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Employment Litigation Update from Temecula Employment Lawyer Ray A Mandlekar

Employer Faces Liability Under WARN Act; "Voluntarily Departed" Exception Held Inapplicable To Employees Who Depart Because of Closing - The Worker Adjustment and Retraining and Notification ("WARN") Act of 1989 covers employers having 100 or more qualified employees. It stipulates that employers serve written notification to employees telling them that they might face layoff due to an anticipated closing or sale of the company, if such is the reality, 60 days in advance. To this end, companies who fail to supply the required notice may be liable to each affected employee for an amount including back pay and benefits for the period of violation, up to 60 days.

In Collins v. Gee W. Seattle LLC, 2011 U.S. App. LEXIS 1169 (9th Cir. Jan. 21, 2011), the business sent out the written notice, but then shut down nine days later - so the notice did not comply with the 60-day necessity. But the concern in the case turned on the fact that the WARN Act applies only if the sale or closing causes 50 or more employees to bear an "employment loss" in a 30-day period. At the time the company issued notice, it had roughly 150 employees. But by the time of closing, only 30. This was due to approximately 120 employees had voluntarily left after they received the notification. Now, the WARN Act reads that an "employment loss" does not include an employee's "voluntary departure." So the company argued against liability because by the time it closed it had fewer than 50 employees; the 120 who left in the preceding days could not be considered toward the 50 required to have an "employment loss," as they were "voluntary departure[s]."

The Ninth Circuit, however, rejected the argument. It held that the carve-out for employees who made a "voluntary departure" does not include employees who leave because of the impending closing or sale. The Ninth circuit decided that accommodating the employer's argument would cut into the protections of the WARN Act; numerous employees may need to vacate the closing business in order to attain other work. The Collins ruling will not be met with favor by covered businesses facing a shutdown or sale.

›Court Allows Wrongful Termination Case Over Employer's Non-Compete Agreement to Proceed - In a recent ruling presenting another potential liability for California employers, the Court of Appeal and the California Supreme Court permitted a exceptional wrongful termination lawsuit to move forward. California law has long allowed workers to file a suit against their employer for wrongful termination when the employee's termination violates a "public policy." Such litigation could concern, for example, when an employee is terminated for complaining about workplace safety practices or for protesting illegal discrimination.

In Silguero v. Creteguard, 187 Cal. App. 4th 60 (2010), a sales employee was made by her employer company to enter into a non-compete agreement. The agreement prohibited her from participating in "all sales activities for 18 months" should she quit the company, either voluntarily or upon termination. Later, the employer fired the employee. She then gained employment at a new company. Her old employer, however, made contact with her new employer, and asked that the new employer be in accordance with the non-compete agreement. The new employer then told the employee that notwithstanding its belief that the non-compete agreement is legally binding, it made the decision to terminate the employment without delay, in order to "keep the same respect and understanding with colleagues in the same industry."

The fired employee filed suit against the new employer for, among other things, wrongful termination. The Court of Appeal permitted the case to proceed. It ruled that California Business and Professions Code §16600 renders such non-compete agreements void and unenforceable; California has a law allowing the mobility of employees, as well as honest competition. Because the new employer terminated the worker based on an "understanding" with the old company that the employee should not be permitted to continue her employment in sales, that termination violated California's policy against non-compete agreements. Accordingly, the new employer can be liable to the employee for wrongful termination. On October 27, 2010, the California Supreme Court declined to reconsider the decision of the Court of Appeal. This permits the case to proceed for now.

This article is intended to convey accurate general information concerning the subject matter covered, but should not be construed as legal advice, which would be dependent upon the specific circumstances of the client.

About Author Ray A. Mandlekar :

Ray A. Mandlekar is a <a href="" target="_blank">Temecula litigation attorney</a>  practicing in the field of business, employment and investment litigation.  He is a former partner of national law firm headquartered in San Diego.  <a href="" target="_blank">Temecula Business Attorney</a>, Ray A. Mandlekar

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Article Added on Wednesday, February 16, 2011
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