employment Law Update Seminars taking place at our San Francisco office on January 9, 2020 and Silicon Valley office on January 22, 2020. READ MORE

Ninth Circuit Clarifies Boundaries of California’s Restriction on Noncompete Agreements

Taking a second look at the use of “no future employment” provisions in a settlement agreement between a doctor and his former employer, the Ninth Circuit Court of Appeals recently held that two of the three provisions constituted “restraints of substantial character” that ran afoul of California’s restriction on noncompete clauses. Golden v. California Emergency Physicians Medical Group, No. 16-17354 (9th Cir. July 24, 2018) (“Golden II”).

In 2007, Dr. Donald Golden, an emergency room surgeon, sued his former employer, California Emergency Physicians Medical Group (“CEP”), claiming that he had been fired because of his race.  After mediation, the parties orally agreed to settle the dispute. However, Dr. Golden later refused to sign a written settlement agreement, arguing that three provisions therein violated the restriction on noncompete agreements embodied by California Business and Professions Code Section 16600. Section 16600 provides that, aside from certain exceptions, “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.”

Dr. Golden challenged the following provisions of the proposed settlement agreement as violative of Section 16600:

  1. A provision preventing Dr. Golden from working or being reinstated at any facility that CEP owns, manages or contracts with.
  2. A provision allowing CEP to terminate Dr. Golden without any liability if CEP contracts with an emergency room at which Golden is employed or rendering services.
  3. A provision allowing CEP to terminate Dr. Golden without any liability if CEP contracts with a facility at which Golden is employed or rendering services.

The district court originally granted a motion to enforce the agreement and ordered Dr. Golden to sign, reasoning that the provisions would only prevent him from working for, not competing with, his former employer CEP, and thus Section 16600 did not apply. When the Ninth Circuit first considered this issue on appeal (Golden I), it  reversed, holding that Section 16600 applies not only to noncompetition agreements but to any contractual provision that places a “restraint of a substantial character” on a person’s ability to practice a profession, trade, or business.  The Ninth Circuit remanded the case to the district court to apply this standard, but the district court again ordered Dr. Golden to sign the settlement agreement, concluding that the disputed provisions did not constitute a restraint of a substantial character.

Addressing the dispute a second time in Golden II, the Ninth Circuit clarified that to meet the “restraint of substantial character” standard, “a provision need not completely prohibit the business or professional activity at issue, nor does it need to be sufficient to dissuade a reasonable person from engaging in that activity…[b]ut its restraining effect must be significant enough that its enforcement would implicate the policies of open competition and employee mobility that animate [Business and Professions Code] section 16600.”

The Ninth Circuit concluded that the first clause prohibiting Golden from working at any facility contracted by, owned, or managed by CEP was valid, as its effect on Golden’s ability to practice medicine was minimal. However, the court held that the second and third restrictions proposed by CEP would “easily rise to the level of a substantial restraint, especially given the size of CEP’s business in California.” CEP currently staffs 160 healthcare facilities in California and handles between twenty-five and thirty percent of the state’s emergency room admissions. Because the second and third restrictions would affect Golden’s “[existing] and future employment at third-party facilities” where CEP provided services, even if the CEP services began after Golden’s employment, and even if CEP’s services did not compete with the services Golden provided, the provisions ran afoul of Business and Professions Code Section 16600.

The Ninth Circuit’s recent decision is a good reminder that California generally disfavors noncompete agreements. California employers may wish to review their separation/settlement agreements with this case in mind or to consult with counsel to ensure that their agreements comply with California law.

Is it now OK to have the ‘It’s not working…’ conversation in the UK?

July 29, 2013 was a big day for employment law in the UK.

Firstly compromise agreements were renamed ‘settlement agreements’. This is largely a rebranding exercise but one that is welcome as we now have a title which more accurately describes what the agreement is designed to achieve.

On this same date, changes around ‘pre-termination discussions’ came into effect. These changes are contained in the Enterprise and Regulatory Reform Act and talk about ‘confidentiality of negotiations before termination of employment’. The theory behind this new law is that employers should be able to discuss with their employees the option of the employee leaving with a settlement agreement without the risk that that discussion itself will be used against them in a future claim. READ MORE

Today is the Day – UK Employment Law Update

Map and Compass

TODAY is a big day for employment law. Even though many of you will be thinking about your holidays, or may have even jetted off to sunny shores, take care to remember that certain changes are taking place which will affect your standard document and how you handle any exiting employees. Read more.