The Letter of the Law: February 2012


AWARDS: Kring & Chung Super Lawyers

EMPLOYMENT: New Penalties for Misclassifying Employees

FAMILY: Steps to Take After Divorce

EMPLOYMENT: Pre-Employment Arbitration Agreement Held Unconscionable

Kring & Chung Super Lawyers

Congratulations to Kyle Kring and Kenneth Chung for being selected again for inclusion in the 2012 list of Super Lawyers in California. Super Lawyers is a rating service of outstanding lawyers from various practice areas who have attained a high-degree of peer recognition and professional achievement. The selection process is multi-phased and includes independent research, peer nominations and peer evaluations.

Each candidate is evaluated on 12 indicators of peer recognition and professional achievement. Selections are made on an annual, state-by-state basis with no more than 5% of the attorneys in California being selected as Super Lawyers.

New Penalties for Misclassifying Employees

By: Laura C. Hess

SB 459, signed by Gov. Jerry Brown in October 2011, prohibits employers from willfully misclassifying an employee as an independent contractor. “Willful misclassification” means that the employer is trying to “avoid employee status for an individual by voluntarily and knowingly misclassifying that individual as an independent contractor.” The new law also makes any non-lawyer who advises an employer to willfully misclassify employees jointly and severally liable along with the employer.

Penalties for violation include:

1. $5,000 to $15,000 civil penalty per violation.

2. $10,000 to $25,000 civil penalty for a “pattern and practice of violations.”

3. The court or California Labor and Workforce Development Agency (“CLWD”) can contact the California State Contractor’s Licensing Board and require it to initiate action.

4. Required notice posting, visible to all employees and the public, stating that the employer has committed a serious violation of the law by willfully misclassifying employers and independent contractors; that it has changed its business practice to avoid further violation; that any worker believing he or she is misclassified may contact the CLWD; and that the notice is being posted pursuant to a state order. This notice must be signed by a company officer and must remain posted for one year.

Steps to Take After Divorce


Once you have received your filed judgment from the court, your divorce is over, but your work is not necessarily done. If you elect to resume using a previous name, you will need to change your driver’s license, vehicle titles and registration, passport and social security card.

For information to change the name on your driver’s license, visit the DMV website.

We suggest clients make an ongoing checklist as they remember other items that will need name changes. Examples of some of these items are: auto or other insurance, bank accounts, schools, daycare facilities, credit cards, employers, health care providers, pension and retirement plans, utility bills, and so forth.

Once a divorce is final, you should take care to remove your former spouse from any insurance policies that you will maintain. Be sure to remove any automobiles that your former spouse has been awarded, as well. Verify whether your former spouse is still listed as a beneficiary under any continuing life insurance policies.

Joint credit cards are often overlooked, so do not make that mistake. Close all joint credit cards and open new accounts in your own name. Obtain a credit report about six months after doing so to ensure that there are no outstanding joint credit cards. Divide your assets right away, according to the terms of the judgment. Be fair and prompt with your former spouse as the Court has continuing jurisdiction over the division of assets and can sanction a party for improper conduct.

Last, but certainly not least, you would be surprised to learn how many people forget to change their wills, trusts and health care directives after a divorce is final. Don’t be one of those knuckleheads!

Pre-Employment Arbitration Agreement Held Unconscionable

In the recent case of Wisdom v. Accent Care, Inc. (2012) 202 Cal.App.4th 591, the Third District Appellate Court decided that a clause in an application for employment requiring only the applicant to agree that, if hired, all disputes not resolved informally will be submitted to binding arbitration, is both procedurally and substantively unconscionable. AccentCare had filed a Motion to Compel Arbitration. The trial court denied the Motion.

Four of the six plaintiffs signed Acknowledgement forms when they applied for employment at AccentCare. The Acknowledgement was on the last page of an application form. It stated, “I hereby agree to submit to binding arbitration on all disputes and claims arising out of the submission of this application. I further agree, in the event that I am hired by AccentCare, that all disputes that cannot be resolved by informal internal resolution which might arise out of my employment with AccentCare, whether during or after that employment, will be submitted to binding arbitration.”

The Appellate Court reasoned that a court can refuse to enforce an unconscionable provision in a contract pursuant to Civil Code § 1670.5. A provision is unenforceable if it is both procedurally and substantively unconscionable. A contract can be procedurally unconscionable if it is oppressive due to the unequal bargaining power of the parties. In this case, the pre-employment arbitration agreement is procedurally unconscionable as few employees are in a position to refuse a job because of an arbitration requirement.” The Court was also concerned that the plaintiffs did not understand that they were waiving their right to a trial, nor was this fact explained to them.

The Court also attacked the provision because it lacked mutuality. The lack of mutuality is made apparent by contrast to a post-hire arbitration agreement, also used by AccentCare, which provided that “in exchange for my agreement to arbitrate, AccentCare, Inc. also agrees to submit all claims and disputes it may have with me to final and binding arbitration….” In the context of an arbitration agreement imposed by the employer on the employee, a one-sided term was found to be unconscionable. The key to this case was that AccentCare required its prospective employees to sign the one-sided agreement to arbitrate. The Court distinguished the AccentCare pre-hire arbitration agreement with the AccentCare post-hire arbitration agreement, concluding that the post-hire agreement did not lack in mutuality because it indicated that both the employee and the employer agreed to proceed to arbitration and waive a jury trial. The Court remarked “clearly defendants knew how to draft a bilateral agreement.”

This case is a red flag to employers to review their arbitration agreements in any pre-hire and post-hire documents. Make sure the provisions are bilateral, meaning that both sides agree to binding arbitration and agree to waive a jury trial. Also, ensure that you reference that the employee is free to consult with legal counsel before signing any documents.

Harold D. Park Joins Kring & Chung’s Irvine Office

Harold D. Park joins Kring & Chung as an Associate in Irvine. He graduated from the University of California, Irvine in 2000 with a B.A. in Psychology and Social Behavior. Prior to attending law school, Park worked for several independent record labels managing their online presence and marketing.

After being admitted to the State Bar of California in 2009, Park started his own solo practice in which he worked in a variety of practice areas such as immigration, contract, licensing, and entertainment law. In 2011, he joined a plaintiff’s class action firm in which he worked on nationwide vehicle defect cases against manufacturers such as Mercedes Benz, BMW, and Honda.

Park will be focusing his practice on employment and business litigation.

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