California Employment Law
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Yes, I forgot to attach paragraph 11. Here it is. But this paragraph only constraints my side and not other people from the company side. That is why I am concerned. How should I rephrase this paragraph to constraint the company side? Does California Civil Code, section 1671 apply to the other party as well? Thanks.
11. Enforcement of Confidentiality. Zhou agrees that in the event Zhou breaches Zhou’s obligation in paragraph 10 above not to disclose confidential information; or Zhou or any of the other persons identified in paragraph 10 above, breach their obligation to keep this Agreement and Release confidential, the damages to Health Plan for breaching that obligation would be impractical and extremely difficult to ascertain, that the magnitude of Health Plan’s direct and consequential harm is likely to be quite substantial, and that it is in the parties’ interest to liquidate the amount of Health Plan’s recoverable damages for the sake of predictability and avoidance of costly litigation over the magnitude of Health Plan’s damages. Therefore, pursuant to California Civil Code, section 1671, Zhou agrees to pay Health Plan the sum of Two Thousand Dollars ($2,000.00) as liquidated damages for any such breach, upon proof of such breach by clear and convincing evidence, and agrees that amount is reasonable in light of the circumstances at the time of this Agreement and Release.
Civil Code 1671 is simply the definition of "liqudated damages" in California. For an employment contract, subsection (b) provides that "...a provision in a contract liquidating the damages for the breach of the contract is valid unless the party seeking to invalidate the provision establishes that the provision was unreasonable under the circumstances existing at the time the contract was made." A liquidated damages clause can be rendered unenforceable by showing in court that the amount of liquidated damages lack a proportional relation to damages which may actually flow from failure to perform under a contract.” Ridgley v. Topa Thrift & Loan Ass’n (1998) 17 Cal.4th 970, 977. However, $2,000 could be argued to be too small of a damage award under your agreement, so this leaves you in a very uncertain position in the event of a dispute. That said, I cannot draft any final legal document in this forum, so please understand that what follows is intended as an example, of what an enforcement clause could look like:In the event of a breach by either party of the obiligation of nondisparagement or confidentiality under this agreement, the parties agree that it would be unreasonably difficult to ascertain damages for the breach in advance of its occurrence, and therefore the parties agree that each and every individual breach of either of the aforementioned obligations shall entitle the nonbreaching party to liquidated damages in the amount of $2,000.00 USD. Hope this helps.
Thanks for the help.
Here is company atterny's response per the HR person.
We cannot agree to Jie's changes. We will not limit the non-disparagement obligation to Health Plan. We need the ability to provide information about her performance or behavior to any of the KP entities without a claim that we breached our non-disparagement obligation. We will not agree to pay her liquidated damages for breach of the confidentiality provision. ______________________________________________________
The second sentence refer to the change I made in a paragraph under #9-
Health Plan agrees to use its best efforts to cause Ray Poppino, Greg Klenske and BXXXXX XXXXX, while under the control of Health Plan, not to make any statements, either verbal or written to anyone outside of XXX HEALTH PLAN, INC, including without limitation, to any electronic or print news media or other publications, or any community organizations, that would disparage the reputation, image, good will or commercial interest of Zhou.
I changed XXX to XXX HEALTH PLAN, INC because there are three legal entities under this holding company: XXX Health Plan, XXX Medical Group and XXX Hospital. I wanted to make sure that the dispute is only known within Health Plan so that when I apply for jobs within the XX Medical Group and XXX Hospital, the HR in the other two groups does not know there is dispute. Otherwise, it will impact my application. Is it legally required that the HR files are accessable to any of the legal entities within this holding company?
Also, company attorny's repsonse does not address my second concern on the $2000 litigation damage charge either. Why should I pay the company a fine when there is a breach on their side? How should I respond to this unlogical request?
Is it legally required that the HR files are accessable to any of the legal entities within this holding company?
A: No. But, this doesn't mean that the attorney can't make the demand. It's all about your leverage. If you have something that could cost the employer a lot more if you were to go to trial or arbitration on the issues surrounding the separation agreement, then you have leverage. Otherwise, the attorney will simply say, no, and you'll have to choose whether or not to sign or sue/arbitrate.
Also, company attorny's repsonse does not address my second concern on the $2000 litigation damage charge either. Why should I pay the company a fine when there is a breach on their side?
A: Once again, it's all about leverage. If I were representing you, and if I thought you had a strong case, then I wouldn't settle -- I'd say, "If you (kp) don't change your mind, then we're going to court/arbitration. Your choice, but if we don't have a response one way or the other by ??/??/????, then we will assume there's no deal and I will proceed to enforce my client's rights."
If I thought you had a weak case, I'd probably suggest that you take the deal.
How should I respond to this unlogical request?
A: Only you can decide how to respond. I'm not permitted to advocate a course of action in this forum. The decisions on what to do with the information provided must be yours alone.
Hope this helps.
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