Moral Turpitude Clauses in the Time of Social Media

With the advent of #MeToo and other social-consciousness movements that increasingly are affecting businesses, not only through negative public relations, but also in the pocket book, more and more companies are looking to protect themselves if a scandal ever hits them.

Social media now provides an instant feedback loop for companies that used to be insulated by the working of a 24-hour news cycle and a bureaucratic traditional media.  Nowadays, if an executive or another high-profile employee becomes embroiled in a scandal, odds are that the world will immediately learn about it via a tweet or post; hashtags and memes will be created within minutes; and consumers may start to turn against that company within hours.

Because of this, talent-driven businesses such as movie studios being the latest examples are now employing aggressive means to prevent fallout from scandals from hitting them in the pocketbook.   As this article in Hollywood Reporter describes, more companies are now using morality clauses in not only talent agreements but also in other business agreements (such as distribution agreements).  Morality clauses come in different shapes and forms, but typically they arise in the context of “termination for cause” provisions in employment or executive agreements.  Most often, these termination clauses are limited to issues pertaining to failure to perform, commission of a crime that causes financial harm to the company etc.  However, I am now seeing provisions that propose the termination of executives for any engaging in activities or conduct injurious to the reputation of the company as the result of engaging in ‘immoral’ acts or acts of ‘moral turpitude.’

A major issue with morality clauses are that, when a scandal hits, their enforcement often requires the use and/or acquisition of information that would otherwise protected by the executive’s right to privacy or in some cases, against their right against self-incrimination.  For this reason, I recommend that if a scandal ever hits your company, also analyze whether the conduct at issue also resulted in violation of key company policies (such as those against discrimination or in a code of conduct). In my experience, executives that are up to no good, often are also guilty of misusing company-resources, mistreating their employees or engaging in conduct that creates conflicts of interest.

Naturally, companies may also decide that they do want to be involved with other companies or executives that either now devalues the value of the business relationship, or worse yet, taints that company’s brand or reputation. Imagining paying millions of dollars on a movie starring an actor that is now being accused of being a serial sex harasser.   However, this problem is not just confined to Hollywood.  Imagine if a key supplier or business partner gets in big trouble and their scandal tarnishes or embroils your company.  Is there a clause in your agreement with that key supplier or partner that protects your company? It might now be worth it to check.

-Sergio H. Parra is the lead attorney for JRG Attorneys at Law, LLP’s labor and employment practice.

Immigration agents target 7-Eleven stores in nationwide sweep…

This raid brings up an important issue that many of my employment law clients in the agricultural, hospitality and other service industries were worried about in 2017. With labor shortages already affecting local employers, it is unclear what effect ICE raids such as these will have in the near future on this shortage.

Employers must be aware that in addition to the sanctuary state law that was enacted in 2018, AB 450 became effective on January 1, 2018, This new law requires, among other things, that employers verify that immigration officials have a judicial warrant or subpoena prior to entering the workplace and for employers to provide proper notice to all employees if there has been a request by any federal agency to review the employer’s immigration files (such as I9s).

If you are an employer needing assistance with this legal issue or any other related matter, please contact Sergio H. Parra of JRG Attorneys at 831-269-7094.

California Supreme Court expands employee rights to discovery in PAGA actions

by Sergio H. Parra li_sp

In a major setback for California employers, the California Supreme Court issued a decision in the matter of Williams v. Superior Court, wherein it ruled that an individual employee asserting a Private Attorney General Act (PAGA) action had the right to seek contact information of every other company employee throughout the entire state.

In Williams, a retail worker asserted various wage and hour violations against his employer, Marshall’s, as a representative action under the PAGA statute. Although the employee was located in the Costa Mesa store, Plaintiff’s counsel propounded discovery requests seeking the name, address, telephone number, and company employment history of each nonexempt California employee that had worked for Marshall’s throughout the state in the last two years.  In response, Marshall’s refused to provide the information on the basis that the request for contact and employment information statewide was overbroad considering that the request extended beyond Williams‘s particular store and job classification and  there were approximately 16,500 employees; unduly burdensome because Williams sought private information without first demonstrating he was aggrieved or that others were aggrieved; and an invasion of the privacy of third parties under California Constitution, Article I, section 1.  Plaintiff filed a motion to compel in Los Angeles Superior Court.

Interestingly enough, during the hearing process, Plaintiff reduced its initial demand and instead stated he was willing to accept information from a representative sample of 10 to 20 percent of employees.  However, the trial court denied the reduced request and instead ordered Marshall’s to provide information only for the Costa Mesa store where Williams worked, subject to a “Belaire-West” notice to the affected employees to guard their privacy rights.  Williams appealed but the appellate court upheld the trial court’s order.

A unanimous California Supreme Court rejected Marshall’s arguments stating that “[c]ontact information regarding the identity of potential class members is generally discoverable, so that the lead plaintiff may learn the names of other persons who might assist in prosecuting the case.” The Curt further stated that limiting discovery “would grant the defendant a monopoly on access to its customers or employees and their experiences and artificially tilt the scales in the ensuing litigation.”

The Supreme Court also rejected that the procedural differences between PAGA representative actions and traditional class actions. In PAGA, unlike in class actions, employees identified in discovery are not considered parties or clients of plaintiff‘s counsel and do not subject plaintiff or counsel to scrutiny with respect to the ability to represent a large class.  Putting these differences aside, the Supreme Court stated that the interests of plaintiff, counsel, and other potentially aggrieved employees are largely aligned as all “stand to gain from proving as convincingly as possible as many Labor Code violations as the evidence will sustain, thereby maximizing the recovery for aggrieved employees as well as any potential attorney fee award.”

The Supreme Court rejected the argument that the disclosure of the information should be limited or conditional. The Court held there was no basis for courts to condition the disclosure of contact information on prior proof of a uniform or companywide policy. Moreover, the Court held that the privacy interests of fellow employees elsewhere in California are addressed by conditioning disclosure on the sending of a Belaire-West notice, as was done for Plaintiff’s store.

This decision tips the scales in favor of employees such that Plaintiff’s counsel will now be able to broadly seek contact information for employees as a means to increase the value of its case.  Defense counsel must now be aggressive in reducing the contours of PAGA claims at the pleading stage before the discovery process begins.  Counsel will now have to be creative and aggressive in ensuring that some limits are placed on the information disclosed.

Contact our firm if you have any further questions about how to further structure your business in light of this result or if you are facing a PAGA lawsuit.

Click here to read the full case opinion:

Sergio H. Parra is the lead attorney for L+G’s labor and employment practice. Sergio represents a wide array of employers and businesses in labor and employment related litigation in state, federal and administrative venues. Sergio is also called on a daily basis to provide practical advice on employment matters, including internal complaints and investigations, employment agreements and wage and hour matters.

About bringing ICE agents to your defense at the Labor Commissioner’s Office…

by Sergio H. Parra li_sp

It appears that ICE might be showing up in Labor Commissioner Offices in California per a recent article in the Los Angeles Times. These sightings are consistent with other reports statewide of ICE officers showing up to Superior Courts to apprehend undocumented workers earlier this year.

According to the article, there were two recent instances of ICE agents showing up at the office of the Labor Commissioner at locations in Van Nuys and Santa Ana looking for undocumented workers who had brought claims against their employers.   The Labor Commissioner’s Office has 18 offices across the state, with the closest offices in Salinas and San Jose.   According to the Labor Commissioner, it hears about 35,000 claims per year from employees seeking back pay, wages and penalties from employers.

The Labor Commissioner reported that Federal immigration agents have shown up twice at California labor dispute proceedings to apprehend undocumented workers, in what state officials believe may be cases of employer retaliation. In Van Nuys, the worker who had made a claim for back wages never showed up the day the ICE officer came, and the case was closed. In Santa Ana, the worker had reported retaliation, and the state is still investigating that claim. The ICE agents who came to the Van Nuys and Santa Ana offices asked for the specific workers involved in the proceedings by name, and arrived within a half hour of when the meetings with employers were supposed to begin, Julie Su, the agency’s head stated. Su said she suspects that the employers being accused of underpaying employees tipped off federal immigration agents about the status of the workers. The timing of wage hearings isn’t public, and generally the worker and employer are the only ones who know that information outside of the agency.

In response, officials distributed a memorandum in July instructing their staff to refuse entry to ICE agents who visit its offices to apprehend immigrants in the country without authorization. The memo instructs staff to ask federal immigration agents “to leave our office, including the waiting room, and inform the agent[s] that the labor commissioner does not consent to entry or search of any part of our office,” the memo said. The memo then instructs that if the agents refuse to leave, they should demand a search warrant signed by a judge before allowing them onto the premises.

California’s Labor Code Section 244(b) prohibits the reporting or threatening to report of the immigration status due to that employee’s exercising of a legal right under the Labor Code.

Let us know if our firm can help your company develop policies and best practices to deal with immigration issues in your workplace.

Sergio H. Parra is the lead attorney for L+G’s labor and employment practice. Sergio represents a wide array of employers and businesses in labor and employment related litigation in state, federal and administrative venues. Sergio is also called on a daily basis to provide practical advice on employment matters, including internal complaints and investigations, employment agreements and wage and hour matters.

New Federal Guidance on Independent Contractors

by Sergio H. Parra li_sp


In June 2017, U.S. Secretary of Labor Acosta announced the withdrawal of the U.S. Department of Labor’s previously asserted guidance on independent contractors.

The prior guidance adopted the position that “most workers are employees under the FLSA” and adopted an economic realities test that focused on whether the worker is really in business for himself or is economically dependent on the employer (as an employee).  The former guidance also went as far to state that any agreement between an employer and a worker designating the worker as an independent contractor was not relevant to the analysis of the worker’s status.

Although the withdrawal of this guidance is not binding, it hampers the ability of federal courts and plaintiffs’ attorneys to rely upon it in support of their cases. Employers operating under California law must still heed the California legal tests as it pertains to defining an employee versus an independent contractor.

For this reason, employers should consult with counsel to minimize their legal exposure as it pertains to their company’s independent contractor/employee classifications. Regular review of policies and agreements as it pertains to independent contractors should be conducted by HR managers with the assistance of counsel on an annual basis.

Contact our firm if you are looking for more information and guidance on this very important issue.


Sergio H. Parra is the lead attorney for L+G’s labor and employment practice. Sergio represents a wide array of employers and businesses in labor and employment related litigation in state, federal and administrative venues. Sergio is also called on a daily basis to provide practical advice on employment matters, including internal complaints and investigations, employment agreements and wage and hour matters.

May an Employer and its Attorney Be Sued by a Former Employee for Calling ICE to Deport Him?

by Sergio H. Parra li_sp

This question was answered last week by the 9th Circuit of Appeal in the case of Arias v. Raimondo, (2017 BL 214215, 9th Cir., No. 15-16120, 6/22/17). This case arose from an earlier lawsuit in 2006 wherein Jose Arias sued his former employer Angelo Dairy in State Superior Court for various wage and hour violations, including failure to provide overtime, rest and meal periods, and under PAGA. The case had been hotly contested for over five years before it had been finally set for trial for August 15, 2011.

Ten weeks before trial, however, the Angelos’ attorney, Anthony Raimondo, hatched an ”underhanded plan” to have Immigration and Custom Enforcement (“ICE”) arrest and deport Arias at an upcoming deposition. Evidently, after Plaintiff Arias became aware of the plot, he instead agreed to settle the case to avoid the threat of deportation hanging over him and his family. It seemed liked the plot had worked.

However, two years later on May 8, 2013, Plaintiff Arias filed a federal lawsuit against his former employer and their attorney for retaliation under the Fair Labor Standards Act (FLSA). Although Angelo Dairy and its owners settled their part of this case early on, Arias continued his case against the attorney on the theory that he, acting as the Angelos’ agent, retaliated against him, by trying to him deported during the earlier lawsuit.
Although the FLSA primary wage and hour obligations fall squarely on the shoulders on the employers, the 9th Circuit held that the anti-relation provision of the FLSA, was specifically also applied to any agent or “person acting directly or indirectly in the interest of an employer in relation to an employee.” As such, the 9th Circuit rejected Mr. Raimondo’s argument that because he was never Arias’s actual employer, he could not be held liable for retaliation under the FLSA. There is no current word yet if Mr. Raimondo will try to seek review by the United States Supreme Court.

Regardless, this case presents several lessons that all employers should heed. First off, an employer must try to avoid temptation, during the heat of the litigation battle, to create additional risk for the company and, instead focus on narrowing the issues involved and winning a case on its merits. Involving federal authorities in a state law dispute not only raises certain moral and ethical concerns, but may also be a double-edged sword. A telephone call to ICE by an employer to report that one of its employees may not be legally entitled to work in the US, may lead ICE itself to also wonder about the reporting employer’s I-9 and employment verification practices. Most importantly, as evident by the Arias case, an employer must analyze and appreciate there are many protections under both federal and state law that prevent retaliatory conduct after a lawsuit or claim had been filed by the employee.

Lastly, any person involved in making HR decisions, whether as an employee or as attorney, must be cognizant that their own actions and electronic communications may be later scrutinized. In reaching its opinion, the Ninth Circuit Court’s opinion quotes from various text messages sent by Mr. Raimondo to ICE and other attorneys not only where he describes his deportation plot, but where Mr. Raimondo admits doing the same thing on five other occasions. Ouch.  As stated by the Court, the FLSA is “remedial and humanitarian in purpose. We are not here dealing with mere chattels or articles of trade but with the rights of those who toil, of those who sacrifice a full measure of their freedom and talents to the use and profit of others… Such a statute must not be interpreted or applied in a narrow, grudging manner.”

Click here for the full written opinion.

Sergio H. Parra is the lead attorney for L+G’s labor and employment practice. Sergio represents a wide array of employers and businesses in labor and employment related litigation in state, federal and administrative venues. Sergio is also called on a daily basis to provide practical advice on employment matters, including internal complaints and investigations, employment agreements and wage and hour matters.

Restaurant Surcharges: The Right Way to Pass the Buck?

If you’ve eaten in San Francisco recently, odds are that your restaurant bill had a charge below the sales tax, charging you up to 4% of your bill to cover healthcare costs for its employees. A recent trend in California and nationwide has seen the increasing use of surcharges, either in response to the passage of the Affordable Care Act, living wage ordinances or statewide increases to the minimum wage.

Earlier this year, an investigation was launched by the San Diego District Attorney’s Office of local restaurants that had recently implemented 3% surcharges in response to minimum wage increases. These restaurants are being investigated for violations under California’s Unfair Competition Laws, which are designed to protect consumers from unfair business practices and false advertising. Because of these broad consumer protections, customers must be made fully informed about these surcharges as soon as possible, not after they’ve eaten their food and received the bill, or worse yet, on the way home.

On the back end, restaurants must also be taken to ensure that the monies are separately accounted for and actually expended as charged. There is also specific guidance from the State Board of Equalization and the IRS on how these monies should be treated. Moreover, individual restaurants should be careful in pursuing these surcharges in concert with other business owners to avoid any antitrust allegations.

The bottom line is that although restaurant surcharges are not per se illegal in California, the legality of such surcharges are currently under scrutiny and thus, will require the attention of attorney to minimize the risks associated with their introduction.

Sergio H. Parra li_sp

Liability of Corporate Individuals for Labor Code Violations under the new Fair Day’s Pay Act

A strong reason for establishing a corporation or limited liability company is to attain protection against personal liability as the result of the company’s debts or liabilities. While it is traditionally true that the corporate form provides direct protection for owners, directors and officers, California courts are increasingly holding owners liable for labor code violations.

This trend led to the enactment of California’s so-called “A Fair Day’s Pay Act” on Jan. 1, 2016, which formalized and extended the case law even further.

Labor Code Section 558.1 now holds that “any owner, director, officer, or managing agent of the employer” that is “acting on behalf of an employer” who violates, or causes certain wage and hour laws to be violated, may be held liable as the employer for such violation.

This expanded liability encompasses most of the common wage and hour violations, such as overtime, minimum wage, pay stub violations, meal and rest periods, and failure to reimburse business expenses, as well as waiting time penalties. A “managing agent” under Civil Code 3294 is one who exercises substantial discretionary authority over decisions that ultimately determine corporate policy. In most cases, personal liability would not reach payroll managers and may not reach HR managers. From the employee/plaintiff’s point of view, individual defendants are chosen for their deep pockets or for their control of the litigation.

Because of this, owners (including directors, officers and managing agents) of corporate entities must be cognizant that if they are wrongly directing employees in regards to work schedules, wages etc., that they may be unknowingly creating liability for themselves as individuals. If possible, owners etc., should train and rely upon its work supervisors and HR staff to supervise wage/hour compliance. This new liability risk should provide even more incentive for businesses to have strong employment policies in place and to review their labor and employment practices on an annual basis to avoid liability in the first place.

Sergio H. Parra li_sp


Welcome to the Central Coast Employment Law blog. The mission of this blog will be to act as a resource to you concerning significant legal developments affecting employers throughout Northern California including Monterey, Santa Cruz,  San Benito and Santa Clara Counties.

Regardless if you operate an ag company in Salinas, run a hotel or restaurant in Carmel or manage a start-up tech company in Santa Cruz, you are facing an ever-increasingly complex regulatory environment that can lead to draconian penalties if you are not up to speed with the latest legal trends.

Each month, this website will attempt to spotlight some of the most pressing areas that human resource managers, executives and business owners should consider as they conduct medium and longer-term planning of their businesses. While most blogs spit out daily robo-news articles and alerts regarding some new case or new regulation that usually does not apply to you, our blog will attempt to introduce you to innovative new trends and practical policies of general importance that will hopefully help you run a smarter, and more profitable, business.

Thank you for visiting.

Sergio H. Parrali_sp